OREANDA-NEWS. OJSC CenterTelecom, major provider of fixed-line telecommunications services in the Central Federal District of Russia, today announced key highlights of the Company’s new Financial Strategy for 2006-2009.  The key task of the Financial Strategy is to reduce CenterTelecom’s debt burden and bring down the cost of debt servicing.
 
By mid-2006 CenterTelecom’s financial position was characterized by substantial debt load, inefficient debt structure and high interest rates on most of the loans.  This situation was a result of low operational efficiency that could not generate cash flows sufficient to finance the Company’s capital expenditure.  This led to continuous growth in debt levels.
 
The Financial Strategy developed by CenterTelecom’s management provides for a comprehensive set of measures aimed at improvement of the Company’s financial standing. 

These measures include: Lowering operating expenses and improving operational efficiency; Optimizing capital expenditures to increase cash flows for debt repayment;  RUR 7.4 billion of existing debt to be repaid from operating cash in flows in 2006 – 2009; Restructuring expensive debt by attracting new financing at lower interest rates; Optimizing debt structure in terms of currency, type and tenor. 

The management’s estimates of the results of the Financial Strategy implementation are the following:  2009 EBITDA margin at approximately 34% compared to 26% in 2005; Annual CapEx of RUR 4 – 6 billion in 2006 - 2009; 2009 CapEx/EBITDA of 0.49 versus 0.74 in 2005; 2009 Net debt/EBITDA of no more than 1.7 compared to 3.36 in 2005; 2009 weighted average debt duration of 2.5 years versus 1.7 years at the end of 2005.