OREANDA-NEWS. August 20, 2009. Russia's mobile phone subscriber base increased 1% MoM in July to reach 200m SIM cards, which implies a 138% penetration. MegaFon was the sector's top performer with a 2.2% MoM increase in subscribers, while Vimpelcom’s posted a 1.2% MoM rise in its Russian user base. MTS lagged behind, with a mere 0.8% growth, reported the press-centre of OTKRITIE FC.

View: Since April, Russia's subscriber base has grown steadily, at a pace of 1%MoM. The difference among the companies in terms of share of net additions is mainly the result of MTS’6-month churning policy (as compared 3-month policies for Vimplecom and Megafon). Beyond the big three operators, it is worth noting that Uralsvyazinform’s base declined 3.7% MoM, which contrasts sharply with Uralsvyazinvform’s previously steady growth in its base. This is most likely a result of its 6-month churning policy, which reflects cannibalization from the earlier Christmas campaign.

Valuation: Vimpelcom trades at 5.7x EV/EBITDA 09E and MTS – at 5.4x.

Action: We view the July subscriber statistics as neutral for MTS and Vimpelcom. Uralsvyazinform shares might see some correction, however we do not think the data should be of major concern at this stage.