OREANDA-NEWS.  On 28 July 2008 was announced, that Uralsvyazinform (RTS and MICEX: URSI/URSIP, ADR: UVYZY/UVYPY) released its audited consolidated financial statement for 2007 drafted in accordance with International Financial Reporting Standards (IFRS). This financial statement was confirmed by the company’s auditor, Ernst & Young.

“In 2007, Uralsvyazinform showed marked improvement in operating efficiency. Mobile and BI business are still the company’s key growth drivers, with revenues spiking in these segments by 23% and 37%, respectively. Based on 2007 performance, non-regulated services generated as much as 41% of the operator’s aggregate revenue. Uralsvyazinform bolstered its positions on the highly competitive Internet access market, with its share reaching 56%, and retained its positions on the mobile market (42% in terms of revenues). In 2007, Uralsvyazinform continued to expand as a universal telecom operator, offering its customers the most advanced and efficient telecommunications solutions. Stringent control led to modest growth in expenses, far below the increase in earnings (up 9% vs. a 16% rise). At the same time, the company managed to reduce payroll and social benefits, the heaviest cost item, by 8%. Last year the company received for the first time considerable compensation for losses incurred when providing universal telecom services (over Rub 750 mln), which also produced a positive impact on the company’s margins. The company’s main financial achievements in 2007 were a 37% surge in OIBDA and an increase in net profit by more than 3-fold” – Uralsvyazinform CEO Anatoly Ufimkin noted.

The company’s earnings climbed 15.6% y-o-y to Rub 39.1 bln. Growth came mainly on the back of earnings from wireless, datacom and Internet access services, and also intrazonal services.

2007 mobile earnings surged 23.1% to Rub 12,470.6 mln owing to a rise in the subscriber base of wireless users and higher ARPU. The subscriber base grew 16% to 5.1 mln as of January 1, 2008. In 2007 and 2006, average revenue per user (ARPU) amounted to Rub 221 and Rub 210, respectively.

The operator continues to make concerted efforts to roll out and phase in value-added services (Internet access and datacom). Revenues from Internet and datacom services soared 36.9% y-o-y to Rub 943.5 mln. BI ports entered into service rocketed 2.6 times from 115,000 to 295,000, while Internet traffic jetted 291.7% against 2006 to 3,531.6 Tb.

A rise in intrazonal earnings stemmed from the introduction of CPP principle as of July 1, 2006, whereby calls from fixed lines to mobile users are charged as intrazonal telephone connections. Revenues from these connections rocketed 83% compared to 2006 to Rub 3,071.7 mln in 2007.

2007 local voice earnings jumped 8.5% (Rub 783.1 mln) against 2006 on the back of an increase in main telephone lines (up 25,800 in 2007), and also the introduction of new local voice tariff plans starting February 1, 2007. At the end of 2007 the company had a base of 3,159,000 private customers, with 2,948,000 (93%) of them having technical capability to choose payment options. In terms of tariff plans selected subscribers were divided as follows:

tariff plan with per-minute billing (52%);

tariff plans with combined payment (16%); and

tariff plan with subscription (unlimited) payments (32%).

Wages, other payments and social allocations decreased 8.1% compared to 2006 owing to staff optimization and improvements in the compensation system.

A sharp leap in expenses related to telecom operator services (up 45.4% vs. 2006) stemmed from growth in mobile and VAS subscribers which pushed up expenses that relate to the payment of call termination and the purchase of backbone Internet traffic.

The full version of Uralsvyazinform’s FY07 IFRS consolidated financial statement and related explanatory notes are available on the company’s website in the section Investor Relations / Reports.