OREANDA-NEWS. On 16 June 2009 CenterTelecom, the largest telecommunications operator in Russia’s Central Federal District, reported its operating results for 2008 issued in accordance with International Financial Reporting Standards (IFRS).

Basic Figures, RUR Million

 

2008

2007

Change, %

Revenues  

34,794

33,457

4.00

Operating expenses (net)

25,697

25,379

1.25

Operating profit

9,097

8,078

12.61

Profit before tax and minority interests

5,512

6,146

-10.32

Net profit for the reporting period

4,220

4,335

-2.65

EBITDA [1]

13,228

12,511

5.73

EBITDA margin, %

38.02

37.39

0.63 pp

Profit margin for the reporting period [2], %

12.13

12.96

(0.83) pp

Fixed assets

48,829

42,351

15.30

Long term liabilities

16,607

19,216

-13.58

Short term liabilities

17,923

11,707

53.10

Net debt [3]

23,765

20,898

13.72

Net cash from core operations

10,385

8,967

15.81

Net cash spent for investments

(6,024)

(5,758)

4.62

Net cash used in the course of financial activities

(4,360)

(3,885)

12.23

_______________

[1] EBITDA is calculated as earnings before taxes minus depreciation minus net interest.

[2] Profit margin for the reporting period is calculated as profit for reporting period before minority interests/revenues.

[3] Net debt is calculated as the sum of long term and short term liabilities on loans, borrowings and financial leases minus cash assets and their equivalents.

Income Structure for 2008, RUR Million

 

2008

2007

Change, %

Local telephony services

15,676

15,393

1.84

Intra-zone telephony services

5,953

5,665

5.08

Interconnection and traffic transfer services

3,969

4,745

-16.35

Data transmission and telematic services (Internet access)

4,885

3,398

43.76

Cooperation and agency services

1,123

1,223

-8.18

Mobile telecommunications, wire broadcasting, radio and TV

710

710

-0.00

Payment for installation and connection

569

751

-24.23

Other services (core operations)

1,020

906

12.58

Income from other sales (non-core operations)

889

666

33.48

Including income from lease of assets

567

299

89.63

Total

34,794

33,457

4.00

CenterTelecom’s consolidated revenues for 2008 rose 4% against 2007 reaching RUR34.794 billion.

Interconnection and traffic transfer services. 16,35% decrease in revenues from interconnection and traffic transfer services to RUR3.969 billion in 2008 (against RUR4.745 billion in 2007) is connected with cancellation of compensation adjustment for local and zonal call initiation starting January 1, 2008.

Data transmission and telematic services (Internet). Owing to aggressive marketing policy aimed at promotion of broadband Internet access services based on ADSL 2+ under the Domolink brand the services’ subscriber base rose 131% to 705,075 users. Dynamic growth of the subscriber base caused a significant increase in revenues from new telecommunications services from RUR3.398 billion to RUR4.885 billion (43.76% growth).

CenterTelecom Operating Expenses (net) in 2008, RUR Million

 

2008

2007

Change, %

Personnel costs

9,110

10,821

-15.81

Depreciation and amortization

5,173

4,207

22.96

Expenses on telecommunications operators’ services

3,132

3,083

1.59

Material costs, repair, maintenance, public utility services

2,887

2,663

8.41

Taxes except profit tax

861

800

7.62

Expenses related to agency services

709

444

59.68

Reimbursement of losses from provision of universal telecommunications services

(1,559)

(37)

4,113.51

Other operating expenses, net

5,384

3,398

58.45

Total

25,697

25,379

1.25

Operating expenses of CenterTelecom for 2008 were increased by 1.25% to RUR25.697 billion against 2007.

The decrease in personnel costs was related to implementation of CenterTelecom’s personnel number optimization program.

Growth of other operating expenses is connected with redistribution of transportation costs in line with CenterTelecom’s business process restructuring program and growth in expenses for third party services which is mainly caused by implementation of the universal service mechanism in the territory of Russia’s Central Federal District.

Moreover the structure of other operating expenses includes formation of a provision for impairment of Oracle E-Business Suite in the sum of RUR760 million. In December 2008 CenterTelecom’s management acknowledged a decrease in Oracle E-Business Suite cost on the basis of estimation of the number of actual users registered in the course of implementation of the software system.