OREANDA-NEWS. On 29 May 2008 Sibirtelecom, a telecom operator in the Siberian Federal District, presented its audited results for 2007, drafted to Russian Accounting Standards (RAS).  The financial (accounting) reports were audited by ZAO KPMG.

The revenue of Sibirtelecom  (hereinafter, the Company) not including its subsidiary business in 2007 reached Rub 26,532,700,000, increasing Rub 3,590,900 or 15.7% compared with 2006.

The main factors which changed the company’s revenue in the reporting year include a rise in the number of Internet users, the subscriber case (local voice), intrazonal and Internet traffic.

As for the company’s revenue mix, 43.4% consists of local voice (Rub 11,526,600,000).  Large portions of revenue came from provision of intrazonal telephony (Rub 5,299,500,000) and interconnect and traffic transmission (Rub 3,737,800,000), 20% and 14.1%, respectively. Revenues from ISP and datacom account for 11.2% (Rub 2,979,500,000) of the total amount of revenue.  Revenue from the provision of cellular communication accounted for 4% in the revenue mix (Rub 1,066,700,000).

Compared with 2006 (not including subsidiary business):

- higher revenue from the provision of local voice services, totaling Rub 1,459,000,000 or up 14.5%.  Growth resulted from a bigger subscriber base (number of the parent company’s main telephone lines rose by 98,600 or 2.3% and stood at 4,295,700 at the end of 2007) and the entry into force of new local tariff plans effective February 1, 2007;

- higher revenue from the provision of telegraph, datacom and telematic services amounted to Rub 1,121,300,000, or 54.2%, which is due to a rise in the number of broadband Internet users and therefore higher ISP revenue (dedicated and dial-up).  As of January 1, 2008 the number of broadband Internet users stood at 196,900.

- higher revenue from the provision of intrazonal traffic for a total of Rub 1,034,000,000, or up 24.2%, due to the entry into force of the Calling Party Pays principle effective July 1, 2006, and a rise in revenue from leasing telecom channels;

- higher revenue from the provision of cellular communication not including the subsidiary business for a total of Rub 54.4 mln or 5.4% (the number of cellular subscribers rose 30% and stood at 540,000 at the end of the reporting year.

- The company’s expenses (not including the subsidiary business) rose by Rub 1,659,800,000 or 8.5% higher than in 2006 for a total of Rub 21,192,700,000.

The largest part of the company’s expenses fell to payrolls and social contributions – 43.7%, depreciation charges – 15.3%, interconnect fees – 11.7% and other expenses for core types of activity – 13.2%.

Compared with 2006 (not including the subsidiary business):

- interconnect expenses (except for Rostelecom) stood at Rub 831.3 mln, or 50.3%, which is due to a change in interconnect rules according to the industry’s statutory requirements, especially the increase in expenses related to zonal termination of calls in conjunction with the introduction of the Calling Party Pays principle as of July 1, 2006;

- the increase in other expenses stood at Rub 650.9 mln, or 30.4%, which is due to an increase in leasing expenses (under leasing contracts stipulated) for the delivery of equipment pursuant to the Universal Services project), agency fees and software support services;

- depreciation of fixed assets rose Rub 316.5 mln, or 10.8% due to the company’s active investment policy aimed at rolling out its network.

 - OIBDAin2007 roseRub2,247.6 mlnor35.5% comparedwith2006. OIBDA margin reached 32.4%.

- EBIT amounted to Rub 5,340 mln, which is an increase of Rub 1,931.1 mln or 56.6%, which was due to rapid growth in revenue.   EBIT margin reached 20.1%.

- Pre-tax profit rose Rub 1,873.5 mln or 101.4% higher for a total of Rub 3,720.6 mln, which is due to a positive trend in profitability for core types of activity, higher revenue from participation in other organizations and income recorded as compensation for losses incurred in providing universal telecom services in 2007 for a total of Rub 472 mln.

- Net profit in 2007 reached Rub 2,744.b mln, which is 110.8% higher than in 2006, as a result of higher pre-tax profit and a 3.2% lower effective tax rate.

- Net profit margin stood at 10%.

- Sibirtelecom’s investments (not including the subsidiary business) in fixed assets in 2007 amounted to Rub 6.7 bln, which is 16.6% more than in 2006.  The bulk of capital investments was allocated to developing local telephony, the datacom network and telecom infrastructural facilities.  The proportion of investments aimed at implementing value-added services (including cellular communication) in 2007 amounted to 22% of the total amount of investments.