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Southern Telecommunications Company reports its RAS financial results for 2009: net profit up 3.3 times |
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Krasnodar, 31 March, 2010: Southern Telecommunications Company (“UTK”) (RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal fixed-line telecommunications provider for Russia’s Southern and North-Caucasian Federal Districts, today announced its audited financial results for the year 2009 compiled in accordance with Russian Accounting Standards (RAS).
Commenting on 2009 performance results, UTK’s General Director Alexander Shipulin noted: “In 2009 the Company managed to regulate its credit portfolio and to reduce significantly its debts as well as to implement a number of major projects, thus having prepared a platform for realization of the Company’s vast goals for 2010. We managed to optimize many business - processes, to broaden a package of services for corporate clients and to improve quality of rendered services”.
UTK’s 2009 revenue made RUR 21,856.9 million, representing a 4.7%- increase over 2008. Operating expenses grew by 3.4% to RUR 16,313.1 million.
Revenues from local telephone services rose by 1.8% to RUR 9,501.4 million due to tariff growth in March 2009 and increase in number of subscribers having the opportunity to choose one of three tariff plans (87% of the subscriber base), and accounted for 45.2% of the Company’s telecom revenues.
Due to structural changes in traffic and mobile substitution, revenues from intra-zonal telephone services decreased to 3,435.7 million roubles accounting for 16.4% of the Company’s telecom revenues.
Active enhancement of Internet broadband access subscriber base by 1.5 times to 546.0 thousand users enabled UTK to increase 2009 revenues from data transfer and Internet access services by 31.0% to RUR 5,580.4 million. Portion of revenues from these services in total telecom revenue increased by 5.3% to 26.6%.
Revenues from interconnection and traffic transit services decreased 12.1% to 1,942.4 million roubles thus accounting for 9.3% of the Company’s telecom revenues. The reduction was attributable to redistribution of traffic among the networks of fixed-line telecommunications providers operating in the licensed territory of Southern Telecommunications Company and decrease in traffic for initiation of local and zonal calls.
SEGMENTAL ANALYSIS OF REVENUES:
Description
Mln rub
2009
2008
Y-o-y change, %
Revenue
21,856.9
20,883.8
4.7
Including Telecom revenue
20,998.7
20,037.9
4.8
Intra-zone telephony
3,435.7
3,720.6
-7.7
Local telephony
9,501.4
9,330.4
1.8
Wireless communication with mobile objects, wired radio, TV and radio broadcasting
361.2
339.2
6.5
Telegraph, data transfer and telematic services
5,757.1
4,420.2
30.1
Including data transmission and Internet access
5,580.4
4,259.9
31.0
Interconnection and traffic transit services
1,942.4
2,210.5
-12.1
Other telecom services
1.1
17.0
-93.5
Fees on assistance and agent services
478.8
520.4
-8.0
Other sales revenues (non-core activities)
379.3
325.5
16.5
2009 expenses for wages and salaries showed a 1.8%-decrease over 2008 to RUR 4,505.2 million accounting for 27.6% of the Company’s operating expenses.
Depreciation charges grew 12.1% to RUR 4,003.6 million accounting for 24.5% of the Company’s operating expenses.
2009 material expenses amounted to RUR 1,682.3 million representing a 3.0%-decrease over 2008 and accounting for 10.3% of the Company’s operating expenses.
Payments to national telecom operators (including to Rostelecom) climbed 7.2% to RUR 1,860.2 million and accounted for 11.4% of the Company’s operating expenses.
Expenses breakdown:
Description
Mln rub
2009
2008
Y-o-y change, %
Operating expenses
16,313.1
15,778.2
3.4
Wages and salaries
4,505.2
4,586.3
-1.8
Social insurance
1,090.3
1,106.7
-1.5
Depreciation and amortization
4,003.6
3,573.0
12.1
Material expenses (total)
1,682.3
1,734.3
-3.0
Payments to national telecom operators (including to Rostelecom)
1,860.2
1,735.2
7.2
Other costs
3,171.5
3,042.7
4.2
Due to improvement of the Company’s operating efficiency indicators and foreign exchange differences net profit was up 3.3 times to RUR 1,845.7 million.
In 2009 the Company continued to optimize the headcount. As a result the Company managed to slash the average number of employees on payroll by 4.8% to 24,996 people and bring a number of lines per employee to 159.8 representing a 3.0%-increase. During the year average wage was up 2.9% to 14,896 roubles.
2009 capex amounted to RUR 1,727.0 million, representing a 63.7%- decrease over 2008. Digitalization rate of the Company’s local network climbed 1.76% y-o-y and stood at 74.04% as at the beginning of 2010.
Key operational highlights and business efficiency indicators:
Description
Measure unit
2009
2008
Y-o-y change, %
EBITDA [1]
RUR mln
8,550.8
6,648.1
28.6
EBITDA margin
%
39.1
31.8
7.3 p.p.
Net profit
RUR mln
1,845.7
557.0
231.3
Average number of employees on payroll
people
24,996
26,250
-4.8
Average wage
RUR
14,896.0
14,481.7
2.9
Number of basic subscriber sets
Ths sets
3,914.7
4,026.6
2.8
Lines per employee
Lines/employee
159.8
155.1
3.0
Revenue per line
RUR/line
5,472.5
5,130.7
6.7
Local network digitization rate
%
74.04
72.28
1.76 p.p.
Investments
RUR mln
1,727.0
4,752.0
-63.7
Based on 2009 results, the Company’s active debt reduced by 19.4% to RUR 18,524.7 million and its net debt was down 16.4% to RUR 18,004.5 million. Net debt to EBITDA ratio decreased to 2.11.
Description
As at 31.12.2009
As at 31.12.2008
Y-o-y change, %
Active debt [2], RUR mln
18,524.7
22,981.4
-19.4
Net debt [3], RUR mln
18,004.5
21,533.1
-16.4
Net debt / EBITDA
2.11
3.24
-
“Today we are facing the future confidently, and our plans are rather ambitious. In 2010 Southern Telecommunications Company will further lower its debt burden, strengthen cost control, increase the efficiency of its investment activities. These actions will finally result in strengthening of the Company’s position in the telecommunications market of the South of Russia”, – General Director of Southern Telecommunications Company Alexander Shipulin stated.
[1] EBITDA includes Earnings Before Interest Payable, Taxes, Leasing Payments, Extra Expenses under Credits and Loans, Depreciation and Amortization minus Interest Receivable.
[2] Active debt includes Long-term and Short-term Credits and Loans.
[3] Net debt includes Active Debt minus Cash and Cash equivalents.
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