OREANDA-NEWS. On 05 August 2008 Sibirtelecom OJSC (RTS: ENCO/ENCOP, ENCOG/ENCOPG; MICEX: STKM/STKMP; ADR: ОТС – SBTLY, Frankfurt and Berlin Stock Exchanges – ISIN: US8257351036, WKN: 260452) – operator of telecommunication services in Siberian Federal Okrug released the results of its activity for the first six months of 2008 in accordance with Russian Accounting Standards.

 Revenue of Sibirtelecom OJSC (hereinafter – Company) without consideration of subsidiaries for the first six months of 2008 reached 13,667.1mln rubles, having increased by 800.9 mln rubles or by 6.2% as compared with the similar period of the last year.

Growth in the number of those who use services of Internet access, intra-zone and Internet traffic were the main factors of changes in Company revenue during the reporting period.

Revenues from providing local telephony services make up 41.5% in the structure of Company’s revenues (5,668.9 mln rubles).

Revenues from providing intra-zone telephone communication services (2,689.9 mln rubles) and services of data transmission and telematic communication (2,075.3 mln rubles), 19.7% and 16.0% respectively, are significant items in the revenue structure. Revenues from the services of connection and traffic transmission amounted to 12.2% (1,674.1 mln rubles) of the net sales.

As compared with the similar period of 2007 (without consideration of subsidiaries):

 The growth of revenues from providing services of data transmission and telematic services amounted to 732.4 mln rubles or 54.5%, which was due to growth of the number of users of broad-band access and, consequently, growth in revenues from providing Internet access (dedicated and dial-up). The number of broad-band access ports as of July 1, 2008 was 273 thousands.

 Growth of revenues from asset leasing amounted to 11.6 mln rubles or 87.2%, which was connected with an increase in the number of leased objects;

 Growth of revenues from providing services of intra-zone telephone communication was 106.1 mln rubles or 4.1%, which was connected with a growth in the traffic from fixed subscribers to the mobile network operators;

 Services of intra-zone telephone communication made up 106.1 mln rubles or 4.1%, which was connected with growing traffic from fixed subscribers to mobile operator networks;

 An increase in revenues from services of connection and traffic transmission that amounted to 160.5 mln rubles (-8.7%) was caused by cancellation of POI tariffication from March 1.

 An increase in revenues from providing services of local telephone communication was 57.4 mln rubles (-1.0%), which was caused by reduced number of installations by 7.2% and an increase in average revenue from providing network access by 23.5%.

 Expenses of the Company (without consideration of subsidiaries) for the first six months of 2008 increased by 1,007.7 mln rubles or by 10.4% as compared with the similar period of 2007 and made up 10,740.4 mln rubles.

Expenses of labor costs and deductions to social insurance – 38.5%, depreciation of fixed assets – 18.4%, miscellaneous expenses – 13.9% and expenses of telecom operator services – 12.7% take up the biggest share in the total amount of Company’s expenses.

As compared with the similar period of 2007 (without consideration of subsidiaries):

 Growth of other expenses amounted to 354.0 mln rubles or 31.2%, which was caused by the growth of leasing expenses (in accordance with the concluded leasing contracts for equipment supply under the project “Universal Service”), agent’s commissions, services of software program management, payments of non-government retirement insurance, expenses of disposal of goods;

 The amount of the accrued depreciation of fixed assets increased by 335.1 mln rubles or by 20.5%, which is connected with active investment policy of the Company aimed at network development;

 Increase in expenses of telecom operator services (except Rostelecom OJSC) amounted to 239.6 mln rubles or 21.5%, which was caused by growing traffic from fixed subscribers to networks of mobile operators;

 Increase in expenses of outside organizations made up 144.8 mln rubles or 19.3%, which was caused by growing expenses of maintenance and repair, transportation costs and security costs.

 OIBDA growth in the first six months of 2008 as compared with the similar period of 2007 was 131 mln rubles or 2.7%. OIBDA margin – 36.1%.

 Sales profit decreased by 206.8 mln rubles or by 6.5% and made up 2,962.7 mln rubles, which was caused by outrunning growth of expenses. Sales profit margin was 21.7%.

 Profit before tax increased by 44.1 mln rubles or by 1.7% and amounted to 2,709.9 mln rubles, which was caused by a decrease of the level of loss from other activities by 287 mln rubles as a result of income from compensation for damages from providing universal services.

 Net income according to the results of the first six months of 2008 increased by 3.5% as compared with the similar period of 2007 and amounted to 2,141.2 mln rubles, which was due to an increase in the profit before tax and a decrease in the effective income tax rate by 1.4 points in connection with the reduction of the share of expenses that are not taken into consideration during income tax assessment.

 Net income margin was 15.7%.