OREANDA-NEWS. On 28 April 2009 Sibirtelecom (RTS: ENCO/ENCOP, ENCOG/ENCOPG; MICEX: STKM/STKMP; ADR: ОТС– SBTLY, Frankfurt and Berlin stock markets – ISIN: US8257351036, WKN: 260452) – a telecommunications operator in the Siberian Federal District hereby presented its audited FY 2008 financial results in accordance with Russian Accounting Standards (RAS).  The audit of the company’s 2008 financial (accounting) reports was conducted by KPMG.

The revenue of Sibirtelecom (hereinafter – the Company) not including the subsidiary business in 2008 reached Rub 27.617 mln, which is an increase of Rub 1.084 mln, or 4.1% compared with 2007.

The main factor driving growth of the Company’s revenue during the reporting period was a rise in the number of Internet users, intrazonal and Internet traffic.

Despite a slight decrease in the Company’s revenue from provision of local telephony, their share in the total breakdown of revenue remains the largest, i.e. 41% (Rub 11.33 bln).

Key items in the breakdown of revenues are provision of intrazonal telephony (Rub 5.427 bln) and datacom and telematic services (Rub 5.427 bln), which account for 19.7% and 16.5%, respectively.  Interconnect and traffic transmission revenue accounts for 11.7% (Rub 3,226 bln) of the operator’s total revenue.  In addition, revenue from cellular traffic accounted for 3.9% of the total (Rub 1.085 bln).

Compared with 2007 (not including the subsidiary business):

the rise in revenue from provision of telegraphic, datacom and telematic services stood at Rub 1.375 bln, or 43.1% due to an increase in the number of broadband Internet services and a corresponding rise in revenue from ISP (broadband and dial-up). As of January 1, 2009 the number of broadband Internet subscribers stood at 410,900.

the rise in revenue from leasing assets stood at Rub 276 mln, or 83.9%, which is due to an increase in the number of leased objects;

growth in revenue from provision of intrazonal telephony stood at Rub 127.8 mln, or 2.4%, which is due to a tariff hike in traffic from fixed-line subscribers to the networks of cellular operators;

the rise in revenue from provision of cellular telephony not counting the subsidiary business stood at Rub 18.3 mln, or 1.7% (the number of cellular subscribers increased by 20% and stood at 632,000 at the end of the reporting year);

the decrease in revenue from interconnect and traffic transmission, which stood at Rub 511 mln (-13.7%), due to an outflow of traffic from the Company’s network to the networks of fixed-line zonal alternative operators and the cancellation as of March 1, 2008 of tariffs charged at interconnection points;

the decrease in revenue from provision of local telephony stood at Rub 244.6 mln (-2.1%), which is due to a 17% decline in the number of installations performed and a drop in the average revenue rate for provision of a network access by 58.4%;

the decline in outsourcing and agency revenue under contract with Rostelecom stood at Rub 58.8 mln (-9.1%).

The decline in revenue came as a result of a decrease in the number of services provided to users on the part of Rostelecom, and also the conclusion of direct agreements with users at the level of Rostelecom.

The Company’s expenses (not including the subsidiary business) in 2008 increased by Rub 1,915 mln, or 9% compared with 2007 and amounted to Rub 23,108 mln. Despite a slight decrease in the Company’s revenue from provision of local telephony, their share in the total breakdown of revenue remains the largest, i.e. 41% (Rub 11.33 bln).

Key items in the breakdown of revenues are provision of intrazonal telephony (Rub 5.427 bln) and datacom and telematic services (Rub 5.427 bln), which account for 19.7% and 16.5%, respectively.  Interconnect and traffic transmission revenue accounts for 11.7% (Rub 3,226 bln) of the operator’s total revenue.  In addition, revenue from cellular traffic accounted for 3.9% of the total (Rub 1.085 bln).

Compared with 2007 (not including the subsidiary business):

the rise in revenue from provision of telegraphic, datacom and telematic services stood at Rub 1.375 bln, or 43.1% due to an increase in the number of broadband Internet services and a corresponding rise in revenue from ISP (broadband and dial-up). As of January 1, 2009 the number of broadband Internet subscribers stood at 410,900.

the rise in revenue from leasing assets stood at Rub 276 mln, or 83.9%, which is due to an increase in the number of leased objects;

growth in revenue from provision of intrazonal telephony stood at Rub 127.8 mln, or 2.4%, which is due to a tariff hike in traffic from fixed-line subscribers to the networks of cellular operators;

the rise in revenue from provision of cellular telephony not counting the subsidiary business stood at Rub 18.3 mln, or 1.7% (the number of cellular subscribers increased by 20% and stood at 632,000 at the end of the reporting year);

the decrease in revenue from interconnect and traffic transmission, which stood at Rub 511 mln (-13.7%), due to an outflow of traffic from the Company’s network to the networks of fixed-line zonal alternative operators and the cancellation as of March 1, 2008 of tariffs charged at interconnection points;

the decrease in revenue from provision of local telephony stood at Rub 244.6 mln (-2.1%), which is due to a 17% decline in the number of installations performed and a drop in the average revenue rate for provision of a network access by 58.4%;

the decline in outsourcing and agency revenue under contract with Rostelecom stood at Rub 58.8 mln (-9.1%).

The decline in revenue came as a result of a decrease in the number of services provided to users on the part of Rostelecom, and also the conclusion of direct agreements with users at the level of Rostelecom.

The Company’s expenses (not including the subsidiary business) in 2008 increased by Rub 1,915 mln, or 9% compared with 2007 and amounted to Rub 23,108 mln.

The bulk of the Company’s cost side is composed of payrolls and social contributions (38.3%), depreciation charges (17.5%), interconnect (11.9%), other expenses (10.8%) and outsourcing expenses (10.2%).

Compared with 2007 (not including the subsidiary business):

expenses related to payrolls and social contributions decreased by Rub 407.3 mln, or 4.4%, which is attributable to work conducted to optimize headcount;

the increase in outsourcing expenses stood at Rub 883.7 mln, or 59.7%, which is attributable to higher costs related to repair and maintenance, transportation expenses, advisory expenses, advertising expenses and security expenses;

the amount of fixed assets depreciation charges increased by Rub 792.1 mln, or 24.4%, which is due to the company’s active investment policy, which is geared towards network rollout;

the rise in other expenses stood at Rub 293.1 mln, or 13.3%, which is mainly attributable to an increase in agency remunerations, private pension fund expenses, leasing expenses (in accordance with leasing agreements stipulated in 2007 for the supply of equipment under the Universal Service project) AND expenses associated with the write-off of software programs;

the increase in interconnect expenses (except for Rostelecom) stood at Rub 267.6 mln, or 10.8%, which is due to higher interconnect expenses for leasing channels and a rise in traffic termination.

The total amount invested in the main equity of Sibirtelecom (not including the subsidiary business) stood at Rub 8.1 bln in 2008, which is 21% more than in 2007. The main part of capital investments was allocated for rolling out local telephony facilities, datacom networks and telecommunications infrastructure facilities. The level of investments aimed at rolling out value-added services in 2008 (including cellular telephony) stood at 22.3% of the total amount of capital expenditure.

During the reporting period there was a slight decrease in OIBDA by Rub 39 mln, or 0.5%, which was due to a decline in EBIT.  In addition, OIBDA margin stood at 30.9%.

EBIT decreased by Rub 831.2 mln, or 15.6% and amounted to Rub 4,508 mln, which was due to faster growth of expenses (9%) compared with the increase in revenue (4.1%).  In addition, EBIT margin stood at 16.3%.

Pre-tax profit decreased by Rub 919.1 mln, or 24.7% and stood at Rub 2,901 mln, which was attributable to a rise in negative foreign exchange differences.

Net profit in 2008 decreased by 20.3% compared with 2007 and amounted to Rub 2,107 mln, which is due to a decrease in pre-tax profit.  In addition, net profit margin stood at 7.6%.

Sibirtelecom’ s 2008 audited RAS financial report can be viewed on the Company’s website at the following address (in Russian) http://www.sibirtelecom.ru/?sbt_rsbuand http://www.sibirtelecom.ru/eng/?esb_rsbu(in English).