OREANDA-NEWS. July 20, 2011. The joint Kyivstar continues to be the leader in the 1st Quarter of 2011 on the national telecom market. The subscriber base of the mobile segment stably remains the largest as well as an active development of the FTTB area of activity is taking place — the number of the "Home Internet" clients has become bigger by half over the year. The business effectiveness has grown: the revenues rose 4.4 percent and the OIBDA margin has gone up 5 percent points in comparison with the similar period of the previous year.

The subscriber base and ARPU

the number of clients remained stable during the 1st Quarter of 2011 due to the implementation of the package offers and there was a little growth — from 24 390 thousand to 24 398 thousand persons. In comparison with the 1st Quarter of 2010 the number of mobile subscribers increased by 2.1 percent. In the 1st Quarter of this year the company has focused on the loyalty of the customers, the increase of the service consumption and the ARPU growth, what was successfully achieved due to the launching of the rate offers for the mass market, such as "Long conversations", "Communication without limits" and "Keep in touch". The youth was offered the renewed rates like "DJUICE the Bomb" and "Speak and write", which ensured the growth of the subscriber base in this segment of up to 35 thousand people during the 1st Quarter of 2011. The level of consumption of the new multimedia services has been growing, especially of the games and digital music — it is about 5 million clients who stably purchase this content. The general result is that consumption of the mobile communications services (MOU) rose 14.6 percent, and ARPU increased by 3.3 percent in the 1st Quarter of 2011 as compared with the similar period of the last year.

The business in the segment of the fixed broadband access to the Internet on the basis of the FTTB technology has been actively growing. The number of the "Home Internet" clients from Kyivstar rose 156.5 percent in the 1st Quarter of the current year — from 92 to 235.5 thousand as compared with the results of the similar period of 2010. It is important to point out that in the 1st Quarter of 2011 the accounting of the number of FTTB-subscribers was brought under a consolidated Kyivstar methodology based on 3-months activity. In such a manner, the numbers in this report for 2010—2011 are given already with account of the adjustment. The income of this segment is actively growing, while ARPU has been reduced by 28 percent as compared to the 1st Quarter 2010 as a result of the market growth and the beginning of the stage of connecting the low paying capacity clients.

Growth of the Business Effectiveness: revenues and OIBDA

The general income trend as compared with the 1st Quarter of 2010 has been stably positive — the net operating revenue increased 4.4 percent, reflecting the growing demand for data transmission.

While the largest share in the income belongs to the voice services, the growth of data transmission services, both for mobile and fixed Internet still remains the most important income growth driver. The revenues of the "Home Internet" rose more than 68 percent — up to 34.5 million UAH in the 1st Quarter of 2011 in comparison with the 1st Quarter of 2010 as a result of the significant increase of the number of subscribers of this service. The popularity of the "Try Internet" action in the mobile segment made it possible to ensure a stable growth of modem activation and increase in traffic of the large screen devices.

Due to synergic effect of the company integration and implementation of the operating effectiveness initiatives, the OIBDA indicator rose 15 percent as compared to the 1st Quarter of 2010. As a result the OIBDA margin reached the level of 54.4 percent.

Investments in the development

Kyivstar is one of the largest investors in the development of telecommunications in Ukraine. The Kyivstar capital expenditures in the 1st Quarter of 2011 totaled 369 million UAH or 12 percent. The main investments were aimed at expanding the mobile network capacity in order to secure consumption growth of voice services as well as data transmission services, improving the communications quality and mobile network reliability, and also at the development of the coverage and infrastructure of the fixed broadband range. The synergy from integration of Kyivstar and Beeline-Ukraine operators generates a good operating result — in the 1st Quarter of 2011 as compared to a similar period of 2010 the volume of capital expenditures was reduced 23 percent while preserving a high rate of network growth.