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MGTS Moscow phone operator Q1 net profits slump over 80%

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MOSCOW, May 16 (RIA Novosti) - MGTS (RTS: MGTS) announced Tuesday a year-on-year decline in net profit of 82.8% in the first quarter of 2006, to 1.04 billion rubles (about $38.4 million).

Moscow's fixed-line telephone monopoly said its earnings grew to 4.85 bln rubles (about $179 mln) in January-March 2006 from 4.11 bln rubles (about $152 mln) a year earlier, and that gross profit rose to 2.23 bln rubles (about $82.5 mln) from 1.73 bln rubles (about $63.9 mln) the previous year.

It said Q1 earnings had grown 18.23% year on year largely due to the development of non-regulated communications services.

In mid-April, MGTS General Director Alexei Goltsov said the company's net profit could decline in 2006. He said the company was unable to forecast its financial performance as inter-urban communication rates had not yet been set and the company's own tariffs were the subject of consideration by Russia's anti-monopoly watchdog.

The company's net profit including asset revaluation of subsidiaries grew 360% in 2005, to 8.79 bln rubles (about $307 mln).

The number of MGTS subscribers reached 4.27 mln in 2005 and 30.5% of its services were digitalized, compared to 22.3% in 2004.

MGTS, one of Europe's largest local telephone service operators, operates 561 exchanges. It accounts for 77.2% of Moscow's fixed-line telephone market. Russia's largest telecommunications holding, Svyazinvest, is a key minority holder of MGTS shares (28%).

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