Urals Region telecoms mergers. Current situation and prospects.
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Urals Region telecoms mergers.Current situation and prospects.
Vladimir I. Rybakin,General Director
Industrial Output USD 37 bln% of overall Russian Industrial Output 15.5% Average USD Rate Exchange in 2001 - 29,2 RUR
PermЕкатеринбургEkaterinburg
Tyumen
Khantymansiysk
Salekhard
ChelyabinskKurgan
Consolidated Urals Region Company
Industry fuel, electroenergetics, ferrous and non-ferrous metallurgy,petrochemical, oil- and gas-extracting machinery, metalworks
Area 2.0 ml.sq.km. Population 15.5 ml. Natural Resources oil, gas, coal, iron and copper ores, potassium food salt, marble, asbest, bauxites, gold, diamonds
UralsvyazinformUraltelecom of Sverdlovsk RegionSvyazinform of Chelyabinsk RegionTyumentelecomKhantymansiyskokrtelecomYamalelectrosvyazElectrosvyaz of Kurgan Region
The Nation Wide Position of the United Ural Region Company
Gross regional product per capita, 2001E
0
20
40
60
80
100
120
140
Urals Far East North West Siberia Central Volga South
US
D
0
100
200
300
400
UralSvyazInf Far EastTelecom
North WestTelecom
Siberia Telecom Center Telecom Volga Telecom South Telecom
US
D m
ln
Revenues in 2001
Average USD Rate Exchange in 2001 - 29,2 RUR
Uralsvyazinform Mission
Shaping and meeting customers’ needs in telecommunication and information services, integration into the Global
Information Community of 21st century.
As of 1.04.2002
Consolidated Stock Capital
Svyazinvest 41% (51,4% of voting
shares)
Federal Property Fund 5%
(6,2% of voting shares)
ADR 4% (4,9% of voting
shares)
Individuals 50%
(37,5% of voting shares)
• Book capital USD 153 ml
• Number of shares 40 169 386 628
• Share of preferred stock 19,5%
• Number of shareholders 25 650
• Market cap USD374 ml
Rate Exchange 1 USD = 31,15 RUR
Merger Goals
• Creating a robust, profit-making nation-scale company with strong market cap;
• Upgrading telecommunication systems to world standards, integration into the global information community of 21st century;
• Better quality and transparency of corporate governance through optimization of decision-making process, bringing the quality of business in compliance with international standards;
• Boosting competitiveness;
• Reduction of costs by means of streamlining the expenditure structure;
• More efficient use of assets and prioritizing on lucrative projects.
Assets valuation and fixing of swap ratios March-April 2001
Decision of the Board of Directors to approve swap ratios, buyback share prices and announce the AGM July 2001
Shareholder support August 2001
Approval by the EGM - 97.54%
September - October 2001
Affiliates formation September 2001
Decision of additional shares issue and prospectus to be adopted by the Urasvyazinform Board of Directors January 2002
Obtaining the MAP of Russia approval January 2002
Merger in Progress
Joint General Shareholder Meeting
4Q2002
Transfer of assets and emloyees to Uralsvyazinform 2Q2002
Expunction of companies merging with Uralsvyazinform from the State Register of Legal Entities and share swap 3Q2002
Federal registration of issues
2Q2002
Actions Scheduled to Complete Reorganization
Market Share of United Company in Urals Region
2001Population Business
sector
Long-distance fixed-line telephony 92,07% 88,97%
Local fixed-line telephony 85,8% 56,89%
Internet 56,88% 56,29%
Mobile telephony 55,4% 55,4%
Paging 29,36% 30,61%
17,619,3
20,9
23,225,3
0
5
10
15
20
25
30
2001 2002E 2003E 2004E 2005E
Telephone Penetration in Urals Region(lines per 100 inhabitants)
Waiting list612 467(as of 1.01.2002)
74,282,8
100,3
149,6
125,0
40
60
80
100
120
140
160
2001 2002E 2003E 2004E 2005E
Lin
esLines per Employee
49%
62%66%
70%
19%
65%
57% 55%
37%
27%
0%
20%
40%
60%
80%
2001 2002E 2003E 2004E 2005E
Switching systems Intrazone Lines
Digitalization
International traffic
95
116
137
197
164
0
50
100
150
200
2001 2002E 2003E 2004E 2005E
Mln
min
1211
1473
1767
2121
2499
0
500
1000
1500
2000
2500
2001 2002E 2003E 2004E 2005E
Mln
min
Domestic Long-Distance Traffic
Monthly Fee(as of 01.03.2002)
4,1
7
4,1
7
4,1
7
4,1
7
4,1
7
9,3
2
11
,07
4,1
7
4,1
7
4,1
7
4,1
7
4,1
7
8,0
3
11
,07
2,5
7
2,5
7
2,5
7
2,5
7
2,5
7
3,5
3
4,8
1
0
2
4
6
8
10
12
Perm Ekaterinburg Chelyabinsk Kurgan Tyumen Khanty-Mansyisk
Yamal
US
D
Business Budget Residents
Rate Exchange 1 USD = 31,17 RUR
Installation Fee(as of 01.03.2002)
193
193
289
193
225
193
257
193
193
289
193
225
193
257
193
193
193
193
177 19
3
193
0
100
200
300
Perm Ekaterinburg Chelyabinsk Kurgan Tyumen Khanty-Mansyisk
Yamal
US
D
Business Budget Residents
Rate Exchange 1 USD = 31,17 RUR
Time-based Billing
Time-based billing is introduced:
• Perm region - 87,5%
• Tyumen region - 67,8%
Introduction of time-based billing is sheduled for 2002 in:
• Sverdlovsk region
• Chelyabinsk region
• Kurgan region
• Khanty-Mansyisk district
• Yamal-Nenets district
365
444
546
764
828
287328
380
475514
69119
165
289314
0
200
400
600
800
1000
2001 2002E 2003E 2004E 2005E
US
D m
ln
Revenues
Costs
Operating Profit
Financial Performance
Average USD Rate Exchange: 2001 - 29,2 RUR; 2002E - 31,5 RUR; 2003E - 33,2 RUR; 2004E - 35,3 RUR; 2005E - 37,2 RUR
1012
16
27
24
0
10
20
30
2001 2002E 2003E 2004E 2005E
US
D t
hs
Revenues per Employee
Average USD Rate Exchange: 2001 - 29,2 RUR; 2002E - 31,5 RUR; 2003E - 33,2 RUR; 2004E - 35,3 RUR; 2005E - 37,2 RUR
132,0
150,0160,0
190,0181,0
0
50
100
150
200
2001 2002E 2003E 2004E 2005E
US
DRevenues per Line
Average USD Rate Exchange: 2001 - 29,2 RUR; 2002E - 31,5 RUR; 2003E - 33,2 RUR; 2004E - 35,3 RUR; 2005E - 37,2 RUR
Revenue Structure
31%
31%
32%
33%
35% 2%
2%
2%
2%
3%
30%
35%
41%
50%
53%
1%
1%
2%
2%
4%
1%
1%
2%
2%
2%
24%
23%
16%
9%
6% 1%
6%
5%
4%
3%
1%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2001
2002п
2003E
2004E
2005E
Urban Fixed-line Network Rural Fixed-line Network Long-Distance Network Data transmission
Wired radio Mobile Radio and TV New services
Cost Structure
42%
43%
39%
36%
34%
31%
29%
31%
34%
34%
16%
16%
17%
16%
18%
11%
12%
13%
14%
14%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2001
2002E
2003E
2004E
2005E
Operational costs Wages Amortization Taxes and deductions
1930
83
157183
85102
195
319
379
0
100
200
300
400
2001 2002E 2003E 2004E 2005E
US
D m
ln
Net Profit EBITDA
EBITDA and Net Profit
USD Rate Exchange: 01.01.02 - 30,14 RUR; 01.01.03 - 32,86 RUR; 01.01.04 - 33,54 RUR; 01.01.05 - 37,06 RUR; 01.01.06 - 37,34 RUR
88
166
218200
155
0
50
100
150
200
250
2001 2002E 2003E 2004E 2005E
US
D m
lnOverall Capital Expenditure
Average USD Rate Exchange: 2001 - 29,2 RUR; 2002E - 31,5 RUR; 2003E - 33,2 RUR; 2004E - 35,3 RUR; 2005E - 37,2 RUR
25
Investment Sources
47%
36%
40%
35%
51%
53%
3%
15%
35%
53%
33%
49%
2%
11%
1%
13%
23%
2001
2002E
2003E
2004E
2005E
Amortization Profit Credits Bonds Shares
United Company Investment Schedule
2001avail-able
2002E 2003E 2004E 2005E Put intooperationin 2002 –
2005г.
Totalas for
01.01.06
Fixed-line Network,thous. lines 2 983 384 330 379 363 1 456 4 085
Mobile-line Network,thous. lines 220 145 269 359 69 842 1 062
Wireless loop, thous. lines
27 3 26 24 59 112 139
Intrazone/Trunk FOLs , km
1 032 529 2 262 3 399 3 573 9 763 10 795
Intrazone/Trunk DigitalMicrowave cable, km 1 705 1 071 1 213 1 962 3 028 7 274 8 979
Put into operation
192201
166
124
5341 37
28 24
214
0
50
100
150
200
250
01.01.01 01.01.02 01.01.03E 01.01.04E 01.01.05E
US
D
mln
Debts as for the beginning of the year including in foreign currency
Debts
USD Rate Exchange: 01.01.02 - 30,14 RUR; 01.01.03 - 32,86 RUR; 01.01.04 - 33,54 RUR; 01.01.05 - 37,06 RUR; 01.01.06 - 37,34 RUR
Investment Priorities
Capacity growth and network upgrade: Digital switching systems; Optical access networks; Long-distance Core Networks; Wireless Loop;
Mobile telephony of GSM-900/1800 standards; Packet switching network:
Multiservice network buildup; Internet enhancement;
Intelligent network;
Cable TV.
Multi-Service Network General Structure
Optical AccessNetwork
Content-Providers
PSTN
InternetManagementSub-Systems
ServiceSelectionGateway
IP Backbone
Corportion AOffice 1 Corportion B
Office 2
Corportion BOffice 2
Corportion AOffice 1
Corporate VirtualPrivate Networks
High- speedInternetAccess
Small office
InternetAccess Virtual
PrivateNetwork
Optical Access Network Implementation
Тelemetry2,4 - 64 кbits
nx64 кbits
District Fiber Ring
Exchange
10/100 ВТ
ADSL
COAX
POTS /ISDN
OLT
ONU 6ONU 4
ONU 3
ONU 2
ONU 5
ONU 1
PC
TV
ISDN
IP
ServerVOD
SecondaryFiber Ring
CATVCable TV /
Internet
PBX
Е1
Corporate VirtualPrivate Network
STB
Video onDemand
ADSL
GSM-900 Network Development
GSM subscribers in Urals region as of 1.04.02г. 152,6 thousand
Салехард
Екатеринбург
Perm
Khanty-Mansyisk
Chelyabinsk
40%
20%
20%
50%
Kurgan
Salekhard
EkaterinburgTyumen • «Ermak-RMS» - 40,2 thous.
subscribers
• «South-Urals Cellular Phone» - 52,4 thousand subscribers
• JSC «Uralsvyazinform» 60 thousand subscribers
220
365
634
9931062
0
200
400
600
800
1 000
1 200
2001 2002E 2003E 2004E 2005E
Th
s n
um
be
rsMobile Installed Capacity in Urals Region
31
2523
2220
0
10
20
30
40
2001 2002E 2003E 2004E 2005E
US
DAverage Revenue Per User
Development of Uralsvyazinform and Rostelecom’s Digital Transport Network based on Digital Microwave, Optical Fiber Links in Ural Region
Digital Transport Network
Uralsvyazinformlines
Uralvyazinform projected lines
Rostelecomlines
Salekhard
Perm
Chelyabinsk
Tyumen
Khanty-Mansyisk
NizhnevartovskSurgut
Berezniki
Serov
N.Tagil
N.Urengoy
Ekaterinburg
Kurgan
Satellite dish
Yamal
Intelligent Network setup in Urals Region
Max. Virtual network capacity is 12 mln. numbers
PSTN PSTN PSTN PSTN PSTNPSTNEkaterinburg Tumen Chelyabinsk Kurgan Yamal Khanty-Mansiysk
Perm SMP
SCPSSPToll Exchange
INAP INAP INAP INAP INAP INAP
SSP
Toll Exch.
SSP
Toll Exch.
SSP
Toll Exch.
SSP
Toll
Exch.
SSP
Toll
Exch.
SSP
Toll Exch.
Uralsvyazinform
Available services Freephone; Premium access; Account card access; Pre-paid card access; Televote.
Prospective Services Pre-paid access to Internet;
Pre-paid access to mobile network;
Personal number service;
Virtual private networks.
Investor Relations
• IAS reporting
• Annual International Audit since 1995
• Level 1 ADR programme
• Fitch credit rating of ‘B’
• Standard & Poor’s rating of ‘В-’Outlook
• Additional shares placement
• Level 3 ADR registration
Uralsvyazinform shares are listed on:
• Russian Trading System, MICEX, MSE
• Berlin, Frankfurt, NewEx Stock Exchanges
• US Secondary market
Stock Performance
0%
50%
100%
150%
200%
250%
300%
03
.01
.01
17
.01
.01
31
.01
.01
14
.02
.01
28
.02
.01
14
.03
.01
28
.03
.01
11
.04
.01
25
.04
.01
09
.05
.01
23
.05
.01
06
.06
.01
20
.06
.01
04
.07
.01
18
.07
.01
01
.08
.01
15
.08
.01
29
.08
.01
12
.09
.01
26
.09
.01
10
.10
.01
24
.10
.01
07
.11
.01
21
.11
.01
05
.12
.01
19
.12
.01
02
.01
.02
16
.01
.02
30
.01
.02
13
.02
.02
27
.02
.02
13
.03
.02
27
.03
.02
Market Cap of United Company
RTS Index
AKM Telecom Index
Volume of Trading Ural Region Telcom shares on the European Stock Exchanges
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
Jan 2
001
Feb 2
001
Mar 2
001
Apr 2
001
May 2
001
Jun 2
001
Jul 2
001
Aug 2
001
Sept
2001
Oct 2
001
Nov 2
001
Dec 2
001
Jan 2
002
Feb 2
002
Mar 2
002
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
5
Jul
200
1
Aug
200
1
Sep
t 200
1
Oct
200
1
Nov
200
1
Dec
200
1
Jan
.200
2
Berlin Stock Exchange NewEx
US
D m
ln
US
D m
ln
Contacts:
68 Lenin Str.
Russia, 614096, Perm
tel.: +7 3422 34 12 00
fax: +7 3422 34 33 36
e-mail: investor@usi.ru
www.uralsviazinform.com
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