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CenterTelecom

November 1, 2005

CenterTelecom 3rd quarter RAS results 2005

Moscow, November 1, 2005: CenterTelecom (RTS: ESMO, ESMOP; MICEX: CTLK, CTLK?; OTC: CRMUY) today announced its third quarter results for 2005, according to Russian Accounting Standards (RAS). 

 

Highlights:

· Revenues increased 11.2% to 20,007 million roubles compared with the same period in 2004.

· Domestic long-distance and international traffic flat, domestic long-distance traffic marginally up by 0.2% and international traffic decreased by 4.3%.

· EBITDA increased 52.2%.

· EBITDA margin: 34.6%, pre-tax profit margin: 6.7%.

· Sales profit up by 26.2%.

· Net profit amounted to 548.1 million roubles (3Q 2004: 8.96 million roubles).

 

Commenting on the outturn, Ruben Amaryan, General Director of OJSC «CenterTelecom» said: «There is the Program of actions intended for increase of overall performance of the Company. Realization of Program is reflected in the parameters of the company shown in company results for 9 months. We improve the control over charges, we cut down expenses in unprofitable sectors, we optimize number of the personnel».

 

Financial summary, (million roubles)

Description 

9 months 2005

9 months 2004

change, %

Revenues

20 007

17 987

11.23%

Operating costs

15 500

14 417

7.51%

Depreciation

2 504

1 867

34.11%

EBITDA

5 358

3 522

52.15%

EBITDA margin

34.57%

24.43%

 

Sales profit

4 507

3 570

26.24%

Sales profit margin

29.08%

24.76%

 

Pre-tax profit

1 041

334

311.25%

Pre-tax profit margin

6.72%

2.32%

 

Net profit

548

9

6115.28

Net profit margin

3.54%

0.06%

 

 

Revenues

CenterTelecom’s revenues for the first nine months of 2005 were 20,007 million roubles, an 11.2%  increase year-on-year. Domestic long-distance and international traffic was flat and amounted to 2,219 million minutes. Earnings from domestic long-distance and international communication services provision decreased by 4.8% to 6,842 million roubles. The decrease in earnings from domestic long-distance and international traffic was due to the reduction in tariffs for domestic long-distance as well as the decrease of international traffic, by 0.1%.

Earnings from urban and rural telephone communication services rose by 26.1% to 9,252 million roubles as a result of an increase in the scope of services (the subscriber base increased by 3.9% to 6,356,191 subscribers), as well as the increase in tariffs for local telephone communications. As a result, revenues from local communication services grew to 46.2% of CenterTelecom’s total revenues.

Revenues from new value added services increased by 46.5%, while the growth of revenues from internet services amounted to 55.8%.  Revenues from telecom operators increased by 9.4%.

 

Revenues, (millions roubles)

Description

9 months 2005

9months 2004

2005/2004

Domestic long-distance and international telephone communications

6 842

7 186

95.21%

Urban and rural telephone communications

9 252

7 334

126.14%

Radio communication, radio broadcasting, TV, satellite communication

39

28

138.76%

Wireline broadcasting

492

472

104.10%

Wireless radio communication

194

242

79.90%

Documentary electric communication

219

219

100.15%

Revenues from new services of electric communication

908

620

146.49%

Revenues from telecom operators

1 752

1 601

109.43%

Other communication services (core activities)

22

23

92.70%

Revenues from other operations (non-core activities)

287

260

110.23%

TOTAL

20 007

17 987

111.23%

 

Costs

The Company’s costs for the first nine months of 2005 increased by 7.5% to 15,500 million roubles. The rise in costs was mainly due to an increase in depreciation costs of 34.1% to 2,504 million roubles as a result of introducing new equipment under the Company’s investment program. At the same time, the decrease of the social insurance allocations rate from 35.6% to 26% (which became effective from January 1, 2005) helped constrain costs growth. Year-on-year, social insurance allocations decreased by 18% to 1,264 million roubles.

 

Costs, (millions roubles)

Costs fractions

9 months  2005

9 months 2004

2005/2004

Payroll costs

4 984

4 628

107.69%

Social insurance allocations

1 264

1 542

81.97%

Depreciation of fixed assets

2 504

1 867

134.11%

Tangible costs

869

955

90.96%

Electric power

308

265

116.40%

Expenditures on telecom operators services (the companies of the Group exclusive)

332

337

98.49%

Expenditures on the services of telecom operators, which are in the Group

84

47

178.43%

Expenditures on Rostelecom services

2 333

2 334

99.96%

Third-party services

1 394

1 168

119.33%

Taxes and dues, which are included in the ordinary activities costs

66

56

116.94%

Other costs

1 362

1 217

111.87%

TOTAL

15 500

14 417

107.51%

 

Profit

Sales profit increased 26.2% to 4,507 million roubles.  EBITDA rose 52.2% to 5,358 million roubles and EBITDA margin grew from 4.43% (Q3 2004) to 34.57% for the same period in 2005. EBITDA margin growth stemmed from depreciation charges and interest payment increase against the background of a tight focus on costs. Net profit was 548 million roubles compared to 8.96 million roubles for the same period of 2004.

 

 

 

 

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