On 20th December the Board of Directors approved the budget of OJSC North-West Telecom for 2006.
The budget of OJSC NWT for 2006 was formed in the framework of the financial and economic strategy of the Company consisting in ensuring a long-term investment attractiveness of the company through:
- a quicker growth of the income as compared to the growth of expenses;
- ensuring a growth of net profit;
- control over the volume and efficiency of investment;
maintaining the financial independence of the Company, i.e. the amount of own funds must exceed the amount of borrowed funds.
The budget of OJSC NWT for 2006 takes into account the new principles of inter-operator interaction under the conditions of telecommunications market liberalization. According to the approved budget, in 2006 the consolidated proceeds of North-West Telecom will amount to 18,613 billion roubles, which is 8% less than in 2005. At the same time, operating expenses will drop by 11% and amount to 13,974 billion roubles.
Due to the continuing policy of cost control, efficiency of NWT's operations will remain at a high level in 2006:
operating profit will increase by 6% to 4,638 billion roubles;
- EBITDA will increase by 15% to 6,042 billion roubles;
- EBITDA margin will amount to 32%;
- net profit will increase by 11% to 2,005 billion roubles;
- net profit margin will amount to 11%.
It is expected that 3,847 billion roubles will be allocated for investment in 2006, which makes 21% of NWT's proceeds. NWT will continue to pursue the balanced investment policy, spending no more than 20% of its proceeds for its development annually. The investment structure has been significantly improved through increasing the share of quickly paying back projects.
In 2006 NWT is planning to concentrate on expanding its presence on the highly profitable market of value added services (VAS). It is expected that over 1 billion roubles will be invested in VAS, which is 3.5 times more than in 2005. The Company's target segments include both private clients ensuring the mass demand and corporate clients, to whom OJSC NWT will provide individual solutions on a turn-key basis. 74,000 DSL ports and 60,000 new lines will be put into operation in 2006 (compare to 149,000 lines in 2005), while network digitalization will increase to 55%. The volume of income from VAS will increase almost 1.5 times, to 1,514 billion roubles, and will amount to 8.1% of the Company's proceeds. Expenses on marketing and services promotion will amount to 108 million roubles in 2006.
NWT's financial stability will remain at a high level in 2006: own funds will make at least 58% of the Company's liabilities (55% in 2005), and the "debt to EBITDA" ratio will be 2.12.
When the budget for the year 2006 was being prepared, the basic principles of the Program for Improving the efficiency of OJSC North-West Telecom's Operations for the Years 2006-2008, which is a logical continuation of the Cost Cut Program in 2005 (see press-release from 17th May, 2005) and was approved by the Board of Directors at its meeting on the 20th of December.
The Programme has been prepared for the purpose of maintaining the competitive capacity on the telecommunications market and ensuring a growth of Company's capitalization. The basic areas of the Programme are:
- ensuring a long-term investment attractiveness of the company by means of control of the key indices: EBITDA, EBITDA margin, number of lines per employee, capex, ARPL;
- optimization of the Company's organizational structure and personnel number;
- improving operations efficiency in commercial activities, financial policy and management of real estate and subsidiaries and affiliates.
You can get more detailed information, comments and answers to your questions at the Internet conference of OJSC NWT, which will be held on 28th December from 3 p.m. to 5 p.m.(Moscow time) on the NWT WEB site.