Time to name a winner

Yesterday Vimpelcom announced financial results. They were the last out of "Great Three". I'll discuss the results of "Great Three", current situation and make some predictions.

1. MTS


2. Vimpelcom


3. Megafon

MTS remains the number one MNO as its income is 50.5 blns rubles. The most interesting competition is about second place. Below you may find Megafon feeling of market share.

I believe that it is not far from truth. Megafon was very successful in 4Q with anticrisis actions. Megafon acts according to market: enhanced bonuses, new tariff Prosto and even overall feeling that Megafon is the cheapest MNO helps them. MTS seems to be able not to respond to the crisis because of good financial conditions. But Beeline fastly loose its advantages over Megafon. Almost all projects are frozen, even significant ones. There is no contraction to the new environment. It seems that they don't realize that market changed, that new turns required. Possibly, it is because new top management haven't taken control of the company.

MTS is aggresively launching new projects in order to grow up VAS revenue. Megafon is concentrated on cheap proposals.

I believe that in near future Megafon will become number two MNO, Beeline will go down. It is not a good choice to hold Vimpelcom shares but MTS shares are still underscored I think.

Thanks,
Denis.

Small portion of analytics

Russian business news magazine "Vedomosti" published small portion of MNOs financial analysis. http://www.vedomosti.ru/newspaper/article.shtml?2008/12/26/175603
The most interesting part of it below on picture. This is debts of MNOs before crisis according to their official financial reports.

You may see significant increase of Beeline debts after Golden Telecom and Corbina aquisition. Of course not all debts should be paid in 2009 but it is very hard to refinance debts in current situation. I think it is the answer on expenditures cuts in 2009. Beeline will have to spent almost all revenue on debts and there is no way for many new projects.

MTS and Megafon already refinanced part of their debts and able to compete for Beeline market share with aggressive strategies. They have already begun this - in the same article there is information about average minute cost (APPM) going down in MTS and Megafon while Beeline increased it.

Thanks, Denis.