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2003 IAS Results
September, 2004
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Inter-Regional Telecommunication Company “VolgaTelecom”
VolgaTelecom offers:
Territory – 665,000 sq.km
Population – 21 million
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
- VolgaTelecom license area
Market share, %
Fixed-line penetration
Urban penetration 2003 - 25.6%
87
100
21.4
20.6
80
70
80
60
86
40
19.5
50
76
29
64
20
44
29
0
Local
2002
2003
2004Е
ILD and
DLD
Dial-up
internet
Dedicated
internet
access
Cellular
2004 E
2003
Charter capital
Charter capital – USD 55.7 mln
Ratings of international rating agency «Standard & Poor’s»
Nominal share value – USD 0.17
• Corporate Governance Rating (CGR) – 5+
• By Russian scale – 5.9
Ordinary shares 75%
(incl. 13% ADRs)
• Credit rating – «В», forecast «stable»
• By Russian scale – «ru A», forecast «stable»
Preferred shares
25%
Dividend policy, $
0.1
0.085
0.08
0.06
0.04
Capitalization growth
0.02
1000
0.02
0.005
0.036
0.031
0.009
0.01
0.032
0.023
0
$m
1999
800
870
600
400
0.059
2000
Common shares
2001
2002
2003
Preferred shares
621
454
•
200
0
Mar-03
Nov-03
Jul-04
•
Dividend yield (2003) – 1.7% for ordinary and 6.9% for
preferred stocks
Payout ratio on ordinary and preferred stock – 10% on both
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Financial Highlights (IAS)
US$, million
Rate of
growth,
%
2002
2003
Revenues
420.46
546.29
29.9
Operating Expenses
341.84
435.68
27.5
Operating Profit
78.62
110.61
40.7
Profit Before Tax
72.23
97.65
35.2
Net Income
29.14
58.39
100.4
Net Margin %
7
11
EBITDA
134.83
173.79
EBITDA Margin, %
32
32
Property, Plant & Equipment
544.82
725.19
33.1
Long- & Short-term Debt
(excluding liabilities)
70.10
155.41
121.7
Cash Flows From Operating Activity
127.66
148.46
16.3
Cash Flows From Investment Activity
110.25
171.11
55.2
Cash Flows From Financial Activity
8.90
28.31
218.3
* The indicators were calculated by the rates:
28.9
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
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Revenue structure
VolgaTelecom plans to increase revenues
through:
10%
3% 3%
35%
12%
Increasing the number of fixed-line
subscribers (in 2004, net adds are expected to
hit 250,000)
8%
24%
DLD
Cellular
ILD
VAS
5%
Raising VAS revenues (mobile, Internet, IPtelephony, multi-service networks, etc.)
Local
Leased lines
Installation
Other
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%)
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Breakdown of expenses
Expenses can be streamlined through:
3.7% 11.3%
0.9%
39.5%
15.9%
- Rationalizing personnel
- Raising digitalization, which helps reduce
maintenance costs
- Cutting G&A expenses as a result of corporate
restructuring
2.0%
11.6%
15.0%
Salaries, including social expenses
Interconnect
Materials, repairs and maintenance, utilities
Taxes other than on income
Depreciation and amortization
Losses on disposal of PPE
Bad debt
Other
- Switching over from wire broadcasting to onair broadcasting; communication lines
modernization
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Wireline network development
‘000 lines
5,000
4,500
3,999
4,242
4,000
40.8
33.8
3,500
3,000
2001
100
%
80
55.6 60
48.3
40
20
0
2003
2004 E
4,672
4,462
2002
Installed capacity
‘000 lines
765
765
764.7
600
561
546
350
400
545.7
345
200
0
2001
32.9%
32.8%
Net additions
1000 914 913
913.8
2003
Digitalization
Waiting list
800
Share of local communication in
the Company’s total revenues
2002
2002
2003
2004 Е
300
250
‘000 lines
213
250
247
221.7
169
200
166.5
150
100
50
0
2001
2002
2003
2004 Е
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DLD and ILD services
Traffic growth
m min
2,410
1,996
86
1,640
1,355
75
68
Number of automatic LD exchanges – 12
Installed capacity – 51,145 channels
Digitalization – 94.1%
61
1,274
1,572
1,920
2,324
2001
2002
2003
2004 E
DLD
Share of DLD and international
traffic in the Company’s total
revenues
ILD
2002
2003
39.4%
38.9%
Total length of channels –
15.2 m channels-km
Length of intra-zone lines –
21,300 km
Since August, 2003 OJSC
“VolgaTelecom” switched over to a new
system of settlements with OJSC
“Rostelecom”; in accordance with this
system the integral settlement rate was
disclosed.
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Value-added services
Value-added services:
•
•
•
•
Internet
ISDN
IP-telephony
Intelligent communication network
Number of Internet subscribers
‘000
336.4
210.7
61.2
Revenue growth of value-added
services
2001
123.2
2002
Dial-up
2003
2004 Е
Dedicated
14.5
$m
7.4
2002
Share of revenues of valueadded services in the
Company’s total proceeds
2002
2003
1.7%
2.64%
2003
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Cellular business
Subscribers
Financial indicators (IAS)
1,200
‘000
$m
2002
Revenues
Market share, %
614
33,135
23,685
ARPU, $
857
67,655
53,812
350
2003
EBITDA
2002
2002
2003
2004 Е
35
29
28
24
14
11
7/1/03
Share of revenues of cellular
business in the Company’s total
proceeds
Company Standard Region
OJSC “VolgaTelecom”
major cellular assets
(the data as of August 2004)
NCC
Ulyanovsk
Tatincom-Т
Orenburg
VolgaTelecom
2003
GSM
GSM
DAMPS/GSM
GSM
GSM
Total cellular subscribers
Nizhny Novgorod
Ulyanovsk
Tatarstan
Orenburg oblast
Mary El
2004 E
2002
2003
10.8%
12.3%
Stake
Subscribers
100%
51%
50%+1 ordinary share
51%
100%
523,000
115,000
109,000
54,000
92,000
985,100
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Investment policy
Growth of capital investments (IAS)
Allocation of capital investments in 2003
$m
55%
180
170
7%
167.1
163.2
160
11%
18%
150
54%
10%
140
2002
Local
Cellular
Other
2003
DLD and ILD
Value-added
Capacity growth, ‘000 lines
443
405
214
462
545.7
179
212
199
USD
The cost of modernization of an analog line,
USD
97
2001
The cost of a new line installation,
2002
2003
275
190
2004 Е
Installation of digital exchanges
Dismantled exchanges
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Thank you for your attention!
JSC “VolgaTelecom”
603000 Russia, Nizhny Novgorod, Maksim Gorky sq., Dom Sviazi
Tel.: +7 (8312) 33-20-47; Fax: +7 (8312) 30-67-68
E-mail: [email protected]
http://www.volgatelecom.ru
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