The BoD of North West Telecom approved the company’s 2005 business plan on January 21, 2005 and instructed the management of the company to work out a radical cost containment program within three months.  Thus, NWT is the first super regional telecom operator to announce its intention to dramatically improve the efficiency of its activity.

According to the approved 2005 business plan, the consolidated revenue of NWT will be Rub 20.1 bln, which is up 15% on 2004.  In addition, operating expenses will rise by only 12%.  Revenues outstripped expenses for the first time since the merger was executed.

EBITDA is expected to rise by 23% to Rub 4.8 bln.  Thus, in line with the operator’s previously announced financial strategy the EBITDA margin will increase by 1.5% to 23.9%.

Net profit is to rise by 13% and reach over Rub 1.5 bln.

The company’s 2005 investment program will stand at Rub 5 bln, which is up 40% on 2004 investments.  Main investments will be aimed at a program for network upgrade and digitalization, reducing the waiting list for telephone installation and expanding zonal telecom networks in the regions.  All in all, 221,000 existing numbers are to be digitalized and 149,000 new lines are to be entered into service.  In addition, revenues from value-added services (VAS) are expected to rise by 30% to Rub 900 mln.

NWT’s investment program factors in the participation of NWT in a number of IT programs, which are to be carried out on a centralized basis by Svyazinvest companies, and a number of possible M&A deals.  In particular, the BoD at its last meeting adopted a decision to enter negotiations aimed at acquiring a group of companies which controls 60% of the ISP market in one of the license territories of North West Telecom.

In 2005, the financial stability of NWT will remain strong: own funds will account for at least 58% of the company’s liabilities (vs. 59% in 2004).  In addition, net debt will increase by Rub 2 bln.

In order to raise the current liquidity ratio (from 0.58 in 2004 to 0.77 in 2005) the company plans to issue bonds worth Rub 3 bln and raise a long-term Rub 1 bln bank loan.  These funds will allow the company to refinance its short-term obligations and finance the 2005 investment program.

In accordance with the decision of the BoD, the main parameters for NWT’s 2005 budget will be reviewed in 2Q 2005 after the cost containment program has been approved.