Strong revenue growth and continued regional expansion. Golden Telecom reports results for the first quarter 2004
06 May 2004
MOSCOW, Russia (May 6, 2004) - Golden Telecom, Inc.'s (NASDAQ: "GLDN") consolidated revenue in the first quarter 2004 rose 70% relative to the same quarter in 2003 to $133.2 million. Net income rose to $14.7 million, up 15% relative to the same period in the previous year. Here are some of the highlights for the first quarter 2004 vs. the first quarter 2003: Consolidated revenues of $133.2 million - up 70%
Consolidated operating income of $21.1 million - up 23%
Consolidated net income of $14.7 million - up 15%
Consolidated net cash flow from operations of $29.5 million - up 50%
Consolidated EBITDA1 of $38.5 million - up 39% Alexander Vinogradov, Chief Executive Officer and President of Golden Telecom, Inc., commented: "I was encouraged by the strong top line growth that we showed across all business units. This is impressive, as the first quarter is traditionally the slowest for us because of the large number of public holidays in Russia. We have demonstrated an ability to maintain focus on our daily activities during this period of reorganizing our recent acquisitions, Comincom and Combellga, so that they operate
consistently with our largest subsidiary, Sovintel. We continue to expand our operations into selected Russian regional centers, announcing our acquisition of 50% plus one share of Samara-Telecom in February this year for $4.8 million. Samara-Telecom recorded $1.1 million in revenues and $0.3 million in operating income for the two months that it was consolidated in this quarter. I am also pleased to announce that in April 2004 we completed the acquisition of 100% of OAO Balticom Mobile that owns 62% of ZAO WestBaltTelecom, an alternative telecommunications operator, in the
strategically important enclave of Kaliningrad. The purchase price was approximately $7.0 million and ZAO WestBaltTelecom recorded approximately $5.0 million in revenue last year according to Russian Accounting Standards. In April 2004, we also acquired the remaining 49% of OOO UralRelcom that we previously did not own from our local partner for approximately $1.0 million. OOO UralRelcom is an Internet Service Provider in the Siberian city of Ekaterinburg, with annual revenues last year of $4.1 million and operating profit of $1.0 million. As previously announced, we are continuing our negotiations to purchase an alternative telecommunications operator in the Southern Russian city of Rostov-on-Don. We expect to execute a Sales Purchase Agreement in the second quarter of this year. Although our revenue growth is strong, our overall margins continue to be impacted by price increases for services received from monopolistic incumbent operators. However, it is noteworthy that the Consumer Internet business unit recorded its first operating profit this quarter, as a result of increased revenues and a relatively stable cost base. We also recorded expenses of $1.8 million for consulting costs and compensation and related payments to employees that we let go in connection with the planned reorganization resulting from the acquisition of Comincom and Combellga." In February 2004, Golden Telecom declared a cash dividend of $0.20 per common share to shareholders of record as of March 18, 2004. The company paid the total amount payable of $7.2 million to shareholders on March 29, 2004. In March 2004, Golden Telecom filed a Registration Statement on Form S-3 with the U.S. Securities and Exchange Commission to register 3,839,823 shares of common stock held by the European Bank for Reconstruction and Development, Capital International Global Emerging Markets Private Equity Fund L.P., Cavendish Nominees Limited, and First NIS Regional Fund SICAV in connection with an anticipated secondary offering of these shares. Golden Telecom had 36,207,256 shares of Common Stock outstanding as of March 31, 2004. Subject to the approval of its Board of Directors, Golden Telecom plans to transfer 20% of its ownership interest in its Ukrainian subsidiary in exchange for services subcontracted to a Ukrainian local partner through affiliates of Golden Telecom's largest shareholder, Alfa Telecom Limited ("Alfa"). This transaction is expected to close in the second quarter and may result in a charge to operating income of up to $4.0 million.
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