OREANDA-NEWS. November 02, 2009. Southern Telecommunications Company (“UTK”) [(RTS: KUBN, KUBNP; МICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal fixed-line telecommunications provider for Russia’s Southern Federal District announces its unaudited operating and financial results for the first nine months of 2009 compiled under Russian Accounting Standards (RAS).

UTK’s 9m 2009 revenue made RUR 16,237.4 million, representing a 5.0%- increase over 9m 2008. Operating expenses grew only by 3.5% to RUR 12,013.6 million.  

Revenues from local telephone services grew by 1.7% to RUR 7,111.7 million due to increase in local tariffs from 1 March 2009, and accounted for 45.6% of the Company’s telecom revenues.

Revenues from intra-zonal telephone services went down 6.3% to 2,592 million roubles due to decrease in demand for fixed-to-fixed and fixed-to-mobile connections and accounted for 16.6% of the Company’s telecom revenues.

Active enhancement of Internet broadband access subscriber base enabled UTK to increase 9m 2009 revenues from data transfer and Internet access services by 31.7% to RUR 4,011.5 million. Based on 9m 2009 results, share of revenues from these services in total telecom revenue increased by 5.2 percentage points to 25.7%. As at 1 October 2009 Internet broadband access subscriber base made 498.8 thousand subscribers.

Revenues from interconnection and traffic transit services decreased 11.5% to 1,480.5 million roubles accounting for 9.5% of the Company’s telecom revenues. The reduction was due to structural changes in traffic and due to the fact that from March 1, 2008 the service of connection point maintenance had been excluded from the structure of interconnection services. 

SEGMENTAL ANALYSIS OF REVENUES: 

Description,

RUR mln

9 months 2009

9 months 2008

Y-o-y change, %

Revenue

16,237.4

15,465.0

5.0

Including Telecom revenue

15,610.3

14,856.1

5.1

Intra-zone telephony

2,592.0

2,766.1

-6.3

Local telephony

7,111.7

6,990.8

1.7

Wireless communication with mobile objects, wired radio, TV and radio broadcasting

270.5

250.2

8.1

Telegraph, data transfer and telematic services

4,143.1

3,163.3

31.0

Including data transmission and Internet access

4,011.5

3,045.0

31.7

Interconnection and traffic transit services

1,480.5

1,672.8

-11.5

Other telecom services

12.4

12.9

-3.9

Fees on assistance and agent services

360.1

378.4

-4.8

Other sales revenues (non-core activities)

267.0

230.5

15.8

9m 2009 expenses for wages and salaries decreased 3.6% over a year-ago to RUR 3,281.0 million and accounted for 27.3% of the Company’s operating expenses.

Depreciation charges grew 13.6% to RUR 2,997.1 million due to implementation of earlier launched investment projects and accounted for 24.9% of the Company’s operating expenses.

Material expenses went down 7.4% to RUR 1,191.5 million due to logistics optimization and accounted for 9.9% of the Company’s operating expenses. 

Amount of payments to national telecom operators (including to Rostelecom) rose 8.7% to RUR 1,396.8 million due to increase in Internet traffic volume and accounted for 11.6% of the Company’s operating expenses. 

Expenses breakdown: 

Description,

RUR mln

9 months 2009

9 months 2008

Y-o-y change, %

Operating expenses

12,013.6

11,602.0

3.5

Wages and salaries

3,281.0

3,403.6

-3.6

Social insurance

818.7

845.4

-3.2

Depreciation and amortization

2,997.1

2,638.1

13.6

Material expenses (total)

1,191.5

1,287.4

-7.4

Payments to national telecom operators (including to Rostelecom)

1,396.8

1,284.6

8.7

Other costs

2,328.5

2,142.9

8.7

In spite of the effect of global financial and economic crisis and 9m 2009 extra expenses caused by foreign exchange differences, the Company managed to show a positive financial result of 1,313.4 million roubles.

EBITDA amounted to RUR 6,315.1 mln which is up 9.1% over a year ago. EBITDA margin stood at 38.9% gaining 1.5 percentage points over 9m 2008.

The Company continued to optimize the headcount aiming to raise its business efficiency. As a result, in 9m 2009 the Company managed to slash the average number of employees by 5.1% over a year-ago to 25,077 people and to bring the number of lines per employee to 159.8 representing a 3.6%-increase.

Under conditions of the financial crisis the Company reduced its capex in order to cut down expenses. 9m 2009 capex amounted to RUR 721.8 million, decreasing 74.7% over 9m 2008.

Due to the Company’s efforts aimed at the debt burden reduction, its net debt decreased by 8.7% over a year ago to 19,072.6 million roubles as of 1 October 2009. 

Key operational highlights and business efficiency indicators: 

Description

Measure unit

9 months 2009

9 months 2008

Y-o-y change, %

EBITDA*

RUR mln

6,315.1

5,787.4

9.1

EBITDA margin

%

38.9

37.4

1.5 p.p.

Net profit

RUR mln

1,313.4

1,186.0

10.7

Average number of employees on payroll

     people

25,077

26,414

-5.1

Lines per employee

Lines/employee

159.8

154.3

3.6

Revenue per line

RUR/line

4,051.4

3,794.5

6.8

Investments

RUR mln

721.8

2,848.8

-74.7

Net debt

RUR mln

19,072.6

20,897.6

-8.7

* EBITDA includes Earnings Before Interest Payable, Taxes, Leasing Payments, Extra Expenses under Credits and Loans, Depreciation and Amortization minus Interest Receivable.

** Net debt includes Long-term and Short-term Credits and Loans minus Cash and Cash equivalents.