OREANDA-NEWS. On 31 July 2008 Far East Telecom (RTS: ESPK, MICEX: DLSV, ADR: FEEOY, Deutsche Bourse and Berlin Stock Exchanges: D7A), the largest telecom of Far East Region, declared non-audited financial and logistics results for the 1-st half 2008 according to the Russian accounting standards (RAS).

Results of Far East Telecom will be commented by executives at the conference call (web-cast) today at 01:00 pm (UK time). Please, visit http://www.dsv.ru/news_en.php?id=83&idnews=1213 for further information about the conference call.

“In 6 months of 2008, Far East Telecom Group demonstrated good economic profitability indices, which are the result of business diversification, share growth of non-regulated services in profile revenues, particularly access to the Internet, interactive TV, mobile telecommunications up to 28.1% and high EBITDA profitability (35.6%)”, emphasized Anton Kolpakov, Far East Telecom Chief Executive Officer.

Business Efficiency

Payroll number of employees as of June 30, 2008 reached 11,732 workers, reduced by 649 persons as compared with January 1, 2008;

Revenue per worker has increased by 18.9%, to RUR 478 thousand in the quarter (RUR 402 thousand);

Number of lines per worker has increased by 10%, to 127.3 lines (115.7);

Net cost per rouble of revenue for 6 months 2008 made up 72.9 kopecks (71.9 kopecks).

Development of Subscriber Base and Data Transmission and Internet Access Services As Resulted from the 1-st half 2008

Share of new services (Internet, data transmission, mobile telecommunications, interactive TV and TV on request) in the Company revenue structure made up 27.2% (in the 1-st half 2007, the new services share was 20%);

Subscriber base of Internet dial-up access users reduced by 17%, down to 167,729 subscribers (6 months of 2007 – 203,290 subscribers) because of transfer to the broad-band access service;

Subscriber base of broad-band Internet access users (DSL technology) increased by 186%, to 211,271 users (6 months of 2007 – 113,890 subscribers);

Subscriber base of cellular communication reduced by 3% and reached 101,570 subscribers (Kamchatka Oblast – 43,693 (6 months 2007 – 50,627), Magadan Oblast – 57,877 (6 months 2007 – 53,946);

Common phone number reduced by 0.1% and reached 1,367,405 customer addresses (6 months 2007 – 1,368,524 addresses).

Depreciation payments increased by RUR 51.4 million, or by 7.9% in connection with commissioning of fixed asset objects. This element ratio in the net cost structure has not changed in relation to the 1-st half of 2007 and made up 16.3%;

Growth of material cost item by 15.3% in regard to the 1-st half 2007 level is conditioned by the rise of costs of subscriber’s equipment for providing broad-band access and interactive digital TV (IP-TV) services, which is included in the cost of services;

Increase in costs under item “Services of communication operators” by RUR 78.1 million in the 1-st half 2008 as compared with the last year similar period happened due to: growth of traffic for mobile operators and growth of their subscriber base, appearance of payment for completion service for АВС codes of mobile operators, lease of satellite segment and additional communication channels for realization of federal target program “Education”;

Growth for services Rostelecom services is conditioned by the increase in tariffs for lease of channels in zone interests beginning from March 2008, in connection with effectiveness of Contract 2- DVF, as well as by the cost growth in connection with the increase in use of Internet services;

Growth of other costs in the 1-st half 2008 as compared with similar 2007 period by RUR 38.5 million is conditioned by the increase in costs of agency services and expenditure on software and data bases.

Other incomes and costs

At the 1-st half 2008 results, a loss was gained from other off-operational activity in the amount of RUR 408.6 million, which is by 16.4% better than the result of the 1-st half 2007 (loss of RUR 488.8 million).

Percent incomes increased in comparison with the 1-st half 2007 by RUR 33.1 million, to RUR 59.0 million;

Percent expenditures increased to RUR 262.6 million, which is by 8.3 % higher than the same of the 1-st half 2007 (RUR 242.5 million).