OREANDA-NEWS. On 26 August 2008 was announced, that Southern Telecommunications Company [(RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the largest fixed-line operator in the South Federal District, hereby announces its indicators for the first half of 2008 in accordance with the Russian Accounting Standards (RAS).

Key events in Q208 for Southern Telecommunications Company:

an agreement was signed with Bank Societe Generale Vostok (closed joint stock company) on a Rub 1 bln non-revolving credit facility;

Southern Telecommunications Company’s fourth and fifth bond issues were added to the Level 1 Quotation List A of the MICEX Stock Exchange;

successful placement of a Rub 3.5 bln debut credit linked note;

extension of the powers and authority of Southern Telecommunications Company CEO Alexander Vladimirovich Andreyev until June 15, 2010;

the company managed to convince the court that tax claims sought for 2004-2006 are unfounded.

H108 revenues jumped 6.5% y-o-y to Rub 10.2 bln;

H108 EBITDA amounted to Rub 3,776.4 mln or 0.5% higher than in the same period a year ago, while EBITDA margin came in at 36.9%, down 2.2%.

Earnings from datacom and Internet access services soared 62.5% in the reporting period to Rub 1,955.1 mln. The percentage of these earnings in the company’s telecom revenues increased 6.8% to 19.9%.

Southern Telecommunications Company’s H108 revenues amounted to Rub 10,247.8 mln, up 6.5% compared with the year-earlier period, whereas expenses climbed 16.6% to Rub 7,890.3 mln. As a result, operating profit declined 17.5% to Rub 2,357.4 mln and net profit sank 21.7% to Rub 835.1 mln. EBITDA amounted to Rub 3,776.4 mln in the reporting period or 0.5% more than in the same period of 2007.

Local voice earnings rose 3.6% to Rub 4,681.2 mln (47.5% of the company’s telecom revenues) due to the introduction of three tariff plans throughout the operator’s coverage area since February 1, 2008.

Intrazonal telephony revenue rose 0.8% to Rub 1,830.5 mln (18.6% of the company’s telecom earnings).

As of H108, revenues from telegraph, datacom and telematic services spiked 56.3% to Rub 2,032.1 mln (20.6% of the operator’s telecom revenues), including a 62.5% upsurge in earnings from datacom and Internet access services. At the same time, the number of broadband Internet users jetted 119.3% to 234,900.

Interconnect and traffic transmission revenues declined 19.0% to Rub 1,130.3 mln (11.5% of the operator’s telecom earnings).

H108 payroll expenses came to Rub 2,414.2 mln (account for 30.6% of the operator’s cost mix), increasing 16.3% y-o-y due to the wage indexation and the payment of additional one-time bonuses for Q108.

Fixed asset depreciation increased 23.6% to Rub 1,739.5 mln (accounts for 22% of the operator’s total costs).

Material expenses jumped 10.2% to Rub 852.9 mln (10.8% of the operator’s cost mix) due to rise in heat and power tariffs and the write-off of valuables up to Rub 20,000.

Expenses related to telecom operators’ services grew 12.6% to Rub 861.3 mln (accounting for 11.0% of the company’s total costs) due a sharp rise in the cost of Rostelecom’s services, higher expenses for call termination services and also expenses related to the lease of satellite lines for universal telecom services.

 Following staff reduction aimed at increasing Southern Telecommunications Company’s operating efficiency, the average headcount of operating personnel dipped 9.3% y-o-y to 26,602. Linesperemployeeincreased10.1% to153.4 lines.

Southern Telecommunications Company’s first-half investments totaled Rub 1,525.8 mln, representing a 43.5% surge on the year-earlier period, while the digitalization rate of the operator’s local voice network jumped 3.36% to 69.4%.