Sibirtelecom OJSC (RTS: ENCO/ENCOP, ENCOG/ENCOPG; MICEX: STKM/STKMP; ADR: ÎŇŃ - SBTLY, Frankfurt and Berlin Stock Exchanges – ISIN: US8257351036, WKN: 260452) – operator of telecommunication services in Siberian Federal District – provides its consolidated financial statements for six months ended on June 30, 2009 (non-audited) that were made in compliance with international financial reporting standards (IFRS).

 

The consolidated financial statements include assets, liabilities and results of activity of Sibirtelecom OJSC (hereinafter – Company) and its subsidiary companies that provide mobile communication and other telecommunication services as their principal activity.

 

Key financial indices according to IFRS (mln rubles):

	For 6 months ended on June 30		Change, %
	2009	2008
Sales revenue	19 070	18 461	3,3
OIBDA[1]	7 407	7 222	2,6
OIBDA margin	38,8%	39,1%
EBITDA[2]	6 981	7 278	(4,1)
EBITDA margin	36,6%	39,4%
Other operating income	638	490	30,2
Operating Expenses	(16 373)	(15 161)	8,0
Operating Profit	3 335	3 790	(12,0)
Operating Profit Margin	17,5%	20,5%
Profit before income tax	1 276	2 779	(54,1)
Revenue for the reporting period	851	2 005	(57,6)
Margin of profit for the reporting period	4,5%	10,9%

 

 

 

The Company’s Sales Revenue

Ø     The Company’s consolidated revenues for six months ended on June 30, 2009 made up 19,070 mln rubles, having increased by 609 mln rubles or by 3.3% in comparison with the similar period of 2008.

The basic factors of the Company’s revenue growth in the reporting period are the increase in the subscriber base of the fixed-line and cellular communication, the development of broad-band access services: the growing number of users of Internet access and Internet traffic.

The Structure of the Company’s sales revenue (mln rubles):

Revenue type	For 6 months ended on June 30			Change
	2009	2008		mln rubles	%
Services of intraareal telephone communication	2,498		2,662	(164)	(6.2)
Services of local telephone communication	5,854		5,709	145	2.5
Services of telegraph communication, data transmission and telematic communication services (Internet)	2,855		2,230	625	28.0
including services of data transmission network and telematic services (Internet)	2,734		2,122	612	28.8
Services of mobile radiotelephone (cellular) communication	4,892		4,815	77	1.6
Services of connection and traffic transmission	1,840		2,058	(218)	(10.6)
Assistance and agency services	266		311	(45)	(14.5)
Services of mobile radio communication, wire broadcasting, television	217		213	4	1.9
Other services (core types of activity)	3		5	(2)	(40.0)
Revenues from other sales	645		458	187	40.8
Including revenues from leased assets	380		220	160	72.7
Total	19,070		18,461	609	3.3

In the structure of consolidated sales revenues of the Company, the main components are profits from providing services of local telephony (5,854.0 mln rubles) and mobile communication services (4,892 mln rubles), which is 30.7% and 25.7%, respectively. Essential items in the revenue structure are revenues from services of data transmission network and telematic services (Internet) (2,734 mln rubles) and services of intraareal telephone communication (2,498 mln rubles), which is 14.3 and 13.1%, respectively.  Revenues from providing services of connection and traffic transmission amounted to 9.6% (1,840 mln rubles) of the consolidated sales revenues.

As compared with the same period of 2008 for the 6 months ended on June 30, 2009:

§         the greatest increase in revenues from providing services of data transmission and services of providing an access to the Internet network amounted to 612 mln or 28.8%. The main factors are the growing number of users of broad-band access services and therefore the growth of income from providing an access to Internet. As of July 1, 2009 the number of subscribers of broad-band access was 501.5 thousand users (+88.0% to the same period of 2008);  

§         increase in revenues from other sales amounted to 187 mln rubles or 40.8%, which is caused mainly by the increase in the number of leased objects;

§         increase in revenues from rendering local connections services amounted to 145 mln rubles or 2.5%, which is attributed to the increase in subscriber base (number of basic telephone sets of parent company increased by 27.9 thousand items and amounted to 4,358.8 thousand items at the end of the first half of 2009) and the adjustment of regulated tariffs from March 1, 2009;

§         increase in revenues from providing cellular communication services amounted to 77 mln rubles or 1.6% due to the growth of the subscriber base. As of July 1, 2009, the subscriber base of the Company’s cellular business exceeded 5.1 mln subscribers (+14.2% to the same period of 2008);

§         decrease in revenues from services of connection and traffic transmission amounted to 218 mln rubles or 10.6% is mainly caused by the cancellation of tariffication of points of interconnect from March 1, 2008; 

§         decrease in revenues from intrazone telephone communication services amounted  to 164 mln rubles or 6.2%, which is caused by the decreased traffic and the reduced average revenue;

§         decrease in revenues from assistance and agency services amounted to 45 mln rubles or by 14.5%, which is mainly governed by a decreased volume of services rendered by Rostelecom OJSC to the customers, as well as direct contracts concluded  with customers at the level of Rostelecom OJSC.

 

The Company’s expenses

Ø     The Company’s consolidated expenses for 6 months ended on June 30, 2009 increased by 1,212 million rubles, or by 8.0%, against the same period of 2008 and amounted to 16,373 million rubles.

Expenses of salaries, other payments and deductions for social insurance (31.4%), depreciation and amortization charges (24.9%), and other operating expenses (20.7%) form a major part of the total amount of expenses.

The Company’s expenses structure (million rubles):

Type of expenses	For 6 months ended on June 30				Change
	2009		2008		mln rub	%
Wages, salaries		(5 137)		(5 087)	(50)	1,0
Depreciation and amortization		(4 072)		(3 432)	(640)	18,6
Telecom operator services		(2 320)		(2 132)	(188)	8,8
Material, repair, and maintenance, public services		(1 457)		(1 536)	79	(-5,1)
Other operating expenses		(3 387)		(2 974)	(413)	13,9
Total		(16 373)		(15 161)	(1 212)	8,0

As compared with the same period of 2008 for the 6 months ended on June 30, 2009:

§         Amount of the charged depreciation and amortization increased by 640 mln rubles or by 18.6%, due to an active investment policy of the Company aimed at the network development;

§         Increase of other operating expenses amounted to 413 mln rubles or 13.9%, due to the increase in expenses from agency fees, taxes, except for profit tax, the growth of expenses from transportation and postal services, as well as the formation of provision for doubtful debts;

§         Increase of expenses from telecom operator services amounted to 188 mln rubles or 8.8%, due to the growing traffic subject to payment in accordance with the order inter-operator relations and the normative legal base of the sector.

 

The Company’s Capital Costs

Ø     The Company’s capital costs for the period ended on June 30, 2009 amounted to 2,372 mln rubles, which is less by 902 mln rubles or by 27.6% as compared with the same period of 2008. The investments in the development of services of mobile radotelephone (cellular) communication amounted to 56% of the total volume of the Company's capital costs.  

The Company’s Debt Load 

Ø     The Company’s debt load is maintained at the acceptable level. As of June 30, 2009, the Company’s net debt is 21.2 bln rubles (-7.6% from the beginning of 2009).  

 

The Company’s Financial Results

As compared with the same period of 2008 for the 6 months ended on June 30, 2009:

Ø     The growth of OIBDA amounted to 185 mln rubles or 2.6%.

OIBDA margin is 38.8%.

Ø     The operating income amounted to 3,335 mln rubles, having decreased by 12.0% due to the outrunning growth of expenses (8.0%) as compared with the growth of revenues (3.3%).

The operating income includes the losses recovered from providing universal communication services in the amount of 406 mln rubles and other operating and other operating revenues amounted to 232 mln rubles. 

The operating profit margin is 17.5%.

Ø     The profit before taxation reduced by 1,503 mln rubles or by 54.1% and amounted to 1,276 mln rubles due to the decreasing operating profit, growing expenses from interests on bank credits and loans of the Company and due to the result of influence of unreliable losses from exchange difference (the negative exchange difference balance amounted to 428 mln rubles).  

Ø     The profit for the reporting period decreased by 1,154 mln rubles or by 57.6% and amounted to 851 mln rubles, which is governed by the decreased profit before taxation. The margin profit for the reporting period was 4.5%.  

 

For reference: The main nonconsolidated operating indicators and statistical data:

	1st  half-year of   2009	1st  half-year of   2008	Change, %
Key operating data
Number of basic telephone sets, thousands	4,358.8	4,330.9	0.6
Intrazone traffic (outgoing paid), mln minutes	1,138	1,204	(5.5)
Number of cellular subscribers (without subsidiary business), thousands	651.9	565.3	15.3
Number of cellular subscribers (including subsidiary business), thousands	5,159.8	4,518.8	14.2
Number of broad-band Internet access, thousands	501.5	266.8	88.0
Average number of lines, thousands	5,035.8	4,886.0	3.1
Average number of employees[3], people	26,065	30,632	(14.9)
Efficiency indicators
Revenues per line, rubles	2,777.2	2,797.2	(0.7)
Revenues per employee, thousand rubles	536.6	446.2	20.3
Number of lines per employee	193	160	21.1

 

 

The IFRS consolidated unaudited interim financial statements of Sibirtelecom OJSC for 6 months ended on June 30, 2009 are available on the Company’s corporate website www.sibirtelecom.ru at “Investor relations - Financial statements”.