OREANDA-NEWS. June 04, 2010. Uralsvyazinform (RTS: and MICEX: URSI/URSIP, АDR: UVYZY/UVYZYP) – a universal telecommunications operator – hereby presents its unconsolidated financial and operating results for the first quarter of 2010 in accordance with Russian Accounting Standards (RAS).

Highlights of first quarter 2010

Owing to 5.9% revenue growth and strict cost containment the company managed to reduce its expenses by 2.5% compared with the year-earlier period, which translated into a major increase in economic efficiency indicators.

Higher revenue was attributable to increased earnings from datacom services and Internet access, mobile telephony and local voice.

Revenue from datacom and Internet access increased by 12.9% and amounted to RUR 1,733.4 mln, while revenue from the provision of broadband Internet increased by 19.4% to RUR 1,368.9 mln.  The number of broadband Internet users climbed by 36.5% compared to the first quarter of 2009 to RUR 804,700, while traffic volumes increased by 2.3 times and stood at 38.9 petabytes.

Revenue from cellular telephony increased by 11.0% and amounted to RUR 3,420.9 mln thanks to a 12.4% rise in the average revenue per user (ARPU) to 200 (compared to the first quarter of 2009), which resulted from optimization of the tariff policy  in this segment. 

Local voice revenue increased by 8.8% and stood at RUR 2,853.3 mln as a result of tariff indexation effective January 1, 2010 in accordance with a decision by the Federal Tariff Service.

A reduction in operating increases was mainly attributable to lower interconnect, including the optimization of backbone Internet traffic and roaming payments.

In addition, EBITDA went up by 25.7% and amounted to RUR 4,884.4 mln, while the ratio of EBITDA to revenue increased by 7.3 percentage points and stood at 46.0% at the end of the first quarter of 2010. 

Net profit increased by 2.1 times to RUR 2,054.7 mln, while the ratio of net profit to revenue increased by 9.6% to 19.4%. 

The proportion of unregulated services (datacom, Internet access and cellular telephony) in the company’s telecommunications revenue increased to 49.8% (up from 47.4% in the first quarter of 2009). 

The company continued its deleveraging efforts during the reporting period ad total liabilities for credits and loans decreased by 30.0% to RUR 17.1 bln compared with the first quarter of 2009.

The operator’s investment program amounted to RUR 264.3 mln (-8.3% compared with the first quarter of 2009), of which 63.8% was allocated for the rollout of unregulated services (datacom, Internet provision, and cellular telephony), while another 26.1% went to investments to develop datacom and other infrastructure which is necessary to provide value-added services. 

Headline financial indicators 

 

Q1 2010

Q1 2009

Change

Revenue, RUR mln

10,615.0

10,024.9

+5.9%

Telecommunications revenue, RUR mln

10 ,346.8

9,743.1

+6.2%

Expense, RUR mln

7,597.0

7,790.0

-2.5%

EBITDA, RUR mln

4,884.4

3 881.2

+25.7%

EBITDA margin

46.0%

38.7%

+7.3%

Operating profit, RUR mln

3,018.0

2,234.9

+35.0%

Operating margin

28.4%

22.3%

+6.1%

Pre-tax profit, RUR mln

2,616.1

1,303.0

+100.8%

Net profit, RUR mln

2,054.7

981.0

+109.5%

Net margin

19.4%

9.8%

+9.6%

EBITDA is calculated as profit before tax, interest payable, depreciation, lease payments and additional payments for credits and loans minus interest receivable.  

EBITDA margin, operating margin, and net margin are calculated as the ratio of the respective indicator (EBITDA, EBIT and net profit) to revenue.

Headline operating indicators 

 

Q1 2010

Q1 2009

Change

Number of subscribers:

fixed line, ‘000

Mobile telephony, ‘000

Broadband Internet, ‘000

Paid television*, ‘000

 

3,710.9

5,711.8

804.7

121.6

 

3,724.5

5,846.1

589.5

118.6

 

-0.4%

-2.3%

+36.5%

+2.5%

Outgoing intrazonal telephony, mln min.

469.8

505.7

-7.1%

Datacom traffic, PB

38.9

16.6

2.3x

*Cable television subscription services + Utel TV digital interactive television services

Revenue breakdown 

 

Q1 2010

Q1 2009

Change

RUR mln

Proportion

RUR mln

Proportion

Cellular telephony

3,20.9

33.1%

3 081.6

31.6%

+11.0%

Local voice

2,58.3

27.6%

2 626.2

27.0%

+8.8%

Datacom and Internet provision, including

1,733.4

16.8%

1 534.9

15.7%

+12.9%

Internet provision

1 408.8

13.6%

1 241.5

12.7%

+13.5%

Interconnect and traffic transit

1 101.5

10.6%

1 156.7

11.9%

-4.8%

Intrazonal telephony

1 051.6

10.2%

1 178.3

12.1%

-10.8%

Wire broadcasting

76.1

0.7%

65.1

0.7%

+16.9%

Radio communication, radio broadcasting, television

64.1

0.6%

65.0

0.7%

-1.4%

Document transmission

38.5

0.4%

33.3

0.3%

+15.6%

Other core activities

2.4

0.0%

2.0

0.0%

+20.0%

TOTAL

10 346.8

100.0%

9 743.1

100.0%

+6.2%

Operating expenses breakdown 

 

Q1 2010

Q1 2009

Change

RUR mln

Proportion

RUR mln

Proportion

Payroll

1,441.4

19.0%

1,424.1

18.3%

+1.2%

Social insurance contributions

367.0

4.8%

353.8

4.5%

+3.7%

Depreciation

1,514.7

19.9%

1,532.3

19.7%

-1.1%

Interconnect

1,169.4

15.4%

1,407.4

18.1%

-16.9%

Outsourcing

600.5

7.9%

624.6

8.0%

-3.9%

Materials

499.7

6.6%

494.2

6.3%

+1.1%

Lease payments

345.5

4.5%

439.5

5.6%

-21.4%

Other expenses, including:

1,658.7

21.8%

1,514.1

19.4%

+9.5%

Agency fees

579.5

7.6%

589.8

7.6%

-1.7%

Lease of premises

171.6

2.3%

179.3

2.3%

-4.3%

Software and database costs

124.1

1.6%

116.6

1.5%

+6.4%

Deductions to universal service fund

109.6

1.4%

101.9

1.3%

+7.6%

TOTAL

7,596.9

100.0%

7,790.0

100.0%

-2.5%

Debt burden 

 

March 31, 2010

March 31, 2010

Change

Long-term credits and loans

12,559.0

15,373.0

-18.3%

Short-term credits and loans

4,578.5

9,101.1

-49.7%

Total

17,137.5

24,474.1

-30.0%

Investment breakdown 

 

Q1 2010

Q1 2009

Total amount of investments, RUR, mln

264.3

288.1

Traditional telephony

5.4%

6.1%

Value-added services, including cellular telephony

63.8%

19.3%

Datacom and infrastructure networks

26.1%

49.4%

Investments in IT projects

0.4%

0.2%

Other, incl.

4.3%

25%

Construction and construction of buildings and facilities

0.6%

14.4%

TOTAL

100.0%

100.0%