- Revenue for the first half of 2010 amounted to RUB 28,467.7 million

- OIBDA* amounted to amounted to RUB 5,789.7 million

- OIBDA margin amounted to 20.3%

Moscow – August 04, 2010 – Rostelecom (RTS, MICEX: RTKM, RTKMP; OTCQX: ROSYY) (“Rostelecom” or the “Company”) today announces its unaudited results for the first half of 2010, in accordance with the Russian Accounting Standards (RAS).

Rostelecom’s first half 2010 revenue amounted to RUB 28,467.7 million, representing a decrease of 6.8% year on year, which was mainly due to a fall in revenues from a number of traditional segments.

However, through the continued diversification of the business, Rostelecom increased its revenues from the new state-of-the art services, and thus the segments proportional contribution to the total revenue, compared to the same period last year. During the period under review, data and intelligent network services (INS) amounted to 15.1% of Rostelecom’s total revenue while revenues from data transmission and telematic services (mainly Internet and VPN services) as a standalone entity increased by 46.3% year on year, amounting to RUB 3,715.1 million. Of particular note, revenue from VPN services amounted to RUB 1,275.1 representing an increase of 176% year on year. Revenue from INS increased by 11.1% year on year to RUB 580.4 million.   

Rostelecom’s operating expenses for the reporting period amounted to RUB 25,258.3 million, a year-on-year decrease of 6.4%, which was largely due to a reduction in direct costs.

As a result, Operating Income before Depreciation and Amortization (OIBDA) remained relatively stable compared to the corresponding period a year ago, amounting to RUB 5,789.7 million – a year on year increase of 0.2%.

The Company’s OIBDA margin was 20.3% compared to 18.9% in the first half of 2009.

Depreciation for the first half of 2010 increased by 16.9% year on year to RUB 2,580.3 million, due to the increased level of investment into the development of the Company’s own IP/MPLS network.

In the first half of 2010, operating profit decreased by 10.1% year on year to RUB 3,209.4 million.

Other gains and losses for the first half of 2010 amounted to a net loss of RUB 342.5 million compared to a net loss of RUB 575.8 million a year ago. This decrease in overall net loss is mainly attributable to a foreign exchange loss.  first half of 2010 amounted to a net loss of RUB 342.5 million compared to a net loss of RUB 575.8 million a year ago. This decrease in overall net loss is mainly attributable to a foreign exchange loss.  

Rostelecom’s first half 2010 net profit amounted to RUB 2,233.9 million, a decrease of 5.5% year on year.

* OIBDA is calculated as total revenues less operating expenses excluding depreciation.