OREANDA-NEWS. On 20 May 2008 Dalsvyaz published its unaudited indicators for its financial and economic activities carried out in Q108, drafted to Russian Accounting Standards (RAS).

 “The company’s primary achievements that were recorded in the Q108 financial statement are a spike in the portion of unregulated services to 27% of revenue mix and strong EBITDA margin (40.3%)” – Dalsvyaz’s CEO Anton Kolpakov pointed out.

 “This year we’ll make concerted efforts to boost our subscriber base using the primary growth drivers: broadband Internet access and interactive television. Also, activities will continue to roll out backbone fiber optic lines. These operations largely aim to boost revenue from unregulated services, lower aggregate traffic transmission expenses and will eventually make possible to improve operating margin” – Kolpakov noted.

Key performance indicators

- Faster growth in earnings (8.8%) over expenses (8.2%);

- The company’s staff reached 12,110 as of March 31, 2008, i.e. 271 less employees compared to the data as of January 1, 2008;

- Revenue per employee surged 20.2% to Rub 247,900 on a quarterly basis (Rub 206,200);

- Lines per employee rose 11.3% to 125.3 lines (112.6);

- Cost per ruble of revenue dropped 0.5% to Rub 0.694 (Rub 0.698).

Data about the subscriber base and value-added services in Q108

- The portion of value-added services (Internet access, datacom, mobile, interactive television and video on demand) in the company’s revenue mix reached 27.2% vs. 19.8% in the first quarter of 2007;

- The base of dial-up Internet access users sank 15% to 194,389 (227,298 subscribers in January-March 2007) as clients switched to broadband Internet services;

- The base of broadband Internet access users (using DSL technology) rocketed 192% to 186,325 (97,032 customers in Q107).

- The base of mobile subscribers dropped 0.5% to reach 102,839 (46,317 in the Kamchatka region (52,349 in Q107) and 56,522 in the Magadan region (50,968 in January-March 2007);

- Main telephone lines grew 0.6% to 1,381,025 vs. 1,373,247 in Q107.

- Q108 payroll remained flat on the first quarter of 2007;

- Depreciation charges climbed Rub 27.5 mln or 8.5% in connection with the commissioning of fixed asset facilities. The portion of this cost item in the company’s cost mix did not change compared to Q107, i.e. was equal to 17.1%;

- Intangibles spiked 17.9% on the year because more funds were spent to purchase subscriber equipment to provide broadband Internet access and interactive digital television (IP-TV) services, which was included in the cost of services;

- Growth in the cost item “Expenses under services provided by telecom operators” by Rub 54.6 mln in January-March 2008 compared to Q107 largely came on the back of an increase in traffic transmitted via cellular networks due to an increase in the customer base, higher lease volumes in the satellite segment and the use of additional telecom lines for the implementation of the federal special-purpose program Education;

- More funds were spent on Rostelecom’s services owing to the increase as of March 2008 of the rates of line lease for intrazonal services (expenses jumped Rub 7.7 mln), and also a jump in expenses by Rub 26.6 mln that relate to higher consumption of datacom and telematic services;

- In the first quarter of 2008 other expenses climbed by Rub 23.6% y-o-y due to higher agency fees (up Rub 14 mln) and a Rub 10.3 mln spike in expenses related to software products and databases.

Other income and expenditure

From other non-operating activities the telecom operator reported a loss of Rub 171 mln or 18.5% more than in Q107 (a Rub 209.8 mln loss).

- Interest receivable grew compared to January-March 2007 by Rub 16.7 mln to Rub 25.1 mln;

- Interest payable increased to Rub 130.1 mln or 10.7% more than in January-March 2007 (Rub 117.5 mln). Debts under credits and loans totaled Rub 6,257 mln as of the end of Q108 or Rub 703 mln higher than the Q107 indicator. The company’s obligations climbed as it raised additional funds to restructure its current liabilities and finance its investment program.

- Other expenses from other activities dropped 26.7% y-o-y from Rub 146.3 mln to Rub 107 mln.