OREANDA-NEWS. September 28, 2010. Southern Telecommunications Company (UTK) [(RTS: KUBN, KUBNP; МICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the largest fixed-line telecommunications operator in the territory of the Southern and North-Caucasian federal districts of Russia, hereby presents its unaudited consolidated financial statement for the first six months of 2010 in accordance with international financial reporting standards (IFRS).

Revenue increased by 6.0% for 1H10 and amounted to RUR 11,547 mln.  In the revenue structure the largest share fell to local voice (43.2%), datacom and telematic services (28.5%) and intrazonal telephony (13.8%).

A 4.8% increase in local voice revenue was attributable to the indexation of local voice tariffs effective February 1, 2010 and in increase in the number of subscribers which have the technical capability to select three tariff plans. 

As a result of traffic redistribution to cellular operators, cellular telephony revenue from intrazonal telephony decreased 7.9% to RUR 1,588 mln.

Centralized operations on the competitive value-added services market allowed the company to boost revenue from telegraphic services, datacom and telematic services (Internet) by 20.8% up to RUR 3,291 mln.  In addition, growth in the broadband Internet subscriber base in the first six months of 2010 reached 40.7%, i.e. up to 636,500 users.

Revenue from interconnect and traffic transmission decreased by 7.7% to RUR 913 mln, accounting for 7.9% of the revenue breakdown.

Revenue breakdown (RUR, mln)  

Indicator

1H10

1H09

Change, %

Revenue

11 547

10 898

6.0

Local voice

4,984

4,754

4.8

Zonal telephony

1,588

1,725

-7.9

Telegraphic, datacom and telematic services (ISP)

3,291

2,724

20.8

Interconnect and traffic transmission

913

989

-7.7

Outsourcing and agency

219

230

-4.8

Mobile and radio, wire broadcasting, radio broadcasting and television

180

181

-0.6

Other telecommunications services

45

54

-16.7

Other revenue

327

241

35.7

The company’s expenses for 1H10 increased by 3.4% and amounted to RUR 9,223 mln, of which the biggest proportion fell to personnel expenses (34.8%), depreciation and amortization (23.0%), other operating expenses (18.3%), and also expenses for material, repair and maintenance, and utilities (13.7%).

Payroll expenses in the first six months of 2010 went up 7.8% and stood at RUR 3,207 mln due to the indexation of employee salaries effective February 1 and May 1, 2010.

Depreciation and amortization increased by 1.7% to RUR 2,122 mln. 

Expenses for materials, repair and service, utilities rose 7.7% to RUR 1,267 mln. 

Other operating expenses decreased insignificantly by 0.8% to RUR 1,684 mln.

Operating expenses (RUR, mln) 

Indicator

1H10

1H09

Change, %

Total expenses

(9,223)

(8,922)

3.4

Personnel

(3,207)

(2,976)

7.8

Depreciation and amortization

(2,122)

(2,086)

1.7

Materials, repair and maintenance, utilities

(1,267)

(1,176)

7.7

Interconnect

(943)

(987)

-4.5

Other operating expenses

(1,684)

(1,697)

-0.8

EBITDA rose 23.7% to RUR 4,844 mln, EBITDA margin increased 6.1% to 42.0%. Net profit in the reporting period more than tripled and amounted to RUR 1,582 mln.  Net debt remained essentially unchanged, as Net debt/EBITDA reached 3.8x.

Main profitability and debt indicators, RUR, mln

Indicator

1H10

1H09

Change, %

EBITDA*

4,844

3,917

23.7

EBITDA, margin %

42.0

35.9

6.1%

Net profit/loss

1,582

525

201.3

Net profit margin, %

13.7

4.8

-

Net debt **

18,283

18,287

-0.02

Net debt/EBITDA

3.8

4.7

-

* EBITDA is calculated as earnings before taxation, depreciation and amortization and interest expenses minus interest revenue.

** Net debt is calculated as the sum of long-term and current borrowing liabilities minus cash and cash equivalents.