Uralsvyazinform reports the audited unconsolidated financial and operating results for the year ended December 31, 2009 prepared under Russian Accounting Standards (RAS).

- Revenues increased by 0.4% on 2008 and totaled RUR 40.7 bln. The revenue growth is mainly due to revenue gains in fixed-line services (+2.4%) and Internet service providing (+25.3%).

- EBITDA^[1] increased by 15.7% on 2008. EBITDA margin totaled 37.9%. Operating margin — 20.4%

- Net profit increased by 51.9% to RUR 4.1 bln Net margin totaled 10.0%.

- Subscriber base totaled 9.4 million including 5.7 million in mobile/GSM.

Financial highlights

Financial	2009	2008	Change, %
Revenues, RUR mln	40,744.0	40,581.0	+0.4%
Costs, RUR mln	32,412.2	33,456.4	–3.1%
EBITDA, RUR mln	15,471.2	13,367.6	+15.7%
EBITDA margin	37.9%	32.9%
Operating profit, RUR mln	8,331.9	7,124.6	+16.9%
Operating margin	20.4%	17.6%
Profit before income tax, RUR mln	5,406.8	4,146.4	+30.4%
Net profit, RUR mln	4,068.9	2,677.9	+51.9%
Net margin	10.0%	6.6%

For information:
[1] EBITDA is calculated as a sum of pre-tax profit, interest payable, depreciation and amortization, leasing payments less interest receivable.

To view complete accounting statements of Uralsvyazinform as of 2009 under RAS please visit corporate web site www.ir.u-tel.ru.

Overview of business

Local Services

	31.12.2009	31.12.2008	Change, %
Installed capacity, thous. lines	4,219.3	4,288.4	–1.6%

	30.12.2009	30.12.2008	Change, %
Subsciber base, thous. lines, incl:	3,722.4	3,722.6	0.0%
Residents	3,177.8	3,167.7	+0.3%
Organizations	544.6	555.0	–1.9%

Revenues from local services increased by 2.4% on 2008 and totaled RUR 10,454.4 mln. Revenues from local calls increased by 4.5% (+RUR 401.0 mln.) including RUR 41 mln. gain on raised quantity of fixed-line subscribers and RUR 360.0 mln. gain on changing of subscribers’ charge for fixed-line services.

The local revenues by types of services (including radio access CDMA, DECT), RUR mln:

	2009	2008	Change, %
Line installation	146.5	282.5	–48.1%
Local calls provision (monthly payment and call charges), including:	9,294.2	8,893.3	+4.5%
Line charge	5,512.0	5,243.7	+5.1%
Unlimited calls charge	2,006.8	1,971.3	+1.8%
Time-based charge	1,248.2	1,148.2	+8.7%
Combined charge	527.2	530.1	–0.5%
Other local services (contracts redrawn, etc.)	463.3	483.7	–4.2%
Line and cable rentals	550.0	550.4	–0.1%
Payphone calls	1.4	5.2	–73.1%
Total	10,455.4	10,215.1	+2.4%

The revenues from local services in terms of customer mix:

- residents — 73.4 % (72.2% as of 2008);

- organizations — 26.6% (27.8%).

Internet

	2009	2008	Change, %
Broadband internet subscribers, thous.	756.1	541.2	+39.7%
Traffic, mln min	605.9	1,328.3	–54.4%
Traffic TB, incl	95,624.5	23,182.9	+312.5%
dedicated channels	95,537.7	22,824.2	+318.6%
υDSL	94,057.0	22,370.9	+320.4%

Revenues from Internet service providing and data transmission, RUR mln:

	2009	2008	Change, %
Revenues from Internet services	5,089.2	4,062.5	+25.3%
Dial-up services	274.0	550.3	–50.2%
Broadband, incl	4,815.2	3,512.2	+37.1%
υDSL	4,697.9	3,359.4	+39.8%
Data transmission	1,036.6	829.7	+24.9%
VoIP	198.5	153.9	+29.0%
Other telematic services	34.4	29.5	+16.6%
Total	6,358.7	5,075.6	+25.3%

Intrazone services

Outbond traffic, mln min	2009	2008	Change, %
Intrazone call, incl.	2,041.7	2,292.5	–10.9%
Fixed-to-fixed	489.5	545.5	–10.3%
Fixed-to-mobile	1,552.2	1,747.0	–11.2%

Revenues from intrazone communication services, RUR mln:

	2009	2008	Change, %
Revenues from intrazone services, incl.	4,557.2	5,026.4	–9.3%
Fixed-to-fixed calls	1,220.0	1,402.4	–13.0%
Fixed-to-mobile calls	2,666.0	2,987.8	–10.8%
Rental for Intrazone channels	587.9	545.5	+7.8%
Other	83.3	90.7	–8.2%

The intrazone revenues in terms of customer mix:

- Residents — 37.9% (39.6% as of 2008);

- Organizations — 62.1% (60.4%).

GSM Mobile services

Revenues from mobile services decreased by 0.8% and totaled RUR 12,998.9 mln. At the same time revenues for 4Q09 increased by 1.7% on 3Q09 results.

As of 2009 ARPU totaled RUR 189 (RUR 202 in 2008).

At the moment Uralsvyazinform holds leading position on highly competitive Urals region market of mobile services with 5.7 mln GSM subscribers.

Revenues and expenses review

Generally as of 2009 revenues totaled RUR 40,744 mln (+0.4% on 2008), revenues from telecom services reached RUR 39,575.4 mln. (+0.8%).

The structure of revenues from telecom services in 2009:

Index, RUR mln	2009	Weight in revenues	2008	Weight in revenues	Change (2009/2008), %
Revenues from telecom services, incl.	39,575.4	100.0%	39,277.7	100.0%	+0.8%
Intrazone services	4,557.2	11.5%	5,026.4	12.8%	–9.3%
Local urban services	9,470.9	23.9%	9,264.7	23.6%	+2.2%
Local rural services	984.4	2.5%	950.5	2.4%	+3.6%
Documentary services	136.3	0.3%	172.2	0.4%	–20.8%
Wired radio	280.2	0.7%	262.3	0.7%	+6.8%
Radio communication, radio and TV broadcasting	261.2	0.7%	233.1	0.6%	+12.1%
Mobile services	12,998.9	32.8%	13,103.7	33.4%	–0.8%
Internet and non-regulated data transmission services	6,358.7	16.1%	5,046.1	12.8%	+26.0%
incl. Internet	5,089.2	12.9%	4,062.5	10.3%	+25.3%
Revenues from interconnection and transfer of traffic	4,517.6	11.4%	5,211.8	13.3%	–13.3%
Other revenues	10.0	0.0%	6.9	0.0%	+44.9%

Revenue gains were mostly based on the following:

- Increased revenues from Internet service providing and non-regulated data transmission as a result of increased number of Internet subscribers and data transmission services.

- Increased revenues from fixed-line services as a result of increased charges for line and calls from 01.03.2009.

Revenues from interconnection and transfer of traffic totaled RUR 4,517.6 mln. (–13.3% as of 2008).

Operating expenses amounted to RUR 32,412.2 mln (–3.1% on 2008 γ.). The expenditure structure is as follows:

Index, RUR mln	2009	Weight in revenues	2008	Weight in revenues	Change (2009/2008), %
Wages	6,374.5	19.7%	7,345.7	22.0%	–13.2%
Social tax expense	1,351.9	4.2%	1,475.1	4.4%	–8.4%
Depreciation	6,079.9	18.8%	5,254.1	15.7%	+15.7%
Telecom service providers	5,662.6	17.5%	5,838.6	17.5%	–3.0%
Materials	2,028.8	6.3%	2,199.1	6.6%	–7.7%
Third party services	2,663.6	8.2%	3,283.4	9.8%	–18.9%
Other expenses, incl:	8,250.9	25.3%	8,060.3	24.0%	+2.3%
Leasehold	439.0	1.4%	421.1	1.3%	+4.2%
Universal service fund expense	415.8	1.3%	404.6	1.2%	+2.8%
Rental payments	1,587.9	4.9%	1,947.0	5.8%	–18.4%
Total	32,412.2	100.0%	33,456.4	100.0%	–3.1%

As of 2008, expenses structure is characterized by lower share of personnel expenses, decreased rental payments, expenses on operators’ services in connection with call termination and provision of Internet services.

Wages decreased by 13.2% and contributed 19.7% (22.0% as of 2008). This was a result from company structure optimization. An increase in depreciation of RUR 825.8 mln is due to the putting in operation of fixed assets.

Repairs and maintenance (categorized under Third party services) totaled RUR 2,663.6 mln.

Other expenses were mainly driven by leaseholds (+4.2%).

Thus, as of 2009 EBITDA totaled RUR 15,471.2 mln. (+15.7%), operating profit — RUR 8 331.9 mln. (+16.9%), pre-tax profit — RUR 5,406.8 mln. (+30.4%), net profit — RUR 4,068.9 mln. (+51.9%).

Arrearage

Index,RUR mln	2009	2008	Change (2009/2008), %
Long-term loans	13,263.2	15,363.4	–13.7%
Short-term loans	7,335.5	8,560.8	–14.3%
Total	20,598.7	23,924.2	–13.9%
Cash assets	1,581.3	1,059.0	+49.3%
Short-term investments	2,995.7	1,502.1	+99.4%
Total	4,577.0	2,561.1	+78.7%

Investments

The investments as of 2009 amounted to RUR 4,233.9 mln. (+42,4% on 2008)

Item	2009	2008
Invesments, RUR mln	4,234	9,980
Fixed-line telephony	4%	22%
New services, incl. mobile	41%	37%
Data transmission network and infrastructure	34%	20%
IT	10%	8%
Other, incl.	11%	13%
Repairs and construction	6%	5%
Total	100%	100%