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Rostelecom

August 1, 2006

Rostelecom reports first half 2006 revenue growth of 47.2% to RUR 28,709.9 million

Revenue for the first half of 2006 increased by 47.2% to RUR 28,709.9 million.

·  Domestic long-distance traffic for the first six months of 2006 rose 1.2% 1 year on year. Outgoing international traffic grew by 12.4 % and incoming international traffic increased 27.6 2%.

·  EBITDA3 decreased to RUR 5,476.8 million compared to RUR 7 735,5 last year, representing an EBITDA margin of 19.1%, due to significantly higher payments to operators under the new settlement system.

·  First half 2006 net profit was RUR 2,735.6 million compared to RUR 5,661.0 million a year ago.

Moscow – August 1, 2006 – Rostelecom (NYSE: ROS; RTS, MICEX: RTKM, RTKMP), Russia’s national long-distance telecommunications operator, today announced unaudited first half 2006 results in accordance with Russian accounting legislation (RAS).

First half 2006 revenues amounted to RUR 28,709.9 million - a year-on-year increase of 47.2%.  The increase is primarily attributable to higher DLD and outgoing ILD revenues as a result of the transition to the new system of interaction with Russian operators and subscribers for the provision of domestic and international long-distance services, which came into effect on January 1, 2006.

Domestic long-distance (DLD) traffic for the first six months 2006 amounted to 4,770.2million minutes – a 1.2% increase year on year.  First half 2006 DLD revenues grew 70.4% and totaled RUR 15,231.4million. 

Outgoing international long-distance (ILD) traffic rose 12.4% to 902.5 million minutes.  ILD revenues from Russian operators and subscribers increased by 42.8% over the first half 2005 and totaled RUR
6,347.6  million. 

First half 2006 incoming ILD traffic totaled 1,088.6 million minutes - a year-on-year increase of 27.6%. Rostelecom increased its share of incoming international traffic, underscoring the strength of the Company’s market position. Revenues from international operators for incoming ILD traffic transit and termination rose 4.0% year on year to RUR 2,051.0 million. 

Revenue from other business segments increased by 21.8% compared to the first half 2005 to RUR 5,079.9  million, reflecting the growth of new products and services.  Rostelecom delivered solid increases in revenues from leased lines, intelligent network services and customer equipment servicing.  For the first six months of 2006, revenues from leased line services grew 22,8% to RUR 3,449.3 compared to the same period last year.

Rostelecom’s operating expenses for the first half 2006 amounted to RUR 24,789.5 million.  The 90.1% increase compared to last year was driven mainly by higher payments to Russian operators which increased by a factor of 3.5 times mainly as a result of the new interaction system.

Depreciation increased 22.5% year on year to RUR 1,556.4 million for the first six months of 2006 as a result of significant additions of property, plant and equipment in 2005.

As a result of higher operating costs, EBITDA for the first half 2006 totaled RUR 5,476.8 million down 29.2% year on year, representing an EBITDA margin of 19.1%.

Operating profit amounted to RUR 3,920.4 million, down 39.4% compared to last year.

The result from other operating activities for the first six months 2006 totaled RUR (211.7)million compared to RUR 1,119.1million a year ago. The decrease is mainly driven by a revaluation of the Company’s financial investments and a decrease in gains from the sale of investments. Rostelecom recorded a RUR (185.1)million net revaluation loss for the first half 2006 compared to RUR 633.7million net revaluation gain a year ago. Net income from the sale of investments in the first half of 2006 was RUR 13.5million compared to RUR 472.9 million for the first half of 2005. The decrease is primarily attributable to the sale of Rostelecom’s interest in Telmos in the first half of 2005.

The result from other non-revenue activities for the first half 2006 amounted to RUR (34.6) million compared to RUR (172.1) million a year ago.

Rostelecom’s net profit for the first half 2006 totaled RUR 2,735.6 million compared to RUR 5,661.0 million a year ago.

______________________________________________________________________ 

1  All traffic data provided in the press release is preliminary.

2   Incoming ILD traffic for thefirst half of 2005 has been revised.

3   EBITDA is calculated as total revenues less operating expense excluding depreciation.

 

 

 

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