Northwestern Telecom. Market description and risks

Resource topic: Internet access, hosting
Site region: Petersburg
Registered: 29.12.2006

Information about the website www.nwtelecom.ru: Information about the company (territory of activity, management, analytical indicators, addresses of branches, etc.). A variety of information for investors and shareholders.

Main domain: www.nwtelecom.ru
Registered page: http://www.nwtelecom.ru/

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Possible factors that may negatively affect the Issuer's sales activities are, first of all, problems associated with competition in the communications market.

The following steps are likely from competitors:

· Rebalancing of tariffs, increasing competition between fixed-line operators and cellular operators in all regional markets;

· Entry into regional markets (primarily into the regional centers of the Northwestern Federal District of the Russian Federation, then into the regional centers of the Northwestern Federal District of the Russian Federation) of large companies that previously operated only in the St. Petersburg market will intensify competition throughout the territory of the Issuer’s activities;

· Active promotion by competitors of their services in the most dynamic markets (telephony, Internet access and data transmission) will lead to increased impact on all client segments of the Issuer;

· Acquisition of developed companies in regional markets by competitors will lead to increased competition throughout the Issuer's territory of operation;

· Active construction of their own infrastructure by telecom operators leads to lower prices for network resources (communication channels) and aggravates the competitive situation in the communication services market.

Telephony:

In the “Population” segment, there is competition in the market for the provision of local telephone services from cellular operators. Mobile operators promote additional (non-voice) services by providing discounts and bonuses on voice traffic.

In connection with the introduction of a time-based payment system for local telephone connections, the risk of subscribers abandoning wireline services in favor of services provided by cellular operators has increased.

To retain subscribers, the Issuer offered a line of additional tariff plans with varying amounts of local traffic included, and also developed a number of package offers for users of several services at more attractive rates.

In the “Corporate Clients” segment, there is significant competition from alternative operators who provide a wider range of related telephony services with a flexible system of discounts, as a result of which there is a possible risk of reducing the Issuer’s share in the “Corporate Clients” segment.

The Issuer plans to retain the number of subscribers by segment due to:

· cost management and pricing of local and intrazonal communication services,

· service packaging,

· formation of comprehensive offers of communication services aimed at various segments of corporate clients.

Internet access and data transfer:

Internet access services are one of the most dynamically developing areas of activity in the communications industry, despite a slight slowdown in growth rates recently.

This market is characterized by strong competition, both in the “Residential” segment and in the “Corporate Clients” segment. It is worth noting that the Issuer, as an operator with its own developed infrastructure, has a clear competitive advantage.

In the broadband access market in the “Residential” segment, home network and cable TV operators are currently actively developing. Cellular operators are striving to actively promote mobile Internet services; their capabilities are expanding with the introduction of 3G networks.

Since the beginning of 2006, the Issuer has been providing broadband access services to the population under the Avangard brand. The Issuer is constantly increasing its subscriber base and occupies a leading position in the market of the Northwestern Federal District of the Russian Federation in this segment, and therefore there is a risk of a response from alternative operators aimed at maintaining their positions in the market, including by lowering prices.

Since December 1, 2007, the Issuer has been providing broadband Internet access services to legal entities under the Alliance-PRO Internet trademark.

The Issuer practices expanding the range of speeds for unlimited tariff plans, systematically increasing speeds on existing tariff plans, reducing the cost of providing access to the Internet, and introducing additional services. Along with this, the Issuer makes efforts to actively attract new users by expanding the geography of service provision, developing, modifying and adapting existing products and services, carrying out outbound telemarketing, organizing the provision of comprehensive services, introducing special programs for retaining corporate clients, providing corporate clients with a range of services ( including the creation of IP VPN), implementation of a customer loyalty program.

Investment risks

In 2006, the Issuer's Board of Directors approved the “Risk Management Regulations” in order to integrate risk management procedures into a comprehensive system. The purpose of the Issuer's risk management system is to reduce the likelihood of events leading to losses. The Regulations define the objectives of the Issuer's risk management system, the levels of the risk management system and the disclosure of information about the system and the assessment of its functioning.

In 2008, OJSC NWT introduced a risk management system (RMS), the main goals of which are to increase the efficiency of managing threats and opportunities and to increase the Issuer's capitalization.

The executive bodies of the RMS (commission and working group on risk management) developed a Risk Management Program at OJSC NWTelecom (hereinafter referred to as the Program).

In accordance with the Program, a reporting system has been introduced on the progress and results of the implementation of approved risk management action plans:

· event owners report quarterly on RMS activities to the relevant risk owners;

· risk owners report quarterly on their management progress to the risk management commission;

· the Issuer's internal audit department checks the risk management process once every six months and makes recommendations to the commission on the necessary adjustments to the RMS work.

The Issuer's summary risk assessment is formed on the basis of risk reports. Risk reports serve to monitor the effectiveness of risk management and, along with the conclusion of the internal audit department on the audits performed, are the basis for considering changes to the current Risk Management Program.

From the point of view of the impact of risk on the Issuer’s performance, all risks are divided into:

· essential;

· moderate;

· insignificant.

Control over the implementation of action plans to manage significant risks is exercised by the Board of Directors. Control of moderate and non-significant risks is the responsibility of risk owners and event owners.

To manage risks, risk management action plans have been developed that include one or both of the following:

· Risk prevention plan (impact on the causes of risk or risk-forming factors);

· Plan for subsequent impact on the risk event (impact on the consequences of the risk).

To measure and evaluate the results of activities in the field of RMS of both departments and individual employees, as well as OJSC NWT as a whole, Key Risk Indicators (KRIs) are used.

Industry risks

The impact of a possible deterioration in the situation in the issuer's industry on its activities and fulfillment of obligations under securities is described. The most significant, in the issuer's opinion, possible changes in the industry (separately in the domestic and foreign markets), as well as the issuer's expected actions in this case are given.

The Issuer operates only in the territory of the North-Western Federal District of the Russian Federation (hereinafter referred to as the Russian Federation or Russia).

1. Changes in industry legislation

The phenomena and processes occurring in the communications and information industry are in a state of continuous movement, and therefore, the current industry legislation requires constant changes and additions. The Issuer's main risk associated with constantly changing industry legislation is the ambiguous interpretation of regulations (amendments and additions thereto) establishing methods and mechanisms of state regulation, including state regulation of tariffs for communication services, connection services and transmission services traffic.

2. Increased competition in the industry.

The communications services market in the Northwestern Federal District of the Russian Federation is characterized by growing competition, both from alternative fixed-line operators and from cellular mobile operators.

Increased competition from cellular mobile operators is due to:

· reduction by cellular operators of prices for intra-network long-distance connections;

· provision of intranet roaming at the price of a local connection;

· provision of mobile Internet access services;

· intensification of the activities of telecom operators in terms of promoting services in the “corporate clients” market segment (due to market saturation in the “residential” market segment);

· landing of zonal traffic of cellular operators at lower prices through their own networks and/or networks of alternative operators to the local level.

These factors create a risk of replacement of fixed-line communications with cellular ones and a slowdown in the growth rate of the Issuer's income.

Increased competition appears to be the most significant risk in the long term.

3. Dependence on the Federal Tariff Service (FST of Russia) in establishing regulated tariffs for communication services for subscribers and dependence on Roskomnadzor in setting prices for connection and traffic transmission services for operators.

In accordance with the Federal Law of August 17, 1995 No. 147-FZ (as amended on December 25, 2008) “On Natural Monopolies,” tariffs for the services of public telecommunications operators recognized as natural monopolies are subject to regulation by government bodies of the Russian Federation.

State regulation of the telecommunications industry introduces into the Issuer's activities risks and uncertainty common to all Interregional companies of OJSC Svyazinvest (hereinafter referred to as interregional companies) associated with changes in tariffs for communication services for users and prices for connection services and traffic transmission for operators.

Thus, the Issuer faces the risk of untimely changes in tariffs, which reduces its competitiveness and may negatively affect the profitability of its activities and, accordingly, the ability of the Issuer to fulfill its obligations under securities.

4. Selection of the Issuer as an operator of universal telephone service using payphones.

According to the Federal Law of July 7, 2003 No. 126-FZ “On Communications” (as amended on April 29, 2008), hereinafter referred to as the Federal Law “On Communications,” the provision of universal communication services is guaranteed in the Russian Federation, which include:

· telephone services using payphones;

· services for data transmission and provision of access to the Internet using public access points.

Universal communication services are provided by a universal service operator (USO), recognized as the winner of competitions for the right to provide universal communication services (UCS) in accordance with the decision of the competition commission (in accordance with the Rules for conducting a competition for the right to provide universal communication services, approved by Decree of the Government of the Russian Federation dated 22 April 2005 N 248).

The provision of universal services implies the provision of a minimum volume of telecommunications services in all localities.

The requirements for the provision of universal telephone services using payphones are determined by Article 57, paragraph 2 of the Federal Law “On Communications”:

· the time during which a user of communication services reaches a payphone without using a vehicle should not exceed one hour;

· each settlement must have at least one payphone installed, providing free access to emergency operational services.

In 2006-2007 The Issuer was recognized as the winner in open tenders for the right to provide universal telephone services using payphones. The number of installed payphones is shown in the table.

* UUS - universal telephone services

Losses caused by the provision of universal communication services are defined as the difference between the Issuer's income from the provision of universal communication services and the expenses incurred by it in the provision of these services, and are subject to compensation in an amount not exceeding the amount of compensation for losses established in the agreement on the conditions for the provision of universal communication services concluded based on the results of the competition.

There are risks of refusal to receive compensation for losses of the Issuer in connection with the provision of universal telephone services using payphones or receiving compensation not in full from the universal service reserve due to:

· violation of deadlines for fulfilling contracts for the organization of universal communication services; untimely commissioning of payphones due to the long period of obtaining permits for the use of radio frequencies;

· failure to comply with the requirements of regulations for organizing the accounting of income and expenses for universal communication services;

· accounting of expenses for the provision of universal communication services in an incomplete volume:

b poorly organized accounting;

b legislative restrictions on the attribution of expenses (inconsistency of depreciation periods with the validity periods of contracts).

5. Licensing

Changes in the licensing conditions for certain communication services may entail the need to redistribute resources and change the Issuer's plans for providing these services.

6. Implementation of social projects

Increasing the volume of projects of social significance and special projects carried out by the Issuer within the framework of federal and regional target programs (program for the provision of Universal Communication Services, provision of a closed numbering system (Order of the Ministry of Information and Communications No. 142 of November 17, 2006) - increasing the level of digitalization), aimed at developing the infocommunication infrastructure , as well as expanding the range and improving the quality of telecommunications services provided, may lead to a reduction in funding for part of the payback projects that form the investment program. lead to a decrease in the return on the Issuer's investment programs and a lack of income in future periods.

Risks associated with possible changes in prices for raw materials, services used by the issuer in its activities, and their impact on the issuer’s activities and the fulfillment of obligations under securities:

There are risks associated with an increase in the cost of equipment, electricity and other services that are necessary to carry out activities, which may lead to an increase in the cost of the Issuer's services and, as a result, a decrease in the profitability of activities and the ability to fulfill obligations on securities by the Issuer.

Risks associated with possible changes in prices for the issuer’s products and/or services (separately in the domestic and foreign markets), and their impact on the issuer’s activities and the fulfillment of obligations under securities:

In accordance with Federal Law No. 147-FZ dated August 17, 1995 “On Natural Monopolies”, the Issuer is a natural monopolist and its activities are subject to regulation by government bodies of the Russian Federation.

The list of regulated services was approved by Decree of the Government of the Russian Federation of October 24, 2005 No. 637:

1. Forwarding internal written correspondence (postcards, letters, parcels).

2. Transmission of an internal telegram.

3. Providing a long-distance telephone connection to a subscriber (user) of a fixed telephone network for the transmission of voice information, fax messages and data.

4. Distribution of all-Russian television and radio programs.

5. Providing access to the local telephone network, regardless of the type of subscriber line (wire line or radio line) of the fixed telephone network.

6. Providing a local telephone connection to a subscriber (user) of a fixed telephone network for the transmission of voice information, fax messages and data (except for payphones).

7. Providing the subscriber with a subscriber line for permanent use, regardless of its type.

8. Providing an intrazonal telephone connection to a subscriber (user) of a fixed telephone network for the transmission of voice information, fax messages and data.

State regulation of the telecommunications industry introduces risks and uncertainty into the Issuer’s activities associated with changes in tariffs for communication services for users and prices for connection services and traffic transmission for operators.

Changes in regulated tariffs for the services of operators - natural monopolists occur in accordance with the parameters of the forecast of socio-economic development of the Russian Federation, approved by the Government of the Russian Federation, and require approval by government bodies of the Russian Federation, and therefore may lag behind changes in the real economic situation and changes in the operator’s costs.

Thus, the Issuer faces the risk of refusal to change tariffs or untimely changes in tariffs, which reduces its competitiveness and may negatively affect the profitability of its activities and, accordingly, the ability of the Issuer to fulfill its obligations under securities.

Tariffs for unregulated communication services are set by the Issuer independently, taking into account consumer properties, quality and cost of the service, market conditions (ratios of supply and demand, tariffs for communication services offered by competitors).

Description of the issuer's actions, in the event of an unfavorable development of the market situation, in order to minimize these risks:

As part of actions in the event of unfavorable market conditions, the Issuer plans to take the following actions:

· optimize the structure of production costs;

· revise the investment program towards reduction;

· adjust marketing policy taking into account the specific market situation;

· change the structure of services provided in order to maximize profits.

As part of tactical actions, the Issuer plans to implement the following activities:

Flow of traffic and subscribers in the cellular network Proactive work with the outflow of subscribers, active information and promotion of tariff plans, implementation of package offers

Consolidation of the business of small operators Provision of Triple Play* services to its own subscriber base

Considering the purchase of fragmented home networks with significant growth potential

*Triple Play is a concept for providing telecommunications services - telephony, Internet access and interactive television, organized through a single connection to a multi-service data network.

Regional risks

Describes the risks associated with the political and economic situation in the country (countries) and region in which the issuer is registered as a taxpayer and/or carries out its main activities, provided that the issuer's main activities in such country (region) generate 10 percent or more of its revenues the last completed reporting period preceding the end date of the last reporting quarter.

The Issuer operates in the Russian Federation.

The main country risks are political and economic risks. In Russia, economic reforms and the development of legal, tax and administrative infrastructure that would meet the requirements of a market economy continue. The stability of the Russian economy will largely depend on the progress of these reforms, as well as on the effectiveness of measures taken by the Government in the field of economics, financial and monetary policy.

Currently, the political situation in the country is stable, while the economic situation in Russia, starting from the second quarter of 2008, has shown a decrease in growth rates. The Russian economy is subject to the influence of market fluctuations and slowdowns in the pace of economic development in the global economy. Declining oil prices and a liquidity crisis contribute to the withdrawal of capital from non-resident investors from Russia, a decrease in the trade balance of the Russian Federation, a decrease in the country's international reserves and the devaluation of the ruble.

The global crisis has led to instability in capital markets, a significant deterioration in liquidity in the banking sector and tightening lending conditions within Russia. Despite the stabilization measures taken by the Russian Government to ensure liquidity and refinance foreign loans of Russian banks and companies, there is uncertainty regarding the ability to access sources of capital, as well as the cost of capital, which may affect the financial position, results of operations and economic prospects of Russian enterprises.

General country risks are also typical for the North-Western Federal District of the Russian Federation (NWFD), the region where OJSC NWT carries out its main activities. There is a risk that regional authorities will reduce funding for telephone installation programs in their regions.

The deterioration of the economic situation in the Northwestern Federal District entails a reduction in the number of industrial and agricultural enterprises of all forms of ownership operating in the region, an increase in unemployment, and a decrease in the effective demand of the population.

The expected actions of the issuer are indicated in the event of a negative impact of changes in the situation in the country (countries) and region on its activities.

Existing negative trends in the economy may lead to a slowdown in the implementation of the Issuer's investment program, a reduction in the increase in the volume of communication services provided by the Issuer in the district, and a slowdown in the growth rate of the revenue base. In this case, the Issuer plans to fulfill obligations under securities at the expense of income from operating activities, and, if necessary, at the expense of short-term loans from commercial banks.

Despite the global financial crisis, the rating agency Standard & Poor's in 2009 confirmed the long-term credit rating of the Issuer at the same level: the international credit rating was confirmed at the level of "BB-", the forecast is "Stable"; The Issuer's national rating was confirmed at the same level - "ru AA-". Against the backdrop of a decline in both country and corporate credit ratings, maintaining the Issuer's credit rating at the same level confirms the Issuer's creditworthiness.

The risks associated with possible military conflicts, the introduction of a state of emergency and strikes in the country (countries) and region in which the issuer is registered as a taxpayer and/or carries out its main activities are described.

The likelihood of military conflicts, the introduction of a state of emergency and strikes in the country and region in which the Issuer is registered as a taxpayer and carries out its activities is assessed as insignificant in order to consider these risks as circumstances that can significantly affect the activities of the Issuer.

In the event of possible military conflicts, the introduction of a state of emergency and strikes, the Issuer will most likely be promptly subordinated to the security and military structures of the Russian Federation, since it provides a vital and nationally important function in the provision of telecommunications services.

Describes the risks associated with the geographical features of the country (countries) and region in which the issuer is registered as a taxpayer and/or carries out its main activities, including an increased risk of natural disasters, possible interruption of transport links due to remoteness and/or inaccessibility, etc. .P.

Risks associated with the geographical features of the region, including an increased risk of natural disasters, possible interruption of transport links due to remoteness and inaccessibility, are assessed as minimal.

Financial risks

Negative changes in the monetary policy in the country, the exchange rate and an increase in interest rates on funds attracted by the Issuer, as well as a significant increase in inflation rates, may lead to an increase in the Issuer’s costs and, therefore, have a negative impact on the financial results of operations. In addition, it is impossible to completely exclude the possibility of changes in the composition and professional level of the Issuer's managers, which may negatively affect the effectiveness of management decisions, including those related to hedging in order to reduce the adverse consequences of the above risks.

The Issuer is exposed to the following financial risks:

1. Currency risks:

Decrease in world prices for raw materials, incl. for oil, could lead to a weakening of the ruble exchange rate against the bi-currency basket (the benchmark for the exchange rate policy of the Central Bank of Russia). A significant increase in exchange rates may increase the Issuer's costs, which may lead to a decrease in reserves and/or a decrease in the ability to service debts.

In the context of the ruble devaluation that occurred at the end of 2008 in the first half of 2009, the ruble cost of servicing the debt portfolio increased. As of September 30, 2009, the Issuer's foreign currency liabilities amounted to approximately USD 210 million and EUR 3.6 million. The main risks for foreign currency debt lie in the dollar portfolio.

Since the beginning of 2009, the Issuer's losses due to exchange rate differences amounted to about 200 million rubles.

Measures to reduce currency risk

Based on the market value of hedging currency risks, as well as taking into account the Issuer's plans to generate free cash flow during 2009, it is advisable to use various tools to reduce risks on currency payments during 2009-2012.

To reduce currency risks for payments in 2009, on June 10, 2009, available funds in the amount of US$33 million were converted at the rate of RUB 30.90/USD, of which US$22 million were placed in short-term bank bills. These funds will be used to repay foreign currency debt according to the payment schedule in July 2009 January 2010. Thus, currency risks on debt with payments in 2009 are eliminated.

To hedge currency risks on foreign currency debt of 2010, in accordance with the decision of the Issuer's Board of Directors, a series of forward transactions were concluded with CJSC CB Citibank on 07/09/2009 and 07/21/2009.

· Transaction amount 93,324,175.84 US dollars;

· The value date (Trade date) and forward rate are determined in accordance with the following schedule:

Regarding foreign currency debt, payments for which fall in 2011-2012, the Issuer will continue to monitor the market value of hedging instruments and, if a favorable situation arises in the foreign exchange market, will enter into transactions to hedge the relevant risks. Also, work is currently underway to prepare for the refinancing of part of the foreign currency debt maturing in 2011-2012. when available long-term bank financing in rubles becomes available.

According to experts, the ability of the Government and the Central Bank of Russia to maintain a stable ruble exchange rate will depend on many economic factors, including: the cost of conditions in the commodity and capital markets, the level of inflation and maintaining foreign exchange reserves at a sufficient level. In the event of a sharp change in exchange rates, in order to minimize the negative impact, the Issuer has the opportunity to reduce the share of foreign currency obligations, focusing on suppliers, with whom settlements are made in rubles of the Russian Federation.

A significant devaluation of the ruble may have a negative impact on the Issuer’s profitability indicators, because in this case, the increase in tariffs may not be sufficient to compensate for the decline in the volume of services in physical terms.

The issuer's expected actions in the event of a negative impact of changes in the exchange rate and interest rates on the issuer's activities.

In the event of a significant devaluation of the ruble and the emergence of inflation risks, the Issuer may take the following measures to reduce them:

Optimize (reduce) costs;

Review the capital investment program;

Take measures to increase accounts receivable turnover.

The Issuer's exposure to risks associated with changes in foreign currency exchange rates is moderate.

Market risks are characterized by the following factors:

1. Possible unfavorable trends in the economy and economic conditions of Russia.

Unfavorable financial or economic conditions are likely to entail a decrease in the business activity of consumers of the Issuer's products and, accordingly, their demand for communication services. In addition, buyers may be partially or completely unable to pay for the Issuer's services received. In such conditions, non-monetary methods (counter deliveries, bills, etc.) may be used as payment, which will also have a negative impact on the financial position and liquidity of the Issuer.

In addition, it is possible that the Issuer's funds in bank accounts may become dead in the event of a crisis in the Russian banking system and/or individual banks.

To reduce possible losses in the event of a crisis in the Russian banking system, the Issuer intends to make efforts aimed at maintaining a high level of current liquidity, creating free lending limits in commercial banks, and creating a portfolio of liabilities with a long average maturity and a uniform service schedule. The issuer uses attraction tools aimed at domestic and Western financial market participants (syndicated loans). At the same time, funds are stored in banks that have a high degree of reliability.

2. Changes in interest rates.

Changes in monetary policy in the country may lead to increased inflation, an increase in interest rates on borrowed funds used by the Issuer, and, accordingly, a significant increase in costs.

In conditions of high volatility of interest rates in the Russian and international financial markets, the Issuer is exposed to the risk of possible losses due to an increase in the cost of servicing financial obligations.

Depending on the nature of changes in interest rates, the following subtypes of credit risks can be distinguished:

· risk of general changes in interest rates - the risk of a rise or fall in interest rates on all investments in one or more currencies, regardless of their maturity and credit rating;

· the risk of a change in the structure of the interest rate curve - the risk of a change in rates for shorter investments compared to longer ones (or vice versa), possibly not associated with a change in the general level of interest rates;

· risk of changes in credit spreads - the risk of changes in rates on investments with certain credit ratings compared to rates on investments with other ratings, possibly unrelated to changes in the general level of interest rates.

The issuer uses instruments with both floating and fixed interest rates, which made it possible to extend the borrowing period and expand the circle of potential investors. However, in conditions of high volatility of interest rates in the Russian and international financial markets, the Issuer is exposed to the risk of possible losses due to an increase in the cost of servicing financial obligations. An interest rate swap agreement (exchange of interest payments for a certain, pre-agreed notional amount on a certain date) can be used as a possible tool for hedging interest rate risks.

As of September 30, 2009, the share of liabilities with a floating interest rate is 52.9% (while the share of liabilities without restrictions on the maximum interest rate is 35.97%).

Currently, the LIBOR rate continues to remain at low levels. It is expected that in the context of the developing crisis in the real sector of the United States, rates will remain at a minimum level for quite a long time. In addition, as the financial crisis develops, there is a risk that the bank will abandon the use of LIBOR as a basis for calculating interest rates and switch to calculating rates based on the average cost of funding of creditor banks. In these circumstances, hedging the floating LIBOR rate is not practical.

Interest rate on the 5th bond issue in the amount of 3 billion rubles. was determined upon placement in May 2008 at the level of Mosprime + 2.12%, but according to the provisions of the Bond Prospectus, the maximum loan rate cannot exceed 15% per annum, which limits the maximum risk of loss.

To reduce interest rate risk in the current unfavorable environment, the Issuer will primarily attract new debt financing at a fixed interest rate.

In the event of a negative impact of changes in interest rates on activities, the Issuer may take the following measures to reduce them:

· use of hedging instruments (interest rate swap);

· limiting the share of obligations with a floating interest rate;

· review of the investment program.

3. Fluctuations in the price environment for the Issuer's services.

The Issuer's commercial activities are significantly affected by fluctuations in prices for communication services (except for tariffs regulated by the antimonopoly authorities of the Russian Federation), the sales of which form the Issuer's income.

4. Possible changes in the composition and professional level of the Issuer's managers, as a result of which the effectiveness of the adopted and accepted management decisions may decrease.

The impact of inflation on payments on securities, critical, in the issuer’s opinion, inflation values, as well as the issuer’s intended actions to reduce this risk.

Inflation in Russia, according to data from the Federal State Statistics Service (Rosstat), was:

According to the Issuer's assessment, the critical level of inflation, at which the Issuer may have difficulty fulfilling its obligations under securities, is significantly higher than the inflation rate projected for the coming years, and amounts to 30-40% per annum.

An increase in the rate of price growth may lead to both a decrease in consumption of communication services and an increase in the Issuer's costs (for example, due to rising energy prices), the cost of borrowed funds and cause a decrease in profitability indicators.

The above risks form liquidity risk, i.e. the likelihood of a loss due to a lack of funds within the required time frame and, as a consequence, the Issuer’s inability to fulfill its obligations. The occurrence of such a risk event may entail fines, penalties, damage to business reputation, etc.

Liquidity risk management is carried out by the Issuer by planning cash flows, analyzing planned and actual cash flows for the company as a whole, as well as by branches.

In order to reduce liquidity risks, the Issuer maintains the volume of free bank credit limits at a level of at least 2.0 billion rubles, forms a loan portfolio with an average debt maturity of more than 2 years and a smoothed repayment schedule.

The indicators of the issuer's financial statements are most susceptible to change as a result of the influence of the specified financial risks (risks, the likelihood of their occurrence and the nature of changes in the statements).

The main indicators of the Issuer's financial statements are profit and accounts payable that are most susceptible to the influence of the above financial risks. Financial risks have minimal impact on revenue levels. With the emergence of these risks, an increase in the cost of services provided and a decrease in the Issuer's profit are possible, which, at least partially, can be compensated by an increase in tariffs and a decrease in the volume of borrowings.

Legal risks

The Issuer is exposed to legal risks to the same extent as other organizations of the Russian Federation. The Issuer operates as a telecom operator and does not export goods, works or services, therefore the legal risks associated with the Issuer's activities are described only for the domestic market.

Risks associated with changes in currency regulation:

Risks associated with the possibility of changes in currency regulation are currently considered by the Issuer to be minimal, in connection with the Government's policy of liberalizing currency regulation.

Risks associated with changes in tax legislation

Risks associated with the possibility of changes in tax legislation are currently considered as standard for the Issuer’s normal business activities. However, Russian tax legislation in some cases allows for different interpretations of its provisions and is subject to frequent changes. As a result, tax authorities may take a more assertive position when interpreting tax laws and tax calculations. As a result, tax authorities may make claims on those transactions and accounting methods for which they previously did not make claims. As a result, significant additional taxes, penalties and interest may be assessed. Tax audits may cover three calendar years of activity immediately preceding the year of audit.

The provisions of the legislation are generally interpreted by the Issuer correctly and the likelihood of maintaining the position in which the Issuer finds itself, in terms of compliance with the requirements of tax legislation, is high. At the same time, there is an equally high probability that in certain issues of interpretation of legal requirements and the assessment of corresponding tax liabilities, the Issuer took a position that may subsequently be considered by state fiscal authorities as not having sufficient grounds. Thus, the Issuer assumes that there is a risk that tax authorities may present significant tax claims to the Issuer in relation to issues that allow for the possibility of ambiguous interpretation of tax legislation, in particular regarding the determination of revenue under agreements for connection and traffic transmission. Determining the amount of claims for possible but not brought claims, as well as assessing the likelihood of an unfavorable outcome, is not possible.

The Issuer's tax liabilities for the reporting and previous tax periods were calculated properly and fully reflected in the Issuer's financial statements.

Risks associated with changes in customs control and duties rules

Since a certain part of the equipment purchased by the Issuer for the provision of communication services is made from foreign-made components, a possible change in the rules of customs control and duties may pose certain risks for the Issuer associated with an increase in the cost of purchased fixed assets.

Risks associated with changes in licensing requirements for the issuer’s core activities or licensing of rights to use objects whose circulation is limited (including natural resources)

The Issuer's main activities are subject to licensing in accordance with current legislation.

The list of licensing conditions in accordance with the Federal Law “On Communications” is compiled and updated annually by the Government of the Russian Federation. Thus, Decree of the Government of the Russian Federation dated February 18, 2005 No. 87 “On approval of the list of names of communication services included in licenses and lists of license conditions” (as amended by Decree of the Government of the Russian Federation dated January 24, 2008 N 23) established a list of names of communication services included in licenses , and lists of license conditions.

The license conditions established in previously issued licenses are valid to the extent that they do not contradict current regulatory legal acts.

Risks associated with changes in judicial practice on issues related to the issuer’s activities (including licensing issues), which may negatively affect the results of its activities, as well as the results of current litigation in which the issuer is involved

Changes in judicial practice regarding the Issuer's activities are possible due to the uncertainty of the specifics of legal regulation of certain types of services and conditions of economic activity in the communications industry associated with the entry into force of the Federal Law "On Communications" dated 07.07.2003 No. 126-FZ on January 1, 2004 and amendments to it, as well as with the entry into force of other regulatory legal acts. In addition, changes in judicial practice are also possible in connection with the development of the regulatory framework on issues of state regulation of the Issuer's activities and ambiguous interpretation of existing regulatory legal acts establishing methods and mechanisms of state regulation of activities in the field of communications. In this regard, despite the fact that the Issuer is currently not involved in legal proceedings that could have a negative impact on the results of its financial and economic activities, there is a risk of the emergence of qualitatively new types of legal proceedings.

The possibility of unfavorable changes for the Issuer in existing judicial practice on issues related to the possible qualification of benefits received by the Issuer in connection with the gratuitous use of non-residential premises as economic benefits and, accordingly, non-operating income of the Issuer (clause 2 of the Information Regulation) is also considered as a legal risk letters of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 22, 2005. No. 98)

Risks of activity

Risks associated with current legal proceedings in which the Issuer is involved:

Currently, the Issuer does not participate in legal proceedings as a defendant, in which, if the claim were successful, the existence of the Issuer would be jeopardized.

The issuer is a defendant in a number of arbitration processes. However, in the opinion of the Issuer, the results of these processes will not have a significant impact on the financial position of the Issuer. An exception is the trial taking place in the Arbitration Court of St. Petersburg and the Leningrad Region, upon the Issuer’s application to challenge the Resolution of the Federal Antimonopoly Service for St. Petersburg dated November 12, 2008 No. 10/8686 on an administrative offense and the imposition of an administrative penalty (fine in the amount of 42,832,588, 00 rubles) for committing an administrative offense, liability for which is provided for in Art. 14.31 Code of Administrative Offenses of the Russian Federation. Currently, by the Decree of the Arbitration Court of St. Petersburg and the Leningrad Region, the consideration of the case is scheduled for November 5, 2009 (by the Decision of the Arbitration Court of St. Petersburg and the Leningrad Region dated January 26, 2009, the decision and order of the Federal Antimonopoly Service dated September 1, 2008 in case No. K10-223/08 was recognized illegal. Decree of the Thirteenth Arbitration Court of Appeal of 05/18/2009 canceled the decision of the Arbitration Court of St. Petersburg and the Leningrad Region dated 01.26.2009. Decree of the FAS SZO of 12.08.2009 was left in force to the decision of the Arbitration Court of St. Petersburg and the Leningrad Region of 26.01.2009) .

There is a risk of bringing the Issuer to tax liability for committing a tax offense due to ambiguous interpretation of the tax legislation of the Russian Federation.

The Issuer's management believes that the tax authorities do not have legal grounds for assessing additional taxes, penalties and fines, and, if necessary, plans to defend its position in court.

Risks associated with the inability to renew the issuer’s license to conduct a certain type of activity or to use objects whose circulation is limited (including natural resources):

The conditions for obtaining new licenses for telecom operators and renewing existing ones are determined by the federal executive body, whose functions are currently performed by the Ministry of Telecom and Mass Communications of the Russian Federation. The Ministry of Communications and Mass Communications of the Russian Federation has the right to determine the method of issuing licenses for certain types of services and for certain territories of the Russian Federation - on competitive terms or based on the results of consideration of the application of the telecom operator.

Licensing of activities in the field of provision of communication services is carried out by the Federal Service for Supervision in the Sphere of Communications, Information Technologies and Mass Communications (Roskomnadzor).

The conditions for extending the validity period of licenses are that the licensee carries out its activities without violating licensing requirements, which is established by regular inspections by authorized supervisory authorities. In the case of carrying out activities related to the use of a limited natural resource (radio frequency spectrum), it is possible for the State Commission on Radio Frequencies to adopt decisions that establish restrictions on the use of certain bands of the radio frequency spectrum or on the use of frequency bands on a competitive basis. Revision of plans for the distribution of frequency bands in accordance with the Federal Law "On Communications" is carried out at least once every ten years.

The validity period of OJSC NWT's licenses for its core activities expires at different times in the range of 2010 - 2013. and can be extended after submitting an application to Roskomnadzor.

OJSC NWT has no guarantees that upon expiration of the licenses will be renewed and that there will not be an increase in obligations and/or a decrease in rights under the terms of the extended licenses, which will be associated with an increase in costs and, possibly, restrictions in the area of ​​provision of communication services. If the Issuer is unable to renew existing licenses or obtain updated licenses on conditions comparable to current ones, it will be forced to reduce the volume of services provided, which will entail a decrease in the number of subscribers. At the same time, the minimum validity period of licenses for the right to provide communication services, which have the largest share in the Issuer’s income structure, is five years, which reduces the risk of uncertainty regarding license renewal in the medium term.

The Issuer's management believes that in the future, existing licenses will be renewed without additional costs in the normal course of business. The license conditions established in previously issued licenses are valid to the extent that they do not contradict current regulatory legal acts.

Risks associated with the issuer's possible liability for debts of third parties, including the issuer's subsidiaries:

The Issuer did not issue guarantees for the obligations of third parties.

The risks of liability for the debts of subsidiaries are insignificant, since the Issuer does not have the right to give instructions that are binding on subsidiaries (such a right is not provided for either by the charters of subsidiaries or by agreements with them).

Risks associated with the possible loss of consumers, whose turnover accounts for at least 10 percent of the total revenue from the sale of products (works, services) of the issuer: there are no such consumers.

Activity

The current situation in the market of the Northwestern Federal District (NWFD) is characterized by the following factors:

· High penetration of cellular communications leads to the replacement of fixed-line services and a reduction in the number of subscriber lines. There is a decline in the rate of fixed telephone installations. There is a decrease in the consumption of local and zonal traffic due to overflow in the cellular network. SPS operators apply a policy of retaining subscribers by reducing tariffs for voice traffic and promoting additional services.

· The market for local telephone services has stabilized, the dynamics are mainly ensured by the growth of tariff revenues, and the processes of migration of BtC subscribers to cellular networks are characteristic.

· The market for long-distance and zonal communication services is characterized by regular reductions in retail tariffs; active tariff policies are pursued by SPS operators. There is a flow of zonal traffic from fixed networks to the networks of SPS operators and a flow of mg/mn traffic to IP networks.

· The market for Internet access services via dedicated channels and data transmission (VPN) is developing most dynamically; demand exceeds supply. CATV operators, Internet providers and SPS operators demonstrate high activity in the Internet access market with the provision of additional services and a variety of content. The growth of the subscriber base is ensured by both new connections and the replacement of dial-up access services with dedicated ones.

· Strengthening the processes of global convergence of services based on IMS networks, blurring the boundaries between communication markets, information technology and mass media entails an expansion of the range of services included in the industry, ensuring a dynamic pace of industry development and intensifying competition for the provision of comprehensive solutions among companies that were not previously were direct competitors.

OJSC NWT takes into account the following characteristic trends in the industry.

Trends in Changing Industry Boundaries

Strengthening the processes of global convergence of services based on IMS networks, blurring the boundaries between communications markets, information technologies and mass media entails an expansion of the range of services included in the industry, ensuring a dynamic pace of industry development and intensifying competition for the provision of comprehensive solutions among companies that were not previously direct competitors. The changes will be due to:

Changes in the terms of provision of telephone services:

· Introduction of ten-digit numbering on local telephone networks

· Implementation of solutions based on Fixed-Mobile Convergence (FMC) technology on local telephone networks.

Completion of the liberalization process:

Completion of the process of demonopolization of the long-distance communication services market

Last mile demonopolization (LLU)

Changes in the conditions for regulating inter-operator relations:

· Regulating the cost of connection and traffic transmission

Trends in demand structure changes

Main expected changes in the structure of demand:

· Increasing demand in the “Residential” segment for comprehensive services based on Triple Play, interactive services and applications

· Increasing demand in the Organization segment for comprehensive and interregional solutions

· Increased demand for data transmission services and the Internet in the Wholesale Market segment

Trends in the geography of demand

· Concentration of the highest growth rates in the consumption of new services in large and medium-sized cities (regional centers), increased competition between operators in these markets

· Gradual saturation of the Internet market of St. Petersburg, shift of development to regional markets

· Reducing demand for communication services in rural regions and regions with low living standards

· The presence of unsatisfied demand for operator services in the northern regions of the Northwestern Federal District and in the Leningrad region.

Characteristic trends in market development

"Population" segment:

· Increased penetration of Internet services among households (from 32.5% in 2007 to 60.3% in 2014, forecast by NWTelecom OJSC);

· Increasing demand for modern services will increase the number of households receiving a range of services (telephony + Internet + TV);

· Decrease in the volume of consumption of traditional fixed telephony services due to the flow of traffic into the networks of mobile operators;

· The dynamic development of Internet services will lead to an increase in the share of promising services in the structure of revenue from communication services;

· The replacement of dial-up access services with dedicated ones will further develop, while dedicated connections will become a standard for the mass market (B2C) and the basis for a set of standard solutions for the corporate segment (B2B);

· Strengthening the processes of global convergence of services based on IMS networks, blurring the boundaries between the communications, information technology and media markets, introducing services for (B2C) based on a single package (Triple Play) will give rise to competition for the provision of comprehensive solutions among companies that were not previously were direct competitors;

· Increasing the share of income from the population (B2C) in the revenue structure through the active promotion of integrated solutions based on Triple Play, the provision of interactive services and applications, and the introduction of Fixed-Mobile Convergence (FMC) technologies will allow maintaining high growth rates.

"Organizations" segment:

· Increasing demand for comprehensive solutions from one telephony, Internet and data transmission operator;

· Growing need for high-speed data transfer services;

· Growing need to unite remote offices of companies and business partners into a single corporate network (VPN);

· Increasing volumes of consumption of mobile communication services;

· Presence of unmet demand for telephony services in the “small and medium business” group.

"Operators" segment:

· Increasing competition in the network resources market due to active construction by operators of their own communication networks and, accordingly, a reduction in prices for renting network infrastructure;

· Consolidation of telecom operators into large holdings, which allows to significantly reduce the costs of providing services;

· Reduced demand for local call initiation services (with active development of broadband access)

· Strengthening the market position of SPS operators by providing Internet services and reducing tariffs for long-distance/international and intra-zonal connections.

General assessment of the performance results of OJSC NWT.

The Issuer provides local and intrazonal telephone services; access to the Internet; data network services; telematics services; intelligent communication network services and ISDN digital communication network services; MCC services; services for leasing physical channels and communication paths; information and reference services. In addition, OJSC NWT acts as a base operator, whose network infrastructure is used by all alternative operators, including mobile operators.

The dynamics of the Issuer's market share, determined in accordance with the Methodology for determining the share of OJSC NWT in the regional telecommunications services markets of the Northwestern Federal District, is shown in the table.

Conditions

The market factor influencing the Issuer and shaping the conditions of behavior in the Issuer's market is competition.

At the moment, both the wired telephone set is being supplemented with mobile communication services, and there is a tendency to replace fixed-line communications with cellular ones. The introduction of a time-based call recording system with the ability to choose a tariff plan, implemented at the beginning of 2007, intensified competition, forcing subscribers to think about the need for a fixed telephone. This may lead to an increase in the number of phone withdrawals and, as a result, a reduction in the subscriber base.

To minimize the risk of a reduction in the subscriber base when introducing a time-based call recording system, the Issuer decided not to introduce the maximum tariff approved by the Federal Tariff Service as a limit, setting a reduced tariff in order to keep subscribers on an unlimited tariff plan, which is most profitable for the Issuer. The distribution of the subscriber base across tariff plans stabilized by the end of 2007. Only from September 1, 2008, the Issuer increased the tariff on the unlimited tariff plan for individuals to the maximum. This made it possible to increase the Issuer's income in 2008 by RUB 161 million. In addition, in accordance with the order of the Federal Tariff Service of the Russian Federation dated November 28, 2008 No. 299-s/4, from March 1, 2009 the Issuer increased tariffs for local telephone services. The weighted average index of tariff changes for all tariff plans amounted to an average of 5.9% for the Company. This change will allow the Issuer to receive RUB 526 million in 2009. additional income (additional income for 7 months of 2009 amounted to 350 million rubles).

There is also little competition from alternative operators in terms of telephone installation in new buildings. Alternative operators attract subscribers by promptly resolving issues and the possibility of one-time comprehensive provision of services.

The advantages of NWTelecom OJSC are its own developed infrastructure, which makes it possible to install telephones in premises anywhere in the city with the subsequent provision of a full list of modern telecommunications services.

Internet access services are one of the dynamically developing areas of activity.

Access to the Internet using dial-up technology is a service for which the company has a clear competitive advantage as an operator with a developed proprietary infrastructure. The degree of presence of OJSC NWT in the market for the provision of dial-up access services is leading. A significant advantage of NWTelecom OJSC is the ability to provide dial-up Internet access services under the Advance trademark to any subscriber who has a telephone from NWTelecom OJSC on credit without additional activation by the subscriber of this service (the ability to use it is specified by default). Due to the trend of dial-up Internet access subscribers switching to dedicated access, the market for dial-up access services is “collapsing,” and competing operators are ceasing to operate in this market. The slowdown in the Issuer's activities, due to its leading position, occurs at a slower pace.

In the broadband access market for individuals, alternative operators and home networks are currently actively developing, in particular in St. Petersburg Z-Telecom (Interzet, 114 thousand subscribers), TKT (Your Internet, 165 thousand subscribers), VimpelCom (Beeline 112 thousand subscribers). In addition, cellular operators are serious about promoting mobile Internet services.

In addition, it is worth noting that in future periods integrated operators may influence the Issuer’s activities. For example, the cellular operator VimpelCom OJSC strengthened its position by merging with Golden Telecom, and now, under the single brand Beeline Business, it provides customers with a full range of communication services: from fixed to mobile.

The advantage of OJSC NWT is the presence of its own networks, which ensure almost 100% coverage of subscribers with the technical ability to provide communication services. A PON network is being introduced, which makes it possible to provide not only dedicated access services at higher speeds than the existing infrastructure using ADSL technology, but also a wide range of modern communication services.

The main strategy of OJSC "NWT", aimed at leveling factors

The strategy of OJSC NWT to maintain and increase shares in the listed markets is to:

· implementing a policy of qualitative changes in business processes of sales and service using the philosophy of customer focus;

· increasing the efficiency of working with large corporate clients through the introduction of the Project Manager institute, responsible for the preparation and implementation of technical solutions;

· formation of niche products that satisfy the basic needs of each segment;

· promotion of integrated solutions.

Methods used by OJSC NWT and methods that the Issuer plans to use in the future to reduce the negative effect of factors and conditions affecting the issuer's activities.

It is planned to use the Issuer's main competitive advantages.

The main directions of the Issuer's activities to develop competitive advantages are:

· organizing strategic protection of your networks, both from unauthorized call termination and unauthorized call initiation;

· effective use and development of network and infrastructure resources;

· increasing organizational efficiency;

· a radical increase in the role of marketing and sales in decision making;

· formation and provision of integrated service packages saving clients money;

· changing the principles of work in the “corporate clients” segment based on long-term partnerships with the organization of an active “direct” sales model.

Significant events/factors that may have the greatest negative impact on the possibility of OJSC NWTelecom obtaining the same or better results in the future compared to the results obtained for the last reporting period, as well as the likelihood of such events (occurrence of factors).

Possible factors and their degree of probability:

The likelihood of this step on the part of mobile operators is assessed as not high, since revenues from voice traffic in cellular networks occupy a significant part of the revenue structure, the decline of which at this stage cannot be compensated by revenues from other services.

Significant events/factors that could improve the results of operations of OJSC NWT are described, as well as the likelihood of their occurrence, as well as their duration.

· Development of a group of promising services based on broadband data transmission services;

· Retention of at least 48% of local communication service subscribers on the “unlimited” tariff plan;

· Offering services in a package.

The likelihood of positive factors occurring is assessed by the Issuer as high; the duration of their effect depends on the general economic development of the Russian Federation and regulation of the telecommunications sector.

Competitors

Analysis of the competitive environment

The main competitors of OJSC NWT:

· Group 1 federal cellular operators (Megafon, MTS, VimpelCom)

· Group 2 federal and regional fixed-line operators (Vimpelcom, Transtelecom, Peterstar)

· Group 3 local (local) operators (house networks, departmental operators)

Dynamics of development of competitors:

· Cellular mobile operators - Megafon, MTS, VimpelCom with an average annual income growth of 107% with a gradual decrease in profitability to 104% in 2013.

· Household network operators, cable television operators - are characterized by increasing development dynamics with an average annual growth rate of 146%, with a peak of development in 2008-2009.

· Alternative telecom operators. The pace of development corresponds to the development of services in which the operator specializes (Internet, operator relations)

Possible changes in business policy:

· Marketing: Creation of fixed-line networks by cellular operators, offering favorable tariff plans, provision of Triple Play services by alternative operators, creation of alliances of small operators

· Technological: Transition of all services to the IP level, development of Wi-Fi, network convergence

· Regulatory: tightening control over the content of home networks, protest against regulation of SPS operators

Likely moves of competitors

· Entering regional markets, intensifying activities in regional and district centers of the regions

· Active promotion of services in high-income segments and capture of the Issuer’s large clients

· Acquisition of developed companies in regional markets and competition throughout the entire geography of the Issuer’s operation

· Reducing competitors' prices for zone termination/call initiation

Weaknesses of OJSC "NWT"

· The Company's introduction of new products to the market is slower than its competitors

· The level of service of competitors is significantly higher

· Customer loyalty level is lower than that of competitors

· There are no significant differences in technological equipment, however, the Company has a significant share of analog equipment on the PSTN.

The main factors creating the competitive advantage of OJSC NWTelecom

Population:

· complex of modern services

· attractive rates

· high level of service

· technical availability of services

· provision of services in a package

· provision of services on credit (payments based on services rendered at the end of the month)

· brand recognition

Organizations:

· high level of service

· attractive rates

· provision of a range of services from one operator

Availability of niche product offerings

Operators

Availability of its own developed network infrastructure with redundancy capabilities

Availability of a wide range of network resources and services

The most intense competition for the Issuer is:

· Universal operators in the corporate segment of users, primarily in St. Petersburg, regional and republican centers.

· Operators providing Internet access and voice services over data networks.

Competitors' successes are largely characterized by the creation of product value with distinctive features for specific customer segments.

Open Joint Stock Company North-West Telecom is one of the largest telecommunications companies in Russia, the leading fixed-line operator in the North-Western Federal District. OJSC NWT provides a wide range of telecommunications services throughout the Northwestern Federal District. The area of ​​the district exceeds 1.7 million square kilometers, the population is 13.5 million people. The Leningrad regional branch of OJSC North-West Telecom provides the Leningrad region with a full range of telecommunications services. The area of ​​the Leningrad region is 85.9 thousand square meters. km., population - 1.68 million people.

Customer requirements

The customer was tasked with modernizing the telegraph equipment of 17 regional communication centers. It was necessary to decommission outdated equipment of telegraph substations and various channel-forming equipment for voice-frequency telegraphy. One of the Customer’s conditions was the organization of communication between the branch nodes not only according to the current scheme using PM channels, but also interaction via the built data transmission network (IP network) of the branch with the possibility of transferring the functions of monitoring and control of equipment of all 17 communication nodes to one from nodes.

Channel capacity of the equipment determined by the Customer’s technical specifications:

• From 2 to 15 TT systems (TC channels) per regional communication center, 130 TT systems for the entire branch;
• From 10 to 80 subscriber telegraph lines per regional communication center, 495 lines for the entire branch.

Solutions

To replace the old fleet of telegraph equipment, TKS VECTOR-2000 equipment manufactured by LINTECH was chosen.

The complete set of each TKS VECTOR-2000 set for 17 branch nodes includes:

• 1 industrial-grade BKTK telegraph channel switching unit without redundancy, equipped with modules;
• From 1 to 5 (depending on the capacity of the RUS) communication modules for 16 bipolar physical telegraph channels VTGA-2P-16 for connecting 4-wire telegraph subscriber lines;
• From 1 to 2 (depending on the capacity of the RUS) communication modules of secondary compaction of TT channels for 8 four-wire TC channels VKTT-8 for connecting 4-wire TC channels;
• The BKTK unit was located in a standard 19” telecommunications cabinet existing at the site;
• 3 ADMINISTRATOR workstations for monitoring and managing the TCS VECTOR-2000 network were installed on three different nodes.

results

The reconstruction of the branch's telegraph communication network allowed the Customer to receive the following benefits and benefits:

• Eliminate obsolete telegraph equipment.
• ATK-20 telegraph substations.
• 130 voice-frequency telegraphy systems of various modifications (TT-12, TT-24, TT-48, TT-144, P-327, TGFM);
• Free up space.
  Dimensions of the ATK-20 substation are 750x378x2600 mm, weight 400 kg.
  The dimensions of one equipment rack are TT-144 225x600x2600 mm, weight 300 kg.
  The BKTK TKS VECTOR-2000 block has dimensions of 440x176x510 mm, weight 20 kg.
• Reduce equipment energy consumption.
• Refusal of dedicated analog channels and transfer of internal telegraph traffic to the data transmission network (IP network) of the branch.
• Reduce operating costs several times.
• The operational staff has been reduced by reducing the technical and operational areas of the telegraph center.
• The labor intensity of operation has been reduced due to built-in functions for monitoring and testing equipment and communication channels, and the volume of specialized telegraph equipment has been reduced. In TCS VECTOR-2000, only VTGA and VKTT modules are specialized telegraph equipment. BKTK is an industrial computer, components for which can be purchased from almost any company that sells computer equipment.
• New opportunities have emerged that were not available before the reconstruction.
  The functionality for monitoring and checking communication channels of the TCS VECTOR-2000 ADMINISTRATOR's workstation is much wider compared to the old equipment. Built-in functions for monitoring the state of telegraph channels (built-in undulator) and the parameters of voice-frequency telegraph signals (built-in spectrum analyzer) eliminate the need for measurements at the cross-connect with external instrumentation.
  In addition, TKS VECTOR-2000 allows automatic switching of channels according to pre-prepared schemes on all 17 nodes simultaneously, for example, for connections of the “Pattern” type. In this case, the administrator needs to select only the desired scheme from the list and click the “Apply” button.
  The ability to remotely monitor and test equipment and communication channels allows one specialist to control the equipment and channels of all 17 branch nodes.

Implementation history

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