OREANDA-NEWS. On 22 April 2009 Sibirtelecom, OJSC (RTS: ENCO/ENCOP, ENCOG/ENCOPG; MICEX: STKM/STKMP; ADR: ОТС – SBTLY, Frankfurt and Berlin Stock Exchanges – ISIN: US8257351036, WKN: 260452) – an operator of telecommunication services in Siberian Federal District provided audited results of its activity in 2008 in accordance with Russian Accounting Standards. Audit of financial (accounting) reports for 2008 was carried out by KPMG, CJSC.

Revenues of Sibirtelecom, OJSC (hereinafter – Company) without consideration of subsidiary business in 2008 amounted to 27,617.0 mln rubles, having increased by 1,084.3 mln rubles or by 4.1% as compared with 2007.

The increase in the number of subscribers to Internet access, intra-zone and Internet traffic were the main factors of Company revenue growth in the reporting year.

Structure of Company revenue (mln rubles):

Type of revenue

2008

2007

Change

mln RUR

%

Local telephone communication services

11,333.4

11,578.0

(244.6)

(2.1)

including:

multipurpose communication services

0.7

0.3

0.4

133.3

Intra-zone telephone communication services

5,427.3

5,299.5

127.8

2.4

Telegraph communication services, data transfer and telematic communication services

4,566.3

3,190.8

1,375.5

43.1

including:

data transfer and the Internet access services

4,333.0

2,979.5

1,353.5

45.4

Connection and traffic transmission services

3,226.8

3,737.8

(511.0)

(13.7)

Mobile radiotelephone (cellular) communication services

1,085.0

1,066.7

18.3

1.7

Revenues from lease of assets

604.9

328.9

276.0

83.9

Support and agent services

590.6

649.4

(58.8)

(9.1)

Mobile radio communication, wire broadcasting, radio broadcasting, and broadcasting services

426.1

405.7

20.4

5.0

Revenues from providing services of non-operating activities

351.7

272.2

79.5

29.2

Other services of operating activities (intelligent networks services)

4.9

3.7

1.2

32.4

Total

27,617.0

26,532.7

1,084.3

4.1

In spite of some decrease of the Company’s revenues from providing local telephone communication services, their share in the total revenue structure is still the most considerable one – 41.0% (11,333.4 mln rubles).

Other considerable items in the revenues structure are revenues from providing intra-zone telephone communication services (5,427.3 mln rubles), and data transfer and telematic communication services (4,566.3 mln rubles) - 19.7% and 16.5% respectively. The revenues from connection and traffic transmission services amounted to 11.7% (3,226.8 mln rubles) of the net sales. The revenues from the provided mobile communication services amounted to – 3.9% (1,085.0 mln rubles) of the net sales.

If compared with 2007 (without consideration of activities of subsidiaries):

Income growth from telegraph services, data transfer and telematic communication services provision was 1,375.5 mln rubles, or 43.1%. It was the result of the growth of the number of wideband access users (ShPD) and the growth of revenues from the (dedicated and switched) Internet access provision. As of January 1, 2009 the number of ShPD users amounted to 410.9 thousand.

Growth of income from the lease of assets was 276.0 mln rubles or 83.9%, which was connected with the increase of the number of objects under lease;

Growth of income from provision of intra-zone telephone communication services amounted to 127.8 mln rubles or 2.4%, which was connected with the growth of traffic from fixed subscribers on networks of mobile communication operators;

Growth of income from mobile communication services, without consideration of activities of subsidiaries, amounted to 18.3 mln rubles or 1.7% (the number of mobile communication subscribers increased 1.2 times and was 632 thousand as of the end of the reporting year);

Decrease of income from connection and traffic transmission services was 511.0 mln rubles (-13.7%); it was the result of the traffic outflow from the Company’s network to networks of alternative operators of the fixed zone communication, as well as cancellation of points of interconnect tariffication from the March 1, 2008;

Decrease of income from local telephone communication services was 244.6 mln rubles (-2.1%). It was a result of the decrease of the number of executed installations by 17.6% and by the decrease of the average payable rate from providing the network access by 58.4%;

Decrease of income from support and agent services provided on the ground of the contract with Rostelecom OJSC was 58.8 mln rubles (-9.1%). Revenues reduction was connected with the decrease of the volume of services provided to users by Rostelecom OJSC, as well as the signing of direct contracts between subscribers and Rostelecom OJSC.

Expenditures of the Company (without activities of subsidiaries) in 2008 increased by 1,915.5 mln rubles or by 9.0% if compared with 2007 and were 23,108.2 mln rubles.

Structure of Company’s expenditures (mln rubles):

Type of expenditure

2008

2007

Change

mln rub.

%

Labour costs

(7,259.1)

(7,542.4)

283.3

(3.8)

Depreciation of fixed assets

(4,036.7)

(3,244.6)

(792.1)

24.4

Services from communication operators (wihtout Rostelecom OJSC)

(2,752.0)

(2,484.4)

(267.6)

10.8

Services from external agencies

(2,363.2)

(1,479.5)

(883.7)

59.7

Deductions to social insurance

(1,585.5)

(1,709.5)

124.0

(7.3)

Tangible costs

(1,533.4)

(1,720.8)

187.4

(10.9

Rental payments

(681.1)

(500.3)

(180.8)

36.1

Services provided by Rostelecom OJSC

(180.8)

(183.4)

2.6

(1.4)

Commodity acquisition value

(181.3)

(87.9)

(93.4)

106.3

Taxes and dues included into expenditures on general activities

(38.4)

(36.3)

(2.1)

5.8

Other expenditures on general activities

(2,496.7)

(2,203.6)

(293.1)

13.3

Total

   (23,108.2)

(21,192.7)

(1,915.5)

9.0

The largest share of the total amount of Company’s expenditures includes labour costs and deductions for social insurance – 38.3%, depreciation costs – 17.5%, expenditures on communication operators’ services – 11.9%, other expenditures – 10.8%, and expenditures for the services provided by external agencies – 10.2%.

If compared with 2007 (without activities of subsidiaries):

labour costs and deductions for social insurance reduced by 407.3 mln rubles or by 4.4%. It was connected with measures taken to optimize headcount;

growth of expenditures for services provided by external agencies was 883.7 mln rubles or 59.7%, which was the result of the growth of expenses for maintenance and repair, transportation costs, consultation expenses, advertisement costs, and expenditures for security;

the amount of accrued depreciation of main assets increased by 792.1 mln rubles or by 24.4%. It was connected with the active investment policy of the Company aimed at the network development;

increase of other expenditures was 293.1 mln rubles or 13.3%, which was result of the growth of agents fees, expenses for non-state pension insurance, lease costs (in accordance with the lease contracts for the equipment supply concluded in 2007 under the “Multipurpose Service ” project), as well as by the expenses for software retirement;

growth of expenditures for the services provided by communication operators (wihtout Rostelecom OJSC) was 267.6 mln rubles or 10.8%, which was the result of increase of expenses for payments to operators for providing channels in use and the growth of the ground traffic.

Main financial indexes according to the Russian Accounting Standards (mln rubles):

 

2008

2007

Change

Revenues

27,617.0

26,532.7

4.1%

Expenditures

23,108.2

21,192.7

9.0%

OIBDA

8,545.5

8,584.6

-0.5%

OIBDA margin

30.9%

32.4%

-1.5 p.p.

EBITDA

8,430.3

8,342.5

1.1%

EBITDA margin

30.5%

31.4%

-0.9 p.p.

Sales profit

4,508.8

5,340.0

-15.6%

Sales profit margin

16.3%

20.1%

-3.8 p.p.

Income before tax

2,801.5

3,720.6

-24.7%

Net profit

2,107.0

2,644.6

-20.3%

Net profit margin

7.6%

10.0%

-2.4 p.p.

 

In 2008 Sibirtelecom OJSC (without consideration of activities of subsidiaries) invested 8.1 mlrd rubles in the capital assets is; if compared with 2007, it increased by 21%. The major part of the capital investments is aimed at the development of local telephone communication means, data transfer network, and objects of the communication infrastructure. The investments for the introduction of new services (including cellular communication) in 2008 amounted to 22.3% of the total volume of the capital investment.

In the reporting year there was a minor decrease of OIBDA by 39.0 mln rubles or by 0.5%. It was connected with the reduction of the sales profit. The OIBDA margin amounted to 30.9%.

The sales profit reduced by 831.2 mln rubles or by 15.6% and was 4,508.8 mln rubles. It was connected with the outrunning growth of expenditures (9.0%), if compared with the revenues growth (4.1%). The sales profit margin is 16.3%.

The income before tax reduced by 919.1 mln rubles or 24.7% and is2.801.5 mln rubles. It was connected with the growth of exchange losses.

According to the results of 2008, the net profit decreased by 20.3%, if compared with 2007, and was 2,107.0 mln rubles, which was connected with the reduction of the profit before tax. The net profit margin amounted to 7.6%.

The principal operating indexes of Company’s activities:

 

2008

2007

Change, %

Principal operating indexes

 

 

Digitation level of commutating equipment, %

74.3

72.1

2.2 p.p.