OREANDA-NEWS. December 16, 2010. The unaudited consolidated interim financial statements include assets, liabilities and results of activity of Sibirtelecom OJSC and its subsidiary companies (hereinafter referred to as “the Company”). The primary activity of the subsidiaries is provision of mobile (cellular) communication and other telecommunication services.

Key financial indices according to the IFRS (mln. rubles):

 

Over 9 months period

ended September 30,

Change, %

2010

2009

Revenue from sales

29,282

28,437

3.0

OIBDA

12,381

11,385

8.7

OIBDA margin

42.3%

40.0%

 

EBITDA

12,384

11,076

11.8

EBITDA margin

42.3%

38.9%

 

Net Debt

17,152

19,894

(13.8)

Operating expenses

(23,860)

(24,165)

(1.3)

Operating profit

6,647

5,274

26.0

Operating profit margin

22.7%

18.5%

 

Profit before tax

5,002

2,434

105.5

Profit for the reporting period

3,815

1,820

109.6

Margin of profit for the reporting period

13.0%

6.4%

 

The Company’s revenues from sales

The Company’s consolidated revenue from sales over the period of 9 months ended September 30, 2010 made up 29,282 mln. rubles, having increased by 845 mln. rubles, or by 3.0% in comparison with the similar period of 2009.

In the structure of the Company’s consolidated revenue the main components are income from provision of local telephony services (9,329 mln. rubles) and mobile radiotelephony (cellular) communication (7,315 mln. rubles). They make respectively 31.9% and 25.0% of the Company’s revenue. Important items in the structure of revenue are income from services of data transfer network and telematic (Internet) services (4,942 mln. rubles) and from provision of intrazone telephony communication services (3,269 mln. rubles), or 16.9% and 11.2% respectively. Income obtained from the services of interconnection and traffic transmission amounted to 9.2% (2,683 mln. rubles) from the consolidated revenue.

The basic factor of the Company’s revenue growth in the reporting period was the development of broad-band access services: the growing number of users of Internet access.

As compared with the same period of 2009, over the period of 9 months ended September 30, 2010:

-      the greatest increase in revenues was obtained from providing services of data transmission network and telematic (Internet) services – 816 mln. rubles, or 19.8%. The main factors are the growing number of users of broad-band access (BBA) services and therefore the growth of income from providing detached access to the Internet. As of October 1, 2010 the number of BBA subscribers was 745.2 thousand users;

-      increase in revenues from rendering local telephony services amounted to 570 mln. rubles, or 6.5%, which is attributed to the aggregate effect of adjustment of fixed tariffs from February 1, 2010;

-      decrease in revenues from providing intrazone telephony services amounted to 431 mln. rubles, or 11.6%, which is connected with reduction of traffic from fixed subscribers both to networks of landline and cellular operators and decrease of tariffs on intrazone connections with “long-range” tariff zones for some territories from January 30, 2010.

The structure of the Company’s revenues from sales (mln. rubles):

Type of revenue

Over 9 months period ended September 30,

Change

2010

2009

mln. rubles

%

Services of local telephone communication

9,329

8,759

570

6.5

Services of mobile radiotelephone (cellular) communication

7,315

7,239

76

1.0

Services of telegraph communication, data transmission and telematic communication services (Internet)

5,106

4,304

802

18.6

including services of data transmission network and telematic services (Internet)

4,942

4,126

816

19.8

Services of intrazone telephone communication

3,269

3,700

(431)

(11.6)

Services of connection and traffic transmission

2,683

2,720

(37)

(1.4)

Assistance and agency services

317

378

(61)

(16.1)

Services of mobile radio communication, wire broadcasting, television

170

327

(157)

(48.0)

Other services (primary types of activity)

1

5

(4)

(80.0)

Revenues from other sales

1,092

1,005

87

8.7

including revenues from leasing of assets

306

572

(266)

(46.5)

Total

29,282

28,437

845

3.0

The Company’s expenses

-      The Company’s consolidated expenses over the period of 9 months ended September 30, 2010 reduced by 305 mln. rubles, or 1.3% against the same period of 2009 and amounted to 23,860 mln. rubles.

Personnel expenses (30.5%), depreciation and amortization (24.0%) and other operating expenses (21.1%) form the biggest share of the total amount of expenses.

As compared with the same period of 2009, over the period of 9 months ended September 30, 2010:

-      expenses on materials, repair and maintenance, utilities increased by 354 mln. rubles, or 16.7%, due to adjustment of tariffs on electric and thermal energy and growth of cost of connection of subscribers;

-      amount of accrued depreciation and amortization decreased by 377 mln. rubles, or 6.2%, due to extension of useful life of new equipment and its higher reliability;

-      reduction of personnel costs by 215 mln. rubles, or 2.9%, which is referred to current optimization of the headcount;

-      decrease of expenses on telecoms operators’ services amounted to 133 mln. rubles, or 3.8%, due to reduction of initiated and landed traffic, optimization of traffic routing and encouraging of intranetwork content consumption.

The Company’s expenses structure (mln. rubles):

Type of expenses

Over 9 months period ended September 30,

Change

2010

2009

mln. rubles

%

Personnel expenses

(7,274)

(7,489)

215

(2.9)

Depreciation and amortization

(5,734)

(6,111)

377

(6.2)

Telecoms’ services

(3,340)

(3,473)

133

(3.8)

Materials, repair and maintenance, utilities

(2,478)

(2,124)

(354)

16.7

Other operating expenses

(5,034)

(4,968)

(66)

1.3

Total

(23,860)

(24,165)

305

(1.3)

The Company’s capital expenditure

-      The Company’s capital costs over the period of 9 months ended September 30, 2010 amounted to 5,698 mln. rubles, having increased by 2,113 mln. rubles, or 58.9%, as compared with the same period of 2009. The investments in the development of mobile radiotelephone (cellular) communication services made up 25.8% of the total volume of the Company's capital costs.

The Company’s financial results

As compared with the same period of 2009, over the period of 9 months ended September 30, 2010:

-      The growth of OIBDA amounted to 996 mln. rubles, or 8.7%. OIBDA margin – 42.3%.

-      The operating profit increased by 1,373 mln. rubles, or 26.0%, and made up 6,647 mln. rubles, due to growing revenues (3.0%) and simultaneously decreasing costs (1.3%).

The structure of operating profit includes other operating income amounting to 1,225 mln. rubles, including compensation for losses from provision of universal communication services making up 994 mln. rubles.

The operating profit margin is 22.7%.

-      Profit before tax increased by 2,568 mln. rubles and reached 5,002 mln. rubles due to performance of operating profit, reduction of interest expenses, and positive behavior of profit from exchange difference during foreign currency valuation (by the results over the period of 9 months ended September 30, 2010, the balance of exchange difference was zero, whereas during the similar period of 2009 the balance of negative exchange difference amounted to 311 mln. rubles).

-      The profit for the reporting period increased by 1,995 mln. rubles and reached 3,815 mln. rubles, due to the growth of profit before tax. The margin of profit in the reporting period is 13.0%.