OJSC North-West Telecom has summed up the results of its financial and business performance for the year 2004 according to RAS* (the Russian Accounting Standards).  

According to the results of the year 2004, the proceeds increase by 24.5 % as compared to the same period of the previous year and amounted to RUR 15,355,680,000. The proceeds increase was based on: development and growth of local communication rates amounted to RUR 2,048,852,000, or +16.6%.  Besides, the proceeds of the regional telecommunication operators Lensvyaz and Svyaz of the Republic of Komi that were affiliated in the 4th quarter of 2004 amounted to RUR 970,436,000.  

The proceeds from the sale of communication services amounted to RUR 14,799,309 thousand, which is 23.6 % higher than for the same period of the last year. 

The cost of sold services was RUR 12,311,699,000.

The net profit of OJSC NWT for 2004 amounted to RUR 1,343,183,000, which is 62% higher than in 2003.

The net profit taking into account the consolidation of the affiliated companies from the start of the year amounted to RUR 1,423,042,000.

 - EBITDA increase by 46.8% and amounted to RUR 3,691,335,000.

 - EBITDA margin increase by 3.6 percentage points, having reached 24%.

 - OIBDA  increase by 18.2 % and amounted to RUR 4,396,273,000.

 - OIBDA margin amounted to 28.6%, having decreased by 1.5 percentage points.  

The reduction of OIBDA profitability is accounted for by the excess of the costs growth rate over the proceeds: in 2004 costs grew by 28.5%. E.g., the growth of depreciation costs by 40% was caused by the intensive capacity commissioning, the growth of expenses for Rostelecom by 32% was the consequence of the changed terms of the mutual settlements agreement, and the growth of expenses for wages amounted to 31%.   

It is expected that in 2005 the income growth rate will be higher than the operating expenses, and this will help resolve one of the most important strategic tasks of the Company’s financial policy – increasing the profitability of operations by at least 1 percentage point per year.

The volume of NWT’s investment in 2004 reached RUR 4.7 billion (RUR 3.6 billion in 2003). Main investment projects: upgrading and digitalization of the network, reduction of the queue for providing telephone communication, expansion of area exchanges in regions. 415,000 lines were commissioned in 2004, including 196,000 new lines and 219,000 replacement lines. The digitalization level of the network reached 48% by the end of 2004.  It is expected that another 149,000 lines will be put into operation and 221,000 existing lines will be digitalized in 2005.  

The Accounting Balance Sheet and the Profit and Loss Report of OJSC North-West Telecom for 2004 (not audited) have been published on the corporate site of OJSC NWT in the section «Economy & finance».