Svyazinvest: 1H2004 Key Performance Indicators November, 2004
May 12, 2015
Svyazinvest: 1H2004 Key Performance
Indicators
November, 2004
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Svyazinvest holds a leading position in the Russian fixed-line market
Company JSC Svyazinvest Foreign shareholders Other
CenterTelecom 51% 8% 41%
North-West Telecom 51% 14% 35%
VolgaTelecom 51% 17% 32%
South Telecom 51% 10% 39%
Uralsvyazinform 53% 13% 34%
Sibirtelecom 51% 7% 42%
Dalsvyaz 51% 16% 33%
Rostelecom 51% 27% 22%
State75% - 1 share
Mustcom25% + 1 share
JSC Svyazinvest
7 mega-regionals
JSC Rostelecom MGTSOther
Controlling stake
Blocking stake
Company profile:
• Svyazinvest foundation – 18 September, 1995
• Sale of Svyazinvest stake to Mustcom – July 1997
• Consolidation of companies – 72 regional telecom operators were merged into 7 mega-regionals in 2000-2002
Share capital (voting stock)
3
JSC North West Telecom 3.4 m lines in service market cap. $372 mn
JSC CenterTelecom 5.8 m lines in service market cap. $518 mn
JSC South Telecom 3.4 m lines in service market cap. $272 mn
JSC Dalsvyaz 1.1 m lines in service market cap. $106 mn
JSC Sibirtelecom 3.5 m lines in service market cap. $620 mn
JSC Uralsvyazinform 3.3 m lines in service
market cap. $1,117 mn
JSC VolgaTelecom 4.0 m lines in service market cap. $726 mn
Consolidation of telecom operators has enabled Svyazinvest to create economically viable and competitive companies
As a result of consolidation, mega-regionals have:
become more investor attractive reduced the cost of borrowed funds optimized equipment purchase
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Svyazinvest in 2003
Revenues from core operations - USD 4.74 bn (up 51.0% against 2002)
Gross revenue – USD 4.92 bn (up 29.0%) Operating costs – USD 3.64 bn (up 29.0%) Profit from sales – USD 1.29 bn (up 28.9%) Payroll – USD 1.02 bn (up 29.6%) Average number of employees – 350,305 (down 3.8%) Average monthly salary – USD 256 (up 39.2%)
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1H03 1H04
Revenues per line, USD 73 98 +34%
Revenues per employee, USD, th 6.06 8.97 +48%
Lines per employee 83 92 +11%
Profit per line, USD 19 24 +26%
Domestic/international traffic per line, min 237 251 +5.5%
Svyazinvest major economic indicators, 1H2004
1.75
1.24
2.14
1.58
3.05
2.30
1H02 1H03 1H04 1H02 1H03 1H04
Revenues CostsOperating profit, USD mnEBITDA, USD mn
US
D b
n
Revenues and costs* Operating profit* and EBITDA*
27.8
29.4
Average number of lines 31.3
1H02 1H03 1H04
Lin
es m
n
* data include JSC MGTS figures
523
744
559503
677
906
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2004 Investment Program
•Total capex of Svyazinvest group of companies is estimated at USD 1.92 bn
•4 mn telephone lines, planned for commissioning, will raise network digitalization rate to 51.3% and expand installed capacity to 35 mn lines.
Installed capacity
lines, mn
2025303540455055
2001 2002 2003 2004
Local network digitalization
%
27
30
33
36
2001 2002 2003 2004
31.1237.5
43.8
51.3
29.7
31.3
33.0
34.9
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Marketing Strategy2004 key marketing objectives
To strengthen company’s presence in the telecom market
To increase market share in certain segments
To increase company’s profit margins by enhancing revenue per customer and expanding subscriber base
To build a steadily growing client-base by boosting customer loyalty
Work with allied operators
MRCs’ marketing strategies Clear-cut system of marketing planning and accounting
Program of aggressive service promotion for each customer category
Regular marketing researches
Implementation of customer relationship management concept Improvement of client service
Transfer to unified billing system
Upgrade of sales and major corporate client servicing systems
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01/01/03 01/08/03 01/10/04
Customers(includingVAT)
Organizations(excludingVAT)
USD
Monthly rate for urban fixed subscribersTariffs growth for local telephone services in 2004:
Urban
telephony
Rural
telephony
Residential
customers
30% 31%
Business
organizations
29% 30%
In 2003 tariffs for domestic long-distance calls for budget-funded institutions, business organizations and residential customers were brought to a similar level.
In 2004 Svyazinvest will carry on increasing tariffs for local telephone services to the level of economically feasible costs, inclusive of target profitability, as well as optimizing ILD tariff.
Average zonal tariff revision for domestic long-distance calls
Res
iden
tial
cu
sto
mer
s
Bu
dg
et-
fun
ded
in
stit
uti
on
s
Bu
sin
ess
org
aniz
atio
ns
+2.3%
-14.3%
+1.5%
-8.3% -10.3%
-25%Zones 1-4 Zones 5-7
Rebalancing of tariffs for telecom services
5.5
7.5
4.1
5.6
3.0
4.3
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Tariffs for local telephone services compared to European telecom operators
Average monthly rate, US$
Average monthly rate in
Russia is still about 70%
lower than in Central and
Eastern Europe, and is 80%
lower than in Western
Europe.
Average monthly rate at mega-regional companies amounts to $ 4.4
3.9
3.7
4.2
4.3
4.4
5.2
5.4
11.4
15.8
12.5
CenterTelecom
South Telecom
VolgaTelecom
Sibirtelecom
North-West Telecom
Urasvyazinform
Dalsvyaz
Cesky Telecom
TPSA
Matav
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Corporate governance rating of mega-regional companies (Standard & Poor’s)
Company 1Н 2003 1Н 2004 Change
JSC North-West Telecom 5.6 5.9 0.3
JSC CenterTelecom 5.3 5.8 0.5
JSC South Telecom 5.2 5.6 0.4
JSC VolgaTelecom 5.8 5.9 0.1
JSC Uralsvyazinform 6.0 6.2 0.2
JSC Sibirtelecom - 5.7
JSC Dalsvyaz 5.3 5.8 0.5
JSC Rostelecom - 6.4
Corporate governance ratings of all mega-regional companies assigned by S&P were above average (5 points out of 10);
Corporate governance ratings of six companies were upgraded;The holding company’s target for 2004 is to further improve its corporate governance, meeting
international standards.
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Credit ratings of mega-regional companiesCompany Rating Outlook Agency
North West Telecom В- Stable S&P
South Telecom В- Negative S&P
CenterTelecom CCC+
Stable S&P
VolgaTelecom В Stable S&P
Dalsvyaz В Positive Fitch
Uralsvyazinform В/ВB- Stable /Stable
S&P/Fitch
Sibirtelecom В+ Positive Fitch
Rostelecom В Positive S&P
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License Portfolio of Svyazinvest GSM operators
- GSM-1800
- GSM-900
- GSM-900/1800
As of Subscriber base Growth rate
January 1, 2000 113,000
January 1, 2001 250,000 up 120%
January 1, 2002 530,000 up 100%
January 1, 2003 2,150,000 up 300%
January 1, 2004 3,000,000 up 50%
Subscriber growth
Volga the Urals Siberia
Svyazinvest 19% 50% 18%
MTS 27% 27% 35%
Bee Line 20% 5% 32%
Megafon 22% 12% 0%
Other 12% 6% 15%
Svyazinvest share in the cellular market
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Cellular Business Development – an important part of Svyazinvest holding’s investment strategy
Svyazinvest holds a strong position in regional cellular market and is focused on further reinforcing this position by developing the existing operators:
In Urals region: Uralsvyazinform’s Board of Directors has decided to consolidate the assets of its subsidiary GSM-operators.
In Volga region: VolgaTelecom’s Executive Board is currently working to consolidate the assets of its subsidiary GSM-operators.
In the Far East region: to increase its coverage territory, Dalsvyaz is planning to acquire cellular assets: ZAO Akos, Primorsky krai company-operator and OOO Wireless Information Technologies, a license holder in Sakhalin and Chukotka.
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Svyazinvest 2004 target performance indicators:
Revenues from core operations - USD 6.32 bn (up 33.4% against 2003)
Gross revenue – USD 6.54 bn (up 32.8%) Operating costs – USD 4.82 bn (up 32.4%) Profit from sales – USD 1.72 bn (up 33.8%) Labor remuneration fund – USD 1.35 bn (up 32.0%) Average number of employees – 337,300 (down 3.7%) Average monthly salary – USD 354.6 (up 38.5%)
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Thank you!