OREANDA-NEWS. On 06 August 2009 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 District presented results of its activity for the 1st half of 2009 in accordance with Russian Accounting Standards.

    Revenues of Sibirtelecom OJSC (“Company”) without consideration of subsidiary business for the 1st half of 2009 amounted to 13,985.6 mln. rubles, having increased by 318.5 mln. rubles, or by 2.3%, as compared with the same period of the previous year.

The main source of the Company income growth in the reporting period is the development of services of broad-band access.

Structure of Company’s revenue (mln. rubles):

Type of revenue

1H 2009

1H 2008

Change

mln. rub.

%

Local telephone communication services

5,811.1

5,668.9

142.2

2.5

including:

multipurpose communication services

0.4

0.3

0.1

33.3

Telegraph communication services, data transfer and telematic communication services

2,801.8

2,187.3

614.5

28.1

including:

data transfer and the Internet access services

2,683.4

2,075.3

608.1

29.3

Intra-zone telephone communication services

2,520.4

2,689.9

(169.5)

(6.3)

Connection and traffic transmission services

1,319.9

1,674.1

(354.2)

(21.2)

Mobile radiotelephone (cellular) communication services

529.7

532.6

(2.9)

(0.5)

Revenues from lease of assets

392.2

239.6

152.6

63.7

Support and agent services

252.3

302.9

(50.6)

(16.7)

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

217.4

213.3

4.1

1.9

Revenues from providing services of non-core activities

140.2

156.2

(16.0)

(10.2)

Other services of core activities

0.6

2.3

(1.7)

(73.9)

Total

13,985.6

13,667.1

318.5

2.3

The share of revenues from providing local telephone communication services in the total revenue structure is the most considerable one – 41.6% (5,811.1 mln. rubles).

Other considerable items in the revenues structure are revenues from providing data transfer and the Internet access services (2,683.4 mln. rubles) and intra-zone telephone communication services (2,520.4 mln. rubles) – 19.2% and 18.0% respectively. The revenues from connection and traffic transmission services amounted to 9.4% (1,319.9 mln. rubles) of total revenues. The revenues from provision of mobile communication services amounted to 3.8% (529.7 mln. rubles) of total revenues.

Compared with the same period of 2008 (without consideration of activities of subsidiaries):

         Income growth from data transfer and Internet access services provision was 608.1 mln. rubles, or 29.3%. It was the result of the growth of the number of broadband access (BBA) users and the growth of revenues from provision of Internet access. As of July 1, 2009 the number of BBA users amounted to 501.5 thousand.

         Growth of income from the lease of assets was 152.6 mln. rubles, or 63.7%, which was connected with the increase of the number of leased objects;

         Growth of income from provision of local telephone communication services amounted to 142.2 mln. rubles, or 2.5%, which was connected with the growth subscriber base (the number of telephone sets of the parent company grew by 27.9 thousand, or 0.6%, and amounted to 4,358.8 thousand items as of the end of the 1st  half of 2009) and indexation of administered tariffs from March 1, 2009;

         Decrease of income from connection and traffic transmission services was 354.2 mln. rubles, or 21.2%; it was mainly due to the cancellation of tariffication of interconnect points from March 1, 2008;

         Decrease of income from intra-zone telephone communication services was 169.5 mln. rubles, or 6.3%; it was due to the decrease of traffic and the decrease of the average payable rate;

         Decrease of income from support and agent services provided on the ground of the contract with Rostelecom OJSC was 50.6 mln. rubles, or 16.7%. Revenues reduction was connected with the decrease of the volume of services provided to users of Rostelecom OJSC, as well as the signing of direct contracts between subscribers and Rostelecom OJSC.

     Expenditures of the Company (without activities of subsidiaries) for the 1st half of 2009 increased by 1,165.2 mln. rubles, or by 10.9%, compared to the same period of 2008, and amounted to 11,869.6 mln. rubles.

    Structure of Company’s expenditures (mln. rubles):

Type of expenditure

1H 2009

1H 2008

Change

mln. rub.

%

Labor costs

(3,425.6)

(3,330.8)

(94.8)

2,8

Depreciation of fixed assets

(2,318.9)

(1,971.4)

(347.5)

17,6

Services of telecoms (without Rostelecom OJSC)

(1,340.0)

(1,355.1)

15.1

(1.1)

Services of third parties

(1,242.7)

(893.3)

(349.4)

39.1

Allocations to social insurance

(866.1)

(787.6)

(78.5)

10.0

Material costs

(639.1)

(785.9)

146.8

(18.7)

Lease payments

(340.6)

(325.1)

(15.5)

4.8

Services provided by Rostelecom OJSC

(208.8)

(73.1)

(135.7)

185.6

Commodity acquisition value

(85.7)

(59.2)

(26.5)

44.8

Taxes and dues included into expenditures of core activity

(18.6)

(18.7)

0.1

(0.5)

Other expenditures of core activity

(1,383.5)

(1,104.2)

(279.3)

25.3

Total

(11,869.6)

(10,704.4)

(1,165.2)

10.9

The largest share of the total amount of Company’s expenditures includes labor costs and allocations to social insurance – 36.2%, depreciation of fixed assets – 19.5%, expenditures on telecoms’ services – 13.0%, other expenditures – 11.7%, and expenditures for the services of third parties – 10.5%.

Compared with the same period of 2008 (without activities of subsidiaries):

         Growth of expenditures for services provided by third parties was 349.4 mln. rubles, or 39.1%, which was due to reconsideration of the Company’s business-processes and using of transport services of third parties;

         Amount of accrued depreciation of main assets increased by 347.5 mln. rubles, or by 17.6%. It was connected with the active investment policy of the Company aimed at the network development;

         Increase of other expenditures was 279.3 mln. rubles, or 25.3%, which was mainly caused by the growth of agents fees and expenses for software retirement;

         Labor costs and allocations to social insurance grew by 173.3 mln. rubles, or by 4.2%, due to indexation of wages from October 1, 2008 and modification of method for accrual of reserves for future expenses (reserve for vacation payments and bonuses is accrued quarterly from January 1, 2009; in 2008 those reserves were accrued once in the 4th quarter);

         Growth of expenditures for the services provided by Rostelecom OJSC was 135.7 mln. rubles, or 185.6%, which was the result of increase of volume of services for transfer of Internet traffic.

     The debt load of the Company decreased by 1.1 bln. rubles since the beginning of the year and as of June 30, 2009 was 16.8 bln rubles, the net-debt was 16.1 bln rubles.

Key financial indices according to Russian Accounting Standards (mln. rubles):

 

1H 2009

1H 2008

Change, %

Revenues

13,985.6

13,667.1

2.3

Expenditures

11,869.6

10,704.4

10.9

OIBDA

4,442.7

4,936.9

(10.0)

OIBDA margin

31.8%

36.1%

            -

EBITDA

4,748.5

5,503.4

(13.7)

EBITDA margin

34.0%

40.3%

                -

Sales profit

2,116.0

2,962.7

(28.6)

Sales profit margin

15.1%

21.7%

                -

Profit before tax

1,289.7

2,709.9

(52.4)

Net profit

1,074.6

2,141.2

(49.8)

Net profit margin

7.7%

15.7%

               -

Compared with the same period of 2008 (without activities of subsidiaries) in the 1st half of 2009:

         Sales profit reduced by 846.7 mln. rubles, or by 28.6%, and amounted to 2,116.0 mln. rubles; it was caused by outrunning growth of expenditures (10.9%) compared with the revenues growth (2.3%). Sales profit margin 15.1%.

         OIBDA reduced by 494.2 mln. rubles, or by 10.0%, due to the reduction of the sales profit. OIBDA margin 31.8%.

         Profit before tax reduced by 1,420.2 mln. rubles, or by 52.4%, and amounted to 1,289.7 mln. rubles; it was caused by reduction of sales profit and effect of non-cash loss from exchange rate differences.

         Net profit reduced by 1,066.6 mln. rubles, or by 49.8%, and amounted to 1,074.6 mln. rubles. Net profit margin 7.7%

Key operating indices of the Company’s activities:

 

1H 2009

1H 2008

Change, %

Key operating indices

 

 

Number of basic telephone sets, thousand

4,358.8

4,330.9

0.6

Intra-zone traffic (outgoing paid), mln. minutes

1,138

1,204

(5.5)

Number of cellular subscribers (without subsidiary business), thousand

651.9

565.3

15.3

Number of cellular subscribers (with subsidiary business), thousand

5,159.8

4,518.8

14.2

Number of Internet BBA ports, thousand

501.5

266.8

88.0

Average number of lines, thousand

5,035.8

4,886.0

3.1

Average headcount, people

26,065

30,632

(14.9)

Efficiency indices

 

 

Earnings per line, rubles

2,777.2

2,797.2

(0.7)

Earnings per employee, thousand rubles

536.6

446.2

20.3

Lines per employee

193

160

21.1

Financial reporting of Sibirtelecom OJSC for the 1st half of 2009 in accordance with RAS is available at the corporate web-site of the Company: http://www.sibirtelecom.ru/?sbt_rsbu (in Russian) and http://www.sibirtelecom.ru/eng/?esb_rsbu (in English).