OREANDA-NEWS. August 6, 2010. Revenues of Sibirtelecom, OJSC (hereinafter – Company) without consideration of subsidiary business in the 1st half of 2010 amounted to 14,404.0 mln rubles, having increased by 418.4 mln rubles or by 3.0% as compared with the similar period of the last year.

The main factor of the growth of Company’s revenue in the reporting period was the development of broadband access services: an increase in the number of subscribers to Internet access.

Structure of Company’s revenues (mln rubles):

Type of revenue

1st half of 2010

1st half of  2009

Change

mln rubles

%

Local telephone communication services

6,248.3

5,777.9

470.4

8.1%

including:

universal communication services

0.3

0.4

(0.1)

(25.0)

Telegraph communication services, data transfer and telematic communication services

3,346.0

2,801.8

544.2

19.4%

including:

data transmission and the Internet access services

3,241.1

2,683.4

557.7

20.8%

Intra-zone telephone communication services

2,243.3

2,489.3

(246.0)

(9.9%)

Connection and traffic transmission services

1,198.7

1,393.1

(194.4)

(14.0%)

Nonoperating revenue

612.7

597.0

15.7

2.6%

including:

Revenues from lease of assets

208.9

328.6

(119.7)

(36.4%)

Services of mobile radiotelephone (cellular) communication

422.8

456.5

(33.7)

(7.4%)

Support and agent services

215.8

252.3

(36.5)

(14.5%)

Services of mobile telephone communication, wire broadcasting, radio broadcasting, and television

115.6

217.4

(101.8)

(46.8%)

Other services of primary activities

0.8

0.3

0.5

166.7

Total

14,404.0

13,985.6

418.4

3.0

Revenues from providing local telephony services 43.4% (6,248.3 mln rubles) constitute the biggest share in the structure of Company’s revenues structure.

Other considerable items in the revenues structure are revenues from providing data transmission and telematic communication services (3,346.6 mln rubles) and intra-zone telephone communication services (2,243.3 mln rubles), 23.2% and 15.6%, respectively. Revenues from connection and traffic transmission services make up 8.3% (1,198.7 mln rubles) of the net sales. Revenues from the mobile communication services make 2.9% (422.8 mln rubles) in the revenue structure.

If compared with the similar period of 2009 (without consideration of activities of subsidiaries):

-       The income from telegraph services, from provision of data transfer and telematic communication services made 544.2 mln rubles, or 19.4% due to the growing number of broadband access users and as a result the growth of revenues from providing Internet access. As of July 1, 2010 the number of broadband access users amounted to 692.5 thousand subscribers;

-       The income from local telephone communication services grew by 470.4 mln rubles or by 8.1%, which mainly resulted from the indexation of regulated tariffs from February 1, 2010;

-       The income from intra-zone telephone communication decreased by 246.0 mln rubles or by 9.9%, which is caused by the reduction of traffic from fixed-line telephony subscribers to both fixed and mobile operators' networks and the decrease of tariffs for intrazone connections to the "distant” tariff zones from January 30, 2010;

-       The income from connection and traffic transmission services decreased by 194.4 mln rubles or by 14.0% due to a decrease in the volume of traffic transmitted;

-       The income from the lease of assets decreased by 119.7 mln rubles or by 36.4%, which was connected with a decrease of the number of objects under lease;

-       The income from support and agent services amounted to 36.5 mln rubles (-14.5%). The revenues reduced due to a decrease in the volume of services provided to users by Rostelecom OJSC, as well as signing of direct contracts between subscribers and Rostelecom OJSC;

-       The income from mobile communication services not including subsidiaries decreased to 33.7 mln rubles or by 10.8%, which is explained by reduced consumption of services by subscribers both in the public and corporate segments.

Expenditures of the Company

-  Expenditures of the Company (without consideration of activities of its subsidiaries) decreased in the first half of 2010 by 637.6 mln rubles or by 5.4% as compared with the similar period of 2009 and made up 11,232.0 mln rubles.

Structure of Company’s expenditures (mln rubles):

Type of expenditure

1st half of 2010

1st half of 2009

Change

mln rubles

%

Labor costs

(3,210.0)

(3,425.6)

215.6

(6.3)

Depreciation of fixed assets

(2,277.9)

(2,318.9)

41.0

(1.8)

Services from communication operators (except for Rostelecom OJSC)

(1,149.9)

(1,340.0)

190.1

(14.2)

Outsourcing

(1,116.3)

(1,242.7)

126.4

(10.2)

Deductions to social insurance

(802.1)

(866.1)

64.0

(7.4)

Tangible costs

(788.2)

(639.1)

(149.1)

23.3

Rental payments

(289.0)

(340.6)

51.6

(15.1)

Services provided by Rostelecom OJSC

(253.9)

(208.8)

(45.1)

21.6

Commodity acquisition value

(105.9)

(85.7)

(20.2)

23.6

Taxes and dues included into expenditures on ordinary activities

(16.2)

(18.6)

2.4

(12.9)

Other expenditures on ordinary activities

(1,222.6)

(1,383.5)

160.9

(11.6)

Total

   (11,232.0)

 (11,869.6)

  637.6

(5.4)

The largest share of the total amount of Company’s expenditures are labor costs and deductions for social insurance, 35.7%; depreciation costs, 20.3%; other expenditures, 10.9%, expenses for communication operators’ services, 10.2%, and expenses for services provided by external agencies, 9.2%.

If compared with the similar period of 2009 (without consideration of subsidiaries):

-       labour costs and deductions for social insurance reduced by 279.6 mln rubles or by 6.5%. It was connected with the measures taken to optimize headcount;

-       expenses for services provided by communication operators (except for Rostelecom OJSC) decreased by 190.1 mln rubles or by 14.2% due to a decrease in the initiated and mobile-to-fixed interconnections;

-       other expenditures decreased by160.9 mln rubles or by 11.6%, which was mainly a result of the decrease in expenses for software products and non-state retirement insurance of the employees;

-       expenses of services provided by external agencies decreased by 126.4 mln rubles or by 10.2%, which was a result of optimization of business processes for cooperation with external organizations as concerns transport services;

-       tangible costs increased by 149.1 mln rubles or by 23.3% mainly due to an increase in expenses for connection of broadband access subscribers as a result of the growing subscriber base.

Financial results of the Company

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

 

1st half of 2010

1st half of 2009

Change

Revenues

14,404.0

13,985.6

3.0%

Expenditures

11,232.0

11,869.6

-5.4%

OIBDA

5,556.6

4,547.9

22.2 %

OIBDA margin

38.6

32.5

6,1 pct points

EBITDA

5,728.5

4,748.5

20.6 %

EBITDA margin

39.8

34.0

5,8 pct points

Net Debt

12,402.8

16,145.7

-23.2%

Sales profit

3,172.0

2,116.0

49,9%

Sales profit margin

22.0%

15.1%

6,9 pct points

Income before tax

2,632.8

1,289.7

104.1%

Net profit

2,050.2

1,074.6

90,8%

Net profit margin

14.2%

7.7%

6.5 pct points

-       In the 1st half of 2010, Sibirtelecom OJSC (without consideration of activities of subsidiaries) invested 2,402.4 mln rubles in its fixed assets, which is 166.4% higher than the same index in the 1st half of 2009. The main part of the capital investments was aimed at creating a state-of-the-art infrastructure of communication networks and data transmission networks. The level of investments used for the introduction of new services in the reporting period amounted to 79.4% of the total volume of capital investments.

-         OIBDA increased in the reporting period by 1,008.7 mln rubles or by 22.2%. It was connected with the growth of revenues (3.0%) at the simultaneous decrease in expenses without consideration of depreciation of fixed assets, intangible assets, and leasing expenses (6.3%). The OIBDA margin was 38.6%, having increased by 6.1 percentage points as compared with 2009.

-         The sales profit increased by 1.056,0 mln rubles or by 49.9% and was 3,172.0 mln rubles. It was connected with the growth of revenues (3.0%) and a decrease of expenses (-5.8%). The sales profit margin was 20.9%.

-         The income before tax increased by 1,343.1 mln rubles and was 2.632.8 mln rubles. It was connected with the dynamics of the sales profit and with a decrease in the loss from exchange rate differences by 217.8 mln rubles.

-         According to the results of the reporting period, the net profit increased by 975.6 mln rubles or by 90.8% as compared with the similar period of the previous year and amounted to2,050.2 mln rubles due to an increase of the profit before tax. The net profit margin increased by 6.5 percentage points and amounted to 14.2%.

Principal operating indices of Company’s activities:

 

1st half of

2010

1st half of 2009

Change, %

Principal operating indices

 

 

Number of main telephone stations at the end of the reporting period, thousand

4,391.0

4,358.8

0.7

Intra-zone traffic (outgoing paid), mln minutes

973

1,137

-14.4

Number of mobile communication subscribers (including subsidiary business) at the end of the reporting period, thousand.

5,394.6

5,159.8

4.6

Number of broadband access subscribers at the end of the reporting period, thousand

692.5

501.5

38.1

Internet traffic via dedicated lines, TByte

65,441.9

24,522.5

166.9

Average number of lines, thousand

5,033.3

5,035.8

-0,05

Average labor force, persons

23,703

26,065

-9.1

Efficiency indices

 

 

Earnings per line, rubles

2,861.8

2,777.2

3.0

Earnings per employee, thousand rubles

607.7

536.6

13.3

Lines per worker

212

193

9.8