Transcript CenterTelecom Investor Presentation, April, 2004

Investor Presentation
APRIL, 2004
WWW.CENTERTELECOM.RU
This presentation contains forward-looking statements.
Such statements are not statements of historical fact, and reflect the beliefs and
expectations of the Company's management. The words "anticipates," "believes,"
"estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects" and "targets"
and similar words are intended to identify these statements, which necessarily involve
known and unknown risks and uncertainties. Accordingly, the actual results of
operations of the Company may be different from the Company's current expectations,
and the reader should not place undue reliance on these forward-looking statements.
Forward-looking statements speak only as of the date they are made, and the Company
does not undertake any obligation to update them in light of new information or future
developments.
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OVERVIEW
KEY PRODUCTION INDICATORS
STRATEGY
FINANCIAL HIGHLIGHTS
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CENTERTELECOM
CenterTelecom is a leading fixed-line provider of telecommunication services to Russia’s
central region, which is Russia’s most densely populated region, covering about 20% of the
total population. The Company currently offers traditional telephone services, Internet, IP
telephony, data transmission, wave and cable television, wired and VHF radio broadcasting
and plans to implement fiber optic lines, SDH networks, and advanced wireless access
systems. CenterTelecom is led by a new and shareholder oriented management team with
many years of telecom experience that has leveraged the Company’s inherent stability and
achieved sales growth of 116.9%, net profit margin grew by 5.8% , while installing over
571,000 numbers over the same period.
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ATTRACTIVE REGION
Central Region:
Yaroslavl
Ivanovo
Tver
Vladimir
Moscow
Smolensk
Kostroma
Kaluga
One of the highest monthly income per
capita in Russia - RUR 5,732.2
Ryazan
Fixed-line penetration level is 17.3 %
Tula
Bryansk
covers 3.8% of Russia’s territory
26.2% of total population of 38 mln people
(most densely populated)
12.8% of GDP of RUR 1,703 bln
Orel
Lipetsk
Kursk
Tambov
Voronezh
6.4 mln lines installed by end of 2003
Borders with Ukraine and Byelorussia
Belgorod
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COMPANY HISTORY
Founded in 1890
Privatized in 1994
Came to existence as a united company in 2002
upon merger of 17 regional telecom companies
of central region of Russia
2003 is the first year as a united company
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SHAREHOLDER STRUCTURE
Svyazinvest
7.19
10.44
6.14 1.03
Nominal
shareholders
Individuals
38.01
Federal Property
Fund
Foreign legal
entities
37.19
Russian legal
entities
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ORGANIZATIONAL STRUCTURE
PRESIDENT
Shareholders
meeting
Carla Cico
PRESIDENT
Board
of Directors
Carla Cico
PRESIDENT
General
Director
Carla Cico
PRESIDENT
Compensation
& Benefits
Committee
Carla Cico
PRESIDENT
Corporate
Governance
Committee
Carla Cico
PRESIDENT planning
Budget & Investment
Committee
Carla Cico
PRESIDENT
Audit
Committee
Carla
PRESIDENT
Financial
Director
CarlaCico
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PRESIDENT
Commercial
Director
Carla
Cico
PRESIDENT
Technical
Director
CarlaCico
PRESIDENT
IT
Director
CarlaCico
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Cico
PRESIDENT
Security
PRESIDENT
HR
Director
CarlaCico
Director
CarlaCico
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STRONG MANAGEMENT TEAM
New and shareholder friendly management team
Management accomplishments during the last 3 years:
developed and implemented business strategy
unified tariffs policy
centralized Internet-traffic
centralized work with multinationals
achieved all business targets
efficient staff management
CenterTelecom Service company
Ability to find non-standard efficient solutions
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STOCK PRICE DYNAMICS
$800 Mln Market Cap.
Stock price dynamics (RTS: ESMO, ESMOP).
Common stock
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Preferred stock
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OVERVIEW
KEY PRODUCTION INDICATORS
STRATEGY
FINANCIAL HIGHLIGHTS
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KEY PRODUCTION INDICATORS
6.4 mln access lines installed
27 long distance connection stations
3,9 mln wire broadcasting points
125 000 cable TV subscribers
1 700 Internet-hosts
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MARKET SHARE IN MAJOR SEGMENTS
New services
(based on IP,
VPN,INS,ISDN)
65%
Mobile 4%
Documentary
58%
Local
92%
Long-distance
91%
0%
10%
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20%
30%
40%
50%
60%
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70%
80%
90%
100%
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OVERVIEW
KEY PRODUCTION INDICATORS
STRATEGY
FINANCIAL HIGHLIGHTS
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OPPORTUNITIES IN THE SECTOR
Intellectual network services, packet and integrated services,
IP-telephony
Introduction of innovations: Intelligent Network Service, IP-telephony, service
package offering.
Call-center has strong potential and may be used for own needs: telemarketing,
Help Desk, Card platform support.
Internet services
Broadband access through regular radio network.
Introduction of Ethernet as a physical and channel level technology will allow to
use inexpensive equipment, which brings significant cost reduction for endusers.
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OPPORTUNITIES IN THE SECTOR
Long-distance telecommunication services
Telephone cards.
Expanding IP-telephony services to public and business segments
Local telecommunication services
Wireless access to general purpose telephone network through DECT and
WLL technologies for high net worth customer segments.
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STRATEGY
Increase share of value-added services in profit structure
Achieve revenue market share in telecommunication services in
Central region of 62% by 2006
Average annual income growth of 25%
Increase non-regulated services market share to 75%
Achieve share of non-regulated services in profits of at least 30%
Increase profit share from corporate sector to 52%
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VALUE-ADDED SERVICES
INS based services
Call-centers
Multi-service network around Moscow
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BROADENING OF CORPORATE CLIENT BASE
Acquisition of ROSNET
Large corporate client base, including Central Bank of Russia
2003 Revenue - $30 mn, EBITDA - $4.8 mn
Licenses as alternative telecom operator in 31 region
Licenses for data services in 51 region
Significant resource allocation to acquire
alternative operators in 2004
Development of multi-service network
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GROWTH DRIVERS
Traffic growth
Tariffs increase
Time billing
Change of business relationship with Rostelecom
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CHALLENGES IN THE SECTOR. SOLUTIONS
Long-distance traffic fees
Competition with wireless operators
Competition with alternative providers
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OVERVIEW
KEY PRODUCTION INDICATORS
STRATEGY
FINANCIAL HIGHLIGHTS
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KEY FINANCIALS (RAS)
RUR Mln
2002
2003
2004E
Revenues
16,400
20,890
27,010
Operating expenses
12,132
15,649
19,856
EBITDA
3,337
4,853
6,613
Net profit
1,084
1,503
1,661
CAPEX
4,791
7,563
9,418
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REVENUE
In 2003 gross revenue reached RUR 20.1 mln, 27,5% growth to 2002
Long-distance telephone
communication
41%
Documentary
telecommunication
2%
City telephone
communication
36%
IP-telephony, Internet,
ISDN,Intelligent netw ork
3%
Traffic
transition
6%
Country telephone
communication
Wireless
Pay phone
5%
communication
2%
2%
Wire broadcast
3%
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REVENUE & COST DYNAMICS
RUR Mln
27 011
20 890
16 389
19 856
15 649
Revenues
12 132
Operating costs
2002
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2003
2004E
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REVENUE STRUCTURE
30 000
RUR Mln
27 011
25 000
Private sector
20 890
20 000
63%
16 389
15 000
62.1%
Budget
organization
Commercial
organization
60.3%
10 000
5 000
7%
7.6%
7.1%
31.2%
31.6%
30%
2002
2003
2004E
0
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OPERATING COSTS AND EXPENSES
In 2003 operating costs and expenses totaled RUR 15.7 mln, 29% increase 2002
Wages
Social tax
32%
11%
A mortisation
Other
11%
costs
11%
M aterials
& spare parts
Leasing
8%
2%
Corporate
spendings
1%
Energy
Other
telecommunication
serv ice payment
payment
14%
3%
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3%
Rostelecom serv ice
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Repair w ork
4%
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DEBT FINANCING
RUR Mln
2 000
APRIL, 2004
600
600
2001
2002
2003
V o lume P la c e d , R U R
mln
P la c e me nt
D a te
YT M
P e rio d
600
600
2 000
16.11.2001
23.7.2002
17.9.2003
23,4
18,89
12,73
2 years
2 3/4 years
3 years
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CAPITAL INVESTMENTS
In 2003 RUR 7.6 bln were invested (57.8% growth to 2002)
Network expansion
51%
Digitalization
19%
New building
18%
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Technical service &
upgrade
6%
Fixed assets acquisition
6%
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CAPITAL INVESTMENTS
9 418
Raised funds
7 562
Company own
funds
4 791
2002
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2003
2004E
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OPERATING HIGHLIGHTS
Lines installed
5 164 368
Lines in service
5 464 096
93,50%
93,40%
87,20%
86,60%
944 118
2002
Urban 2003
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2002
973 150
Rural
2003
2002
Urban
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2002
Rural
2003
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OPERATING HIGHLIGHTS
Utilization rate
ARPU
3 528
0,935
0,934
0,872
2 963
0,866
2002 Urban 2003
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2002 Rural 2003
2002
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2003
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CORPORATE GOVERNANCE AND TRANSPARENCY
The best Corporate Governance Code in industry
4 functioning Committees
Published financial statements according to IAS for 2002
S&P Corporate Governance Rating – 5.3
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CONTACTS
Andrey Kalinchenko
Investor relations manager
Tel: +7 095 793 23 19
Fax: +7 095 209 28 29
E-mail: [email protected]
Alexei Mironov
CapitalLogica-McBride
Tel: +7 916 503 70 90
Fax: +7 095 755 69 71
E-mail: [email protected]
CenterTelecom at RUSTOCKS:
APRIL, 2004
www.rustocks.com/centertelecom
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CENTERTELECOMTHE CENTER OF POTENTIAL
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