OREANDA-NEWS. On 24 June 2008 wSibirtelecom a telecommunications operator in the Siberian Federal District hereby presented its 2007 unaudited, consolidated financial statement which was drafted in accordance with international financial reporting standards (IFRS).

The company’s consolidated financial statement includes the assets, obligations and assets of Sibirtelecom and its subsidiaries (hereinafter, the Company).  The main activity of subsidiaries is to provide cellular communication and other telecommunications services.

The company’s 2007 consolidated revenue increased Rub 2,093 mln or 16.9% compared with 2006 for a total of Rub 35,246 mln.

The main components of the company’s consolidated revenue are local voice (Rub 11,547 mln) and cellular communication (Rub 9,109 mln)or 32.8% and 25.8%, respectively.

Other major items in the revenue breakdown include intrazonal telephony (Rub 5,222 mln) and interconnect and traffic transmission (Rub 4,255 mln), which account for 14.8% and 12.1%, respectively.  In addition, revenues derived from datacom, ISP and telematic services amount to 8.7% (Rub 3,064 mln) of total earnings.

The main factors resulting in changes in the company’s revenue in the reporting year are as follows: rollout of broadband Internet access, a bigger fixed-line and cellular subscriber base, change in tariff plans for local telephony as of February 1, 2007, and also a change in interconnect fees and the introduction of the Calling Party Pays principle in line with an amendment to Article 54 of the Law on Telecommunications dated July 1, 2006.

Compared with 2006, in 2007:

- the greatest growth in revenue came from provision of local voice telephony services, for a total of Rub 1,634 mln or up 16.5%.  The key drivers were a bigger subscriber base (the number of main telephone lines of the parent company rose 98,600 or 2.3% for a total of 4,295,7,000 lines and the entry into force of local telephony tariff plans as of February 2007.

- higher revenue from the provision of datacom services and telematic services for a total of Rub 1,024 mln or 50.2%,which was due mainly to a larger number of broadband Internet users, which more than tripled (as of January 1, 2008 the number of broadband Internet ports stood at 196,900 and, respectively, higher revenue from ISP (broadband and dial-up).

- higher revenue from the provision of intrazonal telephony amounted to Rub 951 mln, or 22.3%, which was due to the inclusion of revenue in FY2007 from fixed-line subscribers with mobile network subscribers within a single location, whereas in 2006 these earnings arose only as of July 1, 2006, as well as higher channel leasing revenue.

- the increase in revenue from provision of cellular service stood at Rub 851 mln or 10.3% due to gains in the subscriber base (during the reporting period the number of cellular subscribers rose 36% and numbered 4,266,000.

The company’s consolidated expenses rose Rub 2,618 mln in 2007, or 9.7% more than in 2006 for a total of Rub 29,531 mln.

The largest single cost-side items were payrolls, payments and social contributions (37.8%) depreciation and amortization (20.8%), other operating expenses (16.7%), and interconnect expenses payable to Russian companies (13%).

Compared with 2006, in 2007:

- depreciation charges increased by Rub 1,986 mln or 47.9%, which is due to the company’s aggressive investment policy aimed at network expansion. Consolidated capital investments increased by Rub 1,779 mln or 15.5% compared with 2007 for a total of Rub 13,288 mln (including fixed asset investments which amounted to Rub 11,523 mln, and intangible investments for a total of Rub 1,765 mln);

- the increase in interconnect expenses (payable to Russian companies) stood at Rub 543 mln, or 67.2% due to a change in the interconnect procedure in line with the statutory and legislative framework for the industry;

- payroll expenses, other payments and social contributions decreased Rub 684 mln, or 5.8%.

The main factor behind a decrease in payroll costs was the launch of measures to optimize business processes and higher efficiency of the company’s activity.  One of the results of these measures was a reduction in headcount at the company.

EBITDA amounted to Rub 4,440 mln in 2007,or 59% higher than in the year-earlier period.  EBITDA margin stood at 33,9%.

Profit from core activity rose by Rub 2,475 mln, or 76.4% higher for a total of Rub 5,715 mln, which was attributable to the rapid rise in revenue. Profit margin from core activity stood at 16.2%.

Pre-tax profit increased Rub 2,112 mln or 102.6% and stood at Rub 4,170 mln, which was due to the positive trend in profitability in core business areas.

Profit during the reporting period amounted to Rub 2,659 mln, which represents a 178.7% rise compared with 2006 and was due to higher pre-tax profit and a lower effective tax rate.  Profit margin during the reporting period was 7.5%.

Sibirtelecom’s 2007 consolidated financial statement will be accessible on the company’s corporate website at the following address:

http://www2.sibirtelecom.ru/sbt_msfo (in Russian) and http://eng.sibirtelecom.ru/esb_msfo (in English).