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ATON - INFRASTRUCTURE DAY: Key Takeaways and Highlights, INFRA-Engineering - Oct 27, 2011.


Currently the largest engineering and construction services provider for the Russian telecommunications sector, INFRA-Engineering is seeking to diversify its revenue streams. Diversification is likely to be accomplished by entering relatively new markets - transport infrastructure and utilities. The company is upbeat in terms of upcoming spending by Russian telecoms companies and aims to capitalise handsomely on their capex plans. INFRA-Engineering could go public in late 2012 once its reorganisation process is completed.

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Q: What are the main revenue drivers going forward?

A: Among the major revenue drivers the company sees upcoming spending by telecoms operators, which has the potential to boost INFRA's revenues into the region of $1.3-1.6bn within the next three years.

Q: What are the company's long-term profitability targets?

A: We aim at maintaining gross margin at a level of 25% with EBITDA margin targeted at 20%. However, INFRA's decision to enter new markets could have an impact on its profitability.

Q: Does the company plan to enter new markets?

A: At the moment INFRA is seeking to diversify its revenues, which is likely to be accomplished by entering new markets - transport infrastructure and utilities. The company said it is seeing major demand for services from road and bridge builders which need to relocate existing infrastructure. INFRA does not believe that entering new markets would require any significant capex.

Q: What is the company's current debt position?

A: INFRA's current debt position is somewhere in the region of RUB500-600mn which is solely used to fund working capital. The company noted that by year end it usually brings its debt position close to zero.

Q: What is the share of subcontracted work?

A: Project execution is currently conducted with 50% of the work done by INFRA and the remaining 50% subcontracted.

Q: Are there any plans for the company to go public?

A: INFRA's current plan is to launch an IPO in late 2012, offering up to one-third of its equity. The company also said that it could sell a stake to a strategic investor (preferably a major foreign peer) before going public.

Q: Who are the company's major competitors?

A: INFRA sees its main competitors as Svyazstroy Concern, Mezhgorodsvyazstroy and Lentelefonstroy.


Copyright:Aton OOO (LLC), All rights reserved.

For further Information please contact: Aton OOO (LLC),

27 Pokrovka str., bld.6, 105062 Moscow, Russia

phone: (495) 777-66-77, (495) 228-38-99,
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Publication:Russian Banks and Brokers Reports
Date:Oct 28, 2011
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