Daily analyst comments
MTS to test mobile TV
24.03.10 15:30
The launch of mobile TV is unlikely to have any notable upward impact on the operator’s revenue, as the service is a niche and not meant for mass use. However, we believe the move is important for the company’s public image, and fully support the operator’s initiative.
MTS has announced plans to launch 3G mobile TV services in a test mode in Moscow and Saint Petersburg. Subscribers will have access to more than 100 TV channels. The service should be available to users of the most widespread mobile operating systems: Windows Mobile, Symbian, Android and Blackberry. If the test ends successfully, MTS could launch the service in other regions of Russia in as early as summer 2010. The operators’ has not disclosed any details yet, but has indicated the projected size of the subscription fee: RUB 200-300 per month.
The launch of mobile TV should not have any notable upward impact on MTS revenue, as the service is unlikely to go into wide circulation. In particular, we project that the new service will be of interest to no more than 1-2% of the company’s total subscribers, and the proceeds from it are unlikely to exceed RUB 100-150 million per month, or 1% of the average monthly revenue. However, we overwhelmingly support this initiative, as we believe the move to positively affect the company’s public image, given especially that its two closest rivals, VimpelCom and Megafon, have already launched similar services. In view of the above, we express our positive attitude to the news.
Our target price for MTS (RTS: MTSS) on 31 December 2010 is USD 12.20 per share with a BUY rating.