Confidential
SITRONICS Overview
JSFC SISTEMA
1
Confidential
SITRONICS Introduction
• Largest technology company in CIS and Eastern Europe
• Based in Zelenograd (the Soviet “Silicon Valley”), inherited soviet scientific and R&D
potential in the field of electronics
• Headquartered in Moscow, with operations throughout EMEA, CEE, CIS & Russia
• Provider of intellectual and technology solutions in the field of:
 Telecommunication Solutions;
 IT Solutions;
 Microelectronic Solutions;
 Consumer Electronics;
 Electronics Manufacturing Services;
• Majority owned by SISTEMA (77% shares), representing 13% of its aggregated
revenues for 2005 and being the fastest-growing business segment in its portfolio.
• Exceptional growth over the past few years.
• More than 4500 R&D staff, developers and programmers.
• Exports to 60 countries (Europe, MEA, North America, South East Asia)
SITRONICS Revenue and OIBDA (mln. USD)
1200
1000
800
600
955
400
488
200
Telecommunication
Solutions
26% 2005 Revs
0
IT Solutions
Microelectronic
Solutions
EMS
6% 2005 Revs
6% 2005 Revs
Consumer
Electronics
96
2003A
10
46
2004A
Sales
155
2005A
OIBDA
49% 2005 Revs
13% 2005 Revs
SITRONICS is the largest high tech company in Central and Eastern Europe
JSFC SISTEMA
2
Confidential
Group strategic goals and strategy
SITRONICS Strategy
Strategic goal: To become one of the leading players in the field of High-Tech.
• Leadership in fast growing markets RF/CIS/CEE/Middle East and
Africa
• Accumulation of R&D and scientific capacity of the Soviet heritage
• Access to customer bases and technologies through M&A
• Combination of low costs attributable to developing markets with access to
competences of the developed markets
• Transition of knowledge and competences from developed markets to
developing ones
Telecommunication Solutions
IT Solutions
• INTRACOM and STROM Telecom integration in one company
• Strategic alliances in the field of NGN development and
marketing (Cisco, Motorola)
• Focus on intellectual services and solutions (billing, CRM, NGN)
• Post IPO M&A to gain access to new markets and technologies
(Radio Access, OSS/BSS)
• Prioritized consulting development
• Priority to develop software outsourcing potential
• Strengthen international strategic relationships (IBM, Oracle, Intel, etc.)
• M&A in CIS (Ukraine, Byelorussia) in order to access new markets and
resources
• M&A in Europe/USA to access new customers
Microelectronic Solutions
EMS
Consumer Electronics
• Developing 0.13-0.18 micron technology -targeting domestic orders in biometric IDs,
defence, smart cards, RFID.
• Focus on complete value-added chain
coverage (chip production, packaging, smart
cards)
• Design centre set-up (fabless)
• Relocation of obsolete production to VZPP.
• Benefit from government support
• Exploit advantageous geographic locations:
• Prague (production of technologically advanced
goods)
• Zelenograd (heart of Russia)
• Romania (cost effective mass-market production)
• JV with foreign companies entering Russian
market.
• Focus on mobile digital and video
products.
• Establish own R&D (design,
software and technical solutions
development)
SITRONICS product portfolio allows it to tap into successive waves of growth
JSFC SISTEMA
3
Confidential
SITRONICS Telecommunication Solutions – Overview
Highlights
Strategy
Key Products / : • Fixed / Mobile network solutions
• OSS/BSS, Billing and CRM
Solutions
• NGN
• Wireline /wireless access & transmission equipment
• Content Delivery Network
• Terminal devices
• System integration & Outsourcing
Key Markets:
• Russia, Ukraine, CIS, CEE, Middle East, Africa, USA.
History:
• Strom Telecom (acquired in 2002). Founded in 1993 in the
Czech Republic on the basis of Tesla.
• Intracom Telecom (acquired in 2006). Founded in 1977 in
Greece
Strengths:
• Experience working for clients with significant subscriber
base
• Advanced R&D Department and own IP products
• Sound & well developed product line
• Strategic partnerships with Motorola, Cisco and Ericsson
Opportunities:
• Leverage
extensive
experience
with
SISTEMA/OTE/Vodafone Group customers and convert
into major external customer acquisition/references
• Develop strong partnership with industry leaders
• Combine product capability, low cost profile and sound
financial position to grow external market-share
Strategic Goal:
• To become one of leading players in the production of
telecommunication HW and SW in the EMEA region.
Key existing capabilities:
• Existing, proven technology base, well coordinated R&D team
and product portfolio.
• Complex and large scale implementation experience (MTS,
MGTS)
Key elements of growth:
• Strategic alliances in the area of development and marketlaunch of joint solutions (CISCO, MOTOROLA, SIEMENS)
• Increasing market demand for NGN and Billing/CRM solutions
• High performing Sales network using synergies with acquired
Intracom Telecom
• M&A delivering extended sales channels, customer base and
complementary product lines
Key competitive advantage lies in its strong experience in implementation of telecom equipment and billing systems for
companies with significant subscriber base
JSFC SISTEMA
4
Confidential
SITRONICS IT Solutions - Overview
Highlights
Strategy
Brief overview:
• One of the largest IT Solutions companies in CIS/CEE
• Established 1990 as Kvazar-Micro
• Sitronics owns 51% of Kvazar-Micro
Main business
activities:
• Systems integration, Software development and
outsourcing, VAS, BPO
• PC Distribution
Key Markets and • Russia, Ukraine, CIS, Western Europe
Market Trends: • Russian and Ukrainian IT markets are among fastest
growing IT markets in the world
• CIS/CEE IT markets are expected to grow faster than
IT markets of Western Europe and America (15-25 %
vs. 5% annually for the next 4-5 years)
• Russia and Ukraine have the 3rd and 5th largest number
of certified IT professionals in the world
Growth Rates of Eastern Europe IT Markets
Revenue Breakdown (2005)
Distribution
78% of sales
Rebalancing the business portfolio
• Prioritized consulting development
• Priority to develop software outsourcing potential
• Maintain current market share in distribution business
Regional expansion
• Expansion of presence – the only pan-CIS SI company
• Target acquisition of branded system integrators to gain
access to new markets
• Expand off-shore software programming to serve European
and US clients
Research & Development
• Expand resource facilities in CIS’ largest science centres Kiev, Dubna and Novosibirsk
Tapping synergies with Sistema
• Secure corporate IT contracts in the telecom, insurance and
other industries
System Integration
22% of sales
Other 12%
Russia
34%
East
Europe
5%
CEE
Latam
12.0%
Asipac
Ukraine
42%
10.4%
MEA
N. America
W. Europe
Japan
Ukraine
66%
16.6%
10.0%
5.3%
4.7%
4.0%
Russia 41%
SITRONICS 51% owned subsidiary Kvazar-Micro is one of the biggest IT companies in Russia, CIS and Eastern Europe
JSFC SISTEMA
5
Confidential
SITRONICS Microelectronic Solutions - Overview
Highlights
Strategy
Brief overview:
• Designs, manufactures and distributes semiconductor
products and components
• Incorporates smart cards production facilities
• The business has some of the most advanced massproduction facilities in the CIS (0.8µ - 2µ)
• In-house R&D department
• Anticipated transition to new technology (0.18µ 0.13µ, on 8’’ wafers) and continued product
diversification
Main business
activities:
• Production of microchips on wafers (secondary
power supply sources in accordance with the bipolar
technology)
• Production of packaged microchips
• Production of flexible microchip modules
(Planned for 2006)
• Production of microchips for e-passports
(Planned for 2007)
• Production of smart cards (the full spectrum) and
related solutions
Projects with
industry leaders:
• 0.13-0.18 μ technology transfer project with STM
• Microchip packaging project with Infineon
• JV in the field of Smart cards production with G&D
Enhance position as CIS/CEE largest semiconductor
manufacturer
Key strategic actions:
• Launch new technology (0.18µ - 013µ), targeting sim-cards
market and government orders in the field of biometric ID+s
and defence contractors
• Sustainable growth of the smart cards business in the field of
SIM cards, financial, transportation and RFID cards
• Diversification into high margin, complementary businesses
(smart cards, flexible microchips packaging, power
electronics production )
• Further development of the design centre, Introduction of a
full range of ASIC-vendor services
• Develop scientific/technological partnership with Russia’s
top companies (RAO UES, Russian Railways, etc.)
• Retain current market share in power management device
through enhancing cost efficiency
Sales Breakdown
Regional
By Segment
SE Asia
54%
Packaged ICs
56%
Others
2%
CIS
44%
Microchips on
w afers
44%
SITRONICS is the leading Russian company in the microelectronics segment providing a base for establishing the newest
technologies for manufacturing of microelectronic components
JSFC SISTEMA
6
Confidential
SITRONICS Consumer Electronics and EMS - Overview
Highlights
Brief overview: • Mid-market brand sells consumer electronics under the
SITRONICS brand with main focus on mobile devices
and Video products
• The largest and most technologically advanced
electronics manufacturing sites located in Russia, Czech
Republic, Greece and Romania.
• Offers facilities for end-to-end OEM production.
• State-of-the-art assembly sites
• Clean room class 100,000
• Qualified R&D staff
• Extensive quality control and ERP system
• World renowned strategic partners and clients
Strategy
• Become leading provider of EMS services in CIS (market share
≥15-20%) by offering a wide variety of complex services from
logistics to manufacturing.
• Focus on mobile digital and video products.
• Establish own R&D (design, software and technical solutions
development)
• Exploit advantageous geographic locations:
– Prague (production of technologically advanced goods)
– Zelenograd (heart of Russia)
– Romania (cost effective mass-market production)
• JV with foreign companies entering Russian market.
Manufacturing and Research Expertise
• Capitalize on technology innovations by setting up engineering
R&D centers in partnership with leading international
companies.
Main products: • SITRONICS CE main product lines include:
– TV/Video products (LCD TVs, DVD and HTH,
Set-top-boxes)
– Portable/Mobile (Mobile Phones, Portable Digital
Electronics,
•
Russia
& Ukraine
Key markets:
Growth Opportunities
• Secure government orders
• Further development of own R&D capabilities and design center
• Product line diversification by increase in value-added Hi-Tech
products
• Strategic partnerships with the leading brands to attain full
loading of assembling facilities
• To become manufacturing and logistics hub for our clients on
their way to Europe
Modern manufacturing capacity, extensive R&D expertise and strong brand awareness make SITRONICS one of the
top Consumer Electronics companies in Russia
JSFC SISTEMA
7
Confidential
Thank you!
JSFC SISTEMA
8