• Revenue for the first nine months of 2004 increased by 33.2% to RUR 27,645.4 mln. Excluding the effect of the introduction of the new settlement system, revenue rose by 16.1% to RUR 23,270.9 mln.
• Domestic LD traffic rose 10.1%, while outgoing international traffic rose by 17.0% and incoming international traffic increased 29.4%.
• EBITDA for the first nine months of 2004 was RUR 11,054.9 mln, a 15.8% increase compared to the same period last year.
• Operating profit totaled RUR 9,465.6 mln — a year-on-year surge of 38.0%.
• Net profit increased by 37.8% to RUR 6,590.7 mln.

Rostelecom's CEO Dmitry Yerokhin had the following to say: “Rostelecom's double-digit growth for 9M of 2004 is the result of the improving revenue dynamics of the Russian telecom market and enhanced efficiency. Rostelecom delivered good traffic and revenue performance in both domestic and international markets, particularly from regional and alternative operators. Revenues excluding the effect of introducing the new settlement system rose 16.1% while net profit increased 37.8%”.

Rostelecom (NYSE: ROS; RTS, MICEX: RTKM, RTKMP), Russia's national long-distance telecommunications operator, today released unaudited results for 9M 2004 in accordance with Russian Accounting Standards (RAS).

Domestic long-distance (DLD) traffic grew by 10.1% year-on-year and amounted to 6,670.1 mln minutes. DLD revenues surged 61.0% compared to the same period last year and totaled RUR 12,799.9 mln. Excluding the effect of  introducing the new settlement system, DLD revenues increased by 16.3% year-on-year to RUR 8,425.4 mln.

Outgoing international long-distance (ILD) traffic rose 17.0% to 1,140.7 mln minutes. ILD revenues from both Russian operators and subscribers for 9M 2004 increased by 13.9% year-on-year and totaled RUR 6,667.8 mln.

9M 2004 incoming ILD traffic grew by 29.4% year-on-year to 1,135.3 mln minutes, as Rostelecom raised its share of the international operators market. Revenues from international operators for incoming ILD traffic termination increased 4.1% year-on-year to RUR 3,157.8 mln.

Total revenues from Moscowsubscribers for 9M 2004 increased 3.2% year-on-year mainly due to the competitive new tariffs introduced last year, while traffic remained stable (up 0.5% compared to the same period last year).

Total revenues for 9M 2004 amounted to RUR 27,645.4 mln — a year-on-year increase of 33.2%. Excluding the effect of the introduction of the new settlement system, revenue grew by 16.1% to RUR 23,270.9 mln.

Operating expenses for 9M 2004 amounted to RUR 18,179.8 mln. The 30.9% increase compared to the same period last year was driven by higher payments to local operators. Excluding the effect of introducing the new settlement system, operating expenses rose by 5.9% to RUR 13,805.3 mln due to higher payments to international operators as well as scheduled increases in staff expenses.

As a result EBITDA (3) rose 15.8% year-on-year totaling RUR 11,054.9 mln.

Depreciation declined 40.8% year-on-year to RUR 1,589.3 mln. Rostelecom gained ownership over several assets it had previously leased, and as a consequence, ceased to apply accelerated depreciation methods to these assets.

Operating profit amounted to RUR 9,465.6 mln, a 38.0% increase compared to 9M 2003.

The result from other operating activities for 9M 2004 totaled RUR (295.3) mln compared to RUR (757.9) mln a year ago, as Rostelecom substantially reduced its expenses on bad debt provisions. Additionally, the company reported a robust increase in net interest income (RUR 142.7 mln versus RUR 8.2 mln  in 9M 2003). The result from other operating activities includes revaluation of financial instruments. The net revaluation gain for the first three quarters of 2004 totaled RUR 89.9 mln.

The result from other non-revenue activities amounted to RUR (398.0) mln compared to RUR 258.6 mln for 9M 2003 when Rostelecom restructured its debt to the Ministry of Finance and consequently reported an additional RUR 751.7 mln profit from non-revenue activities.

Rostelecom’s 9M 2004 net profit totaled RUR 6,590.7 mln, an increase of 37.8% compared to the same period last year.