OREANDA-NEWS. On 20 June 2008 OJSC CenterTelecom, the largest provider of fixed-line telecommunications services in the Central Federal District of Russia, announced its financial results in accordance with International Financial Reporting Standards (IFRS) for 2007.

Commenting on the 2007 results, General Director Vaagn Martirosyan noted that the financial and economic indicators are a result management team's work during the year directed at strengthening the competitiveness of CenterTelecom and the improvement of the financial position of the Company.  Mr. Martirosyan said: “According to the results of the year the revenue of CenterTelecom increased by 13.56% and the EBITDA indicator increased to 36.88%. The expenses of CenterTelecom rose by 12.72%, mainly due to increased expenses on operators services. In addition, as a result of implementation of a number of projects in marketing, human resources and investment policy initiated by the Company management, we were able to increase the share of revenues from unregulated telecommunications services in the revenue structure for 2007 to 10.16% (8.21% in 2006) or RUR3,398 million against RUR2,419 million in 2006. Otherwise, the successful implementation of these programs followed by a tight policy of control over expenses created the basis for a substantial increase in revenue to RUR4,309 million against RUR2,874 million in 2006. The results of the past year formed the basis for the successful future development of the Company.”  He also stressed that the IFRS auditor’s conclusion for 2007 was positive and for the first time in the Company history the shareholders will be able to study the IFRS accounts before the annual general meeting.

Consolidated revenue of OJSC CenterTelecom in 2007 constituted RUR33,452 million, a 13.56% increase in comparison with year 2006.

Local telephony services. Revenue from provision of local telephony services increased by 13.07% in 2007 reaching RUR15,393 million against RUR13,614 million in 2006. The increase in revenues took place due to a rise in the subscriber base and to a growth of tariffs on local telephony services since Feb. 1, 2007.

Inter-zone telephony services. Since July 1, 2006 according to the “Rules of providing local, inter-zone, long-distance and international telecommunications” the “calling party pays” principle took effect, which led to an increase in revenue from inter-zone telecommunications of OJSC CenterTelecom by 53.56% to RUR5,665 million (RUR3,689 million in 2006).

Data transmission and telematics services (Internet). Due to an active marketing policy and the broadening of the geographical range of promoting broadband ADSL 2+ Internet under the DOMOLINK trademark, the number of subscribers of this service increased by more than 160% in 2007 and reached more than 304,000 users. A dynamic expansion of the subscriber base created the prerequisites for a substantial increase in revenues in the segment of new telecommunications services: from RUR2,419 million to RUR3,398 million (by 40.47%).

Operating expenses of OJSC CenterTelecom in 2007 increased by 12.72% in comparison with the previous year and constituted RUR25,590 million.

The increase in payroll expenses is due to the implementation of the personnel optimization program and the resulting compensations payments.

The increase in expenses on payments to telecommunications operators by 55.24% to RUR3,083 million rubles is mainly due to the change in the system of mutual payments between operators.

The full text of the audited consolidated IFRS financial accounts of OJSC CenterTelecom can be found at the Company website.

The audit of the financial accounts was conducted by independent auditor LLC “Ernst & Young”.