Russian Telecom Bets on Buybacks

09/26/2018 5:00 am EST


David Fried

Editor, The Buyback Letter

Moscow-based Russian telecom giant Mobile Telesystems (MBT) is like the AT&T (T) or the Verizon (VZ) of Russia. It offers fixed-line broadband, wireless and pay TV service within the country, and is now the country’s largest wireless carrier, notes David Fried, editor of The Buyback Letter.

The company also sells wireless service in some of the former Soviet republics including Ukraine, Armenia and Turkmenistan, serving more than 100 million subscribers. With annual revenue of $7.7 billion, it's easily the biggest telecom provider in the Russian Federation.

To keep pace with evolving customer demand, MBT is offering products beyond its core network-related businesses in various tech segments, including Big Data, financial and banking services, internet of things (OTT), cloud computing, systems integration and e-commerce.

MBT had a recent win in the FIFA World Cup, but not on the field. MBT and Ericsson (ERIC) announced preliminary results of Europe's largest deployment of Massive MIMO (Multiple Input, Multiple Output) in seven cities staging the World Cup 2018 in Russia.

Mobile internet traffic volume almost tripled during the tournament, while the uplink for video streaming from the sporting events increased by up to five times as a result of implementation of 5G technologies on the MBT network.  

MBT this month reported second-quarter profit of $230.9 million. Net income was 24 cents per share, with revenue of $1.85 billion in the period. Analysts predict average annual earnings growth of 10.4% over the next five years.

This year, the company paid a dividend of just over 74 cents per share, bringing the dividend yield to just over 9%. Analysts who follow the company predict MBT will grow earnings at 14% annually over the next five years. The shares outstanding have been reduced by 5.966% in the last 12 months.

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