Vladimir Postolovsky

"They could use the EGM to try to change the charter," said Vladimir Postolovsky, at UBS in Moscow.

He said the outcome of Wednesday's vote effectively maintained the status quo because two independent directors had previously backed Alfa's stance on the Ukraine purchase.

Vladimir Postolovsky vladimir.postolovsky@ubs.com +7 (495) 258 5103

?To put it into context, in 2005 alone MTS lost 6 percentage points in Russia and 9 percentage points in Ukraine (and the losses have been accelerating lately)," Vladimir Postolovsky, Research Director with UBS said in a research issued May 11. ?The company has already conceded market leadership in Ukraine and if after third quarter of 2005 we were predicting that it would become number two in Russia by the end of 2006, after the fourth quarter results it looks more like the end of first half of 2006," he added.
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We strongly disagree with these points of view," Vladimir Postolovsky, Research Director with UBS said in a research issued May 11.

Postolovsky argues that the fundamental problem of Russian wireless sector is the fact that ?it is stuck in transition from growth to value, while the problem of MTS is that it is losing market share and that management of organic growth does not seem to be one of Sistema?s strengths."

?Should we expect MTS? fortunes to change?We are less than convinced.As we have argued in the past MTS has always underperformed VimpelCom in managing organic growth; this was simply well disguised before 2005 by very profitable growth through acquisitions.We see clear evidence that the company market share losses both in Russia and in Ukraine are accelerating," Postolovsky said.

All of this is seems to be pushing the company's strong free cash flow story further out and, with value being the only attraction in MTS at this stage in our opinion, it is depressing share price performance," Vladimir Postolovsky, research director at UBS, said in a research note.