1 september, 2004 2003 ias results. inter-regional telecommunication company “volgatelecom”...
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September, 2004
2003 IAS Results
Inter-Regional Telecommunication Company “VolgaTelecom”Inter-Regional Telecommunication Company “VolgaTelecom”
VolgaTelecom offers:VolgaTelecom offers:
Traditional telecommunication services:• Local (city and rural) telephony• DLD, ILD• Radio and TV broadcasting
Value-added services:• Internet and data transmission• ISDN• IP-telephony• Intelligent communication network services • Mobile communication• Paging
Fixed-line penetrationFixed-line penetration
- VolgaTelecom license area
Territory – 665,000 sq.km Population – 21 million
19.5
20.621.4
2002 2003 2004Е
Urban penetration 2003 - 25.6%
LocalILD and
DLDDial-upinternet
Dedicatedinternetaccess
Cellular
20032004 E
8676
64
44290
20
40
60
80
100
Market share, %Market share, %87
80
50
70
29
3
Charter capitalCharter capital – – USD 55.7 mln USD 55.7 mln
Nominal share valueNominal share value – – USD 0.17USD 0.17
Charter capitalCharter capital
Ordinary shares 75%(incl. 13% ADRs)
Preferred shares25%
Capitalization growth Capitalization growth
• Dividend yield (2003) – 1.7% for ordinary and 6.9% for preferred stocks
• Payout ratio on ordinary and preferred stock – 10% on both
0.032
0.085
0.005 0.009 0.010.0230.02
0.036 0.031
0.059
0
0.02
0.04
0.06
0.08
0.1
1999 2000 2001 2002 2003
Com m on shares Preferred shares
Dividend policy, $Dividend policy, $
Ratings of international rating agencyRatings of international rating agency « «Standard & Poor’sStandard & Poor’s»»
• Corporate Governance RatingCorporate Governance Rating ( (CGRCGR) – 5+) – 5+• By Russian scaleBy Russian scale – 5 – 5..99
• Credit ratingCredit rating – «В», – «В», forecastforecast « «stablestable»»• By Russian scaleBy Russian scale – « – «ru Aru A», », forecastforecast « «stablestable»»
Mar-03 Nov-03 Jul-04
454621
870
0
200
400
600
800
1000$ m
4
Financial Highlights (IAS)Financial Highlights (IAS)
US$, million Rate of growth,
%2002 2003
Revenues 420.46 546.29 29.929.9
Operating Expenses 341.84 435.68 27.527.5
Operating Profit 78.62 110.61 40.740.7
Profit Before Tax 72.23 97.65 35.235.2
Net Income 29.14 58.39 100.4100.4
Net Margin % 7 11
EBITDA 134.83 173.79 28.928.9
EBITDA Margin, % 32 32
Property, Plant & Equipment 544.82 725.19 33.133.1
Long- & Short-term Debt
(excluding liabilities)
70.10 155.41 121.7121.7
Cash Flows From Operating Activity 127.66 148.46 16.316.3
Cash Flows From Investment Activity 110.25 171.11 55.255.2
Cash Flows From Financial Activity 8.90 28.31 218.3218.3
* The indicators were calculated by the rates:1$= 2002 2003 1$= 2002 2003
Ruble’s average rate 31,4 30,7 The rate as of 31.12., ruble 31,8 30,0
5
VolgaTelecom plans to increase revenues through:
Increasing the number of fixed-line subscribers (in 2004, net adds are expected to hit 250,000)
Raising VAS revenues (mobile, Internet, IP-telephony, multi-service networks, etc.)
Increasing the cellular subscriber base in 2004 from 857,000 in 2003 to 1,200,000
Expanding DLD and ILD traffic (which annually grows at around 21%)
Revenue structureRevenue structure
35%
5%24%
8%
12%
10%3%3%
DLD ILD Local Installation
Cellular VAS Leased lines Other
6
Expenses can be streamlined through:
- Rationalizing personnel
- Raising digitalization, which helps reduce maintenance costs
- Cutting G&A expenses as a result of corporate restructuring
- Switching over from wire broadcasting to on-air broadcasting; communication lines modernization
Breakdown of expensesBreakdown of expenses
39.5%
15.0%11.6%2.0%
15.9%
11.3%0.9%
3.7%
Salaries , including social expensesInterconnectMaterials , repairs and m aintenance, utilitiesTaxes other than on incom eDepreciation and am ortization Losses on disposal of PPEBad debt Other
7
913.8
764.7
545.7
Net additionsNet additions
166.5
221.7
546
765
345
914
Waiting listWaiting list
Share of local communication in Share of local communication in the Company’s total revenuesthe Company’s total revenues
20022002 20032003
32.9% 32.8%
Wireline network developmentWireline network development
‘000 lines
169
213247 250
0
50
100
150
200
250
300
2001 2002 2003 2004 Е
913765
561
350
0
200
400
600
800
1000
2001 2002 2003 2004 Е
‘000 lines
3,9994,242
4,4624,672
33.8 40.8 48.3 55.6
3,000
3,500
4,000
4,500
5,000
2001 2002 2003 2004 E
0
20
40
60
80
100
Installed capacity Digitalization
‘000 lines
%
8
Since August, 2003Since August, 2003 OJSC OJSC “VolgaTelecom” switched over to a “VolgaTelecom” switched over to a new system of settlements with OJSC new system of settlements with OJSC “Rostelecom”;“Rostelecom”; in accordance with this in accordance with this system the integral settlement rate system the integral settlement rate was disclosedwas disclosed..
1,355
61
1,640
68
1,996
75
2,410
86
2001 2002 2003 2004 E
DLD ILD
1,274 1,9201,572 2,324
Number of automatic LD exchanges Number of automatic LD exchanges – – 1212
Installed capacityInstalled capacity – – 5151,,145 145 channelschannels
DigitalizationDigitalization – – 9494..1%1%
Total length of channelsTotal length of channels – –1515..2 2 m channels-kmm channels-km
Length of intra-zone linesLength of intra-zone lines – – 2121,,330000 kmkm
m minm min
Traffic growthTraffic growth
DLD and ILD servicesDLD and ILD services
Share of DLD and international Share of DLD and international traffic in the Company’s total traffic in the Company’s total
revenuesrevenues
20022002 20032003
39.4% 38.9%
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Value-added services:Value-added services:
• Internet• ISDN• IP-telephony• Intelligent communication network
7.4
14.5
2002 2003
Revenue growth of value-added Revenue growth of value-added servicesservices
$ m
Number of Internet subscribersNumber of Internet subscribers
61.2123.2
210.7
336.4
2001 2002 2003 2004 Е
Dial-up Dedicated
‘000
Value-added servicesValue-added services
Share of revenues of value-Share of revenues of value-added services in the added services in the
Company’s total proceedsCompany’s total proceeds
20022002 20032003
1.7% 2.64%
10
350
614
1,200
857
2002 7/1/03 2003 2004 E
Market share, %Market share, % 20022002 20032003 2002004 Е4 Е
35 29 28
ARPU, $ARPU, $ 24 14 11
Company Standard Region Stake Subscribers
NCC GSM Nizhny Novgorod 100% 523,000Ulyanovsk GSM Ulyanovsk 51% 115,000Tatincom-Т DAMPS/GSM Tatarstan 50%+1 ordinary share 109,000Orenburg GSM Orenburg oblast 51% 54,000VolgaTelecom GSM Mary El 100% 92,000
985,100Total cellular subscribers
53,81267,655
23,68533,135
2002 2003Revenues EBITDA
$ m
SubscribersSubscribers
‘000
Share of revenues of cellular Share of revenues of cellular business in the Company’s total business in the Company’s total
proceedsproceeds
20022002 20032003
10.8% 12.3%
Cellular businessCellular business
OJSC “VolgaTelecom” OJSC “VolgaTelecom” major cellular assets major cellular assets (the data as of August 2004)
Financial indicators (IASFinancial indicators (IAS))
11
Growth of capital investments (IAS)Growth of capital investments (IAS)
545.7
55%
Investment policyInvestment policy
Allocation of capital investments in 2003Allocation of capital investments in 2003
The cost of a new line installation, USD 275
The cost of modernization of an analog line, USD 190
97
405
214
443 462
179 199212
2001 2002 2003 2004 Е
Installation of digital exchangesDismantled exchanges
Capacity growth, ‘000 linesCapacity growth, ‘000 lines
54%
10%
18%
7%11%
Local DLD and ILDCellular Value-added Other
163.2167.1
140
150
160
170
180
2002 2003
$ m
12
Thank you for your attentionThank you for your attention!!
JSC “VolgaTelecom”JSC “VolgaTelecom”
603000 Russia, Nizhny Novgorod, Maksim Gorky sq., Dom SviaziTel.: +7 (8312) 33-20-47; Fax: +7 (8312) 30-67-68E-mail: [email protected] http://www.volgatelecom.ru