OREANDA-NEWS. On April 18, 2008 Uralsvyazinform (RTS: URSI/URSIP, ADR: UVYZY/ UVYZYP), the leading carrier of fixed-line and mobile services in the Urals region, Russia reported the unconsolidated financial and operational results for the year ended December 31, 2007 prepared under Russian Accounting Standards (RAS), reported the press-centre of Uralsvyazinform.

Revenues increased by 22,7% on 2006 and totaled US\\\$ 1,5 bln. The revenue growth is mainly due to revenue gains in:

Mobile services (+29,1% on 2006);

New services (+58,4%);
Intrazone calls (+37,9%).

EBITDA[1] increased by 41,8% on 2006. EBITDA margin totaled 33,7%. Operating margin – 22,1%.

Net profit increased by 87,5% and reached US\\\$ 144,2 mln. Net margin totaled 9,4%.

Subscriber base totaled 8,8 mln., including 5,1 mln. GSM mobile subscribers.

Anatoly Ufimkin, CEO comments on 2007 results

The year of 2007 was a special year for us marked by the 5th anniversary of Uralsvyazinform as an interregional company.

We completed all the goals set forth by the shareholders for 2007. Implementation of tariffs in local telephone services turned out to be one of the major reforms of the year. The reform was implemented in a smooth manner. 52 percent of residential subscribers chose time-billed tariff and 16 percent decided for the combined tariff. Thus, 68 percent of subscribers voted for flexibility in payments for local calls. Remaining 32 percent considered it more appropriate to continue with the unlimited tariff.

Boosting the growth in broadband segment was another business priority. Broadband services have been one of the fastest growing businesses of the company for the past two years. During 2007 our broadband subscriber base increased 2,5 times and totaled 295 thousand. Our market share of data transmission services exceeded 55% in the license territory thanks to the outrunning growth in the segment compared to competitors. The growth was driven by the launch of a series of competitive unlimited tariffs in the beginning of the year, the bulk of new customers being subscribed to tariff plans inside the new unlimited tariff family.

Together with broadband services, mobile services were another important growth driver and were given special management’s attention throughout the year. In general, our mobile business demonstrated solid performance in a highly competitive market. Uralsvyazinform has about 30 percent of active subscribers and attracts over 40 percent of revenue generated inside regional mobile market. In 2007 we maintained the positive dynamics with revenue gains of 29% versus 2006, while these in data transmission and Internet totaled 68%. Overall share of unregulated services in the company’s cash generation totaled 58%.

In 2007, we continued our effort to increase operational efficiencies. As part of cost control procedures, Uralsvyazinform streamlined its staff numbers through reorganization of operational units and as a result of staff-efficient network updates. At the same time, reduction-related economies were used to retain highly qualified staff in the form of increased salaries, while an average monthly salary increased by 15%. These measures helped reduce the overall wages and social benefits expense by 3%.

Finally, in 2007, Uralsvyazinform initiated a number of projects that we consider commercially beneficial in the long-term. The projects include prospective broadband-based products: interactive digital television Utel.TV offering our subscribers a universe of Triple Play services encompassing voice, data and video transferred via the single network. Second, Uralsvyazinform pioneered with dynamic tariff package offering launched in November 2007. The new product allows us to combine two technologically independent services – mobile services and broadband access inside a single offering. The dynamic tariff packages, while being an effective tool to promote consumer usage and strengthen customer loyalty, also serve as an important move toward Quadrum Play (Triple Play plus mobile communications).