VimpelCom Ltd. is outperforming its Russian competitor OAO Mobile TeleSystem by the most ever this month on speculation its emerging-market sales are growing and that shareholders are close to resolving an antitrust dispute.
American depositary receipts of the world’s sixth-largest mobile-phone provider gained 1.1 percent yesterday in New York, extending its advance this month to 12 percent. The rally has surpassed the 2.2 percent increase by Mobile Telesystem, Russia’s biggest mobile phone company. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks listed in the U.S. rose 0.1 percent to 94.39 yesterday. The RTS stock-index futures expiring in September lost 0.5 percent to 143,375.
VimpelCom will probably say today that second-quarter revenue increased 3.1 percent to $5.7 billion, according to the mean estimate of four analysts surveyed by Bloomberg. Revenue in Russia, Asia and Africa will show a rise, UralSib Financial Corp. said in an e-mailed report yesterday. The Russian government is trying to reach an out-of-court settlement by October with Telenor ASA involving the company’s purchase of a stake in VimpelCom, the Anti-Monopoly Service said on Aug. 1.
“We prefer VimpelCom over MTS at these levels and believe it’s the right time to buy,” Konstantin Belov, an analyst at UralSib Financial said by phone from Moscow yesterday. “The company is heading in the right direction. There are signs that the conflict between shareholders may be solved and it will be able to benefit from growth in Russia and other emerging markets.”
Russia ETF Gains
The Market Vectors Russia ETF, the biggest U.S.-traded exchange-traded fund that holds Russian shares, rose 0.4 percent to $27.87. The RTS Volatility Index, which measures expected swings in the index futures, advanced 1.5 percent to 30.17.
VimpelCom will probably report a sales increase in Russia, Ukraine, Asia and Africa, that will offset a revenue slump in Europe and North America, UralSib said. The company’s net income is expected to rise 23 percent to $291 million, according to the mean estimate of three analysts surveyed by Bloomberg.
The company, which became the world’s sixth-largest wireless operator by subscribers last year after merging with Italy’s Wind Telecom SpA, probably lost as much as $165 million after the ruble and the euro weakened against the dollar in the second quarter, OAO Nomos Bank said.
Russia’s ruble, the worst performer among 25 emerging-market currencies in the second quarter, weakened by 9.5 percent against the dollar in the period, while the euro lost 5.1 percent.
‘Even Be Higher’
“The numbers would be rather good and could even be higher if it was not for the depreciation of currencies in its largest countries of operation,” Evgeny Golosnoy, analyst at Nomos Bank, said by phone yesterday from Moscow. “We expect the stock to be more affected by the resolution of ownership issues between its two largest shareholders.”
Russia’s Anti-Monopoly Service is disputing Oslo-based Telenor’s right to increase its stake in VimpelCom after the Nordic company bought an 11.3 percent stake from Egyptian billionaire Naguib Sawiris’s Investments II SARL in February. Russia’s FAS, as the agency is known, said it didn’t give permission to Telenor to increase its stake in VimpelCom, a claim that Telenor rejected. The first hearing on the merits of the regulator’s claim was originally scheduled for Oct. 17.
Telenor owns a 35.7 percent stake in VimpelCom, Sawiris’s Weather Investment’s has an 18.8 percent and Alfa Group’s Altimo owns a 31.4 percent stake, according to data compiled by Bloomberg.
VimpelCom rose to $9.38 yesterday, sending valuations to 8.98 times estimated earnings. Mobile TeleSystem, known as MTS, gained 0.9 percent to $19.37, trading at 11.47 times estimated earnings.
OAO RusHydro, Russia’s largest hydropower company, advanced 2.7 percent to $2.70 in New York yesterday and was the biggest gainer on the Bloomberg-Russia US Index. The stock rose 2.4 percent to 88.32 kopeks in Moscow, or 2.8 U.S. cents. Each ADR represents 100 ordinary shares.
OAO Surgutneftegas, Russia’s fourth-biggest oil producer, was the second-biggest gainer on the Bloomberg Russia-US Equity Index as the stock rose 1.6 percent to $6.33 yesterday. Shares rose 1.5 percent to 20.23 rubles, or 63 U.S. cents in Moscow.
OAO Gazprombank, the country’s third-largest lender, cut its recommendation on the stock to hold from buy after the company completed a secondary offering.
Urals crude, Russia’s chief export blend, increased 1.1 percent to $114.56 per barrel, the highest since May 2. Russia depended on revenue from oil and gas for 50 percent of its 2011 budget.
Crude for September delivery rose 0.8 percent to $93.43 a barrel on the New York Mercantile Exchange yesterday. Brent oil for September settlement, which expires on Aug. 16, gained 0.4 percent to $114.03 a barrel on the London-based ICE Futures Europe exchange.