Far East Telecom Discloses Audited Results for 2009
OREANDA-NEWS. April 1, 2010. OJSC "Far East Telecom" (RTS: ESPK, MICEX: DLSV, OTC of USA: FEEOY, Deutsche Bourse and Berlin Stock Exchange: D7A) discloses audited results for
Financial and Economics Highlights for 2009
|
Financial and Economics Highlights for 2009 |
2009, Mln RUR |
2008, Mln RUR |
% Change, yoy |
|
Revenues |
13,396.8 |
12,232.2 |
9.5% |
|
Including revenues from telecommunications services |
12,734.2 |
11,614.5 |
9.6% |
|
Operating expenses |
10,317.6 |
9,538.4 |
8.2% |
|
Sales profit |
3,079.2 |
2,693.8 |
14.3% |
|
Profit before tax |
2,673.6 |
2,334.2 |
14.5% |
|
4,521.8 |
4,103.2 |
10.2% | |
|
33.8% |
33.5% |
| |
|
4,692.9 |
4,174.3 |
12.4% | |
|
35.0% |
34.1% |
| |
|
Net Profit |
2,171.5 |
1,735.6 |
25.1% |
|
NP margin |
16.2% |
14.2% |
|
|
19,360.9 |
16,760.8 |
15.5% | |
|
9,932.8 |
8,196.0 |
21.2% |
“In 2009 we succeed to keep revenue growth rate at the last years’ level. The main drivers of growth were services having high market potential: Internet access and interactive TV. Those services share reached 30% in total revenues. Tight control of operation expenses and investment efficiency increasing gave an additional impulse for business profitability growth”.
The strategic event of 2009 is reaching full control under the largest operator of the fixed communications of Sakh (Yakutia) Republic, OJSC “Sakhatelecom”, - said Andrey Balatsenko, Chief executive Officer of OJSC “Far East Telecom”.
Business Efficiency Highlights
Employees number according to the records as of December 31, 2009 reached 10,215 employees having reduced for 1,104 people or by 9.8% comparing to the amount on January 1, 2009 (11,319 employees);
Revenue per employee increased by 20.1% up to 1,285.4 thousand Roubles for 2009 (for 2008 – 1,070.7 thousand Roubles);
Amount of lines per employee increased by8.5% up to 141.2 lines (for 2008 - 130.1);
Cost per one Rouble of revenue for 2009 is 0.7702 Roubles having increased by 1.2% (for 2008- 0.7798 Roubles) comparing to the same period of the last year.
Revenues from Telecommunication Services Highlights for 2009
|
Type of services |
2009 |
2008 |
% Change, yoy |
|
Mln RUR |
Mln RUR | ||
|
Intrazone telephone communication service |
2,238.1 |
1,994.0 |
12.2% |
|
Local telephone communication service |
5,125.1 |
4,694.3 |
9.2% |
|
Mobile radio communication, wire communication services, broadcasting, television services |
161.0 |
162.1 |
(0.7%) |
|
Mobile radio (cellular) communication services |
255.0 |
317.0 |
(19.6%) |
|
Telegraph communication, data communication and telematic services |
3,974.3 |
3,237.7 |
22.8% |
|
including Internet access services and data transmission services |
3,844.6 |
3,095.1 |
24.2% |
|
including interactive TV services |
229.1 |
134.9 |
69.8% |
|
Connection and interconnection traffic services |
980.7 |
1,209.4 |
(18.9%) |
|
TOTAL |
12,734.2 |
11,614.5 |
9.6% |
Reasons for total revenues growth are as follows:
* sales from Internet access services increase;
* sales from interactive TV (IP TV) services increase;
* sales from intrazone telecommunication services increase;
* sales from local telecommunication services increase.
Revenues from Internet access and data transmission services
High growth rate of revenue was reached due to broad-band Internet access services subscribers’ base enlargement. Comparing to 2008, it increased for 120,159 subscribers (as of December 31, 2010 – 391,606 subscribers).
Also revenue growth was influenced by active marketing of new limited and not limited tariff plans, introduction and development of additional services at the base of Broad-band Internet, which is in it’s turn contributed to revenue growth from subscriber fee.
Revenue growth from “Interactive television” is 69.8% comparing result of 2008 and reached 94.2 mln Roubles. The reason of increase is enlargement of subscriber base to 35,978 subscribers (as of December 31, 2009 subscriber base reached 76,796 subscribers), and also interactive television services putting to commercial exploitation in July
Revenue from Intrazone Telephone Communication Services
Revenue growth of +12.2% is caused by including to this account of revenue from mutual channels reservation with CJSC “Company Transtelecom” since July
Traffic decrease is caused by alternative operators of zonal and mobile communications entry to the market. The decrease was compensated by revenue growth from Intrazone channels rent to 66% (135.3 mln Roubles).
Revenues from local telephone communications services
Revenue increase from local telecommunication service is caused by growth of subscription fee tariffs starting from September 2008 and March 2009.
Mobile radio (cellular) communication services
Revenues from cellular communication for 2009 decreased comparing to 2007 by 19.6%. This decrease is due to subscribers’ base reduction to 21,826 subscribers (as of December 31, 2009 subscriber base was 75,170 clients) and average income per subscriber decrease from 250 Roubles in 2008 to 231 Roubles in 2009 that is result from stiff competitive situation from Bolshaya Troika (Big Three) in Magadanskaya region and Kamchatskiy Krai. Decrease of subscriber base also was caused by correction of subscriber base of Magadansky Branch in July 2009.
Connection and interconnection traffic services
Decrease of revenues from connection and interconnection traffic services for 2009 is caused by:
Revenue decreasing from traffic interconnection services which is caused by:
- traffic of zone call limitation decreasing because of part of traffic interconnection from SPS and LD/International operators through alternative fixed line operators, and because of mobile substitution development;
- introduction of new differentiated tariffs for zone call limitation services from May 1, 2008 within one settlement (0.80 – 1.25 Ruble per minute instead of 1.52 Ruble per minute);
- decreasing of traffic for local call initiation due to decreasing of dial-up Internet access share and share of DSL increasing;
Decreasing of revenue from traffic connection (organization and maintenance of connection dots), which caused by excluding of dot maintenance service from traffic connection service since March 01, 2008.
Changes in subscribers’ base and new services share in revenues of 2009
Share of new services (Internet access, data transmission, mobile communications, interactive TV and video on demand services) in the Company’s revenues for 2009 reached 30.5% (in 2008 share of new services was 27.8%);
Subscribers’ base of users of commutated Internet access dropped by 67.7% to 48,051 subscribers (in 2008 – 148,627 subscribers) because of subscribers’ migration to the broadband Internet access service;
Subscribers’ base of broadband Internet access increased by 44.3% to 391,606 users (in 2008 – 271,447 subscribers), Broadband access penetration to local telephone service reached 28.8% (in 2008 – 19.9%).
Subscriber base of Interactive television service grew to 88.1% and reached 76,796 users (in 2008 – 40,818 subscribers), penetration of Interactive Television to Broadband Internet Access reached 19.6% (in 2008 – 15%);
Cellular communication subscribers’ base reduced by 22.5% to 75,170 subscribers (Kamchatsky region -32,102 (in 2008 – 38,317), Magadansky region 43,068 (in 2008 – 58,679);
Subscriber base for local telephone communications service as of December 31, 2009 became 1,360,381 numbers (as of December 31, 2008 – 1,361,761 numbers).
Operating Expenses Highlights for 2009
|
Operating Expenses |
2009, |
2008, |
% Changes, yoy |
|
Mln Roubles |
Mln Roubles | ||
|
Wages, salary payment expenses |
3,207.0 |
3,059.5 |
4.8% |
|
Social insurance deductions |
681.6 |
675.7 |
0.9% |
|
Depreciation & amortization |
1,442.6 |
1,409.4 |
2.4% |
|
Material costs |
1,059.0 |
930.1 |
13.9% |
|
Expenses on communications providers services (excluding the OJSC “Rostelecom”) |
1,186.3 |
1,175.2 |
0.9% |
|
Expenses of mutual provisions with CJSC "Company TransTeleCom" |
482.6 |
241.6 |
99.8% |
|
Expenses on the OJSC “Rostelecom” services |
369.4 |
306.6 |
20.5% |
|
Expenses on side organizations services |
771.3 |
799.2 |
(3.5%) |
|
Deductions to the universal service provision |
134.5 |
121.3 |
10.9% |
|
Taxes and duties included into expenses resulted from core type of business |
11.3 |
8.6 |
31.4% |
|
Other expenses |
972.1 |
811.2 |
19.8% |
|
TOTAL |
10,317.6 |
9,538.4 |
8.2% |
· Expenses on wages, salary increased for 147.5 million Roubles or by 4.8% comparing to 2008. Growth was due to salary increasing for reaching competitive level of salary and increasing social protectability of those types of employees who have low level of salary.
· Depreciation and amortization increased for 103.2 million Roubles or by 7.9% due to assets putting into operation. Unit weight of this element of expenses in the cost structure reduced comparing to 2007 and constituted 14.8%.
· Expenses on wages and salary payment increased to 147.5 mln Roubles or 4.8% comparing result of 2008. Growth is caused by salary increasing for reaching completive level of salary and social protectability of employees who have low level of salary;
· Increasing of expenses for material costs to 128.9 mln Roubles or 13.9% comparing to result of 2008 was due to increase of expenses for “Products, included to telecommunications services cost ” and growth of tariffs for heat and electricity;
· Increasing of “Expenses for mutual provision with CJSC “Company TransTeleCom” to 241.0 mln Roubles for 2009 comparing to the same result of the previous year is caused by signing contract for mutual channels provision of STM-16 level Vladivostok – Khabarovsk has been signed since 1st July 2008 (120 mln Roubles for one quarter);
· Growth of expenses for services of OJSC Rostelecom is caused by tariff increasing for channels rent in interests of zone since March 2009, as well as increasing Internet services consumption;
· Decreasing of expenses for “Service of side organizations” to 3.5% is caused by consulting expenses decreasing and building and equipment repair;
· Growth of “Other expenses”
· Other expenses increase for 2009 for 160.9 million Roubles comparing to 2008 is due to expenses growth on software and data bases, agent services, and non state pension insurance for employees, and expenses for interactive entertainment services.
Other Incomes and Losses
In 2009 Company received loss from other non-operational activity amounting at 405.6 million Roubles (loss of 2008 was 359.5 million Roubles).
· Interest income decreased by 58.6% comparing to the same period of 2008 and reached 15.1 million Roubles due to decreasing of free cash flow available for placing;
· Interest expenditures accounted at 591.8 million Roubles is 99.7% high than it was in 2008 (492.1 mln Roubles) which was caused by interest rates growth in accordance with loan contract;
· Decreasing of loss from other activities was caused by increasing participation in other organizations (2009 – 404.2 mln Roubles, 2008 – 29.0 mln Roubles), and accounting of excessive taxes (VAT and income tax) amounted to 21.9 mln Roubles at “Other incomes” as a result of tax inspection for period of time from 2001 to 2002, and incomes of 121.6 mln Roubles for 2009 accounting at “Reimbursement of losses received because of universal services” (for 2008 – 109.6 mln Roubles).
Equities and Liabilities
Net assets of OJSC Far East Telecom as of December 31, 2009 increased by 21.2% and reached 9, 932.8 million Roubles (as of December 31, 2008 – 8, 196.0 million Roubles). Net assets include net profit distribution for dividend payment for 2008 fiscal year in amount of 431.1 mln Roubles. Share of equities increased 5.1% comparing the beginning of the year (48.6%) and reached 51.1% in the balance.
|
|
31 December 2009, |
31 December 2008, |
% Changes, yoy |
|
Mln Roubles |
Mln Roubles | ||
|
Debt |
6,820.8 |
5,675.6 |
20.2% |
|
Net debt |
6,675.8 |
5,398.5 |
23.7% |
|
Net debt / EBITDA |
1.42 |
1.29 |
|
|
EBITDA / Interests expenses (net) |
8.14 |
9.98 |
|
Growth of net debt is caused by 49% shares of OJSC Sakhatelecom purchasing from Government of Sakha (Yakutia) in October 2009 for 1,360.3 mln Roubles. Beside these, net debt consists bill loan from OJSC “Sakhatelecom” (including cumulate discount) in amount of 648.1 mln Roubles.
Worsening of ratios Net debt to EBITDA and EBITDA to Interest Expenses (net) is also related to debt growth due to purchasing, mentioned above
Liquidity
As of December 31, 2009 the current liabilities exceeds current assets to 2, 868 million Roubles (as of December 31, 2008 – to 2, 251.1 million Roubles).
|
|
December 31, 2009 |
December 31, 2008 |
|
Mln Roubles |
Mln Roubles | |
|
Quick Assets Ratio |
0.06 |
0.07 |
|
Quick Ratio |
0.34 |
0.39 |
|
Current Ratio |
0.45 |
0.52 |
|
Working Capital Turnover Ratio |
(3.01) |
(2.59) |
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