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04.06.2010
Sibirtelecom releases consolidated 2009 IFRS financial statement

Press release


Sibirtelecom (RTS: ENCO/ENCOP, ENCOG/ENCOPG; МICEX: STKM/STKMP; АDR: ОТС – SBTLY, Frankfurt and Berlin stock exchanges – ISIN: US8257351036, WKN: 260452) a telecommunications operator in the Siberian Federal District, hereby reports its audited consolidated financial statement for 2009 drafted to international financial reporting standards (IFRS).  The company’s financial statement was audited by KPMG.

The consolidated financial statement includes the assets, liabilities and the financial results of Sibirtelecom and its subsidiaries (hereinafter, the Company).  The main activity of subsidiaries is to provide cellular and other telecommunications services.

Headline IFRS financial indicators (RUR, mln) 

Revenue breakdown  

• The Company’s consolidated revenue in 2009 increased by RUR 527 mln or 1.4% higher compared with 2008 and amounted to RUR 38,036 mln.  

The main components of consolidated revenue in the Company’s revenue breakdown are revenue for the provision of local voice (RUR 11,731 mln) and cellular telephony (RUR 9,657 mln) or 30.8% and 25.4%, respectively.  Other major items in the revenue breakdown include datacom and telematic services (Internet) (RUR 5,632 mln) and intrazonal telephony (RUR 4,928 mln) or 14.8% and 13.0%, respectively.  In addition, revenue generated from interconnect and traffic transmission contributed 9.6% (RUR 3,655 mln) of consolidated revenue. 

The main factor behind a rise in the Company’s revenue during the reporting period was the expansion of broadband Internet access services, i.e. an increase in the number of Internet subscribers. 

Compared with 2008 in 2009: 

• the largest growth in revenues came from the provision of datacom and telematic services (Internet) – RUR 1,231 mln or 28.0%.  The main factor driving growth was a surge in the broadband subscriber base, and, respectively, higher revenue from dedicated Internet access.  In 2009 the number of broadband Internet subscribers increased by 1.45 times and amounted to 594,000 users at the end of the reporting period;
• the increase in revenue from the provision of local telephony amounted to RUR 299 mln, or 2.6%, which was mainly attributable to the indexation of regulated tariffs effective March 1, 2009;
• growth in revenue from line leasing amounted to RUR 166.0 mln, or 19.5%, which was attributable to an increase in the number of leased facilities;
• a decline in revenues from the provision of intrazonal telephony equal to RUR 455 mln, or 8.5%, which was attributable to decrease in traffic from fixed-line subscribers to the networks of both fixed-line and to cellular operators.
• a decline in revenue from interconnect and traffic transit, which amounted to RUR 451 mln, or 11.0%, which was attributable to a downturn in volumes of traffic transmitted, and also the cancellation of tariff charges at interconnection points as of March 1, 2008.  

Revenue breakdown (RUR, mln)  

Breakdown of expenses  

• The Company’s consolidated expenses in 2009 increased by RUR 381 mln or by 1.2% compared with 2008 and amounted to RUR 33,256 mln.  

The biggest proportion of expenses fell to payrolls (29.7%), depreciation and amortization (24.7%) and other operating expenses (22.7%).

Compared with 2008 in 2009: 

• the amount of accrued depreciation and amortization increased by RUR 863 mln or 11.7%, which was attributable to implementation of the Company’s investment program aimed at network expansion;
• the rise in interconnect expenses amounted to RUR 190 mln or 4.3%, which was attributable to growth in traffic subject to fees in accordance with the interconnect procedure and the regulatory framework for the telecommunications industry; 
• the increase in operating expenses amounted to RUR 168 mln or 2.3%, which was attributable to a rise in commercial costs associated with the provision of universal telecommunications services, and also the formation of a reserve against dubious debts, which was the result of a rise in outstanding accounts receivable;
• a decrease in payroll expenses by RUR 621 mln or 5.9% was attributable to measures aimed at optimizing headcount;
• expenses for materials, repair and maintenance and utilities decreased by 219 mln, or 6.8%, which was attributable to the implementation of cost-cutting measures. 

Breakdown of expenses (RUR, mln)  

Capital expenses  

• The Company’s capital expenses in 2009 amounted to RUR 4,811 mln, which is 61.7% less than in 2008.  The bulk of capital investments went to develop local telephony, datacom and telecommunications infrastructure facilities.  The level of investments allocated for expansion of radio and mobile telephony in 2009 was 36.3% of the total amount of the operator’s capital investments.  

Financial results 

Compared with 2008 in 2009:

• the increase in OIBDA amounted to RUR 1,224 mln or 9.3%.  OIBDA margin stood at 37.7%.
• operating profit increased by RUR 361 mln or 6.3%, and amounted to RUR 6,136 mln, which was attributable to rapid growth in revenue (1.4%) compared with a rise in expenses (1.2%).  

Operating profit includes other operating revenue totaling RUR 1,357 mln, including the compensation of losses from the provision of universal telecommunications services worth RUR 893 mln.

In addition, operating margin amounted to 16.1%.  

• Pre-tax profit increased by RUR 429 mln or 17.6% and amounted to RUR 2,863 mln, which was mainly attributable to operating profit trends.
• Profit during the reporting period amounted to RUR 1,974, representing a 29.1% increase compared with 2008, which was attributable to an increase in pre-tax profit.  Profit margin during the reporting period stood at 5.25. 

[1] OIBDA is calculated using the following formula: “Operating profit” + “Depreciation and amortization”.
[2] EBITDA is calculated using the following formula: “Profit during the reporting period” + “Income tax” + Depreciation and amortization” + “Financial expenses” – “Interest revenue on pension plan assets” – “Interest revenue on financial assets”.
[3] Net debt is calculated using the following formula: “Long-term borrowed liabilities” – long-term available-for-sale promissory notes and bonds.
[4] Operating expenses are calculated using the following formula: “Payrolls” + “Depreciation and amortization” + “Interconnect expenses” + “Materials, repair and maintenance and utilities” + “Other operating expenses”.