OREANDA-NEWS. September 16, 2010. Sibirtelecom (RTS: ENCO/ENCOP, ENCOG/ENCOPG; МICEX: STKM/STKMP; ADR: ОТС – SBTLY, Frankfurt and Berlin stock exchanges – ISIN: US8257351036, WKN: 260452) – a fixed-line telecommunications operator in the Siberian Federal District, hereby announces its unaudited consolidated interim financial statement for the six months ending June 30, 2010, drafted in accordance with international financial reporting standards (IFRS). 

The unaudited consolidated interim financial statement includes assets, liabilities and the results of the activities performed by Sibirtelecom and its subsidiaries (hereafter, the Company).  The main activity of subsidiaries is the provision of mobile and radio (cellular) telephony and other telecommunications services.

Headline financial indicators, IFRS (RUR, mln) 

 

For the six months

ended June 30

Change, %

2010

2009

Revenue

19,465

19,015

2.4

OIBDA

8,167

7,407

10.3

OIBDA margin

42.0%

39.0%

 

EBITDA

8,152

6,981

16.8

EBITDA margin

41.9 %

36.7 %

 

Net Debt

16,038

21,183

(24.3)

Operating expenses

(15,921)

(16,318)

(2.4)

Operating profit

4,320

3,335

29.5

Operating profit margin

22.2%

17.5%

 

Pre-tax profit

3,150

1,276

146.9

Profit for reporting period

2,444

851

187.2

Profit margin for reporting period

12.6%

4.5%

 

 

 

 

 

 

Revenue 

The Company’s consolidated revenue for the six months ended June 30, 2010 amounted to RUR 19,465 mln, which is RUR 450 mln higher (+2.4%) compared with the same period in 2009.

The main items in the Company’s revenue structure are local telephony (RUR 6,251 mln) and mobile and radio (cellular) telephony (RUR 4,843 mln).  These two items account for 32.1% and 24.9% of the Company revenue, respectively.  Other major revenue items include datacom and telematic services (Internet) (RUR 3,270 mln) and intrazonal telephony (RUR 2,223 mln), or 16.8% and 11.4%, respectively.  Revenue derived from interconnect and traffic transmission accounted for 9.0% (RUR 1,743 mln) of consolidated revenue.

The main factor driving growth of the Company’s revenue during the reporting period was the development of broadband Internet access, i.e. the increase in the number of subscriber base.

Compared to the same period in 2009, during the first six months ended June 30, 2010: 

the biggest increase in revenue came from datacom and telematic services (Internet) equal to RUR 536 mln, or up 19.6%.  The main factor was expansion of broadband Internet subscriber base and, respectively, higher revenue from dedicated Internet access.  As of July 1, 2010 the number of broadband Internet users stood at 692,500;

the increase in revenue from local telephony amounted to RUR 397 mln, or 6.8%, which was attributable to the indexation of regulated tariffs effective February 1, 2010;

the decline in revenue from intrazonal telephony amounted to RUR 275 mln, or 11.0%, which was attributable to lower traffic from fixed-line subscribers both on the fixed-line and cellular networks, and also to a decrease in a number of areas effective January 30, 2010 of intrazonal tariff connections with “remote” tariff zones;

the decrease in line lease amounted to RUR 192.0 mln, or 50%, which was attributable to a decrease in the number of lines leased;

the contraction in revenue from interconnect and traffic transmit amounted to RUR 97 mln, or 5.3%, which was attributable to a decrease in traffic transmission volumes;  

Revenue breakdown (RUR, mln) 

Revenue item

For the six months

ended June 30

Change

2010

2009

RUR, mln

%

Local voice

6,251

5,854

397

6.8

Mobile and radio (cellular) telephony

4,843

4,837

6

0.1

Telegraph, datacom and telematic services (Internet)

3,380

2,855

525

18.4

incl. Datacom and telematic services (Internet)

3,270

2,734

536

19.6

Intrazonal telephony

2,223

2,498

(275)

(11.0)

Interconnect and traffic transmission

1,743

1,840

(97)

(5.3)

Outsourcing and agency fees

220

266

(46)

(17.3)

Mobile, wire broadcasting, radio broadcasting and television

116

217

(101)

(46.5)

Other services (core types of activity)

1

3

(2)

(66.7)

Revenue from other sales

688

645

43

6.7

incl. line leasing

188

380

(192)

(50.5)

Total

19,465

19,015

450

2.4

 

 

 

 

 

 

Cost side  

The Company’s consolidated expenses for the six months ended June 30, 2010 decreased 2.4% (by RUR 397 mln) compared with the same period in 2009 and amounted to RUR 15,921 mln.  

In the cost structure, the largest proportion fell to payrolls (30.4%), Depreciation and amortization (24.2%) and other operating expenses (20.8%).

Compared to the same period in 2009, during the first six months ended June 30, 2010: 

expenses for materials, repair and maintenance as well as utilities increased by 16.5% (RUR 240 mln), which was attributable to indexation of tariffs for electricity and heat, and also an increase in expenses for providing connectivity to subscribers;

a decrease in staff expenses by 5.7% (RUR 291 mln), which was due to headcount reduction;

the amount of accrued depreciation and amortization decreased 5.5% (by RUR 225 mln), which was attributable to an increase in the proportion of amortized fixed assets and a reduction of the Company’s investment program in 2009;

a 4.4% decrease in interconnect expenses ( RUR 101 mln), due to a decrease in the origination and termination of traffic;

a 0.6% decrease in other operating expenses (RUR 20 mln), which was mainly due to the optimization of business processes in operations with outsourcing agencies and the use of software.  

Cost structure (RUR, mln)  

Expense item

For the six months

ended June 30

Change

2010

2009

RUR, mln

%

Payrolls

(4,846)

(5,137)

291

(5.7)

Depreciation and amortization

(3,847)

(4,072)

225

(5.5)

Interconnect

(2,219)

(2,320)

101

(4.4)

Materials, repair, maintenance and utilities

(1,697)

(1,457)

(240)

16.5

Other operating expenses

(3,312)

(3,332)

20

(0.6)

Total

(15,921)

(16,318)

397

(2.4)

 

 

 

 

 

 

 

Capital expenses  

The amount of the Company’s capital expenses for the six months ended June 30, 2010 amounted to RUR 3,545 mln, which is 49.5% or RUR 11,173 mln more than in the same period in 2009.  The level of investments allocated for the expansion of mobile and radio (cellular) telephony amounted to 23.8% of the total amount of the Company’s capital expenses.  

Financial results 

Compared to the same period in 2009, during the first six months ended June 30, 2010: 

OIBDA rose by 10.3%, or RUR 760 mln. OIBDA margin came in at 42.0%.

Operating profit increased 29.5%, or RUR 985 mln, and amounted to RUR 4,320 mln, which was due to growth in revenue (2.4%) alongside a decline in expenses (2.4%). 

Operating profit includes other operating revenue equal to RUR 776 mln, and compensation for losses from the provision of universal telecom services equal to RUR 600 mln.

The operating profit margin came in at 22.2%. 

Pre-tax profit increased by RUR 1,874 mln and amounted to RUR 3,150 mln, which was attributable to the trend in operating profit, a decline in interest expenses, and also positive profit trends in foreign currency exchange rate differences resulting from the revaluation of foreign currency (as of the end of six months ended June 30, 2010, the negative balance on exchange rate differences amounted to RUR 18 mln, whereas during the same period in 2009 the negative balance on exchange rate differences amounted to RUR 428 mln). 

Profit during the reporting period increased by RUR 1,593 mln and stood at RUR 2,444 mln, which was attributable to an increase in pre-tax profit.  Profit margin for the reporting period stood at 12.6%.