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. Last Updated: 07/27/2016

Megafon Turns Profit in Moscow

Russian-Nordic cellular venture Megafon said Wednesday that its fledgling Moscow business reported a core profit in the first three months of 2003, just over a year after it launched a network in the capital.

"In the first three months of 2003 we have positive EBITDA [earnings before interest, tax, depreciation and amortization]," said Leonid Denisov, general director of the Moscow unit of Megafon, the country's No. 3 cellular operator, backed by TeliaSonera.

"The trend will continue unless we try to increase the client base by dipping into operating cash," he said.

Megafon Moscow officials said at a news conference they had just under 400,000 users in Moscow, hardly a patch on its bigger competitors Mobile TeleSystems and Vimpelcom, which had 3.9 million and 4.01 million, respectively, at the end of last quarter, according to independent data.

Still, after a quiet start in November 2001, Megafon went on a drive to win subscribers in Moscow and won consumer sympathy by making an issue of the fees charged by its rivals for incoming calls from outside their networks.

Megafon stopped charging for incoming calls despite having to pay connection fees for the calls to fixed-line partners.

This has been a big issue in neighboring Ukraine, where the parliament has raised cries of distress from mobile operators by banning fees for incoming calls to mobile phones.

Top Ukrainian operator Kyivstar, which like Vimpelcom is backed by Telenor, has said the law could stall growth in mobile, one of Ukraine's few profitable businesses.