OREANDA-NEWS. On 08 July 2009 Southern Telecommunications Company [(RTS: KUBN, KUBNP; МICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the largest telecommunications operator in the Southern Federal District of Russia, presented its audited consolidated financial statement for 2008 in accordance with international financial reporting standards (IFRS).  The financial statement was audited by KPMG.

UTK prepared its 2008 international financial statement before the annual general shareholders meeting, which will allow the investment and analytical community to gain a better understanding of the Company’s results.  An assessment of the fair value of the Company’s assets allowed the latter to receive a positive auditor’s conclusion.

EBID stood at Rub 21.3 bln in 2008, which is 5.3% more than the same metric in 2007.

The largest share of earnings in the operator’s revenue breakdown falls to local voice (44.1%), datacom and telematic services (20.8%), and revenues from intrazonal telephony (17.5%).

The 4.2% increase in local voice revenue is attributable to the fact that tariffs were raised to the maximum level in 2008 and a bigger number of subscribers which have the possibility to choose three tariff plans (85% of the total subscriber base).

In conjunction with structural changes in traffic, there was a minor decline in revenues from intrazonal telephony.

A 54.2% increase in revenue from datacom and telematic services was due to the aggressive promotion of broadband Internet services, as a result of which the subscriber base reached 354,000 subscribers, a 2.1-fold increase by the end of the reporting period.

Revenue from interconnect services and traffic transmission decreased by 23.8% to Rub 211 mln due to the cancellation effective January 1, 2008 of the compensatory surcharge for the zonal origination of calls.

The company’s expenses increased by 16.6% in 2008 and amounted to Rub 19,634 mln, of which the largest portion fell to payrolls (30.5%), depreciation and amortization (18.4%), outlays for materials, repair, service and utilities (13.7%), and other operating expenses (28%).

Higher payroll expenses were due to the indexation of salaries during the reporting period.  In addition, as a result of headcount reduction the total number of staff decreased by 9% to 26,250 and the number of lines per employee increased 9.5% to155.1 lines/employee.

Depreciation and amortization increased by 18%, which is due to the completion of earlier begun facilities and the commissioning of new facilities.

The increase in other operating expenses is attributable to the recognition of losses from the depreciation of fixed assets amounting to Rub 1,642 mln. The company did not manage to maintain positive dynamics in terms of profitability and debt due to the impact of the financial and economic crisis and the accrual of foreign exchange rate differences in 2008, as well as the recognition of a loss from the devaluation of fixed assets.

EBITDA decreased by 34.6% to Rub 4,930 mln, while EBITDA margin declined by 14.1% to 23.1%.