“utk” pjsc extraordinary general shareholders’ meeting 21 january 2003, krasnodar overall...

“UTK” PJSC Extraordinary General Shareholders’ Meeting

21 January 2003, Krasnodar

Overall results of “UTK” PJSC activity for the year 2002 and

financial and economic objectives for the year 2003



0

200

400

600

800

1000

1200

1400

Kal

myk

iaR

epub

lic

Kar

acha

evo-

Cir

cass

iaR

epub

lic

Nor

ther

n O

sset

iaR

epub

lic

Ady

geia

Rep

ubli

c

Kab

ardi

no-

Bal

kari

a R

epub

lic

Ros

tov

Reg

ion

Stav

ropo

lT

erri

tory

Ast

rakh

an R

egio

n

Vol

gogr

ad R

egio

n

Kra

snod

arT

erri

tory

0

5

10

15

20

25 Telephone density per 100 inhabitants Gross Regional Product Per Capita

№ 2Integrated indicator of

telecommunications development

US

dol

lars

Num

ber

of b

asic

tele

phon

e se

ts p

er 1

00 in

habi

tant

s

Average telephone density in SFD – 19,08

Average telephone density in Russia – 23



Mission of the Company

To provide Southern regions of Russia with full range of integrated telecom services of high

quality that will enrich living standards of the work collective and the whole society.

№ 3



Area - 51962 thousand square km , or 3.5% of the

territory of the Russian Federation

Population – 18?4 mln people, or 14% of the population of

the Russian Federation

Density of population – 36.4 people per 1 square km

№ 4

Volgograd

Astrakhan

Rostov-on-Don

Elista

Stavropol

Krasnodar

Maikop

CherkesskNalchik

Vladikavkaz



Place of the consolidated Company among telecom mega-regional entities

of Russia, nine months of 2002

0

2000

4000

6000

8000

10000

12000C

ente

r

Ura

l

Sib

eria

Vol

ga

Sou

th

Nor

th-W

est

Far

Eas

t

0

1000

2000

3000

4000

5000

6000

Tariff income, mln rubles

Average number of lines, thousand lines

№5



Entrance shares of the merged companies, %

№ 6

17%

Volgograd

5%

Astrakhan

21,8% Rostov-on-Don

0,7% Elista

8,5% Stavropol

39% Krasnodar

1,1% Maikop

0,5% Cherkessk2,1% Nalchik 4,2%

Vladikavkaz

Approved by General

Shareholders’ Meetings -

average 98.51%



Charter Capital

Size-1 billion297million779thousand384.66 rubles• Common registered book-entry shares

2 billion 960mln 512 ths 964shares

• Preferred registered book-entry shares

972 mln 151 ths 838 shares

Par value 0.33 ruble

№ 7



№ 8

CJSC "DКК" - nominal holder

12%

Bank (Euroasia) JSC/ING Deposit

11%

Others29%

CB "J.P. Morgan Bank International"

(Limited) - nominal holder

4%

CJSC "ABN AMRO Bank"

6%

“Svyazinvest” OJSC 38%

Structure of the Company’s capital



№ 9 Dynamics of RTS indices and prices of “UTK” PJSC shares for the year 2002

0,02

0,04

0,06

0,08

0,1

0,12

0,14

0,16

14.02.20

02

28.02.20

02

14.03.20

02

28.03.20

02

11.04

.2002

25.04.20

02

09.05.20

02

23.05.20

02

06.06.20

02

20.06.20

02

04.07.20

02

18.07.20

02

01.08.20

02

15.08.20

02

29.08.20

02

12.09.20

02

26.09.20

02

10.10.20

02

24.10.20

02

07.11.20

02

21.11.20

02

05.12.20

02

50

100

150

200

250

300

350

400

Shar

e pr

ice,

USD

RT

S In

dex

Common share price (KUBN), USD Preferred share price (KUBN), USDSource: RTS

20.0

1.20

03



№ 10 Market capitalization of the mega-regional telecom entities

11490

191131

9556

22

417

258

13182

30

150188

276,3

0

100

200

300

400

500O

JSC

"U

rals

vyaz

info

rm"

PJS

C "

UT

K"

OJS

C "

Nor

th-

Wes

tern

tel

ecom

"

OJS

C"

Cen

terT

elec

om"

OJS

C"

Vol

gaT

elec

om"

OJS

C"

Sib

irT

elec

om"

OJS

C "

Dal

svya

z"

Mill

ion

US

D

Market capitalization after the registration of the Reports on the results of the shares’

issuances by FCSM of Russia

As at 31.10.2002As at 31.12.2002As at 20.01.2003



№ 11“UTK” PJSC shares are used when

calculating official stock market indices

• AK&M Composite Index

• AK&M Branch Index• RTS Index• S&P/RUX Index• S&P/RUX - Telecom



№ 12Issuance of ADR of Level 1

35

08

,77

51

38

31

87

,69

29

5

37

13

,54

44

5

44

34

,82

65

5

35

15

,56

62

75

38

82

,13

24

5

47

75

,63

91

25

57

36

,92

90

65

58

79

,56

69

5

49

32

,06

50

3

49

32

,06

50

3

27

49

,90

1

42

86

,21

22

8

27

89

,18

53

28

52

,04

01

8

411

9,0

52

4

411

1,7

22

68

41

39

,57

25

6

41

39

,57

25

6

41

39

,57

25

6

41

39

,57

25

6

41

79

,28

25

6

43

68

,80

75

6

3,503,553,633,40

3,613,88

3,152,932,92

2,65

3,15

3,85

3,61

4,664,65

3,613,613,613,613,613,613,583,38

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

100001

.1.0

1

1.2

.01

1.3

.01

1.4

.01

1.5

.01

1.6

.01

1.7

.01

1.8

.01

1.9

.01

1.1

0.0

1

1.1

1.0

1

1.1

2.0

1

1.1

.02

1.2

.02

1.3

.02

1.4

.02

1.5

.02

1.6

.02

1.7

.02

1.8

.02

1.9

.02

1.1

0.0

2

1.1

1.0

2

1.1

2.0

2 0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

Source of information: JP Morgan

Cap

ital

izat

ion,

ths

US

D

AD

R p

rice

, US

D

Capitalization, ths USD ADR price, USD



№ 13

Resolution of the Board of Directors of 11 March 2002 on changing the Company’s Registrar - OJSC “Registrator-Svyaz”,

Moscow

License № 01147, issued by FCSM of Russia

Registrar of the Company



№ 14 Actions in connection with reorganization

• Formation of organizational structure

• Optimization of financial flows

• Analysis of the existing telecommunication networks

• Audit of software complexes and information systems



Project of “UTK” PJSC organizational structure

General Directorate Head – Director General

“Kubanelectrosvyaz”

“Rostovelectrosvyaz”

“Electrosvyaz” Stavropol Territory

“Electrosvyaz of Adygeia Republic”

“Karachaevo-Cherkesskelectrosvyaz”

“Sevosetinelectrosvyaz”

“Svyazinform” Astrakhan Region

“Volgogradelectrosvyaz”

“Electrosvyaz” Kalmykia Republic

“KabBalktelecom”

head

– h

ead

of c

omm

unic

atio

n ce

nter

Bra

nche

s –

hea

d –

Dep

uty

Dir

ecto

r G

ener

al –

Dir

ecto

r of

a b

ranc

h

Dep

artm

ents

(se

ctio

ns)

head

– h

ead

of d

epar

tmen

t

> 3000

Expected revenues for 2002, mln rubles

2000 - 3000

1000 - 2000

500 - 1000

<500

CNT Yugtaksofon UPC

№ 15



№ 16




“KabBalktelecom”





Specialized secondaryHigher

“Kubanelectrosvyaz” (“UTK” PJSC)

88,2%77,6%


Provision with specialists with higher and specialized secondary education

69.9% 80.9%

“Svyazinvest” OJSC Average

“UTK” PJSC Average



№ 17 Personnel Policy of the Company

• Effective usage of the existing intellectual potential of the Company

• Realization of the principle of professional knowledge conformity with position held

• Carrying out the unified policy on recruiting, training and professional development of personnel



№ 18Work of Board of Directors and

Management Board of the Company

Main issues under consideration :• Financial and economic activity• Reorganization of the Company• Development of the telephone networks of the regions• Execution of the investment program• Introduction of new technologies and services• Development and realization of the marketing policy



№ 19 Revenues, mln rubles

3327

2179,3

1691,7

1542,2

551,2

474,3

368,9

171,1

103,6

102,3

2718,4

2231,8

1958,2

734,7

565,2

455,8

211

134,7

139,3

4191,5




“Kabbalktelecom”






“Kubanelectrosvyaz” (“UTK” PJSC)

budget 2003expected 2002

1334110512

“UTK” PJSC TOTAL

+26,9%



№ 20 Revenues, mln rubles

8209,410511,6

13340,617209,4

22269,0

0

5000

10000

15000

20000

25000

2001 2002 2003 2004 2005 year

Mln

RU

R



№ 21 Share of revenues from new services in total revenues from

telecom services, %

3,14 3,22 4,24

10,02

20

0

5

10

15

20

25

2001 2002 2003 2004 2005 year



№ 22 Revenues from new services, mln RUR

31,4

16,2

12,1

8,2

3,7

2

1,9

205,5

76,2

28,5

20,2

14,8

6,3

3,4

3

156

49,3

39,2

53,4

83,8









320

495

budget 2003Expected 2002

“Kubanelectrosvyaz” (“UTK” PJSC )



+54.7%



№ 23

Internet

Video telephony

ISDN

IP - telephony

Multi service network



№ 24 Digitization, %

31,538,5

48,5

60

0

25

50

75

as at01.01.2002

as at01.01.2003

budget as at01.01.2004




№ 25

• Pre-paid call

• Universal mail box (Fax mail, Voice mail)

• Televoting

• Telecom service payments by a pre-paid card

Intelligent services



Volgograd

Astrakhan

Elista

Makhachkala

Stavropol

VladikavkazNalchik

Cherkessk

Maikop

Rostov-on-Don

Krasnodar

Tasks on formation of common information area of “UTK” PJSC

• Creation of corporate data network together with JSC “Rostelecom” and provision of sufficient level of service for giving access to the network in the Southern Federal District

• Full coverage of the regions

• Realization of the federal target program “Electronic Russia”

• Unification of the tasks and principles of formation of the common information area based on corporate data network of the regional telecom operators

№ 26

01.01.2004

01.01.2004

01.10.2003

01.08.2003

01.08.2003

01.09.200301.06.2003

01.10.200301.06.2003



№ 27 Telephone density, number of basic telephone sets per 100 inhabitants

18,05 19,0825

32,5

0

25

50

as at01.01.2002

as at01.01.2003





№ 28

7228

2455

66166080

6616

2500

0

4000

8000

Invalids of the GPW Participants of the GPW

Number of satisfied requests in 2002

Number of unsatisfied requests as at 1January 2003

Plans of 2003 on telephone installation

Installation of telephones for invalids and participants of the Great Patriotic

War

Installation of telephone sets for all those invalids of GPW who submitted their requests

before 1 January 2003, till 01/01/04



№ 29 Development strategy of the telecom network of the District

Local Center

STM-64

Central Office/POP

STM-1/4

GbE

Metropolis ADM

Local Center

STM-16

ADM 16/1Compact

GbE

MetropolisADM

AM 1Plus

STM-1/4

AM 1Plus

Metropolis ADM

LucentSpringtide 7000

FoundryBig/NetIron

Cisco Router

GbE

GbE

GbE

E/FE

E/FE



№ 30 Capital Investments, mln RUR

546

469

354

130,7

125,7

94

33,8

11,9

9,3

1901

617

1230

702

233,5

147,7

137

96,9

113,7

19,9

1519









3292

5199

Budget 2003 expected 2002

+58%






№ 31 Numbers put into operation, thousand №№

48000

34008

28924

10924

6146

3784

2959

89756

31750

32444

14260

1664

3772

10700

125200

57026

56962

179500

67562

78283









373,9509,7

Budget 2003Expected 2002

+36.3%






№ 32 Growth of the number of basic telephone sets

15115

15000

13691

8314

2400

1600

138

87924

36000

27607

11100

3000

1448

3282

67294

28820

23700

36080

7712

38350









176071

252503


+43.4%


“Rostovelectrosvyaz” “UTK” PJSC TOTAL



№ 33 Average number of lines

514500

186546

139445

138552

74342

62364

53854

572824

206074

146858

144162

75970

63002

57287

851544

647951

533913

920051

543079

666646









3203

3396





+6 %

Ths, lines



№ 34

3064 32043396

36443968

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2001 2002 2003 2004 2005 year

Average number of lines, ths lines



№ 35

Structure of capital investments, %

0% 20% 40% 60% 80% 100%

2001

2002

budget 2003

budget 2004

budget 2005

Depreciation Profit Debt capital Leasing Loan



№ 36

Investment Program, mln RUR

69736366

5199

3292

0

1000

2000

3000

4000

5000

6000

7000

8000

2002 2003 2004 2005 year



№ 37 Operating profit, mln RUR

788,2

575,5

438,5

346

182

153,8

116,5

49,4

21,5

22

1152,3

867,2

750,7

617,9

239,4

194,2

159,1

64,6

25,5

31,6









2653,5

3940,5

+46,3%







№ 38 Order of tax payments after reorganization

Stavropol Territory Rostov Region

General Directorate of “UTK” PJSC Krasnodar

Regional branchRostov-on Don

Regional branchStavropol

Regional branch

Tax agency of the Ministry of Tax Revenue

in Leninski district of Rostov-on-Don

Tax agency № 2of the Ministry of Tax Revenue

in Turkmenski region

Regional Inspection of the Ministry of

Tax Revenue

Before reorganizationAfter reorganization



№ 39 Factors of efficiency

2000

3000

4000

expected 2002 budget 2003

Proceeds per one line, rubles

19,7%

0

1000

2000

3000

4000


Tariff income per one line, rubles

21,2%

-50000

50000

150000

250000

350000


Proceeds per one employee, rubles

30,5%

0

100000


Operating profit per one employee, rubles

50,4%



№ 40

67

81,9

75,1

60

64

68

72

76

80

84

2001 expected 2002 budget 2003

Number of lines per one employee



№ 41

REPORT OF THE AUDITOR.

General Shareholders’ Meeting approved CJSC «Ernst&Young Vneshaudit» the Auditor of PJSC

“UTK”

Basic company

Regional branch

31.12.2002

31.10. 2002

01.01.2002

OPINION OF THE AUDITOR.

General Shareholders’ meeting approved CJSC “Unicom MS-Consulting Group” the Auditor of a Regional branch

Business accounting and accounting reports should be performed in conformity with unified rules of the consolidated company determined by uniform accounting policy



№ 42 Main tasks for the year 2003

Financial policyFinancial policy

Personnel policyPersonnel policy

Tariff policyTariff policy

Investment policyInvestment policy

Technical policyTechnical policy




Engineering Department

Billing

Accounts Department

Economic DepartmentAnalysis, forecasting

Intranet Reports,Documents Circulation

Common Data base

ERP II

Universal client software

Priority guideline when creating the common information area




Unification of the types of telecom equipment applied

28

15

10

6

0

5

10

15

20

25

30

Existing Phase I Phase II Strategic Task

Number of the types of telecom equipment used




Elaboration of the package of documents regulating economic and financial activity of the Company

Technical section

Financial section

Legal section

Corporate management




100

95

75

100

7580

70

9590

75

140

120

90

120

10012

0

90

140130

110

020406080

100120140160

"E

lect

rosv

yaz"

Ad

ygei

a R

epu

blic

"S

vyaz

info

rm"

Ast

rak

han

Reg

ion

"V

olgo

grad

elec

tros

vyaz

"

"K

abB

alk

tele

com

"

"E

lect

rosv

yaz"

of

Kal

myk

ia R

epu

blic

"K

arac

hae

vo-

Ch

erk

essk

elec

tros

vyaz

"

"E

lect

rosv

yaz"

Ros

tov

Reg

ion

"S

evos

etin

elec

tros

vyaz

"

"E

lect

rosv

yaz"

Sta

vrop

ol T

erri

tory

Ku

ban

elec

tros

vyaz

residents, urban telephonybudget institutions, urban telephonynon-budget organizations, urban telephony

Subscriber fee as of 15.11.2002 of the regional branches of “UTK” PJSC

Monthly subscriber fees of the companies of the SFD differ considerably,Uniform tariff level is introduced for residents and organizations

Residents - from 95 to 110 rubles

Organizations- from 120 to 140 rubles

Mon

thly

sub

scri

ber

fee

(urb

an T

N),

rub

les




Adygeia Republic

Astrakhan Region

Volgograd Region

Kabardino-Balkaria Republic

Karachaevo-Cherkessia Republic

Republic Kalmykia

Krasnodar Territory

Rostov Region

Stavropol Territory

Northern Ossetia Republic

Agreement on general principles of relationship

between “UTK” PJSC and Administrations of

the subjects of the Russian Federation

Before1 March 2003




• Systematization of the processes of budgeting and investment planning

• Creation of the effective mechanism of financial relations in the Company (switch to treasury system of budget execution)

• Insurance of communication lines and telephone exchanges

• Enhancement of debt finance efficiency



420

293,7267,3

659

244,3221,1214,6

175,8

14259,6

0

50

100

150

200

250

300

350K

ub

anel

ectr

osvy

az

Sev

oset

inel

ectr

osvy

az

Ros

tove

lect

rosv

yaz

Vol

gogr

adel

ectr

osvy

az

Ele

ctro

svya

z S

tavr

opol

Ter

rito

ry

Kab

bal

kte

leco

m

Svy

azin

form

Ast

rak

han

Reg

ion

Kar

ach

aevo

-C

her

kes

skel

ectr

osvy

az

Ele

ctro

svya

z of

Ad

ygu

eia

Rep

ub

lic

Ele

ctro

svya

z of

Kal

myk

ia R

epu

blic

0

100

200

300

400

500

600

700Accounts receivable for telecom services providedAverage monthly tariff incomeAccounts receivable to average monthly tariff income ratio

Accounts receivable for telecom services for of 2002 with respect to average monthly income

Mil

lion

rub

les

160,4% - “UTK” PJSC

%





•Introduction of the system of time-based (per-minute) billing of local telephone calls



732911

513038

0

400000

800000

Number of unsatisfied requests as at 01.01.2003

Expected number of unsatisfied requests as at 01.01.2004

№ 51 Main tasks for the year 2003•Undoubted execution of the plans of telecommunications development in the Southern Federal District

шт.




Federal program «Electronic Russia»

•Decree of the Government of the Russian Federation №65 of 28.01.02•Provides for implementation of 69 actions

•Inter-departmental commission was set up: Chairman – the Minister for Economic Development of the Russian Federation, Vice-Chairman – the Minister for Telecommunications of the Russian Federation




• Certification of Internet services , e-mail, web-hosting

• Formation of sector security bodies belonging to the Ministry for Telecommunications of the Russian Federation



№ 54

High potential of “UTK” PJSC makes it possible to carry out the

national program on development of modern telecommunications in the

Southern Federal District



Thank you for your time



Results of “UTK” PJSC activity for the year 2002 and

Economic and financial tasks for the year 2003