Daily analyst comments

MTS raises 413 mn euros in loans: credit terms are unclear


	MTS

Capitalization: 16 120 646 409,11 $

Common shares
Rating	Buy
Price	8,09 $
Target price	15,10 $

Price changing
week	month	year
0,5%	-0,5%	34,2%

30.06.09 10:06

The fact that MTS has been granted a EUR 413 million loan is favorable for the operator’s image. At the same time, no information about credit terms has been disclosed so far, so we are unable to assess the impact that the newly accrued debt may have on the operator’s financials.

On June 29, Russian mobile operator MTS (RTS: MTSS) was reported to have raised three loans worth EUR 413 million from the European Bank for Reconstruction and Development, Nordic Investment Bank, and the European Investment Bank. The credit facilities have different repayment periods, from 3 to 7 years, and aim at expanding the operator’s networks in various operating regions.

Unfortunately, MTS has not disclosed the interest rates on the loans – something which has now become a negative trait for the operator (for example, see our daily published January 21, 2009). Therefore, we are unable to say for sure to what extent the operator’s net profit margin may fall after its debts increase. However, the very fact that MTS was able to attract new credit resources is positive for the operator, as it demonstrates the company’s investment appeal.

We assign a BUY rating to MTS with a target price of USD 10.80 at the end of 2009.

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