OREANDA-NEWS. March 1, 2010. National telecommunications provider VOLIA announced preliminary 2009 year-end results. In 2009, the company focused on building a complex service system in the regions and on carrying out a comprehensive upgrade of regional telecommunication networks to increase their capacity, eliminate congestions, and ensure the redundancy of power supply and communication channels.

As a result of these activities, Volia’s regional locations now have contact centers on par with European quality standards and have the capacity to provide non-stop information assistance and customer support through call-centers. For customers’ convenience, all of these locations finally accept payments for company services through banking facilities or electronic payment systems.

All of the regions are undergoing technical overhauls and equipment upgrades. In some locations, networks were in such a poor condition and did not meet company standards that they had to be completely refurbished. The process will continue in 2010. Other measures also included network reach extension in eastern and western parts of Ukraine, installation of new head ends in Kyiv, the Crimea, Vinnytsya, and Kharkiv. In some cities, the networks were fully converted to the 10G technology.

In 2009, customers in Vinnytsya and in Kharkiv were provided with access to digital television programs. Now this service is available not only in Kyiv but also in Lviv, Poltava, Sevastopol, Simferopol, Vinnytsya, and Kharkiv. Digital conversion of the company’s telecommunications network in the capital city is to come to an end over the next month.

2009 Final Year-End Results:

at 2010 year-start Volia Group’s telecommunication networks have 2.5M homes passed;

the active subscriber base at the start of 2010 is estimated at 1.7M subscribers, including more than 380,000 high-speed Internet RGUs;

average revenue per user (ARPU) for broadband Internet came to UAH 50-60; television access, UAH 24-30;

EBITDA margin in hryvnia terms managed to stay at 40% in 2009;

total taxes paid to budgets of all levels came to approximately UAH 200M;

total amount of capital expenditures in 2009 is estimated at UAH 230M

This is how Volia President Mr. Sergey Boyko views future developments on the telecommunications market in 2010: "Various sources estimate 2009 inflation index at nearly 20% (official data have not been published yet), and our estimate for 2010 is at least 12%. Volia experts believe that this is likely to force all market participants to revisit their pricing policies to recover losses. We do not foresee an upsurge in purchasing power or any acceleration of market growth rates in terms of RGU numbers. This will further intensify competition. Amidst decelerating subscriber base growth rates and declining purchasing power, players operating in the „shadow zone“ will be the first to disappear over the short term. This will happen because content suppliers are gearing up to fight piracy and illegal distribution of television programs. On top of that, market participants operating within the scope of the law will be interested in establishing a level playing field and will advocate fighting unfair competition. Market participants are definitely in for a series of inspections this year.

We do not anticipate any dramatic improvements or alleviation of the taxation burden, the so-called tax holidays. Regulatory pressure on the business with regard to licensing and permit procedures is also unlikely to weaken. We understand very clearly that government pressure is in fact going to mount even more on the back of a very tight fiscal budget. We would, however, like to avoid a situation where inspections are limited only to large market players with perfectly legal and transparent business practices. The year 2010 is going to be tough for all businesses, and definitely for telecommunications market participants."