Annual report 2010 _ eng


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Annual report 2010 _ eng

  1. 1. Annual Report 2010
  2. 2. Annual Report 2010SITRONICS at a Glance Business Structure Business Structure Key Indicators SITRONICS is the largest high technology company in Eastern Europe in the fields such CEO’s Statement as telecommunication solutions, information technologies and microelectronics. 2010 Milestones Business Geography The Company’s operating activities are divided into three segments:SITRONICS at a Glance SITRONICS SITRONICS SITRONICSBusiness Strategy Telecommunication Information MicroelectronicsBusiness Segments Overview SITRONICS Solutions Technologies Telecommunication Solutions SITRONICS is a leading global developer and provider is one of the major system integrators is the largest manufacturer and exporter Information Technologies of comprehensive telecommunications and leading providers of IT products, of microelectronics in Russia and the CIS SITRONICS solutions and technology solutions and services in Eastern Europe Microelectronics and the CISFinancial OverviewCorporate GovernancePersonnelSocial ResponsibilityCapital Market ActivitiesRisk ManagementFinancial StatementsGlossaryResponsibility StatementContacts2
  3. 3. Annual Report 2010SITRONICS at a Glance Key Indicators Business Structure Key Indicators Financial Highlights Operational Highlights CEO’s Statement 2010 Milestones Revenues US$ Over 1,167 million 3,500 customers Business Geography up 14% year on year in 62 countries OIBDA US$ Represented in 105.6 million 30 countriesSITRONICS at a GlanceBusiness StrategyBusiness Segments Overview SITRONICS US$ 6.7 million in 2009 Telecommunication Solutions SITRONICS Information Technologies SITRONICS OIBDA margin About 9.1% 8,000 employees MicroelectronicsFinancial OverviewCorporate GovernancePersonnel 0.7% in 2009Social ResponsibilityCapital Market ActivitiesRisk Management Total assets US$Financial StatementsGlossaryResponsibility Statement 2,010 million 4 R&D centers US$ 1,927 million in 2009 in Athens (Greece), Prague (Czech Republic), Zelenograd (Russia) and Moscow (Russia)Contacts3
  4. 4. Annual Report 2010SITRONICS at a Glance CEO’s Statement Business Structure Key Indicators Dear Colleagues, Investors, Customers and Business Partners, CEO’s Statement 2010 was a successful year for SITRONICS on many fronts. We ful- 2010 Milestones filled the promises that we made to the investment community and Business Geography laid solid foundations for the future development of the business. The gradual transition of Russia away from a primarily resource- based economy to an innovation-led economy is gathering pace. There is no doubt that this trend is positive as the intellectual po- tential of the country becomes more valuable. In this context, tech- nology developments and the creation of intellectual property are now prioritised as key contributing factors in the country’s econom-SITRONICS at a Glance ic development.Business StrategyBusiness Segments Overview SITRONICS’s role in the overall modernisation of Russia is there- SITRONICS fore also becoming more prominent, and we have considerably Telecommunication Solutions strengthened our position in this area during 2010. Full year rev- SITRONICS enues were up 14% to US$ 1,167 million and OIBDA was up over fif- Information Technologies teen fold to US$ 105.6 million with a 9.1% margin. Our year on year SITRONICS Microelectronics revenue growth rate accelerated to 21% in the fourth quarter andFinancial Overview we also delivered a US$ 73.8 million positive year on year swingCorporate Governance from an OIBDA loss to an OIBDA profit of US$ 54.8 million with aPersonnel margin of 11.3%. We reported a quarterly net profit for the first timeSocial Responsibility in four years in the fourth quarter.Capital Market ActivitiesRisk Management We were able to achieve these financial results by adhering closelyFinancial Statements to our strategy. We strengthened our position as a primary tech-Glossary nological partner of the State and proved once again that we areResponsibility Statement a leading Russian ICT innovator with a clear focus on investing in R&D. Our successful track record in public to private partnershipsContacts included our participation in the Republic of Bashkortostan’s E-4
  5. 5. Annual Report 2010SITRONICS at a Glance Government project, which resulted in the launch of Russia’s first plan to commence manufacturing by the end of 2011. This will posi- Business Structure full-scale inter-agency legal documentation management system. tion Russia as one of 10 countries globally to own this advanced Key Indicators Similar projects were launched during the year in Mordovia and the technology. Furthermore, the Prime Minister of Russia and various CEO’s Statement Yamal-Nenets Autonomous Region. In addition, we have already Government departments have recently mandated certain mea- 2010 Milestones won a large scale tender to create an intelligent transport system sures to stimulate the accelerated development of the semiconduc- Business Geography for the Moscow city authority in 2011. This system will provide in- tor industry in Russia. formation for the road infrastructure development programme and facilitate improved coordination of the State Traffic Safety Inspec- We signed a contract during 2010 to deliver SIM cards to Vimpel- torate, road services and first response capabilities. Com and we are therefore now supplying SIM cards to all of the “Big Three” mobile telecommunications operators in Russia, which to- A number of prominent IT projects were implemented during 2010 gether account for approximately 60% of the SIM cards in Russia including a CRM system based on Oracle software for Sberbank of and the CIS today. We renewed the US$ 100 million contract withSITRONICS at a Glance Russia; an SAP enterprise management system for Bashneft; and the Moscow Metro and started supplying RFID tickets to Aeroex-Business Strategy a number of hardware and software projects for Mobile TeleSys- press, which operates the rail services between Moscow and theBusiness Segments Overview tems. Our focus in the telecommunications sector was on the de- surrounding airports. We also continued to export our microelec- SITRONICS velopment of our billing and billing-related solutions. As a result, tronic components to South-East Asia and our RFID tickets are now Telecommunication Solutions our flagship FORIS solution has continued to gain popularity and in use by Istanbul’s overground transport network. SITRONICS our FORIS OSS and FORIS InterPartner solutions were implemented Information Technologies for Indian mobile network operator Sistema Shyam TeleServices. I would like to thank you all for your support in 2010 and into 2011. SITRONICS Microelectronics We also signed a long-term contract with Ugandan mobile network We greatly appreciate your trust and are more optimistic than everFinancial Overview operator Warid Telecom Uganda to provide 1.1 million FORIS billing about the future of SITRONICS. This confidence is based on our on-Corporate Governance system licences, and we continued our successful cooperation with going partnership with the State, our market leading positions inPersonnel MTS in Russia, Belorussia and Ukraine. key vertical industry sectors and across multiple geographies. WeSocial Responsibility are committed to further developing our position as a leading ICTCapital Market Activities The performance of our microelectronics business also deserves company and playing an ever increasing role in the building of Rus-Risk Management attention. Russia has managed to close a five-year development sian innovation.Financial Statements gap in the last four years by launching a state-of-the-art manufac-Glossary turing process at our Mikron plant. Microelectronics is the basis ofResponsibility Statement 90% of innovation, which is why research and development in this Sergey Aslanian field is discussed at the very highest level in Russia. We produced President of SITRONICSContacts our first 90 nanometer microchip samples at the end of 2010 and5
  6. 6. Annual Report 2010SITRONICS at a Glance 2010 Milestones Business Structure Key Indicators January system in Russia for interagency relevant CEO’s Statement SITRONICS and MTS launched a project for in low document management at the con- 2010 Milestones automated transport monitoring using NIKA stituent territory level was implemented. Business Geography navigation service for Unimilk Company. SITRONICS completed the implementation of FORIS February Fix billing solution for MGTS. SITRONICS took part in setting up a new data processing centre for MTS in Novosibirsk. June SITRONICS placed commercial bonds of BO-1 series totalling to 2 March billion rubles on the MICEX Stock Exchange. The issue sponsor andSITRONICS at a Glance SITRONICS, ROSNANOTECH State Corporation and STMicroelectro- underwriter was the Bank of Moscow.Business Strategy nics signed a tripartite agreement on the transfer of 90 nm featureBusiness Segments Overview size IC manufacture. SITRONICS signed a contract with SMARTS, the largest telecom- SITRONICS munication operator of the Volga Region, to deliver 0.5 million SIM Telecommunication Solutions SITRONICS have entered into a credit agreement with the Bank of cards. SITRONICS Moscow worth 4 billion rubles. Information Technologies SITRONICS July Microelectronics INTRACOM TELECOM received the HP Communications and Media INTRACOM TELECOM signed a frame contract with Rolaware —Financial Overview Solutions Partner of the Year 2009 award. a Greek broadband access service provider — to supply Wi-Corporate Governance BAS systems (point-to-multipoint). The contract value is 3.4Personnel April million euros, and the maturity date is 3 years.Social Responsibility SITRONICS bought out ownership interest in SITRONICS SmartCapital Market Activities Technologies (SST) from German company Giesecke&Devrient SITRONICS Information Technologies signed a contract with aRisk Management GmbH (G&D) for 101.9 million rubles. As the result, the SITRONICSs Vnesheconombanks subsidiary company in Ukraine —Prominvest-Financial Statements ownership interest in SST has increased from 65% to 100%. bank — to implement Oracle FLEXCUBE Universal Banking solution.GlossaryResponsibility Statement May INTRACOM TELECOM signed a contract with data services provider SITRONICS finished the first stage of the Republic of Bashkortostan DiscoveryTel Ghana (DTG) to deploy the first WiMAX network in Gha-Contacts E-Government. First Phase project. As the result, the first full-scale na. The contract is worth 1.2 million US dollars.6
  7. 7. Annual Report 2010SITRONICS at a Glance August placement, SITRONICS now owns 24.95% of the com- Business structure SITRONICS commercial bonds of BO-01 series totalling to 2 billion panys shares. Key indicators rubles were quoted on the Bank of Russia Lombard List. CEO’s Statement SITRONICS and Ericsson agreed on mutual coop- 2010 Milestones SITRONICS Smart Technologies won a tender arranged by Sberbank eration. The parties also concluded a distribution Business Geography of Russia to provide services of banking cards personalisation. agreement, under which SITRONICS acts as a dis- tributor of Ericsson IP solutions, IMS solutions and SITRONICS signed a contract with Aeroexpress, the subsidiary fixed broadband access solutions in the CIS. of Russian Railways, to deliver RFID tickets. SITRONICS signed a new contract with mobile network op- September erator Warid Telecom Uganda to supply 1.1 million FORIS billing Mikron started exporting chips on 200 mm wafers to South system licences.SITRONICS at a Glance East Asia. RFID tags produced by Mikron will be used in accessBusiness Strategy cards, electronic keys for houses and hotels. DecemberBusiness Segments Overview SITRONICS signed a contract with VimpelCom to supply 1 million SIM SITRONICS SITRONICS-Tatarstan, a subsidiary company, was set up in Kazan. cards with 64KB of memory. Telecommunication Solutions SITRONICS SITRONICS placed commercial bearer bonds of BO-2 series totalling Information Technologies SITRONICS to 3 billion rubles on the MICEX Stock Exchange. The issue was spon- milestones after the reporting date Microelectronics sored by the Bank of Moscow and the Moscow Bank for Reconstruc-Financial Overview tion and Development. FebruaryCorporate Governance The Bank of Moscow and SITRONICS-Nano signed an agreement onPersonnel October opening a letter of credit with post-financing for 27 million euros inSocial Responsibility SITRONICS signed long-term contracts with Sistema Shyam TeleSer- favour of STMicroelectronics NV to finance the transfer of licencesCapital Market Activities vices Ltd. for an overall amount of 22 million US dollars to imple- and technology to SITRONICS-Nano.Risk Management ment a number of its solutions (FORIS billing solution, CRM, STPFinancial Statements platform and MNP solution) and provide technical support. MarchGlossary Mikron supplied contactless transport RFID tickets for Istanbul sur-Responsibility Statement November face transport in amount of 2.42 million tickets. SITRONICS purchased additionally issued shares of Intellekt Telekom,Contacts Sistema Group research and development centre. As a result of this7
  8. 8. Annual Report 2010 SITRONICS at a Glance Business Geography Saint Petersburg Zelenograd Business Structure Moscow Yekaterinburg Nizhny Novgorod Novosibirsk Key Indicators Minsk Kazan Samara Ufa CEO’s Statement Prague Kiev Votice 2010 Milestones Voronezh Krasnodar Belgrade Kishinev Almaty Business Geography Banja Luka Bucharest Pristina Vladivostok Sofia Skopje Yerevan Tirana Tashkent Thessalonike Patras Athens Nicosia TokioAtlanta Damascus Lahore New Delhi Dubai Taipei Gurgaon Shenzhen Riyadh Hong Kong SITRONICS at a Glance SITRONICS has representative Business Strategy Business Segments Overview offices in 51 cities of 30 countries SITRONICS Telecommunication Solutions worldwide Kuala Lumpur SITRONICS Kampala Information Technologies SITRONICS Brazzaville Microelectronics Financial Overview Headquarters Representative Offices Research and Corporate Governance Development Centers Moscow (Russia) Asia CIS Europe Russia Personnel China / Hong Kong Armenia / Yerevan Albania / Tirana Saint Petersburg Russia Manufacturing plants China / Shenzhen Belarus / Minsk Bulgaria / Sofia (HQ), Plovdiv, Varna, Nizhny Novgorod Moscow Social Responsibility Czech Republic / Votice India / New Dehli Kazakhstan / Almaty Pomorie, Plewen, Sliven, Montana, Kazan Zelenograd (contract manufacturing India / Gurgaon Moldova / Kishinev Gotse Delchev Krasnodar Saint Petersburg Capital Market Activities of microchips for industrial Malaysia / Petaling Jaya Uzbekistan / Tashkent Samar Saudi Arabia / Riyadh Ukraine / Kiev Bosnia and Herzegovina / Banja Luka Ufa Europe Risk Management electronics) Syria / Damascus Cyprus / Nicosia Vladivostok Czech Republic / Prague Financial Statements Romania / Bucharest UAE / Dubai Czech Republic / Prague Novosibirsk Greece / Athens (manufacturing Pakistan / Lahore Greece / Athens, Thessalonike, Patras Yekaterinburg Glossary Macedonia / Skopje Asia of telecommunication equipment) Taiwan / Taipei India / New Dehli Japan /Tokio Romania / Bucharest USA Responsibility Statement Russia / Voronezh Serbia / Belgrade Atlanta Contacts (manufacturing of microchips) Kosovo / Pristina Africa Russia / Zelenograd Republic of the Congo / Brazzaville (manufacturing of microchips, Uganda / Kampala RFID and smart cards) 8
  9. 9. business strategy9
  10. 10. Annual Report 2010Business Strategy Mission, Vision, Values Mission, Vision, Values Three Major Vectors For Development Our mission is to build an efficient and innovative economy, Five Focus Growing Points thus raising society’s living standards via the generation Business Segments Strategy and promotion of modern technological solutions. SITRONICS VisionSITRONICS at a GlanceBusiness StrategyBusiness Segments Overview SITRONICS Telecommunication Solutions We generate We understand We develop We contribute We are SITRONICS innovations business partnerships to business efficiency the leaders Information Technologies We improve people’s We work in a rapidly Our partnerships with We develop competen- We are the leaders in all SITRONICS Microelectronics living standards via the evolving high tech in- global leaders in innova- cies and constantly im- the main spheres of ourFinancial Overview implementation of new dustry. We understand tion guarantee that the prove our solutions, thus business — the develop-Corporate Governance technologies. These tech- the details of each of solutions that we offer to increasing the competi- ment and implementationPersonnel nologies favour economic our client’s businesses, our customers are best tiveness of our clients’ of new solutions andSocial Responsibility growth, provide equal which allow us to share a one available, and give businesses business development.Capital Market Activities access to modern world common language our clients the competi- We seek to maximize theRisk Management services and form the tive edge they seek Company’s shareholderFinancial Statements continuous evolution of valueGlossary societyResponsibility StatementContacts10
  11. 11. Annual Report 2010Business Strategy Mission, Vision, Values Mission, Vision, Values Three Major Vectors For Development Five Focus Growing Points Business Segments Strategy SITRONICS ValuesSITRONICS at a GlanceBusiness StrategyBusiness Segments Overview SITRONICS Telecommunication Solutions Result oriented Openness Innovative Continuous improvement Teamwork SITRONICS We focus our efforts on We are open to new We are always searching We strive for continu- One of the key factors in Information Technologies achieving measurable re- contacts, ideas and for the best innovative ously improvement of our success is teamwork, SITRONICS Microelectronics sults in every project and initiatives. We are ready solutions. Every em- our skills, products and in which we use ourFinancial Overview initiative — and for every to share our expertise, ployee is encouraged to services. This we pass on knowledge, experience,Corporate Governance customer knowledge and experi- contribute to the overall to our customers motivation and desirePersonnel ence with our customers success, with original to achieve results. OurSocial Responsibility and partners ideas and proposals actions are based onCapital Market Activities confidence, responsibil-Risk Management ity and professionalismFinancial Statements of all team membersGlossaryResponsibility StatementContacts11
  12. 12. Annual Report 2010Business Strategy Three Major Vectors For Development Mission, Vision, Values Three Major Vectors For Development 1. Being the technological 2. Becoming a global ICT 3. Becoming a leading Five Focus Growing Points partner of the State company focused on key company in development Business Segments Strategy verticals and implementation of innovation products and technologiesSITRONICS at a Glance The first vector implies the development The second vector involves the build-up of The third vector aims at strengthening theBusiness Strategy of partner relationships with the State at a major ICT company, strengthening of the SITRONICSs position in the fields of cre-Business Segments Overview all levels, including expert appraisal in the Companys position in the target markets ation and implementation of new products SITRONICS fields of creation and management inno- in Russia and the CIS, and expansion ini- and technologies through the development Telecommunication Solutions vative projects, industrial parks and R&D tiatives into global markets. SITRONICS is of a complex system, from research proj- SITRONICS centres. oriented to efficient progress through bal- ects to the commercial launching of new Information Technologies anced growth and investment in the devel- products and services. SITRONICS Microelectronics opment of the Company’s own competen-Financial Overview cies and solutions, strategic partnershipsCorporate Governance and M&A, while implementing consistentPersonnel integration and centralisation of processesSocial Responsibility such as sales and marketing, and R&D.Capital Market ActivitiesRisk ManagementFinancial StatementsGlossaryResponsibility StatementContacts12
  13. 13. Annual Report 2010Business Strategy Five Focus Growing Points Mission, Vision, Values Three Major Vectors For Development Five Focus Growing Points Growing points Products and solutions offered by the Company in the market Business Segments Strategy 1. A convergent telecommunications solution, including: • Equipment for creating wireless • Equipment for developing optical • OSS/BSS solution package (real-time networks and providing broadband networks based on the xPON tech- accounting and billing, policy-based EFFICIENT Internet access nology applications and services) TELECOM 2. Hardware and software solutions for power engineering and housing and communal services, including: • Energy resource accounting • Integration of specialists and infor- • Modern RFID-based solutions,SITRONICS at a Glance and billing mation systems over the entire asset Glonass/GPS and 3D for the areas EFFICIENT • Decision support systems life cycleBusiness Strategy of asset servicing and personnel POWER ENGINEERING • Situation and crisis centres trainingBusiness Segments Overview 3. SITRONICS An overall solution for automation of a constituent territory, including: Telecommunication Solutions • “Electronic Government” services • Executive body integrated automation • Infrastructure for Universal Electronic SITRONICS for the region Cards (UEC), integration of E-payment Information Technologies EFFICIENT and UEC systems, provision of access SITRONICS REGION to E-payment services in rural areas Microelectronics 4.Financial Overview A solution for integrated automation of a modern city, including:Corporate Governance • City and municipal asset management • City-based public transport and • City safety managementPersonnel special transport management EFFICIENT • Transport payment automationSocial Responsibility CITY based on RFID technologyCapital Market Activities 5.Risk Management A multilevel solution for integrated automation of a company, including:Financial Statements • IT infrastructure deployment (DPCs, • Development of the IT strategy, • Development of the Companys etc.) with the possibility of outsourc- selection and implementation of integrated safety systemGlossary EFFICIENT ing of these functions solutions such as BI, ERP, CRMResponsibility Statement COMPANYContacts13
  14. 14. Annual Report 2010Business Strategy Business Segments Strategy Mission, Vision, Values Three Major Vectors For Development Strategic priorities of the Strategic priorities of the Five Focus Growing Points Telecommunication Solutions: Information Technologies: Business Segments Strategy • Expansion of the current product and service portfolio due to • Increase of the Company’s share in the IT markets in the Russian the rapid response to the existing and future market demands Federation, Ukraine, and other CIS countries in the following and our customers requirements industries: telecommunications, transport, the public sector, • Increased focus on emerging markets where a share of existing power engineering, banking, retail, education “technological know-how” is relatively small, while growth po- • Increase of the share of high margin services and business prof- tential is high itability on the whole • Entry to new industrial markets, particularly development and • Priority development of consulting and system integration ser- promotion of solutions for housing and communal services, de- vicesSITRONICS at a Glance velopment of comprehensive products and solutions for corpo- • Strengthening of strategic alliances with industry leaders toBusiness Strategy rate and government customers speed up access to the latest technologies and newest marketsBusiness Segments Overview • Strengthening of existing and creation of new strategic allianc- • Use of synergetic communication with other SITRONICS’s seg- SITRONICS es in R&D, and also launching jointly-developed solutions with ments Telecommunication Solutions leading global market players SITRONICS Information Technologies • Improvement of the sales system aimed at external markets through, among other activities, use of geographic and market- SITRONICS Microelectronics ing synergies with SITRONICS’s segmentsFinancial Overview • Use of synergetic communication with the Information Technol-Corporate Governance ogies segments with regard to telecommunications solutionsPersonnel integrationSocial ResponsibilityCapital Market ActivitiesRisk ManagementFinancial StatementsGlossaryResponsibility StatementContacts14
  15. 15. Annual Report 2010Business Strategy Mission, Vision, Values Three Major Vectors For Development Strategic priorities Five Focus Growing Points of the Microelectronics Solutions: Business Segments Strategy • Strengthening of the market position as a technology-sector • Development of partnerships with the government in the area leader, owning the most state-of-art production facilities and of R&D, capital investment and creation of new distribution technology, and a leading IC and smartcard manufacturer in the markets Russian Federation and the CIS • Development of partnerships with international microelectronic • Participation in national upgrade programs through the produc- companies tion of newly developed special chips for industrial and aero- • Increased focus on the exportation of hi-tech products outside space purposes, manufacture of chips for bio-passports and the Russian Federation: to the Asian-Pacific region (China, Tai- other social projects, strengthening of positions in the segment wan, South Korea) and Europe, due to new technologies devel-SITRONICS at a Glance of SIM cards, transport cards, RFID cards and other types of opment, cost structure improvement and product quality en-Business Strategy cards available in the Russian Federation hancementBusiness Segments Overview • Creation of a complete added value chain, from the production • Use of product and geographic synergies with other SITRON- SITRONICS technology creation and chip development, design and manu- ICS’s segments Telecommunication Solutions facture to the production and assembly of end products and so- SITRONICS lutions (chip packaging, smartcards and solutions based on the Information Technologies smartcard technology, etc.) SITRONICS Microelectronics • Development of the design centre, provision of access to a fullFinancial Overview range of services in IC design and manufactureCorporate Governance • Development of partnerships with leading Russian companiesPersonnel with the aim of scientific and technical cooperation and produc-Social Responsibility tion of power electronicsCapital Market ActivitiesRisk ManagementFinancial StatementsGlossaryResponsibility StatementContacts15
  16. 16. sitronics telecommunication solutions16
  17. 17. Annual Report 2010Business SITRONICS Telecommunication SolutionsSegments Overview SITRONICS Telecommunication Solutions comprises companies developing software and hardware for fixed and mobile network operators. This business line generated 45% of the Group’s revenue in 2010. revenue 2009–2010 key products (us$ mln) (in % of the segment revenue)SITRONICS at a GlanceBusiness Strategy 250 -9.2% FY 2009: 579 FY 2010: 525.9 18% Operations and businessBusiness Segments Overview 208 processes support 200 SITRONICS 191 (OSS/BSS) Telecommunication Solutions -8.6% 25% Network deployment SITRONICS 150 141 133 22% Telecommunication Information Technologies 124 software 106 107 SITRONICS 100 95 Microelectronics 18% OutsourcingFinancial Overview 50 17% OtherCorporate Governance 0Personnel 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QSocial Responsibility ‘0 ‘1 ‘0 ‘1 ‘0 ‘1 ‘0 ‘1 0 0 0 9 0 9 9 9Capital Market ActivitiesRisk ManagementFinancial Statements SITRONICS offers telecommunication solutions in all key invest- (OSS/BSS) for telecommunications operators; 3) increase averageGlossary ment areas for telecommunications operators. With the solutions revenue per user through the introduction of new services and QoS offered by SITRONICS, telecommunications operators can: 1) at- enhancement.Responsibility Statement tract new subscribers through the network expansion; 2) reduceContacts costs with the help of operation and business support systems17
  18. 18. Annual Report 2010 “In 2010 we focused on the expansion of the global sales of our broadband wireless systems and value-Business added software applications which employ the newest technologies to enable our customers to differen-Segments Overview tiate, generate new revenue streams and improve their profitability. We further expanded into the Asian markets, while we signed significant new contracts for our wireless systems in Eastern Europe, Russia and the Middle East, where we have been operating for the last decade. We forecast further growth in sales in Russia, Pakistan, Syria, India and Romania, where we have greatly enhanced our sales teams. Our major goal is to be listed among the top international players in the market of wireless network sys- tems and telecom software. We invest in R&D in order to continue the development of innovative telecom- munication products which contribute to the success of our customers” Alexandros Stergios Manos, Managing Director of INTRACOM TELECOMSITRONICS at a Glance Telecommunications equipment • iBAS is a multiservice access platform intended for concurrentBusiness Strategy SITRONICS’s solutions, developed by its subsidiary company, INTRA- providing numerous broadband (high-speed Internet, broad-Business Segments Overview COM TELECOM, help operators establish a powerful and cost-efficient band TV, games) and narrowband (voice, leased lines, subscrib- SITRONICS telecommunications infrastructure, satisfying both current and future er multiplexing) services with one unit. Telecommunication Solutions possible requirements to data communication and subscriber access. SITRONICS Some of the new customers are Syrian Telecommunications Estab- Information Technologies Key SITRONICS solutions: lishment, a major fixed network operator in Syria, and Moldtelecom, SITRONICS Microelectronics • OmniBAS is a solution for providing broadband wireless access a leading telecommunications operator in Moldavia (supply of Wi-Financial Overview and data communication based on the radio-relay technology in BAS and iBAS solutions and technical support for one year). A newCorporate Governance next generation networks. contract with Telecom Srbija to supply IPTV equipment was alsoPersonnel • INTRALINK is a range of homogeneous digital point-to-point concluded in 2010. In June of 2010, agreements were concludedSocial Responsibility radio-relay products for providing broadband wireless access. with DiscoveryTel Ghana (a licensed data communication provider)Capital Market Activities • OmniMAX is a solution for providing broadband wireless access to deploy the first mobile WiMAX network in Ghana, and with Ro-Risk Management and voice communication using the WiMAX technology, at bi- laware (Greek broadband access provider) to deliver WiBAS withinFinancial Statements trates up to 120 Mbit/s, irrespective of the geographic location, three years. In November of 2010, new contracts were signed withGlossary in any types of buildings, and while in motion. Pakistan Telecommunication Company Limited (PTCL), a leadingResponsibility Statement • WiBAS is a solution for creating broadband wireless access net- telecommunications operator in the Middle East, to deliver the Wi- works, based on the FDD-TDMA (IEEE 802.16) standard, to pro- BAS solution, and with Telekom Srpske, a telecommunications oper-Contacts vide carrier-class point-to-multipoint wireless communication. ator in Bosnia and Herzegovina, to deliver INS, INTRALINK and IPTV18
  19. 19. Annual Report 2010 “In the second half of 2010 we worked hard towards the Company restructuring, reviewing the productBusiness strategy, developing a proactive position with regard to the promotion of STS products and strengtheningSegments Overview cooperation with our customers and partners. By the end of the year, we have already demonstrated a significant increase in key performance indicators, higher production efficiency and improvement of the quality of our products and solutions. This allowed us to offer new services to our customers. Our major task today is to surpass what we have accomplished and move forward in line with market requirements.” Mikhail Bondarenko, General Director of JSC “SITRONICS Telecom Solutions” solutions. Moreover, Comstar put a WiMAX network based on the including major telecommunications companies (2N TELEKOMU-SITRONICS at a Glance OmniMAX equipment into pilot operation in Tsahkadzor (Armenia). NIKACE and PRINCIP А.S. (Czech Republic), ERL Electronic GmbHBusiness Strategy and Nanotron Technologies GmbH (Germany), Zenitel Norway ASBusiness Segments Overview Telecommunications software (Norway)) and companies in other industries (Consilium Fire&Gas SITRONICS This segment includes the following three focus areas: A.B. (Sweden) — electrical equipment manufacturer, KV2 Audio In- Telecommunication Solutions 1. BSS/OSS (Business Support System/Operation Support Sys- ternational (UK) — audio equipment and sound system provider). SITRONICS tem), our key business driver, providing for the development, im- Information Technologies plementation and technical support of the FORIS OSS billing so- SITRONICS’s flagship product is FORIS — a comprehensive system SITRONICS Microelectronics lution and related products (FORIS InterPаrtner, FORIS Business for convergent billing and service management, intended for theFinancial Overview Intelligence, FORIS Revenue Assurance, etc.), through which ser- support of fixed and mobile network subscribers and real-time bill-Corporate Governance vices are provided to subscribers and which are actively used by ing for all types of services.Personnel operators. SITRONICS is a top 5 player in the OSS/BSS marketSocial Responsibility in Eastern Europe, South-East Asia and Africa, and the leader Advantages of the solution:Capital Market Activities among Russian billing solution developers in terms of business • A carrier-class scalable billing platform specifically designedRisk Management scale, customer pool, and product and process quality. for market-leading operators providing services to a large num-Financial Statements 2. Network Solutions, providing for the development of MEDIO ber of subscribers and/or to a rapidly growing number of usersGlossary SCP, MEDIO STP, GMSC, TENNET and other products, which are • Suitable for providing services to any types of subscribers — pre- in between hard- and software. paid or postpaid, corporate clients or individualsResponsibility Statement 3. The plant in Votice (a small town in the Czech Republic), manufac- • Billing for all types of services: voice, data communication, VASContacts turing products and assembling equipment for external customers, • Network technology convergence: fixed, mobile, NGN, IMS19
  20. 20. Annual Report 2010 geographies ing Transfer Point (STP) platform and Mobile Number PortabilityBusiness (in % of the segment revenue) (MNP) solution, and also technical support)Segments Overview • WARID TELECOM UGANDA (technical support services) • TELECOM SRBJIА (technical support services) 2% Ukraine • MTS Belarus (delivery of the FORIS and FORIS InterPartner re- 1% Other leases), and others 28% Russia and CIS (excl. Ukraine) In 2010, the billing system was implemented for MTS India; migra- 32% Central and Eastern Europe (excl. Greece) tion of prepaid and postpaid MTS Uzbekistan subscribers to the FO- 21% Greece RIS platform in the Tashkent region was completed; obligations to 11% Middle East and Africa roll out the FORIS solution releases in the MTS Russia regions were 5% Asia-Pacific region fulfilled; the Mobile Internet service based on the FORIS/MSCP con- vergent solution was implemented for prepaid CDMA subscribers ofSITRONICS at a Glance MTS Ukraine; the FORIS Fix system was put into operation for theBusiness Strategy Moscow City Telephone Network (MGTS), and the subscribers wereBusiness Segments Overview migrated to this system. SITRONICS With the FORIS solution, operators can support more than 10 mil- Telecommunication Solutions lion subscribers, ensure cost control and increase service profit- Nowadays SITRONICS’s solutions and products are used by more SITRONICS ability due to billing support. In 2010, FORIS was awarded Certifi- than 50 telecommunications operators worldwide. Information Technologies cate of Compliance OC-1-CT-02-71, confirming that the system can SITRONICS Microelectronics be used in public communications networks supporting up to 35 Research and DevelopmentFinancial Overview million subscribers and is intended for billing automation and pro- In 2010, we continued developments in the key focus areas with re-Corporate Governance vision of different telecommunications services. gard to telecommunications solutions: OSS/BSS systems for tele-Personnel communications operators and equipment for wireless access andSocial Responsibility Today, the FORIS solution is used by fixed and mobile network op- data communication. New versions of FORIS OSS, OmniBAS, Om-Capital Market Activities erators supporting over 100 million subscribers in Russia, the CIS, niMAX, WiBAS and other products were released, the developmentRisk Management India, the Czech Republic, Serbia, Congo and Uganda. of a new billing product based on policy management, ActionRuler,Financial Statements was started.Glossary In 2010, SITRONICS concluded several major contracts for delivery of FORIS solutions and provision of technical support services to 3G Indoor and convergent access system developments, which wereResponsibility Statement the following customers: started in 2009, continued in 2010, and as a result, applications for aContacts • MTS India (implementation of the FORIS billing system, Signal- patent in Russia and approval of a new project in this area were filed.20
  21. 21. Annual Report 2010 The “SITRONICS Research Institute” autonomous non-profit organ- • Companies focus on infrastructure cost reduction: infrastruc-Business isation together with the Lobachevsky State University of Nizhni ture sharing between telecommunications operators, solutionsSegments Overview Novgorod examined the possibility of using 256QAM modulation in based on SaaS and cloud computing. the 3GPP HSPA+ system for Nokia Siemens Networks. • Many operators switch from in-house OSS/BSS systems to com- mercial industrial solutions. A cooperation agreement with one of the world-leading providers of • Wireless segment (3G, LTE) is expanding; therefore, content vol- technology solutions and professional services for telecommunica- ume is growing, including billing requirements. tions operators, Ericsson, was concluded. As part of the partner- • Convergent FMC operators emerge, the MVNO market is developing. ship, we are planning to develop competencies and expertise in IP solutions, and also create a centre of competence and implement While infrastructure development was restrained during the joint projects with the aim of development IMS and VAS applica- crunch, growing traffic volumes force operators to expand and up- tions and BSS/OSS systems. grade the existing mobile and wireless network infrastructure. The world markets growth rates in 2010: Wireless networks — by 5.6%,SITRONICS at a Glance At the end of 2010, the SITRONICS Telecommunication Solutions WiMAX — by 25%, IPTV — by 22.5%, NGN — by 13%. Expected OSS/Business Strategy management adopted a decision to develop regional R&D cen- BSS market growth in 2011 will be at 8%.Business Segments Overview tres and increase investments to R&D significantly for 2011. New SITRONICS R&D centres are being established in the premises of SITRONICS target oss/bss market (eastern europe, Telecommunication Solutions branches in St. Petersburg and Krasnodar. A development team the middle east and africa; million us dollars) SITRONICS was assembled in SITRONICS Tatarstan, responsible for the de- Information Technologies velopment of the FORIS InterPartner system, intended for the sup- 250 SITRONICS Microelectronics port of settlement processes between operators. With the directFinancial Overview involvement of the team, the solution was implemented in MTS 200Corporate Governance Belarus and MTS Uzbekistan, and now the works are in progress 150Personnel in MTS India.Social Responsibility 100Capital Market Activities Industry Trends and Future DevelopmentRisk Management Telecommunications market features: 50Financial Statements • Observation indicates growth rate slowdown worldwide.Glossary • Major telecommunications market players tend to consolidate 0 (fixed and mobile network operators. 20 20 20 20 20Responsibility Statement 10 11 12 13 09 • Competition is becoming more intense (especially in the OSS/Contacts Professional Services License Data Processing and Hosting BSS market). Source: Gartner21
  22. 22. Annual Report 2010Business iptv implementation costs in the world, in/vas costs in the world,Segments Overview million us dollars million us dollars 10,000 500,000 % 8,000 = 22.1 400,000 C AG R % = 30.9 6,000 300,000 C AG R 4,000 200,000 2,000 100,000SITRONICS at a Glance 0 0Business Strategy 20 20 20 20 20 20 20 20 20 20 10 11 12 13 10 11 12 13 09 09Business Segments Overview SITRONICS Telecommunication Solutions Source: IPTV Infonetics, estimated figures by INTRACOM TELECOM Source: Gartner, VAS Portio Research SITRONICS Information Technologies New service implementation the Czech Republic, which is going to manufacture own products. SITRONICS Microelectronics It is anticipated that in the coming years operators will invest more As part of the development of its key product, FORIS, the CompanyFinancial Overview to technologies, which ensure the offered services range expansion has plans to focus on the FORIS functionality enhancement, in-Corporate Governance and QoS enhancement. First of all, this means network migration to crease activity in the CIS and in the world, and work towards higherPersonnel IP technology, creation of Intelligent Networks (IN) and implemen- brand recognition in the market as a whole.Social Responsibility tation of additional value-added services (VAS).Capital Market ActivitiesRisk Management SITRONICS will continue to promote OmniBAS and OmniMAX solu-Financial Statements tions in the target markets.Glossary With regard to telecommunications software, we plan to strengthenResponsibility Statement and develop profitable areas, competencies and products. This isContacts true in respect of the OSS/BSS, Network Solutions and the plant in22
  23. 23. sitronics information technologies23
  24. 24. Annual Report 2010Business SITRONICS Information TechnologiesSegments Overview SITRONICS Information Technologies is the largest system integrator in Ukraine and one of the Russian top 10 largest IT companies revenue 2009–2010 key products (us$ mln) (in % of the segment revenue) 180 +46% 181 FY 2009: 221.5 FY 2010: 323.6 18% IT Infrastructure and 150 System integrationSITRONICS at a Glance 44.5% TelecommunicationsBusiness Strategy 120 121 +50% Integration solutionsBusiness Segments Overview 90 37.5% Business Consulting and IT outsorcing SITRONICS Telecommunication Solutions 63 60 46 46 SITRONICS 35 34 Information Technologies 30 19 SITRONICS Microelectronics 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFinancial Overview ‘0 ‘1 ‘0 ‘1 ‘0 ‘1 ‘0 ‘1 0 0 0 9 0 9 9 9Corporate GovernancePersonnelSocial Responsibility SITRONICS Information Technologies is one of the major system SITRONICS Information Technologies:Capital Market Activities integrators and a leading provider of IT products, solutions and 1. Is a qualified team with a unique experience in implementingRisk Management services in Russia and the CIS. The Company offers a broad range international projects in different industriesFinancial Statements of solutions for the telecommunications, financial, and public sec- 2. Demonstrates many years of successful cooperation with lead-Glossary tors, as well as for the industrial sector. The Information Technolo- ing global vendors, which is confirmed by high partner statuses gies line of business generated 28% of the total Group revenue 3. Holds a portfolio of the most in-demand solutions and servicesResponsibility Statement for 2010. aimed at increasing efficiency and competitiveness of our cus-Contacts tomers’ businesses24
  25. 25. Annual Report 2010 “SITRONICS Information Technologies demonstrated faster growth during 2010 than the market did. IBusiness think that the key factors of this success are our high expertise level, experience in implementing mostSegments Overview complex projects and increased focus on services provision for IT intensive industries.” Vladimir Yasinsky, Head of SITRONICS Information Technologies IT Infrastructure creation and The first stage of the NIKA project for the Moscow heating systemsSITRONICS at a Glance system integration company Moskovskaya Teplosetevaya Kompaniya (MTK) to pro-Business Strategy • IT infrastructure creation. A wide range of infrastructure solu- vide an integrated service for vehicles monitoring and manage-Business Segments Overview tions based on developments by internationally-known com- ment was completed during 2010. Concurrently, another project SITRONICS panies: IBM, Oracle, Hewlett-Packard, EMC, HDS, Cisco Sys- was launched to implement automated vehicle fleet monitoring Telecommunication Solutions tems, АРС, and others. based on the navigation service NIKA for PalletTrade. Pilot sys- SITRONICS Information Technologies • System integration. Integration of enterprise information tem operation provided savings on the vehicle fleet maintenance resources and software systems into a single system. Soft- costs at about 40%. SITRONICS Microelectronics ware audit services. Creation of portals and intranet systems,Financial Overview knowledge base management systems, and document man- Telecommunication integrationCorporate Governance agement and workflow systems. • Design and construction of networks for mobile operators, in-Personnel cluding wireless networks, and also implementation of OSS/Social Responsibility Implementation of the E-Government project in Bashkortostan BSS for mobile network operators. Design and deployment ofCapital Market Activities continued in 2010, and other similar projects were launched in intranet portals, including the design of specialised distrib-Risk Management Mordovia and the Yamal-Nenets Autonomous Area. SITRONICS uted systems of different complexity levels.Financial Statements installed Multimedia Information and Educational EnvironmentGlossary (MIEE) for the Bashkortostan Ministry of Education, and with During 2010, SITRONICS completed the implementation of IBM compliments to the support of the Tula branch of Sberbank, Tyvoli Fault Management and Performance management subsys-Responsibility Statement the MIEE software was installed in the regional school Vozro- tems at MTS with the aim of improvement data transport networkContacts zhdeniye. management. Concurrently, the project for a data transport net-25
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