OREANDA-NEWS. On 30 June 2009 Uralsvyazinform (RTS and MICEX: URSI/URSIP, ADR: UVYZY/UVYPY) announced its audited consolidated financial statement for 2008 drafted to International Financial Reporting Standards (IFRS). The operator’s financial records were audited by KPMG.

2008 HEADLINE FINANCIALS

(in accordance with International Financial Reporting Standards)

Item

2008

2007

Chng, y-o-y

Revenue, Rubmln

40,691

39,147

+3.9%

EBITDA, Rubmln

13,792

12,961

+6.4%

EBITDA margin

33.9%

33.1%

-

Operating profit, Rubmln

6,481

6,257

+3.6%

Operating margin

15.9%

16.0%

-

Profit for the reporting period, Rub mln

2,535

2,297

+10.4%

Net margin

6.2%

5.9%

-

Net debt, Rubmln

26,596

25,883

+2.8%

The full version of Uralsvyazinform’s FY08 IFRS consolidated financial statement and explanatory notes are available on the telecom operator’s corporate website in the section entitled For Shareholders / Financial Statements(in Russian).

Overall revenue mix

Revenue items

2008

Share

2007[4]

Share

Chng, y-o-y

Mobile radio telecommunications (cellular) services

13,156

32.3%

12,471

31.9%

+5.5%

Localvoiceservices

10,218

25.1%

10,413

26.6%

-1.9%

Telegraph network services, datacom networks and telematics services (Internet)

5,239

12.9%

3,502

8.9%

+49.6%

Interconnect and traffic transmission services

5,229

12.9%

5,317

13.6%

-1.7%

Intrazonalservices

5,026

12.4%

5,165

13.2%

-2.7%

Revenue from other operations

1,223

3.0%

1,147

2.9%

+6.6%

Mobile radio telecommunication, wire broadcasting, radio broadcasting and television services

495

1.2%

488

1.2%

+1.4%

Outsourcing and agency fees

86

0.2%

562

1.5%

-84.7%

Other services

19

0.0%

82

0.2%

-76.8%

Total

40,691

100.0%

39,147

100.0%

+3.9%

Revenue grew by 3.9% y-o-y to Rub 40.7 bln. Improvements mainly reflected earnings from mobile radio telecommunication (cellular), datacom and telematics (Internet) services.

Mobile radio telecommunication (cellular) earnings amounted to Rub 13.2 bln, up 5.5% on the year. The portion of this revenue item in the revenue mix rose to 32.3% and earnings from this revenue item increased on a 10.6% increase in the subscriber base to 5,689,000.

Telegraph network, datacom and telematics (Internet) earnings soared 49.6% y-o-y to Rub 5.2 bln. The weighting of this revenue item rose to 12.9% of aggregate revenue. Earnings rose as new subscribers were hooked up and the volume of services provided expanded. Broadband Internet users attracted during 2008 surged by 83.7% from 294,600 to 541,200, while Internet traffic increased by more than 6.3x compared to 2007 to 23,392 Tb.

Breakdown of operating expenses

Operating expenses

2008

Share

2007

Share

Chng, y-o-y

Payroll

9,243

25.7%

9,307

27.5%

-0.7%

Depreciation and amortization

7,675

21.4%

6,514

19.3%

+17.8%

Expenses related to services provided by telecom operators

5,845

16.3%

5,245

15.5%

+11.4%

Supplies, repair and maintenance, public utilities

3,526

9.8%

3,223

9.5%

+9.4%

Other operating expenses, including

9,641

26.8%

9,546

28.2%

+1.0%

Services rendered by outside organizations and those related to management

2,229

6.2%

1,870

5.5%

+19.2%

Agencyfees

2,190

6.1%

2,550

7.5%

-14.1%

Taxes other than the corporate profit tax

1,034

2.9%

935

2.8%

+10.6%

Property lease expenses

753

2.1%

650

1.9%

+15.8%

Total

35,930

100.0%

33,835

100.0%

+6.2%

In 2008 operating expenses increased 6.2% to Rub 35.9 bln, mainly due to

growing expenses under services provided by other telecom operators (+11.4%) following the expansion of the cellular customer base and the range of VAS.

a 17.8% increase in depreciation charges, as new facilities were entered into service.

The operator’s policy aimed at optimizing headcount and streamlining the corporate structure enabled Uralsvyazinform to reduce payroll expenses by 0.7%.