UPDATE 1-Russia's Rostelecom targets 1-2 pct revenue growth, flat margins

Tue May 27, 2014 7:36am EDT

* Says on track to cut operating costs by 5 billion roubles

* First-quarter revenues rise 1 pct, core profit down 10 pct

* Rostelecom is on privatisation list for 2014 (Adds full-year guidance, CFO comment, details)

MOSCOW, May 27 (Reuters) - Russian state telecoms operator Rostelecom said on Tuesday it aimed to keep this year's revenues and core profit margin at least at last year's levels as it presses ahead with an efficiency drive before possible privatisation.

Rostelecom, which recently spun off its mobile business into a joint venture with Tele2 Russia to focus investment on broadband and pay TV, is pencilled in for privatisation this year. It has been taking measures to boost operational efficiency, including improving procurement procedures.

According to the company's presentation, it aims at growing revenues from fixed-line businesses by 1-2 percent this year while maintaining its core profit margin year-on-year. The margin stood at 34.8 percent in 2013.

"There are clear signals that we are improving our operating efficiency and we are on track to meeting our target for this year of reducing our operating expenses by 5 billion roubles," chief financial officer Kai-Uwe Mehlhorn said in a statement.

In the first quarter, Rostelecom's revenues climbed 1 percent to 80.4 billion roubles ($2.35 billion), as a 23 percent rise in pay TV sales and 11 percent growth of broadband revenues helped offset declines in fixed-line and mobile revenues.

Its operating income before depreciation and amortisation (OIBDA) fell 10 percent to 26.5 billion roubles, with the margin sliding to 33 percent from 37 percent a year ago. Net profit grew 8 percent to 6.9 billion roubles, reflecting an income from the disposal of Rostelecom's mobile business. ($1 = 34.1780 Russian Roubles) (Reporting by Maria Kiselyova, editing by Elizabeth Piper)