2 iPhone Russia Investments
Posted on Friday, September 12th, 2008 | In Market Commentary, RussiaSoon to sell iPhones, two Russian cell phone companies, VimpelCom (VIP) and Mobile TeleSystems (MBT) stand to rake in some serious dough, seeing what a hot item black market iPhones have been in Russia. These would both be good Russia investments, as in addition to the iPhone developments on the horizon, both companies are currently very cheap.
VimpelCom CEO Alexander Izosimov expresses the solidity of this Russia investment when he says, “Our research shows that when the iPhone falls into the hands of a customer, the use of data services increases by four to five times.”
An estimated half-million unlocked iPhones are already in use in Russia. Though pricing information has not yet been outlined, VimpelCom announced on Monday that it would be offering the iPhone without subsidy, because under Russian law locked phones are illegal.
VimpelCom is expected to benefit from cross-selling benefits connected to its recent purchase of Golden Telecom, a Russian broadband and wire line company, as well as from cost savings. Credit Suisse Russian telecom sector analyst Elena Tymchenko has a price target of $40 per share which recently traded for $22.
As for overall Russia investments in the telecom sector, Tymchenko expects double-digit annual growth in the medium term, though Mobile TeleSystems is trading at 8.8 times its expected 2009 earnings. She’s got a price target of $108 a share on this stock, for a medium-term potential gain of 66%. A the leading mobile company in Russia, with customers also in Ukraine and other countries near Russia, Mobile TeleSystems continues to present itself as a strong Russia investment.
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