OREANDA-NEWS. On 29 May 2008 was announced, that Southern Telecommunications Company, the largest fixed-line operator in the Southern Federal District of Russia, presented the results of its financial activities carried out in the first quarter of 2008 in accordance with Russian Accounting Standards (RAS).

The main events at STC in Q1 2008 include:

- introducing three tariff plans effective February 1, 2008 in the entire coverage area of the company;

- the launch of IP-TV in the Astrakhan region and the Republic of Nothern Ossetia-Alania;

- confirmation of STC’s A corporate governance rating assigned by ExpertPA rating agency;

- the stipulation of a collaboration agreement between STC and Sky Link on providing high-speed Internet access;

- approval of the new edition of the Statute on the Dividend Policy of STC;

- the signing of a Rub 1 bln non-revolving credit line with Bank Societe Generale commercial shareholder bank (closed joint stock company)

- inclusion of STC’s fourth and fifth bond issues in theLevel-1 A Quotation List of MICEX.

1) Revenue in Q1 2008 rose 7.9% compared to the same period in 2007 and stood at Rub 5.1 bln;

2)EBITDA in Q1 2008 rose 0.4%, which is 0.4% more than in the same period of 2007.  EBITDA margin stood at 38.4% (down 2.4% y-o-y) in the first three months of the year.

3) Revenue from datacom and ISP rose 63% during the reporting period for a total of Rub 936.7 mln.  The share of revenue from these services in the tariff revenue of the company rose 6.4% to 19.1% in 2007.

STC’s revenue amounted to Rub 5,103.6 mln in Q1 2008, which is 7.9% more than in Q1 2007.  In addition, expenses rose 21.1% to Rub 3,968,800,000.  As a result, EBIT decreased 22% to Rub 1,134.8 mln, and net profit decreased 21.1% to Rub 463.4 mln.

During the reporting period EBITDA amounted to Rub 1,957.7 mln, which is 0.4% higher than in the same period in 2007.

Revenue from local voice services rose 4.8% to Rub 2,343.2 mln (47.7% in the company’s tariff revenue mix) due to the introduction of three tariff plans within STC’s coverage area as of February 1, 2008.

Revenue from intrazonal telephony rose 1.4% to Rub 914.5 mln (18.6% in the company’s tariff revenue mix).

Revenues from telegraph services, datacom transmission and telematic services rose 56.3% in Q1 2008 and stood at Rub 976.7 mln (19.9% in the company’s tariff revenue mix), including revenue from datacom transmission and ISP, which increased 63%.  In addition, the number of broadband Internet users rose 118.8% and stood at 202,800.

Revenue from interconnect and traffic transmission decreased by 12.2% to Rub 592.4 mln 12.1% in the company’s tariff revenue mix).

Payroll expenditures amounted to Rub 1,237.6 mln in Q1 2008 (31.2% in the company’s cost structure), which is 21.9% higher than in the same period last year due to the payment of an additional one-time premium in Q1 2008.

Depreciation of fixed assets rose 25.1% to Rub 866.8 mln (21.8% in the company’s cost structure).

Material expenses rose 13.5% to Rub 431.7 mln (10.8% in the company’s cost structure) due to higher heat and electricity rates and a write-off of inventory items amounting to Rub 20,000.

Interconnect expenses rose 17.9% to Rub 435.2 mln (11% in the company’s cost structure) due to higher expenses payable to Rostelecom, and also higher call termination expenses.

As a result of work aimed at staff optimization for the purpose of raising the efficiency of STC’s business, the average number of staff on record in Q1 2008 decreased 8.7% compared to the year-earlier period to 26,953.  The number of lines per employee rose 9.6% to 151.6.

STC’s investments in Q1 2008 amounted to Rub 190.8 mln, which is 22.4% less than in the year-earlier period.  The digitalization rate of the operator’s local voice network rose 3.55% and stood at 69.06.