Sibirtelecom (RTS: ENCO/ENCOP, MICEX: STKM/STKMP, ADR: SBTLY), the largest telecom operator in the Siberian federal district, hereby presents its 9M 2004 RAS financial results. 

The company’s 9M 2004 revenues reached RUR 13,504 bln, which is up RUR 2.5 bln or 22.9% more than in the same period last year.

The main components of the company’s revenue mix remain LD, ILD and local traffic (up 40.1% and 38.1%, respectively). Revenues from other telecom operators also remain a strong part of revenue breakdown and amount to 9.2% (RUR 1.2 bln, including RUR 594 mln from Rostelecom).  Revenues generated by the company from value-added services (Internet, ISS, ISDN, IP-telephony) accounted for 4.3% (RUR 582 mln), while revenues from wireless services provided accounted for 2.3% (RUR 316 mln).

Main growth factors in the reporting period were the rise in LD and ILD traffic, Internet traffic, cellular com, the change in the settlement procedure with Rostelecom and an increase in the total volume of telecom services.

Comparison with the same period in 2003:

- growth in revenue from local telephony stood at RUR 833 mln, or up 20.7% y-o-y (number of main lines rose 5.5% and reached 3,721,000 at the end of the reporting period);

-       growth in revenue from LD and ILS traffic stood at RUR 341 mln, or up 6.7% (outgoing paid domestic and international traffic rose by 12% and reached 1,535,000 min.);

-       growth in revenue from new service (Internet, ISS, ISDN, IP-telephony) stood at RUR 209 mln or up 56.1% (Internet traffic with access via the public telephone network rose 37.4% and reached 1,082,000 min).

-       growth in wireless telecom services stood at RUR 139 mln, or up 78.4% (the number of cellular subscribers (not counting subsidiaries) rose 110% and reached 84,000);

-       growth in revenues from telecom operators stood at RUR 919 mln, or up 289.2%.

Breakdown of revenues (RUR, mln)

9M 2004 expenses rose 34.8% and stood at RUR 11.4 bln.  Major expense items in the cost side were payroll and social insurance deductions, as well as expenses for services to Rostelecom, depreciation and other expenses.

In comparison with the same period in 2003:

-          growth in payroll and social deductions stood at RUR 1,238 mln or 32.1%. The main factor contributing to the rise in expenses was an increase in average payroll, which resulted from the situation on the employment market. In addition, expenses for the unified social tax increased at a slower pace due to the transition to a regressive scale;

-           depreciation on fixed assets rose by RUR 711 mln or up 95.1% as the result of a faster pace of network development and accelerated depreciation on equipment acquired under leasing agreement;

-          increase in settlements with Rostelecom for transiting international traffic due to the new settlement system to RUR 523 mln or 44.6%;

-           rise in other expenses stood at RUR 263 mln or 33.2% which was mainly the result of increased advertising and marketing, property insurance and staff training.

Breakdown of Expenses (RUR, mln):

-  EBITDAin9M2004 rose8.5% y-o-y, toRUR278 mln. EBITDAmargin was26.3%.

-  Sales profit stood at RUR 2,087 mln, down RUR 433 mln, or 17.2%. Sales profit margin was 15.5%.

-  pre-tax profit was down 21.8%; net profit stood at RUR 777 mln, which is down 26% compared to the same period a year earlier. Net profit margin was 5.8%.  

Main operating and financial indicators:

To view the full text of Sibirtelecom’s 9M 2004 report, see: https://www.sibirtelecom.ru/investor/finot.php.

An internet conference addressing the topic: “Results of Sibirtelecom’s 9M 2004 financials” will be held from 12:00until 13:30on November 4, 2004on the corporate website  www.finam.ru