New Users Boost MTS Sales 25% in '07

ST. PETERSBURG -- Sales at Mobile TeleSystems, the country's largest mobile-phone provider, rose about 25 percent in 2007, more than the company had previously expected, boosted by new subscribers, chief executive Leonid Melamed said Saturday.

Revenue climbed to more than $8 billion last year, Melamed told reporters in St. Petersburg. In November, he had predicted sales would increase 22 percent for the year.

The revenue figure compared with a median estimate of $8.17 billion from 23 analysts compiled by Bloomberg.

MTS increased its number of subscribers about 17 percent to 85 million, Melamed said, as it added music and video content and greater Internet access. The company is seeking to expand in the nations of the former Soviet Union as there is now more than one cell phone for every Russian.

"The Commonwealth of Independent States is our first priority, but we also are looking to Africa and Southeast Asia" Melamed said. MTS is not interested in boosting its presence in Eastern and Western Europe, he said.

MTS's American Depositary Receipts rose 1.2 percent to $81.80 in New York Stock Exchange composite trading Friday. The shares have dropped 20 percent this year, giving the company a market value of $32.6 billion.

MTS, controlled by billionaire Vladimir Yevtushenkov's Sistema, and smaller competitor VimpelCom are seeking to buy regional operators to strengthen their positions in the domestic market.

The country's mobile operators had more than 166 million domestic subscribers at the end of February in a country with a population of 142 million people, according to Moscow-based researcher Advanced Communications & Media.

MTS offered to buy Smarts, a mobile-phone operator based in Samara, for $1 billion, Vedomosti reported Thursday, citing a source close to Sistema. Melamed declined to comment on the report Saturday.

MTS will release a full 2007 earnings statement on April 16, he said.