OREANDA-NEWS. On 24 June 2008 the largest fixed-line operator in the Central Federal District of the Russian Federation, CenterTelecom, reported its 2007 financial results drafted to international financial reporting standards (IFRS).

Commenting on the 2007 results, the general director of CenterTelecom Vaagn Martirosyan noted that the company’s financial achievements are the result of team work on the part of managers, who focused during the year on boosting the competitive ability of CenterTelecom and improving the company’s financial standing.

In 2007, CenterTelecom’s revenue rose 13.56% and EBITDA margin surged to 36.88%.  CenterTelecom’s cost side increased 12.72% mainly as a result of higher interconnect expenses.  In addition, owing to the implementation of a number of marketing, HR and investment policy programs which were spearheaded by the management of the company, the proportion of earnings from unregulated telecom service in the company’s revenue breakdown increased to 10.16% (vs. 8.21% in 2006), for a total of Rub 3,398 compared with Rub 2,419 mln in 2006.

In addition, the successful implementation of planned measures under the above-mentioned programs against the backdrop of a strict cost-cutting policy laid the groundwork for a considerable increase in net profit to Rub 4,309 mln compared with net profit amounting to Rub 2,874 in 2006.

The results of 2007 pave the way for successful future expansion”, he said.  Vaagn Martirosyan also pointed out that the 2007 IFRS audit report is positive, and for the first time in the company’s history the shareholders of CenterTelecom will be able to have access to this financial statement before the annual general shareholders’ meeting.

CenterTelecom’s consolidated revenue amounted to Rub 33,452 mln in 2007, which represents a 13.56% increase compared with 2006.

Local voice.  The company’s revenue from providing local voice rose 13.97% to Rub 15,393 mln in 2007, compared with Rub 13,614 in 2005.   Higher revenue was attributable to an increase in the subscriber base for traditional telecom services, and also higher local voice tariffs beginning in 2007.

Intrazonal telephony.  Effective July 1, 2006, in accordance with “The Rules for providing local, intrazonal, DLD and ILD telephony, the Calling Party Pays (CPP) principle came into force, as a result of which the intrazonal traffic of CenterTelecom rose 53.56% to Rub 5,665 (Rub 3,689 mln in 2006).

Datacom and telematic services (Internet).  The number of subscribers rose more than 160% in 2007 and stood at 304,000 thanks to an aggressive marketing policy and expansion of the geographical range of a project to promote ADSL 2+ broadband Internet access under the Domolink trade mark in 2007.  Rapid growth of the subscriber base created the prerequisites for a dramatic increase in value-added service revenue: from Rub 2,419 mln to Rub 3,398 mln (40.47%) y-o-y.

CenterTelecom’s operating expenses rose 12.72% y-o-y in 2007 and amounted to Rub 25,590.

Higher payrolls were attributable to the implementation of staff optimization programs and the execution of compensatory payments.

Higher interconnect fees, which rose 55.24% to Rub 3,083 mln, were due primarily to a change in the system of mutual interconnect payments.

The full text of CenterTelecom’s 2007 IFRS audited and consolidated financial statement can be viewed on the company’s website.

The company’s financial statement was audited by independent audit firm Ernst & Young.