OREANDA-NEWS. June 29, 2009. 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 releases FY2008 audited consolidated financial statements of the Group compiled under International Financial Reporting Standards (IFRS). The audit of 2008 financial statements was carried out by CJSC KPMG, reported the press-centre of UTK.

PJSC Southern Telecommunications Company drafted its FY2008 statements under IFRS well before the Annual General Shareholders' Meeting, thereby providing investment and analytic community with a high-quality and understandable tool to assess UTK’s 2008 performance. Appraisal of the fair value of the Company’s PP&E allowed it to receive a positive opinion of the Auditor.

UTK’s 2008 revenue made RUR 21,300 million, representing a 5.3%- increase over 2007. Local voice, data transfer and telematic services, as well as intra-zonal telephony accounted for major part of the revenue representing 44.1%, 20.8% and 17.5% in the revenue structure, accordingly. 

Revenues from local telephone services grew by 4.2% due to bringing the unlimited tariffs to their maximum permitted level as well as due to increase in number of subscribers having the opportunity to choose one of the three tariff plans (85% of the subscriber base).

Due to structural changes in traffic, revenues from intra-zonal telephone services showed a slight decrease.

Active enhancement of Internet broadband access subscriber base by 2.1 times to 354.0 thousand users enabled UTK to increase 2008 revenues from data transfer and telematic services by 54.3%.

Revenues from interconnection and traffic transit services decreased by 23.8% to 2,211 million roubles due to cancellation from January 1, 2008  of a compensation bonus to the price for initiation of zonal calls.

2008 operating expenses increased by 16.6% over 2007 to 19,634 million rubles Expenses on wages and salaries and other social payments to employees (30.5%), depreciation charges (18.4%), materials, repairs and maintenance, utilities (13.7%) and other costs (28.0%) accounted for major part of the operating expenses.

2008 expenses for wages and salaries grew due to wages indexing in the period under report. The Company continued to optimize the headcount. As a result, Southern Telecommunications Company managed to slash the average number of its employees by 9.0% over a year ago to 26,250 people and to bring a number of lines per employee to 155.1 representing a 9.5%-increase.

The growth of depreciation and amortization charges by 18.0% was due to implementation of earlier launched investment projects and putting new objects into operation.

Increase in other operating costs was attributable to recognition of the loss in the amount of 1,642 million roubles from the impairment of fixed assets.    

The Company failed to keep positive dynamics of its operating efficiency indicators owing to the effect of global financial and economic crisis and extra expenses caused by foreign exchange differences and recognition of the loss from the impairment of fixed assets.   
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2008 EBITDA decreased by 34.6% to RUR 4,930 million roubles. EBITDA margin stood at 23.1% which was down 14.1 percentage points over 2007.

The full text of UTK’s 2008 IFRS audited and consolidated financial statements can be viewed on the corporate website in the section “Investor Relations/Financial Reports”.