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. Last Updated: 07/27/2016

MGTS Posts Loss For 1998

Moscow telephone monopoly MGTS reported Tuesday that it posted a loss of 1.44 billion rubles ($62.6 million at Wednesday's official rate) on sales of 2.89 billion rubles in 1998, results that analysts blamed on the revaluation of the company's Eurobonds.

The telecom giant, struggling to meet its next Eurobond payment March 19, also intends to set up this week a program to fund the coupon, company officials said. The telecom firm has been trying to drum up funds for the $9 million semiannual payment since last fall, when the ruble started to devalue.

MGTS officials would not comment further on Tuesday.

MGTS issued the $150 million of Eurobonds in March 1998. Since then, the ruble has sunk from 6 to the dollar to 23, making the $150 million in paper worth a staggering 3.5 billion rubles - almost 20 percent more than MGTS's total revenue last year.

"This is a paper loss," said Brian Coleman, a telecom analyst with Aton. "But once you compare the amount of liabilities to the size of the company, it looks enormous."

The company's operating profit, however, has barely changed on a yearly basis, still amounting to about 20 percent of sales, Coleman said.

Russian telecom companies, laden with dollar debts and a weak currency, are struggling to keep afloat amid the financial crisis. Of the nation's 90 firms, analysts expect only 15 to break even this year.

MGTS may be hurting more than others because Moscow tariffs are lower than in many other regions. Moscow Mayor Yury Luzhkov has refused to raise the prices of residential phone calls despite high inflation. Muscovites are charged a monthly fee of 24 rubles, 2 rubles less than St. Petersburg residents and 50 percent less than many Siberians.