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16.04.2010
Sibirtelecom reports 2009 RAS audited financial results

Press release


Sibirtelecom (RTS: ENCO/ENCOP, ENCOG/ENCOPG; MICEX: STKM/STKMP; ADRs: ОТС – SBTLY, Frankfurt and Berlin stock exchanges  – ISIN: US8257351036, WKN: 260452) – a telecommunications operator in the Siberian Federal District, hereby presents its audited financial results for full-year 2009 in accordance with Russian Accounting Standards (RAS).  The audit of the company’s 2009 financial (accounting) reports was conducted by KPMG.

Revenue 

• The revenue of Sibirtelecom (hereinafter – the Company) not including the cellular business, reached RUR 29,970.1 mln in 2009, which is RUR 353.1 mln more of 1.3% up compared to 2008.  

The Company’s main growth driver during the reporting period was the expansion of broadband Internet services, with a rise in the numbers of users and Internet traffic.

Revenue breakdown (RUR, mln) 

The biggest share of the Company’s revenue mix falls to local voice, i.e. 41.7% (RUR 11,650.3 mln).  

Other major revenue items include revenue from datacom and telematic services (RUR 5,791.2 mln) and from the provision of intrazonal telecom services (RUR 4,966.1 mln), which account for 20.7% and 17.8% in the revenue mix, respectively.  In addition, revenue from interconnect and traffic transit amounted to 9.2% (RUR 2,561.6 mln) of total revenue.  And revenue from the provision of cellular telephony services amounted to 3.7% (RUR 1,034.9 mln) of the operator’s revenue mix.

Compared with 2008 (not including the subsidiary business): 

• the increase in revenue from the provision of telegraphic, datacom and telematic services amounted to RUR 1,224.9 mln, or 26.8%, which was due to a rise in the number of broadband Internet users and accordingly higher revenue the provision of Internet access.  As of January 1, 2010 the number of broadband subscribers stood at 593,900 (up 44.5% compared with 2008);
• the rise in revenue from provision of local voice telephony services amounted to RUR 312.7 mln, or 2.8%, which was mainly attributable to indexation of regulated tariffs as of March 1, 2009;
• the rise in revenue from asset leasing amounted to RUR 169.0 mln, or 27.9% which is due to an increase in the number of leasable facilities;
• the decline in revenues from interconnect and traffic transit, amounting to RUR 537.6 mln, or 17.3%, was attributable to a decline in volumes of traffic transits, and also the cancellation of charges at interconnect points as of March 1, 2008;
• the decline in provision of intrazonal telephony services stood at RUR 461.6 mln, or 8.5%, which is due to a decrease in traffic from fixed-line subscribers both to fixed-line and also cellular operators;
• the decrease in revenue from the provision of cellular services not including subsidiary business amounted to RUR 177.7 mln, or 14.7%, which was attributable to a decrease in the volume of services both in the household and corporate segments.
• the decline in revenue from outsourcing and agency fees amounted to RUR 116.4 mln (-19.7%).  This decrease was attributable to lower volumes of services provided to users on the part of Rostelecom, and also the conclusion of direct contracts with users at the level of Rostelecom.  

Expenses  

• The Company’s expenses (not including subsidiary business) increased by RUR 43.8 mln or 0.2% compared with 2008 and stood at RUR 23,152 mln.  

Expense breakdown (RUR, mln) 

The biggest share of the Company’s expenses falls to payrolls and social insurance contributions (35.3%), depreciation charges (20.4%), other expenses (11.7%), interconnect (11.1%), and outsourcing (7.7%).

Compared with 2008 (not including the subsidiary business): 

• payrolls and social insurance contributions decreased by RUR 675.6 mln, or 7.6%, which was due to headcount reduction efforts;
• Interconnect expenses (except for Rostelecom) shrank by RUR 192.5 mln, or 7% due to the optimization of traffic routes;
• material expenses went down by RUR 182.3 mln, or 13.2%, which was attributable to the implementation of cost-cutting measures;
• the amount of fixed-income depreciation charges increased by RUR 677.4 mln, or by 16.8%, which was due to the Company’s active investment policy aimed at expanding and upgrading its network;
• the rise in expenses for Rostelecom services amounted to RUR 247.1 mln, or 136.7%, which was attributable to an increase in the volume of Internet traffic from Sibirtelecom’s growing subscriber base;
• the rise in other expenses stood at RUR 217.6 mln or 8.7%, which was mainly caused by an increase in agency fees, software and database costs.  

Financial results 

Headline RAS financial results (RUR, mln) 

• The total amount of Sibirtelecom’s investments in fixed assets (not counting the subsidiary business) amounted to RUR 2.7 bln in 2009, which is 67% less than in the year-earlier period.  The bulk of capital investments are aimed at rolling out advanced telecom network infrastructure and datacom networks.  The level of investments aimed at phasing in value-added services in 2009 amounted to 23.4% of the total amount of capital investments.
• During the reporting year the increase in OIBDA amounted to RUR 997.2 mln, or 11.7%, which was attributable to the rise in revenue (1.3%) and a simultaneous decrease in expenses not including the depreciation of fixed assets and tangible assets (-3.4%).  OIBDA margin stood at 34.1% which implies an increase of 3.1% compared to the same period in 2008.
• EBIT increased by RUR 309.4 mln, or 6.9% and stood at RUR 4,818.2 mln, which is due to rapid growth in revenue (1.3%) compared with an increase in expenses (0.2%).  In addition, EBIT increased by 17.2%.
• Pre-tax profit increased by RUR 216.2 mln, or 7.7% and stood at RUR 3,017.6 mln, which is due mainly to the EBIT trend.  The loss from other activity increased by RUR 93.2 mln, or 5.4%, as a result of higher interest payable expenses.
• Net profit increased by RUR 238.2 mln or 11.3% y-o-y in full-year 2009, which was due to a rise in pre-tax profit.  In addition, net profit margin edged up 0.8% and reached 8.4%.   

Headline operating indicators 

Sibirtelecom’s RAS audited financial reports can be viewed at the Company’s corporate website at the following addresses:

http://www.sibirtelecom.ru/?sbt_rsbu (in Russian) and http://www.sibirtelecom.ru/eng/?esb_rsbu (in English).

[1] OIBDA is calculated using the following formula: EBIT + Depreciation of fixed assets and intangible assets.
[2] EBITDA is calculated using the following formula: Pre-tax profit + Interest payable including additional expenses for credits and loans + Depreciation of fixed assets and intangible assets + Lease expenses – Interest receivable.
[3] Net Debt is calculated using the following formula: Long-term credits and loans + Short-term credits and loans – Cash & cash equivalents.