Russia's MTS happy with current debt profile: CEO

Wed Jan 27, 2010 4:01pm EST
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By Gleb Bryanski

DAVOS, Switzerland (Reuters) - MTS (MBT.N: Quote), Russia's largest mobile phone operator, is comfortable with its current burden of gross debt at 1.8 times OIBDA and has no plans to change it significantly in 2010, the firm's CEO told Reuters.

"We are not planning to raise it (debt burden) above two (times OIBDA) but are not planning to cut it either," Mikhail Shamolin said on the sidelines of the World Economic Forum in Switzerland.

"We need to use our balance sheet's potential to invest," he added. Shamolin said the company planned capital expenditure at 20 percent of sales in 2010, lower than a previously announced guidance of 22-25 percent.

"On the whole we have a very good cash position and we do not need new debt to finance this investment," Shamolin said. MTS secured about $1.8 billion in "vendor financing" in the second half of 2009.

Shamolin said there was no decision yet on how the company is going to refinance its two Eurobond tranches for a total of about $2 billion. He said the company could issue new Eurobonds, take new loans or use cash. All options were open.

Shamolin said the company was not yet ready to give any guidance for 2010 due to low visibility in the current economic conditions. He said the current debt profile worked as long as the rouble stood within a corridor of 30-33 to the dollar.

Shamolin said traditional voice services, which account for about 80 percent of MTS' revenue, will drive MTS growth in the coming year as the economy is recovering from the crisis.

"If there is an economic recovery, voice traffic will grow. It stagnated last year and we believe there is a potential for growth," Shamolin said, noting that this potential depended on the economic situation and psychological expectations.   Continued...