OAO Mobile TeleSystems surged to a six-month high as Russia’s largest mobile-phone operator said it will pay its biggest dividends on record, helping extend a rally this year that’s surpassed its industry peers.
MTS, which is controlled by Russian billionaire Vladimir Evtushenkov, climbed as much as 4.9 percent to 265.90 rubles after its board of directors recommended a 40.42 billion-ruble ($800 million) payout for the second half of 2014. That corresponds with a dividend yield of more than 7 percent, according to UralSib Capital, exceeding the 4.6 average for the benchmark Micex Index.
“That’s very valuable for investors amid Russian economic turmoil,” Konstantin Belov, an analyst of UralSib Capital in Moscow, said by phone. The telecommunications industry is resilient during times of crisis and MTS may offer the highest dividend yield among Russian industry peers, he said.
The phone company’s U.S. shares have outperformed all stocks in the MSCI Russia Index this year with a 57 percent advance, almost double the RTS Index. While MTS boosted its dividend, competitor VimpelCom Ltd. said last year it was scaling back payouts until it’s able to bring its net debt-to-Ebitda ratio to under two. Ebitda refers to earnings before interest, taxes, depreciation and amortization.
MTS was the biggest gainer on Wednesday on the Micex, which was little changed by 11:53 a.m. in Moscow at 1,647.59. Seven analysts have a buy recommendation on the stock, while four say to hold it, according to data compiled by Bloomberg.
The phone operator’s payout brought the total for 2014 to a record 53.2 billion rubles, according to MTS. Russia’s economy is poised to shrink 4.1 percent this year, the first recession since 2009, a Bloomberg survey of analysts shows.