Foolish Forecast: Calling Mobile Telesystems

Ring, ring! Will somebody please pick up the phone? It's Mobile Telesystems (NYSE: MBT) on the line, calling with its Q4 and full-year 2005 earnings news. Problem is, I'm a late sleeper, and the news is due out at 6 a.m. EST on Monday. So I'm happy to go over where the company's been and where it seems to be headed right now . but on Monday, like I said, will somebody else please get the phone?

Wall Street Wisdom:

• General consensus. Fourteen analysts follow Mobile Telesystems (MTS). Of these, 11 rate the stock a buy, and three a hold.
• Revenues. Annual sales are expected to increase 30% versus 2004, to $5.06 billion.
• Earnings. Full-year profits are expected to lag that performance, rising just 17% versus 2004 to $3 per share.

Margin watch:
Historically a superior performer, MTS's stock price has underperformed the S&P 500 over the past year as revenue growth slows and margins begin to slide. Over the past 18 months, the company has seen each of its gross, operating, and net margins decline.

Margins %	6/04	9/04	12/04	3/05	6/05	9/05
Gross	82.3	82.2	81.9	81.6	81	80.6
Op.	38.2	39.7	36.5	36.1	33.9	32.4
Net	24.4	27	25.4	25.3	23.5	22.2

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish lookout:
In its latest update on subscriber growth, MTS reported a 62% year-over-year increase in its February subscriber count. In general, as we've seen in the past, the fastest growth is occurring outside the company's home base in the twin capitals of Russia, Moscow and St. Petersburg. Subscribers increased much faster in the provinces than in the capitals, faster still abroad in Ukraine, and fastest of all among the minuscule user base in Uzbekistan.

However, there's fast and then there's fast. Is 62% subscriber growth over the course of one year "fast?" Out of context, I'd have to say yes. But relative to what the company was saying just before last quarter's earnings release (i.e. 89% growth), 62% doesn't look so good.

Going forward, both tomorrow and in quarters to come, expect more of the same from MTS. There's only so many quarters a high-growth company can continue to grow its numbers in the mid-double-digits before a plateau appears. It's happening at archrivalVimpelCom (NYSE: VIP). It's happening at MTS. Be ready for it.

Fool contributor Rich Smith has no interest, short or long, in either company named above.