OREANDA-NEWS. November 16, 2007. VolgaTelecom (RTS: NNSI / NNSIP, MICEX: VTEL / VTELP, ADR VLGAY / NZH) reported its 9M07 financials drafted under Russian Accounting Standards.

VolgaTelecom’s revenue came in at Rub 18,503.90 mln (up 117.4% y-o-y) in 9M07 and telecom services generated Rub 17,558.50 mln (118.2%).

VAS accounted for the bulk of growth (datacom and Internet access) – 155.6%, up Rub 781.20 mln. Earnings grew largely due to a 3.6-fold rise in ADSL subscriber base (from 74,000 to 265,000 users) and Internet traffic growth. The share of VAS in revenue grew from 8.9% in 9M06 to 11.8% in 9M07.

Another rapidly growing segment was intrazonal calls 147.9%, up Rub 1,144.90 mln due to introduced payment for fixed-line telephone calls to mobile numbers (the CPP principle) and incremental traffic.

Expenses amounted to Rub 14,027.30 mln in 9M07 up 120.4%. The bulk of growth was ensured by the following line items: interconnect fees 328.8% due to revised interconnection rules, fixed asset depreciation 120.4% due to a heavy investment program to upgrade telecom infrastructure and establishing basis to provide hi-tech telecom services. The universal service reserve stood at 150.4% due to a revised procedure for establishing the reserve according to the statutory base.

- Sales profit – Rub 4,476.70 mln (109.0%) and sales profit margin 31.9%;

- EBITDA was Rub 6,418.20 mln (108%) and EBITDA margin 34.7%.

- Pre-tax profit was Rub 3,256.30 mln and pre-tax profit margin is 23.2%.

- Net profit came in at Rub 2,296.80 mln and net profit margin 16.4%;

- Line per employee ratio (payroll) rose to 136.20 (120.8%) and revenue per employee Rub 503,000 (139.1%). Revenue per line amounted to Rub 3,692.20 (115.2%) in 9M07. COGS of Rub 100 revenue is Rub 75.80.

VolgaTelecom’s 9M07 financials are squarely in line with earlier guidance, which makes it possible to project that the company will meet FY07 target, specifically, at least 10% net income growth.

For more details about VolgaTelecom’s financials, please visit the company’s website http://www.vt.ru/?id=9308.