OREANDA-NEWS. September 9, 2010. 7,5% of income increase and 20,5% of OIBDA growth, subscribers’ base stability and services’ consumption increase

The Kyivstar development dynamics in the 2nd quarter 2010 is characterized by two key trends: active subscribers’ base stability (+0,1%) and services’ consumption increase (+8,5%). The company demonstrated an increase almost of the every performance indicator in the 2nd quarter in comparison with the previous one.

2nd quarter 2010 key results

In the 2nd quarter Kyivstar subscriber’s base increased 0,1% in comparison with the 1st quarter 2010 and a share of the market in subscribers kept stable — at 40% level.

Net operating revenues (income) in the 2nd quarter 2010 increased by 7,5% in comparison with the previous quarter 2010. The causes of the growth were stabilized subscribers’ base and the growing ARPU that reflected the seasonal voice services’ consumption growth and the growing demand for the data communications services.

The income decrease by 2,3% in comparison with the 2nd quarter 2009 is caused by the decrease of the average revenue per user and the interconnect rates decrease.

OIBDA in the 2nd quarter increased by 20,5% in comparison to 1st quarter, OIBDA margin increased by 6,1 pct — from 50,8% in the 1st quarter to 56,9% in the 2nd quarter 2010 — as a result of the income growth and the cost optimization programs realization.

Operating costs were cut down by 11,9% in the 2nd quarter in comparison with the 1st quarter 2010.

CAPEX (capital investment) in the 2nd quarter 2010 increased by 56% in comparison with the similar period of the year 2009. The MOU growth and the ever-growing demand for the data communications services resulted in the network capacity investment growth that allows providing the stable high communication quality.

Net income increased by 93,2% in the 2nd quarter 2010 in the comparison with the 1st quarter. It’s caused mainly by the income increase by 7,5% in combination with the essential cutting down of the operating costs in the represented period

Key performance indicators in the 2nd quarter of 2010 compared to previous periods

KYIVSTAR Financial indicators

(UAH millions)

2Q 10

2Q 09

2Q 10/
2Q09

1Q 10

2Q 10/
1Q 10

Net operating revenues

2 767

2 832

-2,3%

2 573

7,5%

Adjusted OIBDA

1 575

1 629

-3,4%

1 307

20,5%

Adjusted OIBDA margin, %

56,9%

57,5%

-—-

50,8%

-—-

Operating income

622 

542 

14,8%

320

94,5%

Operating income margin, %

22,5%

19,1%

-—-

12,4%

-—-

SG&A

688

717

 

782

 

including Sales & Marketing Expenses

127

145

 

134

 

including General & Administrative Costs

561

573

 

648

 

SG&A percentage

24,9%

25,3%

-—-

30,4%

-—-

Net income (loss)

432

524

 

224

93,2%

KYIVSTAR OPERATING DEVELOPMENT

2Q 10

2Q 09

2Q 10/
2Q09

1Q 10

2Q 10/
1Q 10

Mobile subscriptions ("000)

21 948

22 224

 

21 934

0,1%

MOU, min

447

303

47,7%

425

5,2%

ARPU mobile, USD

5,2

5,4

 

4,7

9,3%

ARPU mobile, UAH

40,9

41,4

 

37,7

8,5%

CAPEX (in USD millions)

2Q 10

2Q 09

2Q 10/
2Q09

1Q 10

2Q 10/
1Q 10

CAPEX (in USD millions)

58,9

37,8

56,1%

55,8

5,6%

Starting from the 1st quarter 2010 report all financial indicators of Kyivstar are given in accordance with USGAAP accounting principles (United States Generally Accepted Accounting Principles).

They may be adjusted based on financial audit in future.

2nd quarter 2010 key events

The services" consumption growth:

The average quantity of used minutes per user (MOU) in the Kyivstar network in the 2nd quarter 2010 increased by 47,7% in comparison with the similar period of the previous year.New tariff proposals of the 2-nd quarter and the tariffs for the extranet calls including "More intercourse", introduced in the 1st quarter caused not only consumption growth but the increase of the APRU by 9,3% as well in comparison with the 1st quarter 2010.

The data communications services consumption is the essential driver for the common growth of the consumption and Kyivstar income. In the 2nd quarter the quantity of the mobile internet users increased by 13% in comparison with the 1st quarter 2010. In the data communications segment the income over the represented period increased by 13% as well.

The popularity of the additional services grows as well, for example:

The handy and actual service "Extra money" is already being used by more than 3,5 million users. Furthermore the access to the service is extended for more than 13 million subscribers..

The digital music and games in the youth segment: summing up the results of the 2nd quarter more than 2,5 million people are the permanent users of the digital portal djuice.com.ua, from which more than 43,7 million mp3 tracks were downloaded.

New tariffs and promos:

All the new tariffs introduced in the 2nd quarter are based on the "bundle" principle of giving the extremely advantageous prices for the calls to the all networks.

"Bomb" — new tariff plan let all the DJUICE subscribers call other operators’ subscribers only for 0,1 UAH per minute with no connection fee.

"Freedom" — new tariff plan for the prepaid subscribers that doesn’t include the connection fee and the daily subscription fee is only 6 UAH. The subscriber receives daily 100 package minutes for outgoing calls to Kyivstar subscribers and 30 package minutes for outgoing calls to fixed and mobile networks of other Ukrainian operators.

"Unlimited comfortable", "Unlimited + Internet", "Unlimited + StarSvit", "Unlimited VIP" — the new tariff plans line for the Kyivstar business clients and the contract form service clients.