OREANDA-NEWS. On September 25, 2008 Southern Telecommunications Company [(RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal fixed-line telecommunications provider for Russia’s Southern Federal District, reported its unaudited consolidated interim financial results for the first half of 2008 compiled in accordance with International Financial Reporting Standards (IFRS), reported the press-centre of Southern Telecommunications Company.

The indicated data is based on the Company’s Annual Consolidated Financial Statements for the year ending 31 December 2007.

EBITDA  includes Earnings Before Interest, Taxes, Depreciation and Amortization

The Company’s IFRS revenue for the first half of 2008 amounted to RUR 10,446 mln, gaining 6.4% over H1 2007. The main revenue components were earnings from local voice (up 45.1%), earnings from telegraph, data transfer and telematic services (up 19.5%) and intra-zonal calls (up 17.5%).

The revenue growth was attributable to enhancement of the Internet broadband access subscriber base by 119.3% over H1 2007 to 234,910 subscribers as well as to a 4.5%-increase in revenues from local voice services due to introduction of three tariff plans throughout the whole licensed territory of "UTK" PJSC from February 1, 2008.
  
H1 2008 operating expenses of the Company grew by 12.7% to 8,977 million rubles. Wages and salaries (36.4%), depreciation and amortization (19.7%), materials, repairs and maintenance, utilities (14.8%) as well as other operating expenses (13.0%) accounted for major part of operating expenses.

The growth of operating expenses was mainly due to a 14.6%-increase in expenses for wages, salaries, other employee benefits and payroll taxes as well as to a 11.4%-increse in payments to national telecom operators owing to growing expenses for call termination services and expenses for lease of satellite channels to ensure provision of universal telecom services.

H1 2008 net income in accordance with IFRS amounted to RUR 813 million representing a 12.9%-increase over H1 2007.

Interest expenses amounted to RUR 1,053  million in the reporting period which is up 12.6% over a year ago. 1H2008 EBITDA decreased 2.5% year on year to RUR 3,680 million. EBITDA margin was down 3.2 percentage points to 35.2%.

During the first six months of 2008 umber of lines per 1 employee was up 10.1% over a year-ago period to 153.4 lines. Revenue per 1 line increased by 6.6% to 2,511 rubles/line, In H1 2008 the Company managed to slash the average number of employees by 9.3% over a year-ago to 26,602 people.

The full version of UTK’s unaudited consolidated financial statements for the first six months of 2008 under IFRS and explanatory notes to the financial statements can be viewed at the Company’s corporate web-site www.stcompany.ru in the section "Investor Relations/Financial reports".