MOSCOW. Feb 6 (Interfax) - Tele2 Russia, the Russian subsidiary of Scandinavian telecom holding Tele2, plans to boost revenue by at least 8%-9% this year to 64-64.5 billion rubles, the company's CFO Lyubov Smirnova told reporters. Earnings before taxes, depreciation and amortization (EBITDA) are expected to grow 6%-7% to 22.4-22.9 billion rubles in 2013, she said.

Last year, Tele2 Russia generated 59.5 billion rubles in revenue, up 15%. EBITDA was up 7% to 22.7 billion rubles, and capex totaled 6.1 billion rubles, compared to 7.6 billion rubles in 2011. Free cash flow jumped 27% to 12.8 billion rubles.

Subscriber growth to slow

"We will continue our efforts to maximize the use of the segment in which we work, which is 2G. We will also focus continuing to grow our subscriber base. Our strategy for 2013 is to continue growth. And, traditionally being the market leader in efficiency of cost management, we also plan to carry out measures that will help us to keep our margin at least at the 2012 level," Smirnova said about the company's plans for this year.

Tele2 Russia's EBITDA margin dropped to 38.2% in 2012 from 39.1% a year earlier, which was in line with the company's projection of 37-39%. The figure dropped due to costs related to the launch of operations in six new regions in Russia's Far East, as well as pressure on prices amid growing competition on the market.

The company's subscriber base grew by 10% in 2012, with the total number of subscribers in Russia reaching 22.7 million. The average monthly revenue per user (ARPU) rose by 4% to 229 rubles in 2012, while the MOU (monthly average minutes of use per user) across Russia increased by 7% to 257 minutes.

In 2013 and in subsequent years, Tele2 Russia expects the growth of its subscriber base to slow as the market becomes saturated, the company's chief commercial officer, Inessa Galaktionova said at the press conference. Revenue growth will be driven primarily by growth of ARPU among existing subscribers. Growth will be constrained by the fact that Tele2 does not have licenses to provide 3G and 4G services. The company now provides data services in the GSM EDGE standard. However, demand for data services is not very high yet, as penetration of smart phones in Tele2 Russia's network is less than 20%, Galaktionova said.

Tele2 Russia plans to aggressively increase its subscriber base in new regions where it has a presence: the company aims to expand its market share in six Far East regions, including Sakhalin, Kamchatka, Magadan, the Jewish Autonomous Region and Chukotka, from the current 5% to 15-20% in 18 months to two years.

The company also aims to expand its presence in the corporate segment of the market. Corporate customers now account for about 2% of total revenue, but revenue in this segment grew by 50-60% year-on-year, Galaktionova said. Tele2 Russia's share of the B2B market varies by region, reaching a high of 15%.

In future, Tele2 Russia also plans to enter the M2M (machine-to-machine) market, particularly in the area of transport services and payment of utility bills.

Most sales to go through own retail chain

Tele2 Russia's own mono-brand retail outlets (including kiosks) account for 40-50% of new contracts, Galaktionova said. Sales through major mobile phone retailers Svyaznoy and Euroset account for 15-17%, depending on region.

Galaktionova said Tele2 Russia has "decent relations with Euroset and Svyaznoy," but it does not plan to increase their share of its sales because this is the most expensive way to hook up subscribers - the dealer commission of these retailers is twice that of alternative channels.

Regional retailers account for 20-25% of Tele2 Russia's sales, and the company is also expanding relations with new partners such as Russian Post and supermarkets.

At its own stores, Tele2 Russia plans to develop new types of business such as selling phones and providing financial services. The company sold more than 200,000 phones in 2012, and plans to sell at least 500,000 this year, Galaktionova said.

"A fairly right direction for us and other players is financial services [