Mobile TeleSystems (NYSE:MBT) is the biggest telecommunications provider in Russia, with more than 78.9 million users at the end of the second quarter of 2021. The company (known in its home market as Mobil'nye Telesistemy) has experienced phenomenal growth over the past year, with revenue up 10.7% year over year in Q2 to 128.6 billion rubles, and net income coming in hot with a growth rate of 53.6% to 17.1 billion rubles. (On Tuesday afternoon, the exchange rate was about 73.75 rubles to $1.)
However, Mobile TeleSystems' stock price does not reflect these fundamental improvements. It's trading at a mere 8.3 times earnings, even though its cash flows are sufficient for dividends amounting to an attractive yield of 10.7% at current share prices. What's more, the company is deploying a 5G network across Russia. Here's why investors who open stakes in the telecom now could be rewarded handsomely.
A troubled past
Mobile TeleSystems' early shareholders do not have fond memories of the company.
In 1991, a group of American investors and the then-government of the Uzbek Soviet Socialist Republic formed Uzdunrobita, the first mobile operator in Central Asia. In 2004, Mobile TeleSystems acquired a controlling stake in that company, which had then grown into the biggest telecom operator in Uzbekistan. Over the next eight years, together with a Dutch and Swedish telecom company, they paid nearly $1 billion in bribes to Gulnara Karimova, the daughter of deceased Uzbek President...
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