Rostelecom Boosts RAS Revenue in 3Q 2010

OREANDA-NEWS. December 3, 2010. Rostelecom (RTS and MICEX: RTKM, RTKMP; OTCQX: ROSYY) hereby presents its unaudited financial results for the first nine months of 2010, drafted in accordance with Russian Accounting Standards (RAS).  Revenue in the third quarter of the reporting period amounted to RUR 15.1 bln, which is 1% more compared to the year-earlier period by doubling revenue (plus 100%) from high-tech value added services mainly related to Internet (plus 44%) and the rollout of virtual private networks (VTNs) (plus 366%).  The Company’s total amount of revenue for the nine months of 2010 amounted to Rub 43.5 bln, which is 4% less than revenue for the same period of 2009.

In the first nine months of 2010, revenue from high-tech services increased by 1.6 times and reached RUR 6.2 bln.  Total revenue derived from these services, as well as intelligent network services (INS), increased by 1.5 times compared with the same period last year and reached RUR 7.1 bln, which is equal to 16% of Rostelecom’s total income up from 10% during the year-earlier period.  Thus, the company’s overall revenue trends were driven during the first nine months of 2010 by an escalating substitution of revenue from traditional long-distance telecom services, the volumes of which have been contracting due to ongoing migration of subscribers to cellular telecommunications networks and also by higher revenue from high-tech value-added telecommunications services owing to business diversification.

The Company’s expenses for core types of activity amounted to RUR 38.2 bln, which is 3% less than in the year-earlier period due to the reduction of direct costs, i.e. expenses related to the termination and transit of ILD traffic, interconnect expenses of the origination and termination of calls.

OIBDA remained flat year-on-year at RUR 9.3 mln, which accounts for 21.4% of revenue compared to 20.6% during the first nine months of 2009.  The rise is OIBDA margin also points indirectly to the replacement of low-margin traditional revenues with high-margin value-added services.

The company’s depreciation during the reporting period increased by 19% compared to the same period last year on the back of a rise in the volume of investments, including in the expansion of its IP/MPLS network, and amounted to RUR 4.0 bln. Operating profit for the first nine months of 2010 totaled RUR 5.4 bln, which implies an 11% decrease compared to the same period in 2009 in line with operator’s revenue trends.

The Company reported other gains and losses for the first nine months of 2010 of RUB 220.5 mln net loss, which decreased by 27% year-on-year due to a decrease in foreign exchange losses in line with the fluctuations of the Russian ruble against the US dollar and the euro.

Net income for the first nine months of 2010 decreased by 11% year-on-year to RUR 4.0 bln.

Earlier, the Board of Directors of Rostelecom recommended the Extraordinary General Meeting of Shareholders scheduled for November 10, 2010 to adopt a decision on paying out dividends on the results of the first nine months of fiscal 2010 in the amount of 0.0000000411722654% of the RAS net profit for the period, which amounts to RUR 1.6667 per one class A preferred share; and 0.0000000274519684% of the RAS net profit for the period, which amounts to RUR 1.1113 per one common share.

Appendix 1. P&L Statement 

Appendix 2. Balance Sheet