"Russia MTS Q4 net profit below market expectations: Russia's top mobile phone provider, Mobile TeleSystems (MTS) reported a lower-than-expected fourth-quarter 2006 net profit on Wednesday after writing off an asset acquired during 2005."

So reported Reuters on Mobile TeleSystems' (NYSE:MBT) Q4 and full-year earnings report, released Wednesday. However, the way Reuters reported this gives the impression that MTS' write-off of its $150 million investment in the holding company for Kyrgyz mobile telecom provider Bitel came as a surprise, causing Q4 earnings to come in "lower than expected." Hardly.

In fact, it's highly unlikely that the write-off caught investors unaware. As readers of our pre-earnings Foolish Forecast already know, this write-off had previously been reported in a March 6-K filing with the SEC. (The Motley Fool: We dig through the SEC's filing cabinets so you don't have to.)

Also misleading in Reuters' report was the suggestion that earnings were, in fact, "lower than expected," and that this was something investors should look unkindly upon. That couldn't be farther from the truth; in the wake of the earnings report, MTS' share price leapt 5%.

The fact of the matter is, MTS bested quarterly revenue estimates by growing 35% to $1.8 billion. It also strengthened its profit margins on that revenue. Operating income before depreciation and amortization (OIBDA) improved 590 basis points year over year to 51.9%, and net operating margins did even better, rising 870 basis points to 35.9%. Free cash flow (as conservatively calculated by MTS) turned positive to the tune of $645.9 million, compared to last year's negative $700.1 million. And the company increased its subscriber counts in every market in which it operated.

Indeed, about the only metrics to decline were those for customer churn in MTS' largest market, Russia. Outstanding. If investors in rival telecom VimpelCom (NYSE:VIP) get news anywhere near this good when that company reports next month, they should be thrilled.

The more things change ...
Some 20 years ago, there used to be a saying over in the former Soviet Union, the land in which MTS now operates. Roughly translated, it went: "There is no truth in the news, and there is no news in the truth." Sadly, today, there doesn't seem to be much of either in Reuters' reporting.

What did we expect out of MTS last quarter, and what did it give us? Find out in:

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Fool contributor Rich Smith has no interest, short or long, in any company named above. The Fool has a disclosure policy.