Svyazinvest: 1H2004 Key Performance Indicators
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Svyazinvest: 1H2004 Key Performance Indicators

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    Svyazinvest: 1H2004 Key Performance Indicators Svyazinvest: 1H2004 Key Performance Indicators Presentation Transcript

    • Svyazinvest: 1H2004 Key Performance Indicators November, 2004
    • Svyazinvest holds a leading position in the Russian fixed-line market
      • 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) 22% 2 7% 51% Rostelecom 33% 16% 51% Dalsvyaz 42% 7% 51% Sibirtelecom 34% 13% 53% Uralsvyazinform 39% 10% 51% South Telecom 32% 17% 51% VolgaTelecom 35% 14% 51% North-West Telecom 41% 8% 51% CenterTelecom Other Foreign shareholders JSC Svyazinvest Company State 75% - 1 share Mustcom 25% + 1 share JSC Svyazinvest 7 mega-regionals JSC Rostelecom MGTS Other Controlling stake Blocking stake
    • 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
    • Svyazinvest in 200 3
      • Revenues from core operations - USD 4.74 bn ( up 51.0 % against 200 2 )
      • Gross revenue – USD 4.92 bn ( up 29.0 %)
      • Operating costs – USD 3.64 bn ( up 2 9.0 %)
      • Profit from sales – USD 1.29 bn ( up 28.9 %)
      • Payroll – USD 1 .02 bn ( up 2 9.6 %)
      • Average number of employees – 350 ,305 ( down 3.8 %)
      • Average monthly salary – USD 256 ( up 3 9.2 %)
    • Svyazinvest major economic indicators, 1 H2004 1.75 1.24 2.14 1.5 8 3.05 2.30 1H 0 2 1H03 1H04 1H02 1H03 1H04 Revenues Costs Operating profit , USD mn EBITDA , USD mn USD bn Revenues and costs * Operating profit * and EBITDA* 27. 8 29 . 4 Average number of lines 31 . 3 1H02 1H03 1H04 Lines mn * data include JSC MGTS figures 523 744 55 9 503 677 906 251 24 92 8.97 98 1H04 + 5. 5% 237 Domestic/international traffic per line, min + 26 % 19 Profit per line, USD 1 H 03 + 11 % 83 Lines per employee + 48 % 6.06 Revenues per employee, USD, th + 34 % 73 Revenues per line, USD
    • 2004 Investment Program
      • Total capex of Svyazinvest group of companies is estimated at USD 1 .9 2 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 Local network digitalization % 31.12 37.5 43.8 51.3 29.7 31.3 33.0 34.9
    • Marketing Strategy 2004 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
    • USD Monthly rate for urban fixed subscribers Tariffs growth for local telephone services in 2004 :
      • 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 Residential customers Budget-funded institutions Business organizations +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 30 % 2 9 % Business organizations 3 1 % 30 % Residential customers Rural telephony Urban telephony
    • 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
    • Corporate governance rating of mega-regional companies (Standard & Poor’s)
      • 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.
      0 . 4 5 . 6 5 . 2 JSC South Telecom 0 . 5 5 . 8 5 . 3 JSC Dalsvyaz 0 . 5 5 . 8 5 . 3 JSC CenterTelecom 0 . 3 5 . 9 5 . 6 JSC North-West Telecom Change 1Н 2004 1Н 2003 Company 6 . 4 - JSC Rostelecom 5 . 7 - JSC Sibirtelecom 0 . 2 6 . 2 6 . 0 JSC Uralsvyazinform 0 . 1 5 .9 5.8 JSC VolgaTelecom
    • Credit ratings of mega-regional companies Fitch Positive В+ Sibirtelecom S&P Positive В Rostelecom S&P/ Fitch Stable / Stable В / В B- Uralsvyazinform Fitch Positive В Dalsvyaz S&P Stable В VolgaTelecom S&P Stable CCC + CenterTelecom S&P Negative В- South Telecom S&P Stable В- North West Telecom Agency Outlook Rating Company
    • License Portfolio of Svyazinvest GSM operators - GSM-1800 - GSM-900 - GSM-900/1800 Subscriber growth Svyazinvest share in the cellular market up 50% 3 , 000 , 000 January 1, 2004 up 300% 2 , 150 , 000 January 1, 2003 up 100% 530 , 000 January 1, 2002 up 120% 250 , 000 January 1, 2001 113 , 000 January 1, 2000 Growth rate Subscriber base As of 15% 6% 12 % Other 0% 1 2 % 2 2 % Megafon 3 2 % 5 % 2 0 % Bee Line 35% 2 7 % 2 7 % MTS 1 8 % 50% 1 9 % Svyazinvest Siberia the Urals Volga
    • 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.
      • Revenues from core operations - USD 6.32 bn ( up 33.4 % against 200 3 )
      • 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 – 3 37,300 ( down 3.7 %)
      • Average monthly salary – USD 354.6 ( up 38.5 %)
      Svyazinvest 2004 target performance indicators:
    • Thank you!