OREANDA-NEWS. October 19, 2011. Rostelecom OJSC (the “Group”) (RTS, MICEX: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, today announced its unaudited consolidated[1] IFRS financial results for the second quarter and six months, ended June 30, 2011.

SECOND QUARTER FINANCIAL HIGHLIGHTS 

Consolidated revenues up 6% year on year to RUB 71.2 billion

OIBDA[2] up 8% year on year to RUB 28.8 billion

OIBDA margin increased to 40.4% compared to 39.6% for the same period of 2010

Net income2 down 2% year on year to RUB 8.6 billion 

SIX MONTHS FINANCIAL HIGHLIGHTS 

Consolidated revenues up 7% year on year to RUB 143.6 billion

OIBDA up 3% year on year to RUB 56.0 billion with OIBDA margin of 39.0% compared to 40.4% for the same period of 2010

Net income up 2% year on year to RUB 19.1 billion

Capital expenditure[3] of RUB 25.6 billion representing 18% of the combined revenues

Net debt[4] of RUB 139.1 billion (net debt / annualized OIBDA of x1.4) as of  June 30, 2011 

SIX MONTHS OPERATING HIGHLIGHTS 

Total broadband subscriber base up 30% year on year to 7.7 million with revenues increasing by 21% to RUB 23.4 billion

Total Pay-TV subscriber base up 582% year on year to 5.6 million

Total subscriber base for local telephony services decreased by 2% year on year at 29.0 million 

Alexander Provotorov, President and Chief Executive Officer commented: “Our financial and operating results for the second quarter of 2011 reflect the actual performance of the combined Company for the first time following the completion of the legal reorganisation on April 1, 2011, as well as the sustainability of our business in difficult market conditions. In its first three months as a combined operator, Rostelecom has shown strong and steady growth, which will drive the Company’s further development and will help us to achieve our targets to transform the business and to strengthen our market position. Revenues increased by 7% and OIBDA by 3% in the first half of 2011, and a comfortable level of predominantly ruble-denominated debt was maintained. We continued actively to grow our broadband and Pay-TV subscriber base. We are on track to achieve by 2015 the ambitious targets we set out in our development strategy. We believe that by attaining these objectives we will increase Rostelecom’s market value for the benefit of our shareholders.

FINANCIAL SUMMARY 

RUB million

2Q 2011

2Q 2010

% change, y-o-y

6M 2011

6M 2010

% change, y-o-y

Revenue

71,232

67,491

6%

143,598

134,713

7%

OIBDA

28,813

26,703

8%

56,041

54,472

3%

   OIBDA margin, %

40.4%

39.6%

 

39.0%

40.4%

 

Operating income

14,593

13,963

5%

28,813

28,976

(1%)

   Operating margin, %

20.5%

20.7%

 

20.1%

21.5%

 

Net income

8,550

8,761

(2%)

19,112

18,736

2%

   Net margin, %

12.0%

13.0%

 

13.7%

14.1%

 

Capital expenditures

10,475

11,965

(12%)

25,579

21,187

21%

% of revenue

14.7%

17.7%

 

17.8%

15.7%

 

Net debt

139,126

n.a.

-

139,126

n.a.

-

Net debt/annualized OIBDA

1.4х

 

 

1.4х

 

 

1 Combination of consolidated financial statements of North-West Telecom OJSC, CenterTelecom OJSC, Southern Telecommunications Company OJSC, VolgaTelecom OJSC, Uralsvyazinform OJSC, Sibirtelecom OJSC, Far East Telecom OJSC (“RTOs”), Dagsvyazinform OJSC and Rostelecom OJSC, which had been under common control of Svyazinvest OJSC and were merged on April 1, 2011.

2 Here and below, please refer to Attachment 1 to this statement for a full definition and reconciliation of OIBDA

3 Here and below, capital expenditure (“CAPEX”) comprises cash spent on purchase of property, plant and equipment and intangible assets

4 Here and below, net debt is calculated as the sum of long-term loans and short-term borrowings minus cash and cash equivalents and short-term investments