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17.05.2010
Uralsvyazinform – results of Q1 2010: net profit soars 2.1x

Press release

Uralsvyazinform (RTS: and MICEX: URSI/URSIP, АDR: UVYZY/UVYZYP) – a universal telecommunications operator – hereby presents its unconsolidated financial and operating results for the first quarter of 2010 in accordance with Russian Accounting Standards (RAS).

Highlights of first quarter 2010

Owing to 5.9% revenue growth and strict cost containment the company managed to reduce its expenses by 2.5% compared with the year-earlier period, which translated into a major increase in economic efficiency indicators.

Higher revenue was attributable to increased earnings from datacom services and Internet access, mobile telephony and local voice.

Revenue from datacom and Internet access increased by 12.9% and amounted to RUR 1,733.4 mln, while revenue from the provision of broadband Internet increased by 19.4% to RUR 1,368.9 mln. The number of broadband Internet users climbed by 36.5% compared to the first quarter of 2009 to RUR 804,700, while traffic volumes increased by 2.3 times and stood at 38.9 petabytes.

Revenue from cellular telephony increased by 11.0% and amounted to RUR 3,420.9 mln thanks to a 12.4% rise in the average revenue per user (ARPU) to 200 (compared to the first quarter of 2009), which resulted from optimization of the tariff policy in this segment.

Local voice revenue increased by 8.8% and stood at RUR 2,853.3 mln as a result of tariff indexation effective January 1, 2010 in accordance with a decision by the Federal Tariff Service.

A reduction in operating increases was mainly attributable to lower interconnect, including the optimization of backbone Internet traffic and roaming payments.

In addition, EBITDA went up by 25.7% and amounted to RUR 4,884.4 mln, while the ratio of EBITDA to revenue increased by 7.3 percentage points and stood at 46.0% at the end of the first quarter of 2010.

Net profit increased by 2.1 times to RUR 2,054.7 mln, while the ratio of net profit to revenue increased by 9.6% to 19.4%.

The proportion of unregulated services (datacom, Internet access and cellular telephony) in the company’s telecommunications revenue increased to 49.8% (up from 47.4% in the first quarter of 2009).

The company continued its deleveraging efforts during the reporting period ad total liabilities for credits and loans decreased by 30.0% to RUR 17.1 bln compared with the first quarter of 2009.

The operator’s investment program amounted to RUR 264.3 mln (-8.3% compared with the first quarter of 2009), of which 63.8% was allocated for the rollout of unregulated services (datacom, Internet provision, and cellular telephony), while another 26.1% went to investments to develop datacom and other infrastructure which is necessary to provide value-added services.

Headline financial indicators

	Q1 2010	Q1 2009	Change
Revenue, RUR mln	10,615.0	10,024.9	+5.9%
Telecommunications revenue, RUR mln	10 ,346.8	9,743.1	+6.2%
Expense, RUR mln	7,597.0	7,790.0	-2.5%
EBITDA, RUR mln	4,884.4	3 881.2	+25.7%
EBITDA margin	46.0%	38.7%	+7.3%
Operating profit, RUR mln	3,018.0	2,234.9	+35.0%
Operating margin	28.4%	22.3%	+6.1%
Pre-tax profit, RUR mln	2,616.1	1,303.0	+100.8%
Net profit, RUR mln	2,054.7	981.0	+109.5%
Net margin	19.4%	9.8%	+9.6%
EBITDA is calculated as profit before tax, interest payable, depreciation, lease payments and additional payments for credits and loans minus interest receivable. EBITDA margin, operating margin, and net margin are calculated as the ratio of the respective indicator (EBITDA, EBIT and net profit) to revenue.

Headline operating indicators

	Q1 2010	Q1 2009	Change
Number of subscribers: fixed line, ‘000 Mobile telephony, ‘000 Broadband Internet, ‘000 Paid television*, ‘000	3,710.9 5,711.8 804.7 121.6	3,724.5 5,846.1 589.5 118.6	-0.4% -2.3% +36.5% +2.5%
Outgoing intrazonal telephony, mln min.	469.8	505.7	-7.1%
Datacom traffic, PB	38.9	16.6	2.3x
*Cable television subscription services + Utel TV digital interactive television services

Revenue breakdown

	Q1 2010		Q1 2009		Change
	RUR mln	Proportion	RUR mln	Proportion	Change
Cellular telephony	3,20.9	33.1%	3 081.6	31.6%	+11.0%
Local voice	2,58.3	27.6%	2 626.2	27.0%	+8.8%
Datacom and Internet provision, including	1,733.4	16.8%	1 534.9	15.7%	+12.9%
Internet provision	1 408.8	13.6%	1 241.5	12.7%	+13.5%
Interconnect and traffic transit	1 101.5	10.6%	1 156.7	11.9%	-4.8%
Intrazonal telephony	1 051.6	10.2%	1 178.3	12.1%	-10.8%
Wire broadcasting	76.1	0.7%	65.1	0.7%	+16.9%
Radio communication, radio broadcasting, television	64.1	0.6%	65.0	0.7%	-1.4%
Document transmission	38.5	0.4%	33.3	0.3%	+15.6%
Other core activities	2.4	0.0%	2.0	0.0%	+20.0%
TOTAL	10 346.8	100.0%	9 743.1	100.0%	+6.2%

Operating expenses breakdown

	Q1 2010		Q1 2009		Change
	RUR mln	Proportion	RUR mln	Proportion	Change
Payroll	1,441.4	19.0%	1,424.1	18.3%	+1.2%
Social insurance contributions	367.0	4.8%	353.8	4.5%	+3.7%
Depreciation	1,514.7	19.9%	1,532.3	19.7%	-1.1%
Interconnect	1,169.4	15.4%	1,407.4	18.1%	-16.9%
Outsourcing	600.5	7.9%	624.6	8.0%	-3.9%
Materials	499.7	6.6%	494.2	6.3%	+1.1%
Lease payments	345.5	4.5%	439.5	5.6%	-21.4%
Other expenses, including:	1,658.7	21.8%	1,514.1	19.4%	+9.5%
Agency fees	579.5	7.6%	589.8	7.6%	-1.7%
Lease of premises	171.6	2.3%	179.3	2.3%	-4.3%
Software and database costs	124.1	1.6%	116.6	1.5%	+6.4%
Deductions to universal service fund	109.6	1.4%	101.9	1.3%	+7.6%
TOTAL	7,596.9	100.0%	7,790.0	100.0%	-2.5%

Debt burden

	March 31, 2010	March 31, 2010	Change
Long-term credits and loans	12,559.0	15,373.0	-18.3%
Short-term credits and loans	4,578.5	9,101.1	-49.7%
Total	17,137.5	24,474.1	-30.0%

Investment breakdown

	Q1 2010	Q1 2009
Total amount of investments, RUR, mln	264.3	288.1
Traditional telephony	5.4%	6.1%
Value-added services, including cellular telephony	63.8%	19.3%
Datacom and infrastructure networks	26.1%	49.4%
Investments in IT projects	0.4%	0.2%
Other, incl.	4.3%	25%
Construction and construction of buildings and facilities	0.6%	14.4%
TOTAL	100.0%	100.0%

Recent news

17.05.2010 Uralsvyazinform – results of Q1 2010: net profit soars 2.1x

17.05.2010
Uralsvyazinform – results of Q1 2010: net profit soars 2.1x