The results of the year 2005 show that North-West Telecom has been the most efficient in the fixed communication business, having confirmed once again its long-term business forecasts: net income margin has reached 9% and EBITDA margin 26.8 %.
One of the basic goals of JSC North-West Telecom's long-term development strategy is to maintain the level of EBITDA margin growth at at least 1 p.p. per year. To achieve the targets, JSC North-West Telecom is implementing a strategy of improving the efficiency of asset and subsidiaries management.
The main goal of JSC North-West Telecom's business reorganization is to liquidate investments in non-core or unprofitable assets and to develop Company's participation in strategic profile companies. In 2005, as a result of withdrawal from 10 commercial and 5 nonprofit companies, the income of JSC North-West Telecom from selling those assets made RUR 4.1 million. In 2006 JSC North-West Telecom plans to terminate its participation in 8 commercial and 1 nonprofit organizations, the income from selling those interests are expected to amount to about RUR 41 million.
A significant part of Company's assets are real estate and land plots: at the moment, the property of North-West Telecom includes 1,356,500 sq. m of areas (including 529,600 sq. m in St. Petersburg) and 4,044,800 sq. m of land plots (including 507,600 sq. m in St. Petersburg). The share of operating premises is 60%.
As a result of network reorganization and updating in 2005, North-West Telecom abandoned 6,100 sq. m of leased premises, and another 21,500 sq. m in the 1st six months of 2006; leased out 67,500 sq. m, and 74,900 sq. m in the 1st six months of 2006. The income from leasing out the premises amounted to RUR 187.8 million in 2005; and according to the plans of 2006 they will amount to RUR 200 million. To improve the efficiency of property management, JSC North-West Telecom has planned an at least 3% annual reduction of the quantity of leased spaces.
In 2005 North-West Telecom sold 28 sites of real estate, and another 31 sites in the 1st half of 2006. It is expected that in 2006 over 25,000 sq. m of Company's real estate will be sold. The income from real estate sale in 2005 amounted to RUR 27.4 million and in 2006 it is expected to earn RUR 68.2 million.
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