Daily analyst comments

On July 31, Siberia Telecom released H107 RAS financials. We have repeatedly noted that these accounting standards are not fully reflective of information about companies. However, we can draw a few preliminary conclusions based on these reports.

Overall, the company's performance turned out to be quite strong. Topline growth was 20%, which we view as fairly good, taking into account that the results of rapidly expanding wireless subsidiaries are not included. In addition, we were upbeat on Internet access revenue which advanced 64% in H107, while we project only 30% growth in this segment in 2007. We would like to note that headcount optimization exceeded forecast and the line per employee ratio climbed 21% to 132 in H107.

Stabilization of OIBDA and net profit margins is not indicative, since RAS data do not correspond to IAS results.

RAS financials, Rub mln

	H106	H107	H107/H106
Revenue	10,757	12,866	20%
Internet access services	647	1,063	64%
Internet access services, share in revenue	6%	8%
OIBDA	4,116	4,806	17%
OIBDA margin	38%	37%	-1%
Net profit	1,548	2,069	34%
Net profit margin	14%	16%	2%
Lines per employee, pcs	109	132	21%

Source: Company data, Finam estimates

In the interim until the company's IAS report is released, we reiterate our Buy recommendation on Siberia Telecom commons with a target price of $0.133 per share and a Hold recommendation on Siberia Telecom prefs with a target price of $0.081 per share.