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Recent news06.05.2010 |
|
Indicator |
Q110 |
Q109 |
Change 2010/2009 |
|
Revenue from main types of activity, RUR mln |
7,029.7 |
6,655.4 |
+5.6% |
|
Revenue from telecom services, RUR mln |
6,674.8 |
6,339.6 |
+5.3% |
|
Operating expenses, RUR mln |
5,320.6 |
5,246.6 |
+1.4% |
|
Operating profit, RUR mln |
1,709.1 |
1,408.8 |
+21.3% |
|
EBIT margin, %1 |
24.3 |
21.2 |
+3.1% |
|
OIBDA, RUR mln 2 |
2,971.6 |
2,781.5 |
+6.8% |
|
OIBDA margin, %3 |
42.3 |
41.8 |
+0.5% |
|
EBITDA, RUR mln.4 |
3,084.3 |
2,797.3 |
+10.3% |
|
EBITDA margin, % 5 |
43.9 |
42.0 |
+1.9% |
|
Net profit, RUR mln |
1,279.9 |
765.3 |
+67.2% |
|
Net profit margin, %6 |
18.2 |
11.5 |
+6.7% |
|
Number of main local voice lines as of the end of the reporting period |
4,815.5 |
4,840.1 |
-0.5% |
|
Number of broadband Internet users as of the end of the reporting period, ‘000 |
1,046.0 |
855.7 |
+22.2% |
|
Average number of personnel |
28,723 |
30,564 |
-6.0% |
1 EBIT margin is calculated as operating profit /revenue.
2 OIBDA is calculated as profit from sales of depreciation charges and lease payment expenses.
3 OIBDA margin is calculated as OIBDA/revenue.
4 EBITDA is calculated as pre-tax profit, interest payable, depreciation charges, and lease payment expenses adjusted by interest receivable.
5 EBITDA margin is calculated as EBITDA/revenue.
6 Net profit margin is calculated as net profit/revenue.
Revenue breakdown
The company’s revenue stood at RUR 7,029.7 mln, which implies 5.6% growth compared to the first quarter of 2009. The company’s revenue amounted to RUR 6,674.8 mln which implies 5.3% growth. The share of revenue from telecom services in revenue amounted to 95%.
Revenue breakdown for Q1 2010
|
Revenue types, RUR mln |
Q110 |
Percentage in revenue |
Q109 |
Percentage in revenue |
Change (2010/2009) |
|
Intrazonal telephony |
1,077.8 |
16.2% |
1,123.0 |
17.7% |
-4.0% |
|
Local voice telephony |
3,109.0 |
46.6% |
2,816.7 |
44.4% |
+10.4% |
|
Mobile radio communication, cellular telephony, wire and TV broadcasting |
264.0 |
3.9% |
268.3 |
4.2% |
-1.6% |
|
Telegraph, datacom and telematic services |
1,577.2 |
23.6% |
1,462.6 |
23.1% |
+7.8% |
|
including datacom and provision of Internet services |
1,541.4 |
23.1% |
1,429.4 |
22.6% |
+7.8% |
|
Interconnect and traffic transit |
646.6 |
9.7% |
668.7 |
10.5% |
-3.3% |
|
Other main types of main activities |
0.19 |
0.003% |
0.24 |
0.004% |
-19.5% |
|
Total telecom revenue |
6,674.8 |
95.0% |
6,339.6 |
95.3% |
+5.3% |
|
Outsourcing and agency fees |
127.1 |
1.8% |
130.9 |
1.9% |
-2.9% |
|
Revenue from non-core revenue |
227.8 |
3.2% |
184.9 |
2.8% |
+23.2% |
|
Total revenue from main services |
7,029.7 |
100% |
6,655.4 |
100% |
+5.6% |
The main sources of revenue growth in the first quarter of 2010 were:
- a 22% rise in the broadband Internet subscriber base. Based on the results of the first quarter of 2010 the number of broadband Internet subscribers (not counting national projects) stood at 1,046,000.
- a local voice tariff hike as of February 1, 2010 (Federal Tariff Service Order # 284-s/1 dated November 11, 2009.
For household subscribers the tariff hike for use of a telephone line averaged 10%, while the cost of local telephony increased from 5% to 21% depending on the tariff plan. For subscribers that are legal entities the tariff hike for use of a telephone line stood at 7.1%, and the cost of local telephone connections with respect to the existing tariffs rose from 6.7% to 23.1%, depending on the tariff plan.
The factors which constrained cost increase can be identified as follows:
- mobile substitution which has an influence on local voice and intrazonal telephony.
Revenue from the provision of intrazonal telephony decreased by 4.0% (or RUR 45.2 mln compared to the same period last year, mainly as a result of a decline in F2F traffic (-5.9%) and F2M traffic (-3.0%);
- increased competition on the wholesale market, decrease in volumes of ILD/DLD traffic in wire networks. Revenue from traffic transit decreased by RUR 22.4 mln compared with the same period in the first quarter of 2009 (of which RUR 13.1 mln – a decrease in revenue from zonal termination of calls as a result of a decline in volumes of transit traffic for network subscribers from DLD telecom operators.
Expense breakdown
Expenses for main types of activity in the first quarter of 2010 amounted to RUR 5,320.6 mln, which implies a 1.4% increase compared with the first quarter of 2009, which is less than the rise in revenue (5.6%). Strict cost containment had a positive impact on the company’s operating profit, which increased by 5.2% to 32.1% compared with the year-earlier period.
VolgaTelecom’s expense breakdown in Q110
|
Expenses, RUR mln |
Q110 |
Proportion in expenses |
Q109 |
Proportion in expenses |
Change (2010/2009) |
|
Depreciation of fixed assets |
1,129.8 |
21.2% |
1,218.7 |
23.2% |
-7.3% |
|
Payroll expenses |
1,662.1 |
31.2% |
1,599.2 |
30.5% |
+3.9% |
|
Social insurance contributions |
409.9 |
7.7% |
407.4 |
7.8% |
+0.6% |
|
Materials |
531.9 |
10.0% |
450.3 |
8.6% |
+18.1% |
|
Interconnect |
527.3 |
9.9% |
543 |
10.3% |
-2.9% |
|
Other |
1,059.6 |
19.9% |
1,028.0 |
19.6% |
+3.1% |
|
incl. lease payments |
132.5 |
|
153.9 |
|
-13.9% |
|
Total |
5,320.6 |
100% |
5,246.6 |
100% |
+1.4% |
A decline in the following expense items occurred in the first quarter of 2010:
- a RUR 88.9 mln contraction in depreciation expenses, which was attributable to pre-crisis measures taken in 2009, and which resulted in a reduction in the volume of investment activities;
- a RUR 15.7 mln decrease in interconnect expenses, which was attributable to the refusal to use the lines of other telecom operators as a result of the construction of an in-house inter-regional multi-service datacom network, a decline in traffic to mobile (cellular) operators as a result of mobile substitution and lower traffic origination by the subscribers of interconnected operators at the local level;
- a RUR 21.4 mln decline in lease expenses. This expense item was attributable mainly to the payment schedule under the financial lease agreement for equipment used to provide universal telecommunications services.
An 18.1% rise in expenses under the item “Materials” was due mainly to higher electricity and heating tariffs, utilities, postal services and prices for fuel and materials.
The increase in other expenses was due to higher lease payments and the introduction of projects related to the automation, expansion and upgrade of a number of business processes, which resulted in a higher cost of software products and databases which are to be written off to cost.
Investments
The amount of investments in the first quarter of 2010 amounted to RUR 341.5 mln, which is 89.2% higher than in the same period in 2009. The main area of investments was value-added services (71.4% or RUR 343.8 mln of the total amount was allocated for the organization of broadband Internet access using FTTx, Ethernet, xDSL, the construction of NGN networks, etc.).
Investment breakdown
|
Investment area, RUR, mln |
Q110 |
Q109 |
Change 2010/2009 |
|
Traditional telephony |
13.1 |
12.7 |
+3.1% |
|
Value-added services |
243.8 |
109.7 |
+122.2% |
|
Datacom network and infrastructure |
16.9 |
31.2 |
-45.8% |
|
IT investments |
0.6 |
7.5 |
-92% |
|
Other infrastructure |
67.1 |
19.3 |
+247.7% |
|
Total |
341.5 |
180.5 |
+89.2% |
Main projects under the investment plan for the first quarter of 2010:
- organizing Ethernet/FTTx access (6,900 Ethernet/FTTx ports were commissioned);
- organizing xDSL access 17,200 xDSL broadband Internet ports were commissioned);
Debt burden
VolgaTelecom’s net debt (not including off-balance leasing) for the first quarter of 2010 amounted to RUR 7,796.4 mln, which is RUR 5,966.7 mln or 50.7% less than in the same quarter in 2009. Actions aimed at raising operating efficiency and optimizing the investment program allowed the company to considerably improve its generation of free cash flow, reduce its debt burden and improve liquidity.
|
|
Q110 |
Q109 |
Change |
|
Net debt *, RUR, mln |
5,796.4 |
11,763.1 |
-50.7% |
|
Net debt to EBITDA ** |
0.47 |
1.14 |
-58.8% |
|
Interest payable to EBITDA |
0.07 |
0.17 |
-58.8 |
|
Turnover of debt receivable, days |
22.79 |
23.64 |
-3.6% |
|
Quick ratio |
0.88 |
0.54 |
+63.0% |
* Net debt is calculated as the amount of borrowed liabilities adjusted by cash & equivalents.
** Net debt to EBITDA is calculated as the ratio of all paid debt obligations minus cash & equivalents as of the reporting date to EBITDA over the last 12 months.
For more complete information on the accounting reports of VolgaTelecom for the first quarter of 2010 in accordance with Russian Accounting Standards, see the company’s website at www.vt.ru.