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| Investor presentation May
2004 |
| Disclaimer This
presentation is not an offer to sell or solicitation of an offer
to buy any shares of our common stock in any circumstances under
which any such offer or solicitation is unlawful. You should not
assume that the information in this presentation or any supplement
is accurate as of any date other than the date in front of those
documents You may rely only on the information incorporated by
reference or contained in our prospectus filed with the US
Securities and Exchange Commission. We have not authorized anyone
else to provide you with different information. You may request a
copy of the prospectus at no cost, by writing or telephoning us at
the following address: Golden Telecom, Inc. 4400 MacArthur
Boulevard, N.W., Suite 200 Washington, D.C. 20007 Attention: Julia
Marx Telephone: (202) 332-5997 |
| Roadshow team Alexander
Vinogradov, President and Chief Executive Officer David Stewart,
Chief Financial Officer Michal Cupa, Chief Operating Officer Tom
Adshead, Director of Investor Relations |
| Russia's corporate
incumbent Since 1991, the largest independent provider of
fixed-line telecom services in Russia and the CIS and Russia's
largest Internet Service Provider (ISP) Approximately 50% market
share of Moscow alternative operator market and 35% in all Russia
US registered, publicly traded on NASDAQ since 1999 Market cap.
US$0.9 billion (7 May 2004) Recent acquisitions include: Comincom/Combellga,
Sibchallenge, Samara-Telecom, WestBalt Telecom Committed and
complementary strategic partners - Telenor, Alfa Group and
Rostelecom Golden Telecom share price performance |
| Increasing liquidity
Estimated secondary offering size: approx. 3.8 million shares EBRD,
Capital and Baring Vostok each to sell approximately 50% of their
stakes No new shares to be sold by Golden Telecom Free float
expected to increase to nearly 30% Post-offering Pre-offering
Source: SEC filings |
| 0 20 40 60 80 100 120 140
(US$m) 1999 2001 2002 2003 2004 2000 A successful alternative
operator IPO Acquisition of Agama Holdings Acquisition of Cityline,
Uralrelcom, ADS (Nizhny Novgorod) Alfa acquires 48% stake New CEO
and CFO Acquisition of Sovintel First profitable quarter (1Q 2002)
Acquisition of Sibchallenge (Krasnoyarsk) Acquisition of Comincom/
Combellga Acquisition of Samara-Telecom First dividend paid Golden
Telecom quarterly revenues Appointment of new COO Acquisition of
WestBalt Telecom (Kaliningrad) |
| Acquisition of Comincom/Combellga
Confirms Golden Telecom as Russia's leading alternative operator
Complementary customer bases in Moscow 100% of Comincom acquired
from Telenor in exchange for a 19.5% stake in Golden Telecom
Acquisition helps us expand our metropolitan and regional networks
Significant revenue and cost synergies achievable Revenues Note: *
Including Comincom and Sibchallenge |
| Strategic shareholders
Strategic shareholder since May 2001 3 Board seats (out of 10) One
of the largest financial and industrial groups in Russia Partner
with Telenor in VimpelCom since 2001 and in Kievstar since mid
2002 Shareholder since Sep. 2002 (Sovintel deal) 1 Board seat Also
nominates one independent director Russia's monopoly long-
distance carrier Our largest supplier of capacity Strategic
shareholder since Dec. 2003 (Comincom deal) 2 Board seats One of
the largest strategic foreign investors in the Russian telecom
sector Partner with Alfa in VimpelCom since 2001 and in Kievstar
since mid 2002 |
| Golden Telecom: our
strategy To be the leading facilities-based alternative voice,
data and Internet services company in Russia and key markets in
the CIS Pursue consolidation opportunities Increase market share
by offering bundled voice and data services Extend leading
position in data and Internet markets Reduce operating costs and
satisfy capacity needs through network planning Focus operating
activities and capex in major metropolitan areas Selective
acquisitions focused on the regions to improve and expand our
presence Integrated telecommunications solutions and services from
a one- stop shop Increasing the number of access points to satisfy
growing demand for data and Internet services Owning our local
exchange and customer access networks Selective investment to
build fiber optic cables on high capacity routes to reduce costs
and meet increases in demand Focus on cities where demand for
services is most concentrated |
| Lines of business - 2003
Note: 2003 revenues; breakdown of Sovintel Carrier and Operator
clients and Business and Corporate clients only |
| Sources of growth: regions
Moscow clients expanding to the regions: Banks opening regional
branches - eg Alfa, Raiffeisen Consumer goods manufacturers
opening new plants - Coca Cola, Mars, TetraPak Regions will be the
key Faster growth in the regions, particularly St. Petersburg and
major cities in Ukraine Continue with acquisitions such as ADS in
Nizhny Novgorod, Sibchallenge in Krasnoyarsk and Samara-Telecom in
Samara and WestBalt Telecom in Kaliningrad In Russia, there are a
further 8 cities with more than 1 million population, and 16
cities with more than 0.5 million ADS (Nizhny Novgorod) revenue
growth Source: Golden Telecom Golden Telecom Ukraine revenue
growth |
| Focus on high demand
regions 1.75-3.3 million 1.2-1.75 million More than 3.3 million
KAZAKHSTAN UKRAINE RUSSIA Kiev Odessa Almaty Vladivostok
Khabarovsk Irkutsk Novokuznetsk Krasnoyarsk Novosibirsk
Ekaterinburg St. Petersburg Ufa Arkhangelsk Kaliningrad Syktyvkar
Saratov Novorossiysk Krasnodar Less than 1.2 million Pskov Moscow
Nizhny Novgorod Tyumen Samara Volgograd Voronezh Orel |
| Opportunistic network
development Current status Historically, capacity leased from
Rostelecom/Transtelecom duopoly and satellites Inter-city channel
costs are rising in Russia Opportunistic approach - selective
build-out Regional expansion generates higher demand for
inter-city channels We will build our own capacity where justified
by current traffic Payback on fiber link to Nizhny Novgorod
expected in 36 months Moscow To Stockholm STM-16 (IRU from Sonera)
St. Petersburg STM-16 (IRU from Sonera) VC-3 (IRU from
Transtelecom) Nizhny Novgorod Our network build-out Planned fiber
link (joint project with VimpelCom) Drop offs at regional cities
en route |
| Financial highlights
EBITDA*, US$ million Operating cashflow, US$ million Consolidated
revenues, US$ million Net income, US$ million Note: * See EBITDA
reconciliation and definition on page 22 |
| Margins recovering in
first quarter Three months ended Operating margin 21.9% 21.7%
20.3% Business and corporate services 27.2% 31.0% 26.8% Carrier
and operator services 24.2% 18.3% 21.0% Consumer internet services
-7.0% -6.9% -11.1% Mobile services 34.4% 44.4% 47.2% 31-Mar-03
30-Jun-03 30-Sep-03 31-Dec-03 Depreciation and amortization 13.3%
13.0% 12.4% EBITDA* margin 35.2% 34.7% 32.7% Recent erosion
drivers Incumbent price increases Intergration charges Greater
equipment sales Recovery drivers Increased prices Synergies from
Comincom/Combellga merger Economies of scale Regional growth
Increased ownership of capacity (% of revenues) 15.8% 22.8% 13.8%
9.0% 22.2% 13.1% 28.9% 31-Mar-04 15.1% 18.3% 18.7% -5.4% 28.6%
11.9% 27.0% Note: * See EBITDA reconciliation and definition on
page 22 |
| Conservative balance sheet
We expect to fund capital expenditure and small acquisitions with
cash flow Large acquisitions will be funded through borrowing
Dividends paid for the first time in corporate history in Q1 2004
(US$0.20 per share) and are expected to be repeated in future
quarters As at December 31 2000 2001 2002 2003 Cash and cash
equivalents 57.9 37.4 59.6 65.2 Total assets 348.4 300.4 435.8
729.2 Total debt and capital lease obligations, including current
portion 12.7 22.2 40.5 8.0 Shareholders' equity 283.2 220.8 307.5
580.2 Debt / shareholders' equity 4.5% 10.1% 13.2% 1.4% Debt /
total assets 3.6% 7.4% 9.3% 1.1% US$ million As at March 31 2004
58.7 6.9 591.0 1.2% 0.9% 764.8 |
| Disciplined capital
expenditure We expect capex to remain at around 18% of revenue
Most of our capex is last mile, and discretionary 2004 guidance:
US$85-95 million Customer connection Russia 80% Ukraine 10% ROL 4%
Capex breakdown 2004F IT 4% Administrative and other 2% Total 100% |
| Key issues Competition
Incumbents, other alternatives, new entrants Barriers to entry:
existing network and existing client relationships Regulation
Interconnect Universal Service Fund If the new Telecoms Law is
fairly implemented, it will be positive for Golden Telecom
Universal Service Fund to start in 2005 (up to 3% of revenues)
Technology Competitive threat from alternative technologies Both a
threat and an opportunity - technology enhances our service
offering |
| Summary We have built a
profitable alternative operator We are currently the leading
telecoms provider for Russia's business sector Growth comes from
Moscow, new market segments and our regional expansion We have the
track record - corporate governance, financial discipline,
profitability |
| EBITDA reconciliation 12
months ended 31-Dec-03 31-Dec-02 31-Dec-01 US$ million 29.8 (39.0)
Net income (loss) 55.4 12.8 14.6 1.0 - Cumulative effect of a
change in accounting principle - - - 28.8 (39.0) Income (loss)
before cumulative effect of a change in accounting principle 55.4
12.8 14.6 (4.6) (1.9) Income taxes (17.4) (4.2) (7.1) 33.4 (37.1)
Income (loss) before income taxes 72.8 17.1 21.7 2.0 8.2 Total
other income (expense) 3.1 (0.2) 0.6 (0.5) (0.1) Minority interest
(0.5) (0.1) (0.3) (0.7) 0.7 Interest income (expense), net (0.9)
(0.4) 0.1 (1.2) (0.6) Foreign currency gain (loss) (0.2) 0.2 0.8
4.4 8.2 Equity in earnings of ventures 4.7 0.1 0 31.4 (45.3)
Operating income (loss) 69.7 17.2 21.1 (30.0) (41.4) Depreciation
and amortization (45.3) (10.4) (17.4) 115.0 61.4 (3.9) EBITDA 38.5
27.6 31-Mar-04 31-Mar-03 3 months ended Note: EBITDA is defined as
operating income plus depreciation and amortization. This measure
is not defined by generally accepted accounting principles (GAAP)
and is a measure of a company performance commonly used in the
telecommunications industry, but should not be construed as an
alternative to operating income/(loss) determined in accordance
with GAAP as an indicator of operating performance or as an
alternative to cash from operating activities determined in
accordance with GAAP as a measure of liquidity. |
| Financial summary US$
million 31-Dec-00 31-Dec-01 31-Dec-02 31-Dec-03 Guidance for 12
months ended 31-Dec-04 Revenues 113.1 140.0 198.7 360.5 510-530
Access and network services (excluding depreciation and
amortization) (51.0) (63.7) (91.2) (181.1) SG&A (excluding
depreciation and amortization (45.4) (48.9) (46.1) (64.4)
Depreciation and amortization (31.9) (41.4) (30.0) (45.3) (65-70)
Income / (loss) from operations (15.2) (45.3) 31.4 69.7 105-110
Non-operating income 5.9 8.2 2.0 3.1 Provision for income taxes
(1.0) (1.9) (4.6) (17.4) Net income / (loss) (10.3) (39.0) 29.8
55.4 n/a 12 months ended |
| Special note regarding
forward looking statements Certain statements contained in this
presentation or made during the meeting concerning management's
intentions, expectations or predictions are forward looking
statements. Such statements include the expected benefits of the
Comincom and Sibchallenge acquisitions, estimates of future
financial and operating performance, expectations regarding future
market position, geographical markets that we plan to enter, our
future product offerings, our assessment of the risk factors and
effectiveness of our strategic responses. It is important to note
that the company's actual results may differ materially from those
projected in such forward looking statements. Factors that may
cause the anticipated results not to occur include our ability to
consummate potential acquisitions, our ability to efficiently
integrate the acquired companies, unanticipated changes in
customer demand, changes in competitive product offerings,
increased price competition, changes in the macroeconomic and
political environment, changes in local regulatory regimes, or
shifts in strategy by our partners. All forward looking statements
are made as of March 7, 2004 and Golden Telecom disclaims any duty
to update such statements. Additional information concerning the
factors that could cause actual results to differ materially from
those projected in the forward looking statements is contained in
the company's annual report on Form 10K for the year ended
December 31, 2003 and the Company's quarterly report on Form 10Q
for the quarter ended March 31, 2004 and other filings with the
U.S. Securities and Exchange Commission (SEC). Copies of these
filings may be obtained by contacting Golden Telecom or the SEC.
For more information contact Investor Relations: e-mail:
investorrelations@gldn.net, web: www.goldentelecom.com tel.:
+7-501-797-9300; fax: +7-501-797-9332 |
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