Jul
12
Volgatelecom: One of the best - July 08, 2009
Filed Under Bullet-moments |
Sales of Volgatelecom, JSC by IAS in 2008 totaled 32.1 bn RUR. Operating profit reduced to 5.5 bn RUR. Net profit reduced to 2.9 bn RUR. Totally the financial estimates of the company remain secure and stable – with no leaps of sales, profitability or profit in 2008.
We consider Volgatelecom to be one of the strongest IRC. Among the definite benefits of the company is the fact of diverse business. Volgatelecom obtains developed cellular business, and also a fast-growing BBA-segment. By the number of BBA-subscribers Volgatelecom occupies a 3rd place among the Russian providers, going behind Comstar and Vimpelcom.
The second important matter is the debt load of the company, which is at a relatively comfortable level – comparative figures of the debt load of Volgatelecom are lower than average estimates within the industry. In absolute figures the arrearage of Volgatelecom totals 580 mn USD, 257 mn USD out of which form the short-term share, which is to be covered during 2009. According to our estimations, the given volume of arrearage can be covered by Volgatelecom using its own assets, without going for additional borrowings.The company plans the investment program for the current year at the level of 2.6 bn RUR. The given volume of the investments will allow Volgatelecom to payoff the debts and survive the hard times with benefits to the company.
We revised our model of Volgatelecom considering the new data. We place Volgatelecom in one line with Dalsvyaz as the least risky for investing in IRC from the point of fundamental estimates. Nevertheless, similar to the case of other IRC, we do not consider the factor of Svyazinvest reorganization.
After having revised the model we calculated the estimation of the common and preferred shares of Volgatelecom, which forms 3.0523 USD and 2.2893 USD respectively. The former estimations – 2.5992 USD and 1.9495 USD respectively. Considering the fact that the given estimations provide for significant growth potential, we confirm the recommendation BUY for both share types. But once again please note that the given estimation does not consider the possible risks, related to the possible reorganization of Svyazinvest.