OJSC North-West Telecom summed up the results of its operations in 2001. Last Friday, March 29th, 2002, a press conference was granted where the Company’s management presented to journalists the essential operating and financial results of the North-West Telecom.
In his address at the press conference, General Director S. V. Soldatenkov announced that the installed capacity of the network reached 1,922,901 numbers, and the operative capacity, 1,822,082 (94.8% of the network’s installed capacity.) During 2001, over 74,000 step-by-step numbers in Nodal Sector 29 of St. Petersburg were replaced with digital ones. As a result, the network currently contains as few as 7.38% of step-by-step numbers, and the digitization level has reached 32.5%. The digitization level of Trunk Automatic Exchanges (TAX) increased by 12.5% in the last year. The long-distance traffic was about 414,000,000 minutes, and the international traffic, 87,000,000 minutes. In all, nearly 52,000 applications for connection were fulfilled during the year, of which 34,000 were from private persons.
OJSC North-West Telecom sales income amounted RR 3,951,387,000. In the last year, the fixed telephone communication tariffs for home users and legal entities were revised twice (15.03.2001 and 15.11.2001). The subscriber fee growth for home users was 23%, i.e. from 60 to 73.5 rubles. The subscriber fee for State-budget organizations grew by 32% to equal the value for business users, i.e. 145 rubles per month. The company was active offering additional services, the segment of which in the North-West Telecom’s income structure is 12%, and the local communication service revenues, 39%.
However, according to S. V. Soldatenkov, “home user rates nearly cover the network operation costs, but they still do not include the investment component, which is necessary for updating and development.” The prime costs were RR 2,713,943,000. Moreover, the network operation costs significantly increased in 2001. For example, electric power charge rates grew by 34% on the average. The estimated integral appraisal rate (deductions to Rostelecom) also increased.
The report period saw the expiry of the property tax benefit granted to OJSC North-West Telecom by a Law of St. Petersburg in 2000 (the benefit was effective for one year.). The property tax amounted to about RR 100,000,000.
Overdue receivables in the amount of RR 55,000,000 were also written off in the last year.
In accordance with the new RF Ministry of Finance requirements for accounting (Accounting Rules, 9/99 and 10/99), the taxable basis calculation significantly changed. As a result, the taxable basis increased by more than RR 370,000,000 to reach over 1 billion rubles. The amount of paid-up profit tax alone was RR 327,168,000.
The above changes had their reducing impact on the calculation of profit, so that the profit before taxes was RR 691,280,000, and the net profit, RR 364,112,000.
1st Deputy General Director I. N. Samylin made a report on the development of the Company’s additional services (where the Company is free to set tariffs.) Currently, North-West Telecom is successfully competing with alternative operators in the businesses of Internet, data transmission, and inquiry/information services. Due to an expanded scope of activity, the income from such services in the last year were RR 426,000,000, which is 85 % higher than in the year 2000 (taking into account the additional earnings of National International Telephone and Telegraph.)
Structural Reorganization Director N. G. Bredkov reported the progress of telecommunication companies’ reorganization in the North-West region. Currently, the primary goal of OJSC North-West Telecom is to get a permission from the RF Ministry of Antitrust Policy. As per established procedure, an application to this effect has already been filed at the Ministry. The reorganization process completion is scheduled for February 2003, when a joint general meeting of the shareholders is intended to approve the reorganization results and make appropriate amendments in the Charter of OJSC North-West Telecom.
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