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. $726 mn Consolidation of telecom operators has enabled Svyazinvest to create economically viable and competitive companies As a result of consolidation, mega-regionals have:
To strengthen company’s presence in the telecom market
To increase market share in certain segments
To increase company’s profit margins by enhancing revenue per customer and expanding subscriber base
To build a steadily growing client-base by boosting customer loyalty
Work with allied operators MRCs’ marketing strategies Clear-cut system of marketing planning and accounting Program of aggressive service promotion for each customer category Regular marketing researches Implementation of customer relationship management concept Improvement of client service Transfer to unified billing system Upgrade of sales and major corporate client servicing systems
USD Monthly rate for urban fixed subscribers Tariffs growth for local telephone services in 2004 :
In 2003 tariffs for domestic long-distance calls for budget-funded institutions, business organizations and residential customers were brought to a similar level .
In 2004 Svyazinvest will carry on increasing tariffs for local telephone services to the level of economically feasible costs , inclusive of target profitability , as well as optimizing ILD tariff .
Average zonal tariff revision for domestic long-distance calls Residential customers Budget-funded institutions Business organizations +2 . 3% -14 . 3% +1 . 5% -8 . 3% -10 . 3% -25% Zones 1-4 Zones 5-7 Rebalancing of tariffs for telecom services 5.5 7.5 4.1 5.6 3.0 4.3 30 % 2 9 % Business organizations 3 1 % 30 % Residential customers Rural telephony Urban telephony
Tariffs for local telephone services compared to European telecom operators Average monthly rate , US$ 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.
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.