Mobile TeleSystems (MBT) Stock Lower Today After Cost Cuts to Stem Currency Losses

NEW YORK (TheStreet) -- Shares of Mobile TeleSystems (MBT) are down 4.6% to $8.09 down after the wireless operator agreed to jointly build and operate faster networks with VimpelCom  (VIP) to cut costs amid a plummeting ruble, Bloomberg reports.

The carriers will construct and run 4G networks in 36 Russian territories, aiming to save about a quarter of the required capital spending in the regions, the telecommunications companies told Bloomberg.

Russia is heading to a recession after oil prices fell and the ruble plunged more than 30% against the U.S. dollar and euro this quarter, Bloomberg added.

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Separately, the ruble gained today, hitting the highest levels in two weeks, as Russian authorities ordered major state companies to sell foreign currency to stabilize the market, the Wall Street Journal reports.

TheStreet Ratings team rates MOBILE TELESYSTEMS OJSC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MOBILE TELESYSTEMS OJSC (MBT) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MOBILE TELESYSTEMS OJSC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MOBILE TELESYSTEMS OJSC increased its bottom line by earning $2.34 versus $1.04 in the prior year. This year, the market expects an improvement in earnings ($69.45 versus $2.34).
  • The gross profit margin for MOBILE TELESYSTEMS OJSC is currently very high, coming in at 70.39%. Regardless of MBT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 13.92% trails the industry average.
  • The revenue fell significantly faster than the industry average of 57.6%. Since the same quarter one year prior, revenues fell by 43.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Wireless Telecommunication Services industry. The net income has significantly decreased by 55.2% when compared to the same quarter one year ago, falling from $582.32 million to $260.98 million.
  • Net operating cash flow has decreased to $738.50 million or 49.00% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: MBT Ratings Report

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