The NHH has released 1Q06 communications statistics showing continued growth in mobile subscribers as penetration rate reached 93.5%. Market mobile subscribers grew 6.6% from 8.82m in 1Q05 to 9.41m in 1Q06. We are forecasting that penetration rate will reach 100% this year as subcribers grow to 10m. We also expect TMH's market share to contract from 44.0% in 2005 to 40.8% in 2006 with a broadly unchanged subscriber base at 4.2m.
The fixed line segment, on the other hand, continues to see churn, with subscribers falling some 3.7% y/y to 3.42m. We are forecasting market fixed lines to fall to 3.30m in 2006, with MTEL's market share broadly unchanged at 77%.
We continue to believe that MTEL is well positioned to adapt to the slowing market. Furthermore, at 2006F 4.7x EV/EBITDA, we believe that th erisks are priced in, whilst the robust cash and dividend yields of 11.0% and 8.0% respectively deserve more value. We reietarte our Buy recommendation.