OREANDA-NEWS. On 14 April 2008 Dalsvyaz announced the company’s financial results according to Russian Accounting Standards (RAS).

According to the general director of Dalsvyaz Anton Kolpakov, the company improved its profit margins in 2007 compared with the previous year mainly as a result of business sustainability (higher ISP, datacom, and document transmission earnings, with a market share equal to 21%), control over operating expenses (mainly payrolls) and higher labor productivity. “The company reported a strong operating margin.  Therefore, despite the formation of a reserve for contingent liabilities, we managed to achieve an increase in EBITDA and EBITDA margin.  The company’s key drivers were aggressive growth in broadband access, a larger proportion of unregulated services and the rollout of bundled telecom options”, Anton Kolpakov said.

Business efficiency indicators

- Revenue per employee rose 31.6% to Rub 899,00 (up from Rub 682,200 in 2006);

- The number of lines per employee rose 25.2% to 119.2 lines (up from 95.2 in 2006);

- Cost per ruble of revenue decreased by 1.1% to 74.1 kopecks (down from 74.9 kopecks in 2006);

- The average number of staff decreased by 1,482 to 12,381 (down from 13,863 in 2006).

 
- The proportion of ISP, datacom, and cellular communication rose to 21% in the company’s revenue breakdown (vs. 16.9% in 2006);

- The company’s dial-up subscriber base decreased 13.4% to 200,772 users (vs. 231,846 in 2006);

- The company’s DSL subscriber base doubled to 159,948 users (vs. 78,667 in 2006);

- The company’s cellular communication subscriber base [7]rose by 4,000 subscribers and reached 104,284 subscribers (vs. 100,022 in 2006) (Kamchatka region – 48,722 (59,722 in 2006), - Magadan region – 55,562 (vs. 47,065 in 2006);

- The company’s fixed-line subscriber base increased 0.6% and stood at 1,364,950 subscribers (vs. 1,356,158 in 2006).

- Payroll expenses decreased by Rub 243.2 mln or 6.8% in 2007 vs. 2006.  This was a result of the company’s staff reduction program.

- Depreciation charges increased by Rub 169.1 mln or 14.9% due to the commissioning of fixed assets.  The proportion of this line item rose 14.8% to 15.7% (a high level of depreciation is typical for high-tech sectors).

- A 35% increase in interconnect expenses compared with 2006 was due to higher outlays for the purchase of backbone Internet traffic from outside operators in connection with expansion of the broadband subscriber base and the range of available services, and also due to the fact that no settlements were made with cellular communication operators in 1H 2006.

- A large increase in outsourcing compared to 2006 was due to higher expenses for consulting and agency expenses, repair and transportation services.

Sundry revenues and expenses 

The operator reported a Rub 1,455.8 mln loss from sundry non-operating activity in 2007, which is 12.4% lower than in 2006 (a loss of Rub 1,295.7 mln).

The main positions are as follows:

- Interest-bearing revenue amounting to Rub 75.6 mln, which is Rub 13.9 mln less than in 2006 (Rub 89.5 mln).

- Interest-bearing expenses reached Rub 509.3 mln, which is 38% more than in 2006 (Rub 369.1 mln).  The increase was due to the stipulation of an agreement on extending a Rub 1,955 mln non-revolving credit line, refinancing a series D1 bonded loan (Rub 1 bln) by issuing D2 and D3 series bonds (Rub 3.5 bln).

- In 2007 net revenue from replenishing provisions against dubious debts reached Rub 59.9 mln, which is Rub 145.2 mln more than the net loss from forming provisions against bad debts in 2006 (Rub 85.3 mln).

- Revenue from reimbursement of losses from providing universal telecom services amounted to Rub 94.5 mln (there was no revenue from reimbursement in 2006).

- The result of sundry activities was impacted by the formation of provisions against contingent liabilities in the amount of Rub 317.3 mln (of which Rub 296 mln for a claim filed by Primtelefon).  In 2006 the provisions amounted to Rub 467.9 mln (of which Rub 466.1 mln for 2001-2002 claims filed by tax authorities).