OREANDA-NEWS. November 8, 2010. Sibirtelecom announced results of 9M financial and economic activity.

-    Revenues of Sibirtelecom, OJSC (hereinafter, Company), subsidiary businesses not considered, for 9 months of 2010 amounted to 21,643.7 mln rubles, having increased by 772.8 mln rubles or by 3.7% as compared to the similar period of the previous year.

The primary 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

9 months of 2010

9 months of 2009

Difference

RUB mln

%

Local telephone communication services

9,322.1

8,658.1

664.0

7.7

including:

multipurpose communication services

 

0.5

0.5

(0.0)

(0.0)

Telegraph communication services, data transfer and telematic communication services

5,052.6

4,237.7

814.9

19.2

including:

data transmission and

Internet access

4,896.4

4,064.9

831.5

20.5

Intra-zone telephone communication services

3,302.8

3,699.6

(396.8)

(10.7)

Connection and traffic transmission services

1,860.5

2,030.2

(169.7)

(8.4)

Nonoperating revenue

974.6

884.5

90.1

10.2

including:

Revenues from lease of assets

338.6

457.8

(119.2)

(26.0)

Mobile radiotelephone (cellular) communication services

648.1

670.9

(22.8)

(3.4)

Support and agent services

311.8

362.5

(50.7)

(14.0)

Mobile telephone communication, wire broadcasting, radio broadcasting, and television

170.0

326.9

(156.9)

(48.0)

Other services of primary activities

1.2

0.5

0.7

140.0

Total

21,643.7

20,870.9

772.8

3.7%

Revenues from providing local telephony services 43.1% (RUB 9 322.1 mln) 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 (RUB 5,052.6 mln) and intra-zone telephone communication services (RUB 3,302.8 mln) 23.2% and 15,6%, respectively. Revenues from connection and traffic transmission services make up 8.6% (RUB 1,860.5 mln) of the net sales income. Revenues from the mobile communication services make 3.0% (RUB 648.1 mln) in the revenue structure.

If compared with the similar period of 2009 (subsidiary businesses not considered):

-         The income from telegraph services, data transfer and telematic communication services increased by 814.9 mln rubles or 19,2% due to the growing number of broadband access users and as a result the growth of revenues from providing Internet access. The number of broadband access users amounted as of October 1, 2010 to 745.2 thousand;

-         The income from local telephone communication services grew by 664.0 mln rubles or 7.7%, which mainly resulted from the indexation of regulated tariffs adopted since February 1, 2010;

-         The income from intra-zone telephone communication decreased by 396.8 mln rubles or 10.7%, which was caused by the reduction of traffic from fixed-line telephony subscribers in both fixed and mobile operators' networks and the decrease of tariffs applicable to intra-zone connections to "distant" tariff zones from January 30, 2010;

-         The income from connection and traffic transmission services decreased by 169.7 mln rubles or 8.4% due to a decrease in the volume of traffic transmitted;

-         The income from the lease of assets decreased by 119.2 mln rubles or 26.0%, which was connected with a decrease in the number of leased facilities;

-         The income from support and agent services decreased by 50.7 mln rubles             (-14.0%). The revenues reduced due to a decrease in the volume of services provided to users by Rostelecom OJSC and signing of direct contracts between subscribers and Rostelecom OJSC;

-         The income from mobile communication services (subsidiary businesses not considered) decreased by 22.8 mln rubles or 3.4%, which could be explained by reduced demand from subscribers for services in both retail and corporate segments.

Expenditures of the Company

-     Expenditures of the Company (subsidiary businesses not considered) decreased for 9 months of 2010 by 756.0 mln rubles or 4.3% as compared to the similar period of 2009 and made up 16,663.6 mln rubles.

Structure of Company’s expenditures (mln rubles):

Type of expenditure

9 months of 2010

9 months of 2009

Difference

RUB mln

 

Labor costs

(4,825.6)

(5,010.9)

185.3

(3.7)

Depreciation of fixed assets

(3,430.0)

(3,527.5)

97.5

(2.8)

Services from communication operators (except Rostelecom OJSC)

(1,636.1)

(1,945.8)

309.7

(15.9)

Outsourcing

(1,702.9)

(1,827.9)

125.0

(6.8)

Deductions to social insurance

(1,179.1)

(1,229.3)

50.2

(4.1)

Material costs

(1,068.5)

(852.7)

(215.8)

25.3

Lease payments

(422.5)

(500.5)

78.0

(15.6)

Services provided by Rostelecom OJSC

(426.9)

(312.8)

(114.1)

36.5

Commodity purchase value

(141.2)

(125.8)

(15.4)

12.2

Taxes and dues included into expenditures on ordinary activities

(23.8)

(27.2)

3.4

(12.5)

Other expenditures on ordinary activities

(1,807.0)

(2,059.2)

252.2

(12.2)

Total

(16,663.6)

(17,419.6)

756.0

(4.3)

The largest share of the total amount of Company’s expenditures are labor costs and deductions for social insurance, 36.0%; depreciation costs account for 20.6%, other expenditures 10.8%, payments for services provided by external agencies 10.2% and payments for communication operators’ services (except Rostelecom OJSC) 9.8%.

If compared with the similar period of 2009 (subsidiary businesses not considered):

-         Labour costs and deductions for social insurance reduced by 235.5 mln rubles or 3.8% as a result of the measures taken to optimize the number of employees;

-         Payments for services provided by communication operators (except Rostelecom OJSC) decreased by 309.7 mln rubles or 15.9% due to a decrease in the volume of  initiated and mobile-to-fixed traffic and the number of Internet to Rostelecom network interconnections;

-         Other expenditures decreased by 252.2 mln rubles or 12.2%, which was mainly a result of the decrease in expenses on software products and non-governmental retirement insurance of the employees;

-         Payments for services provided by external agencies decreased by 125.0 mln rubles or 6.8%, which was a result of optimization of business processes in business relations with external entities as regards carriage services;

-         Material costs increased by 215.8 mln rubles or 25.3%, mainly due to an increase in expenses on connection of broadband access subscribers caused by the growth of subscriber base.

Financial Performance of the Company

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

 

9 months of 2010

9 months of 2009

Difference

Revenues

21,643.7

20,870.9

3.7%

Expenditures

16,663.6

17,419.6

-4.3%

OIBDA

8,567.0

7,147.0

19.9%

OIBDA margin

39.6%

34.2%

5.4 pct points

EBITDA

8,759.2

7,419.6

18.1%

EBITDA margin

40.5%

35.5%

5.0 pct points

Net Debt

13,729.2

15,202.0

-9.7%

Sales profit

4,980.1

3,451.3

44.3%

Sales profit margin

23.0%

16.5%

6.5 pct points

Income before tax

4,124.6

2,141.6

92.6%

Net profit

3,185.5

1,737.3

83.4%

Net profit margin

14.7%

8.3%

6.4 pct points

-         For 9 months of 2010 Sibirtelecom OJSC (subsidiary businesses not considered) has invested 3,840.8 mln rubles into fixed assets, which is 130.2% higher than the same index in 2009. Capital investments have basically been aimed at creating a state-of-the-art infrastructure of communication and data transmission networks. The amount of investments intended to introduce new services amounted in the reporting period to 69.7% of the total capital investments.

-         OIBDA increased in the reporting period by 1,420 mln rubles or 19.9%. It was connected with the growth of revenues (3.7%) accompanied by the simultaneous decrease in expenses less depreciation of fixed and intangible assets and leasing expenses (4,7%). The OIBDA margin was 39.6%, having increased by 5.4 percentage points compared to that of 2009.

-         The sales profit increased by 1,528.8 mln rubles or 44.3% reaching an amount of 4,980.1 mln rubles. It was connected with the growth of revenues (3.7%) and a decrease of expenses (4.3%). The sales profit margin was 23.0%.

-         The income before tax increased by 1,983.0 mln rubles, i.e., almost two times reaching 4,124.6 mln rubles. It was connected with the positive dynamics of sales profit and the reduction of exchange losses by 182.6 mln rubles.

-         The net profit increased in the reporting period by 1,448.2 mln rubles or 83.4% as compared with the similar period of the preceding year and amounted to 3,185.5 mln rubles due to an increase in the profit before tax. The net profit margin increased by 6.4 percentage points, that is, by 14.7%.

Principal operating indices of Company’s activities::

 

9 months of 2010

9 months of 2009

Difference, %

Principal operating indices

 

 

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

4,391.5

4,356.4

0.8%

Intra-zone traffic (outgoing paid), mln minutes

1,428.3

1,672.2

-14.6%

Number of mobile subscribers (including subsidiary businesses) as of the end of reporting period, thousand.

4,901.3

5,382.0

-8.9%

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

745.2

543.5

37.1%

Internet traffic via dedicated lines, TByte

102,462

40,958

150.2%

Average number of lines, thousand

5,040

5,036

0.1%

Average number of employees, persons

23,568

25,756

-8.5%

Efficiency indices

 

 

Earnings per line, rubles

4,294.6

4,144.0

3.6%

Earnings per employee, thousand rubles

918.4

810.3

13.3%

Number of lines per one employee

213.8

195.5

9.4%