OREANDA-NEWS. November 29, 2010. Uralsvyazinform (RTS and MICEX: URSI/URSIP, ADR: UVYZY/UVYZYP) – a universal telecommunications operator in the Urals region – hereby presents its unaudited operating and financial results for the first nine months of 2010 drafted in accordance with Russian Accounting Standards (RAS).

Highlights of 9M10 

The company managed to boost its revenue by 6.0%, while cutting expenses by 4.6% compared to the year-earlier period thanks to strict cost control measures, as a result of which economic efficiency improved (EBITDA margin increased to 44.3%, while net profit/revenue reached 18.9%).

Revenue from datacom and Internet access (ISP) increased by 14.3% and exceeded RUR 5.3 bln.  The number of broadband Internet users rose 23.7% to 827,800 compared with the same period in 2009. 

Revenue from cellular telephony increased by 10.5% and reached RUR 10.6 bln thanks to a 14.5% increase in average monthly revenue per user (ARPU) to RUR 213 (up from RUR 186 in January-September 2009). 

Revenue from local telephony increased by 5.8% and amounted to RUR 8.3 bln as a result of tariff indexation effective January 1, 2010 in accordance with a decision by the Federal Tariff Service. 

The proportion of unregulated services (datacom and ISP, cellular telephony) in revenue derived from telecommunications services increased to 51.1% (up from 48.6% in January-September 2009).

The company’s total amount of liabilities on credits and loans compared with the beginning of 2010 decreased by 29.9% to RUR 14.4 bln. 

Headline financial indicators  

 

9M10

9M09

Change, %

Revenue, RUR, mln

32,053.5

30,244.2

 plus6.0%

Expenses, RUR, mln

23,006.9

24,119.8

-4.6%

EBITDA, RUR, mln

14,186.9

11,525.4

 plus23.1%

EBITDA margin

44.3%

38.1%

 plus6.2%

Operating profit, RUR, mln

9,046.6

6,124.3

 plus47.7%

Operating margin

28.2%

20.2%

 plus8.0%

Pre-tax profit, RUR, mln

7,798.6

3,889.0

 plus100.5%

Net profit, RUR, mln

6,071.2

2,953.2

 plus105.6%

Net margin

18.9%

9.8%

 plus9.1%

EBITDA is calculated as the sum of pre-tax profit, interest payable, depreciation and amortization, lease payments minus interest receivable.

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

“The results of Uralsvyazinform’s financial activities for January-September 2010 point to the fact that the company’s growth is gaining momentum,  as shown by the trend whereby the pace of revenue exceeded the pace of expenses (and also, expenses decreased), thanks to which EBITDA margin exceeded 44%, while net profit margin reached 19%.  In addition, thanks to strong cash flows the company dramatically reduced its liabilities on credits and loans, and the net debt/EBITDA multiple reached the lowest level in recent years, coming in at 0.8x. Our main challenge for the fourth quarter of 2010 and in 2011 is to further strengthen our market positions in the mobile telephony, broadband Internet and pay TV segments, which already generate over half of the company’s revenue”, noted first deputy general director of Uralsvyazinform, Sergey Frolov. 

Headline operating indicators  

 

Sept. 30, 2010

Sept. 30, 2009

Change

Number of subscribers:

fixed line, ‘000

mobile telephony, ‘000

broadband Internet, ‘000

pay television, ‘000

 

3,665.4

4,952.0*

827.8

122.5

 

3,730.4

5,687.0

669.0

118.9

 

-1.7%

-12.9%

 plus23.7%

 plus3.0%

Outgoing traffic, intrazonal telephony, mln min.

1,408.1

1,501.5

-6.2%

Datacom traffic, PB

122.1

63.5

 plus92.3%

*A decline in this indicator was attributable to a change in the accounting methodology for active subscribers.

**Subscribers for cable television and digital interactive television (Utel.TV).

 

Revenue breakdown from telecommunications services (RUR, mln)  

 

9M10

9M09

Change

RUR, mln

proportion

RUR, mln

proportion

Cellular telephony

10,596.4

34.0%

9,590.7

32.6%

 plus10.5%

Local voice

8,281.1

26.5%

7,826.0

26.6%

 plus5.8%

Datacom and Internet access

5,347.5

17.2%

4,677.2

15.9%

 plus14.3%

Interconnect and traffic transmission

3,287.4

10.5%

3 ,69.9

11.5%

-2.4%

Intrazonal telephony

3,161.4

10.1%

3,401.8

11.6%

-7.1%

Wireline broadcasting

219.6

0.7%

205.6

0.7%

 plus6.8%

Radio and television broadcasting

200.2

0.6%

196.0

0.7%

 plus2.1%

Data transmission

110.3

0.4%

99.4

0.3%

 plus11.0%

TOTAL

31,203.9

100.0%

29,366.6

100.0%

 plus6.3%

Breakdown of operating expenses (RUR, mln)  

 

9M10

9M09

Change

RUR, mln

proportion

RUR, mln

proportion

Payrolls

4,812.4

20.9%

4,589.7

19.0%

 plus4.9%

Social insurance contributions

1,105.3

4.8%

1,034.7

4.3%

 plus6.8%

Depreciation and amortization of PP&E

4,504.7

19.6%

4,574.8

19.0%

-1.5%

Interconnect

3,666.2

15.9%

4,357.8

18.1%

-15.9%

Outsourcing services

1,775.9

7.7%

2,007.1

8.3%

-11.5%

Materials

1,327.9

5.8%

1,489.5

6.2%

-10.8%

Lease payments

989.5

4.3%

1,231.4

5.1%

-19.6%

Other expenses, including:

4,825.2

21.0%

4,834.9

20.0%

-0.2%

Agency fees

1,512.8

6.6%

1,778.3

7.4%

-14.9%

Lease of premises

522.4

2.3%

530.5

2.2%

-1.5%

Expenses related to software and databases

384.3

1.7%

329.9

1.4%

 plus16.5%

Deductions to the universal service fund

331.0

1.4%

308.2

1.3%

 plus7.4%

TOTAL

23,006.9

100.0%

24,119.8

100.0%

-4.6%

Debt burden (RUR, mln)  

 

Sept. 30, 2010

Jan. 1, 2010

Change

Long-term credits and loans

9,340.2

13,263.2

-29.6%

Short-term credits and loans

5,106.1

7,335.5

-30.4%

TOTAL credits and loans

14,446.3

20,598.7

-29.9%

Net debt

11,526.1

16,021.6

-28.1%

Net debt/EBITDA

0.81

1.04

 

Investment breakdown (RUR, mln)  

 

9M10

9M09

Change, %

Total amount of investments

2,577.0

2,488.1

 plus3.6%

Traditional telephony

75.3

105.4

-28.6%

Value-added services, incl. cellular telephony

1,374.9

1,263.7

 plus8.8%

Datacom network and infrastructure

624.3

942.4

-33.8%

IT investments

334.2

23.4

 14.3 times

Other, including

168.3

153.2

 plus9.8%

Construction and reconstruction of buildings and facilities

53.6

63.0

-14.9%