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April 8, 2005

Uralsvyazinform reports 2004 full year results (RAS)

Ekaterinburg – April 8, 2005 – Uralsvyazinform (RTS: URSI/URSIP) the leading carrier of fixed-line and mobile services in the Urals region, Russia reports the unaudited and unconsolidated 2004 financial and operational results under Russian accounting standards (RAS).

  • Revenue growth totaled 24% compared to 2003 mainly due to the increase in DLD and ILD traffic, rise in local tariffs, and growth of fixed-line and GSM subscriber bases;
  • EBITDA has increased by 23% versus 2003, driving EBITDA margin to 36% for the full year. Operating margin increased to 27%.
  • Net profit increased by 15%, net margin remained at 9%;
  • Revenue growth for the main business segments included:
    - Local services – 23.7%;
    - DLD and ILD – 22.4%;
    - Mobile services – 20.0%;
    - New services – 47.5%.
  • Total subscriber number reached 5.4 mln, including 2.0 mln GSM subscribers;
  • Fitch Ratings upgraded Uralsvyazinform credit rating from B+ to BB-/Stable as of March 26, 2004. As of October 18, 2004 Fitch also assigned Uralsvyazinform the national credit rating at A+(rus).
Operational and financial highlights:
*Including subsidiary businesses

Anatoly Ufimkin, CEO commented the results of the year: “The 2004 results reconfirmed the company’s position as one of the leaders in the industry. The main business segments demonstrated healthy growth – both fixed-lines and mobile, long distance and new services. We are building our networks using packet-switched technology and broadband fiber-optic lines – both enabling us to offer the customers quality up-to-date services. The increase of internet traffic by x1.6 translated into the growth of new services, which contributed 3.3% to the overall revenues.

2004 saw the peak in the volume of investments, and we expect that within the next 2 or 3 years the annual CAPEX at about RUR 6 to 7 bln would be enough to meet the demand for telecommunications services and fuel the update of the networks.

In 2004, the company started several new projects in the mobile segment, including the consolidation of subsidiaries into Uralsvyazinform and the launch of GSM900/1800 services in Sverdlovsk region and Ekaterinburg. In my opinion, the two projects are being successfully implemented, at the same time their efficiency proves critical to the overall success of Urasvyazinform’s mobile business. We will further adhere to the strategy of integration of mobile and fixed lines as the main competitive advantage of the company, which is prerequisite to retain leadership in the regional telecommunications market.

In 2004, Uralsvyazinform delivered stable growth in terms of financials. Revenues and operating profit increased by 24% on average, while total EBITDA margin reached 36%.

Generally, the company met the goals set for 2004, and along the next year will focus on the increase of efficiency and cost optimization.




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