OREANDA-NEWS. On May 16, 2007  Southern Telecommunications Company (“UTK”) (RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal fixed-line telecommunications provider for Russia’s Southern Federal District, announced its 1Q2007 financial results compiled in accordance with Russian Accounting Standards (RAS), reported the press-centre of  UTK.


1Q2007 net income amounted to RUR 587,3 million;
Revenue from value-added services increased 54,82% over 1Q2006 to RUR 613,4 million. Share of revenues from value-added services in total telecommunication services revenue increased to 13,6% versus 10,1% in 1Q2006;
1Q2007 EBITDA increased 20,6% over 1Q2006 to RUR 1,949.7 million;
UTK generated 1Q2007 revenue of RUR 4,731.8 million, representing a 14,9%-increase over 1Q2006. Revenue from telecommunications services increased by 15,5% to RUR 4,522.3 million;
Based on 1Q2007 results share of revenues from local telecommunication services decreased by 4,2% to 49,1%, share of value-added services revenue grew by 3,5 percentage points to 13,6% of the Company’s telecom revenue. Revenues from local telecommunication services increased by 6,4% over 1Q2006 to RUR 2,222.1 million;

1,206 thousand new subscribers were added to the Company’s subscriber base in 1Q2007, including 1,092 thousand telephone sets  - in urban telephone network (TN). As of April 1, 2007 number of basic telephones operated by UTK amounted to 4,065.212 thousand sets;
1Q2007 revenues from value-added services rose 54,8% over a year-ago to RUR 613,4 million. Revenues from Internet services grew by 67,0%, from VPN (virtual private networks) services by 4,2%. Internet services sales were supported by strong usage growth: Internet traffic rose by 115,7% to 481,0 Tbyte;
Broadband access subscriber base expanded to 92,702 thousand subscribers, 89,329 of them being xDSL subscribers;
Revenues from telecom operators were down 9,4% to 675,1 million rubles;
1Q2007 operating expenses increased by 13,9% over 1Q2006 to RUR 3,277.7 million. Based on 1Q2007 results, expenses on wages and salaries and other social payments to employees (31,0%), depreciation charges (21,1%) and other costs (16,9%) accounted for major part of operating expenses;
There were following material changes versus 1Q2006: share of expenses for wages and salaries decreased by 3,7 percentage points to 31%, share of other costs was up 0,8% to 16,9 %;
The growth of depreciation charges by 8,8% to RUR 693,1million was attributable to increase in value of the Company’s fixed assets;
Increase of material expenses by 5,7% to RUR 380,3 million was due to growing expenditures for cables;
Amount of payments to telecom operators grew by 153,9% to RUR 354,2 million due to change of the methodology of settlements with mobile operators and introduction of “Calling Party Pays” principle, as well as due to growing payments to telecom operators for Internet access services;
Certain financial measures to extend duration of UTK’s debt and reduce its value within the framework of the Company’s credit portfolio made it possible to cut down interest expenses by 15,2% over 1Q2006 to RUR 460,6 million;
1Q2007 EBITDA increased 20,6% over 1Q2006 to RUR 1,949.7 million. EBITDA margin was up 1,9 percentage points to 41,2%. Operating income grew by 17,2% over a year ago to RUR 1,454.1 million. Operating margin was up 0,6 percentage points reaching 30,7%;
1Q2007 capex increased by 110,2% over 1Q2006 to RUR 245,9 million. Fixed assets put into service increased by 153,7% to RUR 391,96 mln;
In 1Q2007  14,178 thousand telephone lines were put into operation in UTK networks including 7,152 thousand lines to replace analog equipment. As a result, total installed capacity of UTK’s local network stood at 4,349.113  thousand lines as of April 1, 2007;
Digitization rate of UTK local network rose 3,06 percentage points over 1Q2006 and totaled 65,51%, of which the digitization rate in urban telephone network (TN) was 70,14%, in rural TN - 50,59%.