MegaFon S.A. - Final Unaudited Results

RNS Number:5735S
MegaFon S.A.
17 April 2008

MegaFon Announces Unaudited Financial and Operational Results for Q4 and 12
months of 2007

April 17, 2008, Moscow, Russia. Open Joint-Stock Company "MegaFon", the third
largest Russian mobile operator, announced today its unaudited financial and
operational results for Q4 and 12 months of 2007.

Key Financials for 12 months of 2007(1)

The Company's consolidated revenue increased 53% over 2006 and reached 5.7 BUSD.

The Company's EBITDA was 2.9 BUSD, a 58% improvement over 2006.

EBITDA margin was 51.0%.

The Company's Gross Margin was 4.6 BUSD, a 51% increase over 2006.

The Company's Net Income increased by 70% y-o-y, reaching almost 1.4 BUSD.

CAPEX was 1.5 BUSD.

2007 Free Cash Flow(2) was 885 MUSD, a 645 MUSD increase over the previous year.

Key Financials for the 4th Quarter 2007

The Company's consolidated revenue in Q4 2007 was 1,576 MUSD, an increase of
41.1% over Q4 2006.

EBITDA in Q4 2007 reached 778 MUSD, an increase of 47% over Q4 2006.

Gross Margin in Q4 2007 was 1,284 MUSD, a 42.5% improvement over Q4 2006.

Net Income increased 55% over Q4 2006, reaching 375 MUSD.

Speaking about the results that were announced today, Sergey Soldatenkov,
General Director of MegaFon, said: 2007 was a strong year for MegaFon. Our
consolidated revenue exceeded 5.7 BUSD, representing year-on-year growth of 53%.
Our EBITDA margin improved to 51.0%. Increasing revenue, higher margins and
well-balanced investment policies have resulted in the Company having free cash
flow of 0.9 BUSD, a 3.5x increase over the level achieved in 2006. These strong
financial results, plus other important achievements in 2007, such as our
achieving 100% coverage of the licensed RF territory and the launch of the first
3G commercial network, suggest that the Company can look forward to strong
future growth and development .

Key Financial and Operational Results

Table 1
Three months Twelve months

Q4 2007 Q4 2006 Q4 2007/ Q3 2007 Q4 2007/ 2007 2006 2007/
Q4 2006 Q3 2007 2006

MUSD

Aggregate revenue 1 576 1 117 41.1% 1 527 3.2% 5 720 3 733 53.2%
EBITDA 778 529 47.1% 809 (3.8%) 2 916 1 849 57.7%
EBITDA margin, % 49.4% 47.4% 53.0% 51.0% 49.5%
Gross margin 1 284 901 42.5% 1 244 3.2% 4 648 3 088 50.5%
Gross margin, % 81.5% 80.7% 81.5% 81.3% 82.7%
Net income 375 242 55.0% 416 (9.9%) 1 384 813 70.2%
Commercial and operating 507 372 36.3% 434 16.8% 1 731 1 238 39.8%
expenses
Commercial and operating 32.2% 33.3% 28.4% 30.3% 33.2%
expenses, % of revenue

The Company's revenue growth was driven by various factors, including the
general improvement in economic conditions in the Russian Federation and other
macroeconomic factors, as well as growth in the number of subscribers and
average traffic per customer.

Various initiatives aimed at increasing the subscriber base and ensuring a
well-balanced tariff policy resulted in higher ARPU, while increasing volume of
operations coupled with cost management helped the Company to improve its bottom
line.

Table 2

Three months Twelve months
Q4 2007 Q4 2006 Q4 2007/ Q3 2007 Q4 2007/ 2007 2006 2007/
Q4 2006 Q3 2007 2006

Number of subscribers 35 585 29 620 20.1% 33 841 5.2% 35 585 29 620 20.1%
(,000)
ARPU (USD) 15.1 13.3 14% 14.9 1% 14.1 12.3 15%
MOU (minutes) 267 223 20% 248 8% 244 211 15%
SAC (USD) 24 18 33% 21 14% 22 18 22%
Churn rate 11% 13% (2%) 11% 0% 42% 46% (4%)
Market share in 20.5% 19.5% 1% 20.5% 0% 20.5% 19.5% 1%
subscribers

The Company's subscribers grew by 6 mln during 2007 and reached 35.6 mln in
Russia by the end of 2007 and approximately 120 K in Tajikistan.

In July 2007, the Company expanded network coverage to include its entire
licensed area in the RF, so that it now has operations throughout 100% of the
country, with the number of BTS at the end of 2007 having reached 17 700.

Average monthly revenue per subscriber (ARPU) in 2007 grew 15% and reached 14.1
USD.

Traditionally MegaFon's MOU is one of the highest in Russia. During 2007 MOU
grew 15% to 244 minutes per subscriber, and average price per call remained
consistent with that of 2006.

Attachment 1(3).

The Company's financials for 2007 and 2006 are shown in US Dollars at the
average exchange rate of the Central Bank of the Russian Federation for the
respective quarters to facilitate comparison with MegaFon's peers.

Three months Twelve months

Q4 2007 Q4 2006 Q4 2007/ Q3 2007 Q4 2007/ 2007 2006 2007/
Q4 2006 Q3 2007 2006

MUSD

Revenue 1 570 1 117 40.6% 1 493 5.2% 5 503 3 733 47.4%
EBITDA 774 529 46.3% 792 (2.3%) 2 806 1 849 51.8%
EBITDA margin, % 49.3% 47.4% 53.0% 51.0% 49.5%
Gross margin 1 279 901 42.0% 1 216 5.2% 4 472 3 088 44.8%
Gross margin, % 81.5% 80.7% 81.4% 81.3% 82.7%
Net income 373 242 54.1% 407 (8.4%) 1 331 813 63.7%
Commercial and operating 505 372 35.8% 425 18.8% 1 666 1 238 34.6%
expenses
Commercial and operating 32.2% 33.3% 28.5% 30.3% 33.2%
expenses, %

###

Reference

OJSC MegaFon is the first all-Russian mobile operator. It operates in the GSM
900/1800 frequency ranges. The Company was established in May 2002 as a result
of the combination of Closed Joint-Stock Company North-West GSM with nine other
companies in the Russian Federation, and the adoption of the common name and
brand "MegaFon". Its principal shareholders are OJSC "Telecominvest", OJSC "
CT-Mobile", and TeliaSonera, the major Finnish/Swedish telecommunications
company. Its license area covers all 83 regions of the Russian Federation with a
population of approximately 145 million. As of the end of March 2008, the number
of its subscribers exceeded 36 million.

www.megafon.ru

www.megafonpro.ru

--------------------------

(1) Until December 31, 2006, the Company used the US dollar as its reporting
currency. Effective January 1, 2007, the Company changed its reporting currency
from the US dollar to the Ruble, since this is the primary currency of the
economic activities in which substantially all operations of the Company are
conducted. Numbers in this press-release are shown in US dollars to facilitate
comparison with our Peers, translating 2007 Ruble financial data using the
official exchange rate determined by the Central Bank of the Russian Federation
as of the end of each financial period.

(2) Difference between cash flow from operations and CAPEX.

(3) In order to facilitate comparison with MegaFon's peers that use US Dollars
as the reporting currency in their US GAAP financial statements, all 2007
financial data was translated into US Dollars using the average exchange rate of
the Central Bank of the Russian Federation for the respective quarters.

This information is provided by RNS
The company news service from the London Stock Exchange
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