Russian Telecommunications Stocks

Do you have the guts to invest in Russian telecommunications companies? Russia's gross domestic product skyrocketed 7.9% last quarter compared to a 6.6% increase last year. This means that rising incomes will be talking more on their wireless handsets. There are not many new subscribers left. Growth must come from current subscribers increasing their telecommunications usage. This article will recommend on the following Russian companies:

Mobile Telesystems (MBT)

Vimpel Communications (VIP)

Rostelecom (ROS)

Mobile Telesystems is Russia's number one wireless provider. They also provide service in Ukraine, Uzbekistan and Turkmenistan. MTS provides network access services including mobile cellular voice, data and facsimile communication services to its subscribers. It also offers voice mail, short message services, general packet radio services, and multimedia message services. It shows a healthy return on equity of 35%. This is due partly because of the high debt to equity ratio being 0.785. Quarterly revenue growth year over year on Yahoo Finance is 35%. Quarterly earnings growth (yoy) is 15% Solid fundamentals indicate shares of Mobile Telesystems should be bought. MTS is currently dropping in price on below average volume. This would indicate that big institutions are holding onto their shares.

The VimpelCom Group, Russia's 2^nd biggest wireless provider includes cellular companies operating in Russia, Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia and Armenia. Vimpel last month announced a plan to repurchase up to 1,600,000 American Depositary Shares, equivalent to 400,000 shares of the company's common stock. That is usually a sign that the insiders in the company feel that the stock is undervalued. Plus buying back shares lowers the trading float which makes the stock go higher faster when it is under heavy accumulation and lower at a faster rate when there is a sell off. Vimpel has a 24% return on equity. The debt to equity ratio is .593. Quarterly revenue growth (yoy) is 59%. Quarterly earnings growth (yoy) is 30%. It is growing faster than Moble Telesystems because they are rapidly expanding business in Kazakhstan and other Commonwealth of Independent States (CIS) nations. The stock price was at $50 last August. It is currently in the $100 range. Since it hit $90 in March, it has been steadily rising on declining volume. This is an early sell signal. It may be time to wait for the stock to make a 20-25% correction before buying more shares.

Rostelecom owns and operates a nationwide trunk telecommunications network. Rostelecom renders domestic and international long distance telecommunications services to end users and provides traffic throughput services to Russian operators. The company provides services to various government-funded entities and government ministries across Russia. Rostelcom has a 4% quarterly earnings growth and a 47% quarterly revenue growth. This stock has risen from less than $15 to over $50 in the past 16 months. I really think it is time for it to make a correction. I believe this because I analyzed the chart. The volume is below average on weeks the price increases. The volume is above average in weeks when the price decreases. Do not buy Rostelcom at 56. Wait for it to c'mon back like Jim Cramer says to do.

Out of the three companies, I would recommend buying Vimpel Communications as they work at passing Mobile Telesystems.