Rostelecom Q1 net profit edges up 6%; broadband, pay-TV subs rocket

1 Jul 2011

Russia’s state-owned telecoms giant Rostelecom has reported consolidated revenues of RUB72.4 billion (USD2.6 billion) for the three months ending 31 March 2011; this figure represents an increase of 8% year-on-year. Net income for 1Q11 increased 6%, reaching RUB10.6 billion, whilst OIBDA dropped 2% to RUB27.2 billion. CAPEX increased 64% to RUB15.1 billion, representing 20.9% of the firm’s quarterly revenue. Local telephony services accounted for the lion’s share of revenues, weighing in with RUB21.6 billion of the total. Broadband revenues contributed RUB11.5 billion to the total, whilst mobile services generated a further RUB7.2 billion. Rostelecom notes that all figures include the earnings of the seven mega-regional telcos that were merged into its central operation on 1 April 2011 – after the end of the reporting period in question. North-West Telecom, CenterTelecom, Southern Telecommunications, VolgaTelecom, Uralsvyazinform, Sibirtelecom and Far East Telecom had all previously operated under the control of state-owned telecoms holding company Svyazinvest.

In operational terms, the total subscriber base for fixed line voice telephony services remained fairly flat, dropping 1% to 29.2 million. In contrast, the newly enlarged Rostelecom saw its total broadband subscriber base grow 33% year-on-year to 7.4 million. Wireless subscribers dropped from 15.2 million to 12.4 million, with Rostelecom citing the introduction of a new three-month churn policy in 3Q10. The telco’s total pay-TV subscriber base increased 605%, to 5.5 million, largely thanks to the addition of around 4.6 million National Telecommunications (NTC) subscribers; the company was acquired in February 2011. NTC is the country’s largest cable TV operator, and its cable network passes at least 5.1 million households in Moscow, Moscow Region, St Petersburg, Ekaterinburg and Novosibirsk.

Alexander Provotorov, CEO of Rostelecom commented: ‘Our results for the first quarter reflected the performance of the combined company for the first time, despite the fact that the merger was completed on 1 April, after the end of the reporting period. The initiatives that we have implemented in order to drive the group’s revenue growth – by providing our subscribers with a full spectrum of telecommunications services – have been further strengthened by the successful acquisition of companies like Teleset and Severen Telecom in 2010, and National Telecommunications in February 2011. The acquisition of National Telecommunications in particular has provided us with access to over 3.1 million Moscow households, and has enhanced our market positions in key cities such as St Petersburg, Ekaterinburg and Novosibirsk’.

Russia, Rostelecom