Bloomberg News

Golden Telecom Net Rises 11% on Corporate Contracts

March 15, 2007

Golden Telecom Inc. (GLDN:US), a Nasdaq- listed provider of Internet, voice and data services in the former Soviet Union, said fourth-quarter profit (GLDN:US) advanced 11 percent as the company added corporate contracts.

Net income (GLDN:US) climbed to $19.8 million from $17.9 million a year earlier, the company said in a U.S. regulatory filing today. The median estimate of eight analysts in a Bloomberg survey was $24.7 million. Profit excluding the cost of stock appreciation rights jumped 82 percent to $32.5 million.

Golden Telecom, whose biggest shareholder is billionaire Mikhail Fridman's Alfa Group, sells services to companies, operators and consumers in Russia, Ukraine, Kazakhstan and Uzbekistan. The company's corporate contracts, its main business, increased to 253,133 in the fourth quarter from 184,206 a year earlier.

``The results are very positive if you take away the SARs payment,'' Nadezhda Goloubeva, a telecommunications analyst with Aton Capital Group in Moscow, said in a telephone interview today. ``What we have seen should reflect in the eyes of investors and lead to an upgrade of the price.''

Golden Telecom shares (GLDN:US) fell as much as 4.3 percent in New York today and traded 2 percent down at $49.21 at 11:55 a.m. local time, valuing the company at $1.8 billion.

Sales rose 43 percent to $250.8 million in the fourth quarter, more than the $237 million analysts had anticipated.

Revenue from corporate contracts rose 37 percent to $141.5 million. Demand for fixed-line services increased, driven by economic growth in Russia, Ukraine and other former Soviet countries, and new additional services, the company said.

Margin Pressure

Fourth-quarter earnings before interest, tax, depreciation and amortization, or Ebitda, increased 11 percent to $55.6 million. Ebitda as a percentage of sales fell to 22 percent in the quarter from 28 percent a year earlier.

Golden Telecom estimates its sales will grow 35 percent to 40 percent this year, including revenue from Corbina Telecom, which it plans to consolidate in the second half of this year. The company's growth forecasts are aggressive and above growth estimates of mobile-phone operators, Goloubeva said.

Golden Telecom will invest about 20 percent of its revenue (GLDN:US) in its development between 2007 and 2010.

To contact the reporter on this story: Lyubov Pronina in Moscow at

To contact the editor responsible for this story: Lars Klemming at at

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