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. Last Updated: 07/27/2016

Comstar Earnings Surge 51%

Fixed-line telecoms operator Comstar beat forecasts Thursday with second-quarter core profit and sales and said it expected an improved full-year margin and higher revenue growth.

The country's telecoms market is one of the fastest-growing in the world, and Comstar, controlled by Sistema, posted a 51 percent surge in earnings before interest, taxation, depreciation and amortization, to $173.2 million.

The EBITDA margin rose to 46 percent from 40.1 percent a year ago, while revenues climbed 32 percent year on year to $379.2 million. Both figures were above market expectations.

Comstar said the results were helped by growing demand for the unlimited calling plan introduced by its MGTS unit and $27 million received from the government in compensation for subsidizing a specific group of customers in past years. It said 52 percent of subscribers have chosen its most expensive unlimited calling plan at around $15 a month.

It also cited a positive impact from the introduction of the calling-party-pays principle, and the continuing appreciation in the ruble among reasons for the revenue growth. The principle, introduced in July 2006, benefits fixed-line operators because they can now charge fixed-to-mobile rates.

"The solid Q2 '07 results confirm that the introduction of new tariffs for local telephone services had a positive effect on the company's financials," UralSib said in a research note.