BTILGARIAN TELECOMMT]NICA'IIONS COMPANY AD …

BTILGARIAN TELECOMMT]NICA'IIONS COMPANY ADINTERIM SEPARATE AND CONSOLIDATEDCONDENSED ['INANCIAL STATEMENTSPREPARED IN ACCORDANCE WITH IAS 34

3l -Nlar-201 2

Bti LG,\ Rt,\N't 'Et. l tcoNl Nt trN tcAl ' toNS coNt PANI' AI)(]ONSOI,I D,\ ' I 'T],D AN D SE PARA'I 'E BA I,ANC E SH EE'TA s a t 3 l M a r c h 2 0 l 2All anrourrts are in thousarrd BGN. unlcss othenvisc stated

Notes Consol idatedFinancia l

J r .0J.2012

Separate Financia l StatementsStatcments

J1 . t2 .20 i l

l4 I ,664159.488

25.731

16,970

1.892

J r .0t.20 l2

t 5 1 . 3 3 I

95.t22

28.023

25.(\44

1.899

3 1 . r 2 . 2 0 I I

t4 l .355t59.497

) \ 7 \ 4

16,969

t .892

ASSI,TS

( 'urrent assets

Cash ancl oash ecluivalents-l'radc

reccivablcs

Inventor ies

( ) ther asscts

Asscts o l 'd isposal group held lbr sale

Total current assets

Non-current assets

( loodwi l l

Property, plant ancl ccluipment

lntangihle assets

Invcstmerlts

l radc rcccivablcs

I)cftrred tax assets, nct

' I 'o ta l non-current assets, net

] 'O' fAI , ASSETS

t, lABtLt ' i lEs , \ND I tQt r t ] 'v

( lurrent l iabi l i t ies

Div idcnds payable'frade

payablos

Other payables

C urrerr t i r reonrc tax l iabi l i t ics

Provisions fbr other liabilities and charges

Borro*'ings

Total current l iabi l i t ies

Non current l iabi l i t ies

Borrow ings

Def'orrcd tax liabilities, nct

Retircment bcncfit obligations

Provis ions fbr other l iabi l i t ies and charges'fradc

ancl other pa.vables

' l ota l non current l iabi l i t ies

Iiquity

Share capi ta l

Rcserves

Retained earnlngs

' l 'o ta l equi ty

' IO-[AI l . lA l l l l . lT lES ; \ND l lQUl ' IY

4 .

5 .

6 .

8

1

l 0

5 .

l 6

l s 1 . 6 0 6

95.096

28.023

25.050

1.899

30r.674 J15.718 30 I .1 19 345.447

3.706

976.209

292.702

3 3 5

4.2441 1

3.706

1.007.369

304.922

3 i 5

4.642

73

3.706

976.209

292.693

1 , 1 3 4

4.244

3.706r.007.369

304.913I . 13.14.642

1,2'77,269 I,32 t ,047 1,277,986 |,321,761

I,578,9,13 |,666,795 I,579,.105 1,661,21t

l 8t 1

l 3

90,03069.-59544,6-s 8

20t6.147

967 .018

I s 8.0927 5 q ) l

41.392

404

12.460

994.925

90.010

69.625

44,659

20

t6.147

967.0 l t t

I 58.092

75.921

41.392

404

t2 .460

994.92s

t 4l 5

l 5

l 6

1 7 .

t 4

l, l 87,168 l ,28J, l9, l r. l 87,499 I,283,19,1

1 . 7 1 2

2 6 . 8 l 8

1 . 6 3 4

7.493

4.830

1 l q t

27.210

1 . 6 r 0

7.329

4.926

t . 7 1 2

26. t t t8

1 , 6 3 4

7.493

4.830

I t g 3

27.2!(J

1 . 6 1 0'7.329

4.926

12,187 4.1,.168 {2.{87 41,468

l 8 288.765

39.8 10

20.4t3

288.76-5

3 9 . 8 l 0

1 0 . 5 5 8

288.765

3 9 . 8 l 0

20.844

2{t8,765

3 9 . 8 r 0

t0.97 4

3.t8,988 JJ9, r 33 3,19,1 l9 3J9.s49

r.578.94J I,666,79s I,579,105 r,667,2t1

Atanas

cr.'o

3 | are an integral part of tl.rcse interin.r and scoarate tlnancial statenlents

Bt I I ,GARIAN ' f E I , I ]CONTNIT IN ICA l ' IONS CONIPANY A I )

CONSOI, I DA' I 'FID i \N D SEPARATE STAI 'UMENT OF CION!PRI1HENSM INCONI E

Iror the three nronths ended 3 l March 2012

n ll anrounts are in thousand B(lN. unless otherwisc stated

( lonsol idatcd f i nancia l s t t tements

Rovenue

Ilrtcrc0nnect cxpcnses

Other operating expenses

Materrals and consumables expenses

StaIT coStS

Deprcciation and anrortizirtion

liinancc costs

lirnancc rnconre

Other gains. net

Share of prolit of.joint ventures

Profit l)efore tax

lncolne la\ expenses

Profit for the p€riod

Other comprehensive income/(loss)

Clurrcncy lbrrvarcl

lnconre tax eflbct

( ) thcr comprthensivc income for the pr : r iod, net o l ' tax

' l 'o ta l comprehensive income for the per iod

F:arnirrgs per share (basic and diluted)

Separate f i nancia l s tatements

Revenue

Interconnect expenses

Other opcrattng exPenscs

Materials and cousunrables expellses

StalT costs

I)cpreciation and anlortizution

F inance c0sts

[]inance tncoure

Other gains. net

Profi t/(loss) before tar

Incoltle tilx e\pcnses

Profit for the pcrio(l

Other comprchensivc income/(loss)

Currencl ' fbrward

lnconrc tax eff'cct

Other comprehensivc income for the per iod, net of tar

t9.04.2012

l ) r t r r ) o l ' t l l e L l . ( )

' l he accompanying notcs 1'rorr pages

Notes

1 9 .

20.

2 l

9 . . l 0

22 .

22

218 .684(3 s,618)(6 r ,840)(2 r . r06 )

( | 6 .337)(67.8 l4)(8 ,S l 6 )2.6311 . 7 5 4

213 ,837(28,884)(s9,588)

(26, I 9e)( 1s.426)(65.8e7)(8,93 0)2.25 8

39327

Three months endcd

3t .03.2012 31.03.201|

r r .108 l l ,537

z4 ( l . l 7 l )

10,231

(426)

i 1

(8s1)

r 0,683

(205 )2 l

(381) ( r81 )

9,85J 10,499

Notes

0.04 0.04

Three months ended

31 .0J .2012 31 .03 .201 I

l 9

70

2 t 8 . 7 l 6

(3 5 .616)

(6 l .863 )( 2 l . l 0 0 )

( 1 6 . 3 3 6 )

(6 i ,8 l4 )

( 8 . e 1 6 )

2.628

1 . 7 5 1

2 I 3 ,865

(2 8 .8 82 )(5e .590)

(26 . l 94)

( l s . 4 2 s )

( 6 s .896 )(8.e30)

2.253

39

2 1 .

9 . . l 0

22 .

22 .

l r ,423 l r .240

1 A ( 1 . 1 7 0 )

| 0,253

(8s7 )

10,383

(426)

t 1

(20s )2 l

(381) (r81)

9.869 1 0 . t 9 9

0.04

5 to 3 I are an integral part of thcse interinr corrsolidated and statenlcnts.

0.04

BULGARIAN TELECOMMUNICATIONS COMPANY ADCONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITYl ior thc three months ended 3l March 2012

All amounts are in thousand [JGN" unless othertvise stated

( lonsol idatcd Financia l Statements

Share capi ta l

288,765

[,egal reserve

28,876

Revaluationreserve

11,527

Retained earnings

I 78,870( 1 8 4 )

r 0,683

Total

508,038( r84 )

I 0.683

Balance as nt I January 201 |

Loss on currency tbrrvard

Net income fbr the period

' l 'o ta l comprehcnsive income

' f r rnsact ions wi th owners

[) iv idends

' l 'o ta l t ransact ions rv i th owners

'['ransf'er tu retaincd earnings

I la lance as at J l Nlarch 201 I

l la lance as at I January 2012

l-nss on currencl' lbrivard

Net income lbr thc period

' l 'o ta l comprehcnsive income

'I'ransactions rvith owncrs

[) iv idcnds

' l 'o ta l t ranslct ions wi th otvners

l la lancc as at 3 l l l larch 2012

Separate F in lncia l Statements

Balancc as at | . lanuary 201 I

l-r'rss orr currcncy lorward

Nct inconre fbr the period

' l 'o ta l comprchensive income

' l ' ransact ions u i th ow ners

[) iv idends

' fota l t ransact ions * ' i th o lvners

'l ransl'er to retained earnings

Balance ns at J l l \ larch 20l l

Ba lance as a t I J l nua ry 2012

l-oss on currcncy fbrrvard

Net incoms firr the period' l 'o ta l

comprehensive income

' l r i rnsact ions wi th owners

[) iv idends

' l 'o ta l t ransact ions wi th o lvners

t0,.r99 10,499

(e0) 90

288,76s 28,8',76 | 1 ,437 r89.159 5 | 8,537

288,765 28,816 10,932 10,560(384)

t0,237

339,133(384)

10,23'7

9,8sJ 9,853

288,765 28.876 l 0,932 20.4 t 3 348,986

Share capi ta l

288,765

Legal reserve

21t,876

Revaluat ion

rcserve

11,527-

Retained earnings

171,217( 1 8 4 )

r 0,3 8i

TotNl

506,385( r 8 4 )

I 0 ,383

r0,199 r0, t99

(e0) 90

288,765 28.876 I1,.137 I 87,506 516,584

288,765 28,876 10,934 10,975(384)

10.2-s39,869

3J9,550(384)

I 0 .2539,869

28,876 20.844 3,19,419

Atanas Dobrev

C]FO

'l hc accontpanl rug notcs fiom pagcs 5 to i I arc an rntegral part of thosc

10,93,1

scpi . l ratc l ln i rncia l s tatc l l rcnts

Bt r l . ( ;ARtAN't '0 1_t iCoM ivt t rN tcAl ' toNs C0NtpANy AI)(.ON SOI, I DAl' T] I),\N D ST.], PA RAl' I,] CASH I,'LOW S'I'AT E M I'NTIror tht thrcc nronths e nde d 3 I March 20 I 2All anroLlnts are in thousand B(iN. unless otherwise statcd

Note s

(-'ash flows from ope rating activities

Protlt befbrc tax

Adprstnrerrt lbr:

l )epreciat ion and anrort izat ion 9. l0

lnrpairntent and Irite otJ'of rcceiviiblcs

lmpaintrcnt of assets

Interest expensc.s. net

(l)rolit)/l-oss liont operations witlr non-current asset

Carrying amount ol' inventuries rvrrtten-of'fLrconrc lionr opcrations with tlnanciai instruments

I t tcot t tc l iorr r i l r \ cst l ]1cnt { )pcrJt ions

Incrcasc in provis ions fbr ot l rcr l iabi l i t ies and charges

Changcs in opcrat ing assets and l iabi l i t ies

Irrcrease in opcrating assets

I t tcrc l tsc i t t r )pcrut i l r t l l iu l r i l r t rcs

Cash generated f rom operat ions

lntcrest rcccivcd

Interest paid

Corporate inconre tax paid

Net cash f rom opcrat ing act iv i t ies

I)roceeds lionr sale ol'property. plant and eclr-riprnent

Purcha>e ol 'propcrty. p larr l und equiprncrr t

Purchase ol' other non-currel'rt assets

Div idcnds received

Cash deposits rvith nratunty greater thall three months

Net cash used in invest ing act iv i t ies

Reprvr t tcr t ts r ) l ' lonu- l ( r tn hort0ui t tgs

Divrdencl paid

I)aynrents o l 'o[ r l igat ions under f inance lease

Net cash used in f inrncing act iv i t ies

Net increase/(decrcasc) in c: rsh and cash equivalents

Iixchangc gain on cash

Consol idated f i nancia l s tatement' I 'hree

months e nded

Separate f i nancia l s tat€ment' f

hree months cnded

3r.03.20 I 2

I 1"408

61.8t4

4,509

6 .1 38

(779)

(e )

4,864

(s.870)

7.1 30

3 1.03.201 I

I t , 5 3 7

65.897

s.686

t 9 l

6.679

I ,664'7

(2e)

(364 )

860

( 17.456)

7,599

3 1.03.20 1 2

I t . 421

67.8 l4

4.50tt

6 . 1 4 I

(779r.

) L

(e )

4.864

(s .883 )7 , 1 6 1

3t .03 .20r I

1t.240

65,896

5 . 6 8 1

1 9 3

6,684

r.664

7(2e)

(37 )860

( r 7.608)

7.778

95,237

2.154

( 8.33,1)

( r .e04)

82,273

1.957

(u.700)

( 8,230 )

o< t7 t

? t 5 7

(8 .333)

( 1.904)

82,3t9I q s )

(fi.700 )

(8.230 )

87, I 54

2,163

(2e.80e)

(6,3e7)

3 l

54.46i

67,300

1.471

(26.se3 )(6,r86)

3'1

87,187

2.163

(2e.809)

(6.3e7)

3 l

54.463

67,351

t,414

( 26.s93 )(6 .386)

37

20,451

(29.s 8s )(68.062)

( 5 )

(3 r,168)

(s6.7 | 9)

( 1 , 4 9 3 )

20'.t51

(2e.s8s )(68.062 )

(s)

(3 l,468)

(s6 .7 | e )

( 1 .491)

(e7,6s2) (s8,2 l 2) (97,6s2) (58,21 2)

9,9s3( l 0 )

t4 | .663

(22,380)

( i 8 )

| 54.521

9,9{t6

( l 0 )

l 4 | , 155

(22,32e)

(18 )1 54 .1 63( ash rnd ers l r cc lurr q lgrr ls ut lhc l )egintr ing ol - lhc ycr lr

( lash and cash cT4uivalents at th€ €nd of the per iod

I l tcsc l i r rarre i l l { r , . , t , " , t t r , * { r ( oonn,t" ,L, , , t ,9 94 2r t l2

\ \ t rMre haela K;r lai l iera'\

, \ . , t , t \

l 5 L606 1 3 2 , t 0 5 l5 r ,33 | l 3 l 796

Atanas Dobrev

CFOProry of thc' CFO

The accompanying notes t'rorn pages 5 to J I rre arr intr'grcl part olthese interim consolida staternenls.

BULGARIAN TELECOMMUNICATIONS COMPANY ADNOTES TO THE CONSOLIDATED AND SEPARATE CONDENSED FINANCIAL STATEMENT For the three months ended 31 March 2012All amounts are in thousand BGN, unless otherwise stated

1. General information

The Parent Company – Bulgarian Telecommunications Company AD

BTC Security EOOD/ Renamed to BTC Net EOOD

The registered subject of business activity of BTC Net is building and operation of data transfer networks for theprovision of domestic and international value added services and sale of telecommunication network facilities,development and exploitation of other telecommunication networks, and provision of other telecommunicationsservices, as well as any other commercial activities.

Bulgarian Telecommunications Company AD (“BTC”, the “Parent Company” or the “Company”) is a public jointstock company, domiciled in Bulgaria, with its registration address: 115 I, Tzarigradsko shausse Blvd, Hermes park,building A, 1784 Sofia. BTC’s activities include development, operation and maintenance of the national fixed andmobile network and data system for the Republic of Bulgaria.

The Ultimate Parent Company is PineBridge Investments Limited (“PIL”). PineBridge Investments Partners LLC(“PineBridge”) is a wholly-owned subsidiary of PIL. PineBridge holds its interest with third party investors in theCompany through PineBridge Black Sea Holdings, L.P., (formerly AIG Black Sea Holdings, L.P.) and relatedfunds (the "Entities"). The Entities’ general partners are controlled by PineBridge. PineBridge has less than 1% ofthe economic interest in the Entities.

The subsidiary was registered in the Register of commercial companies of Sofia City Court on 27 October 2004with share capital of BGN 5 thousand. Its main activity is provision of security services to BTC AD and thecompanies controlled by it. BTC is the sole owner of this company.

As at 31 March 2012 and 31 December 2011 the Group includes the subsidiary entity BTC Net EOOD.

The Group

As at 31 March 2011 the Group includes the subsidiary entity BTC Net EOOD and the joint venture NURTSBulgaria AD.

On September 30, 2009 BTC Net EOOD was merged into BTC Security.

The legal merger of the entities was registered in the Commercial Register on October 15, 2009. As a result, BTCNet has ceased to exist as a separate legal entity, by virtue of law BTC Security has become universal legalsuccessor of BTC Net and all assets, rights and obligations of BTC Net have passed to BTC automatically as ofthat date. On October 16, 2009 the successor BTC Security was renamed to BTC Net.

5


2. Functional and Presentation Currency

3. Summary of significant accounting policies

4. Cash and cash equivalents

31.03.2012 31.12.2011 31.03.2012 31.12.2011Current accounts and cash in handHeld in BGN 2,898 3,914 2,894 3,911 Held in EUR 1,329 1,559 1,329 1,559 Held in foreign currencies other than EUR 537 364 536 363

Total current accounts and cash in hand 4,764 5,837 4,759 5,833

Term deposits Held in BGN 146,842 135,827 146,572 135,522Held in EUR - - - -

Total term deposits 146,842 135,827 146,572 135,522

Total cash and cash equivalents 151,606 141,664 151,331 141,355

The same accounting policies and methods of calculation are applied in the present interim separate andconsolidated financial statement, as in the annual consolidated financial statements of the Group for the year ended31 December 2011.

Consolidated financial statements

Separate financial statements

This condensed interim consolidated and separate financial report has been prepared in accordance with IAS 34,‘Interim financial reporting’. The interim condensed financial report should be read in conjunction with the annualfinancial statements for the year ended 31 December 2011.

These financial statements are prepared in thousand Bulgarian Levs (BGN), unless otherwise stated, whereas theBulgarian Lev has been accepted as presentation currency for the presentation of Group’s consolidated financialstatements. Effective from 1 January 1999, the Bulgarian Lev was fixed to the EUR at a rate BGN 1.95583 = EUR1.00.

As at 31 March 2012 and 31 December 2011 the components of the cash and cash equivalents are:

As disclosed in note 15 on 14 November 2007 BTC signed agreements to secure payments related to Company’sliabilities under the new agreement loan by establishing a pledge on the receivables on bank accounts and from itsinsurers of the Group.

6


5. Trade receivables

31.03.2012 31.12.2011 31.03.2012 31.12.2011Trade receivables 158,264 164,714 158,073 164,354

incl. international settlement receivables 19,018 30,009 19,018 30,009 Intercompany receivables 372 371 509 656 Other receivables 5,713 63,242 5,710 63,239

Total 164,349 228,327 164,292 228,249 Provision for impairment of receivables (65,009) (64,197) (64,926) (64,110)

Total Trade receivables 99,340 164,130 99,366 164,139 Incl:Non-current portion: trade receivables 4,521 4,953 4,521 4,953 Provision for impairment of receivables (277) (311) (277) (311)

Total non-current portion: trade receivables 4,244 4,642 4,244 4,642 Current portion trade receivables 159,828 223,374 159,771 223,296 Provision for impairment of receivables (64,732) (63,886) (64,649) (63,799)

Total current portion: trade receivables 95,096 159,488 95,122 159,497

31.03.2012 31.12.2011 31.03.2012 31.12.2011Finance leases receivables with maturity:Within one year 12,137 13,805 11,519 13,088 In the second to fifth years inclusive 2,855 3,201 2,770 3,109

Total receivables 14,992 17,006 14,289 16,197

Less: unearned finance income (703) (809) - Provision for impairment of receivables (1,429) (1,620) (1,429) (1,620)

Net investment in finance leases 12,860 14,577 12,860 14,577

31.03.2012 31.12.2011 31.03.2012 31.12.2011Balance at the beginning of the period 64,197 78,744 64,110 78,609 Accrued impairment 4,503 21,420 4,502 21,407 Impairment of receivables written off (3,691) (35,967) (3,686) (35,906)

Balance at the end of the period 65,009 64,197 64,926 64,110

Other receivables for 2012 and 2011 include respectively BGN 45 thousand and 54,507 thousand term cashdeposits with maturity greater than three months.All non-current receivables are due within two years from the end of the reporting period and relate to sales ofmobile phone sets on finance lease agreements with customers. The net investment in finance leases for the Groupand BTC may be analyzed as follows:



Net investment in finance leases

Gross receivables from finance leases


As at 31 March 2012 and 31 December 2011 trade receivables include:


Movement of the provision for impairment of accounts receivables as at 31 March 2012 and 31 December 2011 isas follows:

7


5. Trade receivables (continued)

Presented by class of customer the figures above are as follows:

Business customers

31.03.2012 31.12.2011 31.03.2012 31.12.2011Balance at the beginning of the period 19,364 30,748 19,277 30,613 Accrued impairment 836 (373) 835 (386) Impairment of receivables written off (1,663) (11,011) (1,658) (10,950)


Residential customers

31.03.2012 31.12.2011 31.03.2012 31.12.2011Balance at the beginning of the period 44,833 47,996 44,833 47,996 Accrued impairment 3,667 21,793 3,667 21,793 Impairment of receivables written off (2,028) (24,956) (2,028) (24,956)


Related parties balances are shown in note 26.

31.03.2012 31.12.2011 31.03.2012 31.12.2011From 60 to 90 days 3,310 4,483 3,182 5,808 From 91 to 180 days 505 1,591 340 343 From 181 to 360 days 833 1,039 145 93 Above 1 year 1,374 636 154 143

Total 6,022 7,749 3,821 6,387

31.03.2012 31.12.2010Outside the country 4,839 420 Outside the country 4,549 10,622 Outside the country 1,449 6,886 In the country 1,438 1,110 In the country 1,394 73

As of 31 March 2012 and 31 December 2011 receivables of the Group and the Company at the amount of BGN4,029 and 4,589 thousand were assessed individually and the impairment amounts to 3,511 and 4,297 thousand.



As of 31 March 2012 and 31 December 2011 the age structure of overdue receivables not impaired is as follows:


As of the balance sheet date the accounts with major (the five biggest) counterparties in the trade receivables forthe Group and the Company are as follows:

Type


Carrying amount of the receivable as of

Consolidated and Separate financial statements

8


6. Inventories

The materials and supplies as of 31 March 2012 and 31 December 2011 are as follows:

31.03.2012 31.12.2011 31.03.2012 31.12.2011Materials and supplies, net 9,553 5,524 5,846 5,999 Merchandise and other, net 24,344 25,592 22,177 19,735

Total materials and supplies 33,897 31,116 28,023 25,734

7. Assets classified as held for sale

31.03.2012 31.12.2011

Real estates, held for sale 1,899 1,892

Total assets held for sale 1,899 1,892

8. Other current assets

As of 31 March 2012 and 31 December 2011 other current asets are as follows:

31.03.2012 31.12.2011 31.03.2012 31.12.2011Prepayments 21,445 12,332 21,444 12,333 Other current assets 3,605 4,638 3,600 4,636

Total other current assets 25,050 16,970 25,044 16,969


Subscriber acquisition cost, representing mainly fees paid to distributors, are included in other assets above, whichfor the Group and the Company are BGN 3,456 thousand as of 31 March 2012. As of 31 December 2011 theyamount to BGN 3,950 thousand.


As of 31 March 2012 and 31 December 2011 BTC has signed several preliminary agreements for the sale of realestates reported in the balance sheet by their net asset value, excluding a few properties stated on the lower thantheir carrying value contracted price.


9


Property, plant and equipment

Transmission General support

Construction in progress Total

Gross Book Value At 31 December 2010 896,582 282,317 39,821 2,566,638

Revaluation - (559) - (559) Additions - 87 122,531 126,629 Transfers 9,973 12,720 (124,410) - Impairment - - (2,411) (2,411) Assets held for sale - 5,024 - 5,024 Disposals (11,014) (15,274) (2,049) (92,569)

At 31 December 2011 895,541 284,315 33,482 2,602,752

Revaluation - - - - Additions - - 17,454 17,536 Transfers 1,882 1,642 (17,624) - Impairment - - 72 72 Assets held for sale - (57) - (57) Disposals (1,060) (913) (59) (16,219)

At 31 March 2012 896,363 284,987 33,325 2,604,084

Accumulated depreciationAt 31 December 2010 583,514 152,641 - 1,477,544

Depreciation charged 24,069 27,927 - 187,142 Impairment 5 (238) 4,645 Assets held for sale - 542 - 542 Disposals (9,956) (13,833) - (74,490)

At 31 December 2011 597,632 167,039 - 1,595,383

Depreciation charged 6,047 6,862 - 47,305 Impairment - 29 - 72 Assets held for sale - (34) - (34) Disposals (1,060) (856) - (14,851)

At 31 March 2012 602,619 173,040 - 1,627,875

Net book valueAt 31 December 2011 297,909 117,276 33,482 1,007,369 At 31 March 2012 293,744 111,947 33,325 976,209

558,702

9.

4,011

135,146

830,712

The composition of property, plant and equipment for the Group as of 31 March 2012 and 31 December 2011 is asfollows:

Switching

(50,701)

- (14,187)

4,878

741,389

1,389,409

-

82

1,389,414

-

-

-

101,717 -

1,347,918

14,100

(64,232)

-

852,216

- 43

34,396

(12,935)

537,193

10


Property, plant and equipment (continued)

Transmission General support

Construction in progress Total

Gross Book Value At 31 December 2010 896,582 282,800 39,821 2,566,974

Revaluation - (559) - (559) Additions - 87 122,531 126,629 Transfers 9,973 12,720 (124,410) - Impairment - - (2,411) (2,411) Assets held for sale - 5,024 - 5,024 Disposals (11,014) (15,221) (2,049) (92,369)

At 31 December 2011 895,541 284,851 33,482 2,603,288 Additions - - 17,454 17,536 Transfers 1,882 1,642 (17,624) - Impairment - - 72 72 Assets held for sale - (57) - (57) Disposals (1,060) (913) (59) (16,219)

At 31 March 2012 896,363 285,523 33,325 2,604,620 Accumulated depreciationAt 31 December 2010 583,514 153,124 - 1,477,883

Depreciation charged 24,069 27,927 - 187,140 Impairment 5 (238) - 4,645 Assets held for sale - 542 - 542 Disposals (9,956) (13,780) - (74,291)

At 31 December 2011 597,632 167,575 - 1,595,919 Depreciation charged 6,047 6,862 - 47,305 Impairment - 29 - 72 Assets held for sale - (34) - (34) Disposals (1,060) (856) - (14,851)

At 31 March 2012 602,619 173,576 - 1,628,411

Net book valueAt 31 December 2011 297,909 117,276 33,482 1,007,369 At 31 March 2012 293,744 111,947 33,325 976,209

101,717

558,702

On the base of § 8 Para 1 of Transitional and concluding provisions to the Law for amendment and supplement ofthe law for privatization and post-privatization control the Agency for Privatization and Post-privatization Controlimposed statutory mortgage on 688 properties of BTC with a net book value as of 31 December 2011 amounting toBGN 22,397 thousand( BGN 22,951 as of 31 December 2011).

(12,935)

34,396 43

537,193

As disclosed in note 15 on November 14, 2007 BTC signed agreements to secure payments related to Parentcompany’s liabilities under the new loan agreement by establishing a pledge on real estate property, which netbook value as of 31 March 2012 amounted to BGN 18,268 thousand, and as of 31 December 2011 their net bookvalue was BGN 18,680 thousand.

4,878

(50,555)

830,712

852,216

-

9.

-

741,245 135,144

The composition of property, plant and equipment on BTC stand alone basis as of 31 March 2012 and 31December 2011 is as follows:

Switching

1,389,409

82

1,347,771 -

4,011

- 14,100

-

(14,187)

- (64,085)

1,389,414

-

11


Intangible assets

SoftwareOther

intangible assets

Intangible assets under construction

Total

Gross book valueAt 31 December 2010 509,687 14,711 5,387 648,829

Additions(Transfers) 53,116 5,604 (2,025) 57,421 Disposals (19,384) (52) - (19,436)

At 31 December 2011 543,419 20,263 3,362 686,814 Additions(Transfers) 6,396 1,089 (1,308) 6,397 Disposals (15,110) (46) - (15,156)

At 31 March 2012 534,705 21,306 2,054 678,055

Accumulated amortizationAt 31 December 2010 282,526 2,488 - 318,716

Amortization charge 70,215 2,862 - 80,329 Impairment 2,151 - - 2,151 Disposals (19,291) (13) - (19,304)

At 31 December 2011 335,601 5,337 - 381,892

Amortization charge 15,640 1,128 - 18,579 Disposals (15,102) (16) - (15,118)

At 31 March 2012 336,139 6,449 - 385,353

Net book valueAt 31 December 2011 207,818 14,926 3,362 304,922 At 31 March 2012 198,566 14,857 2,054 292,702

220 119,770

119,044

10.

33,702

78,816

726

1,811

40,954

-

119,990

7,252

As of 31 March 2012 and 31 December 2011 intangible assets of the Group are as follows

-

Licenses

-

-

42,765

-

77,225

12


Intangible assets (continued)

SoftwareOther

intangible assets

Intangible assets under construction

Total

Gross book valueAt 31 December 2010 509,459 14,711 5,387 648,546


At 31 December 2011 543,264 20,263 3,361 686,603


At 31 March 2012 534,647 21,306 2,053 677,941

Accumulated amortizationAt 31 December 2010 282,298 2,488 - 318,443

Amortization charge 70,215 2,862 - 80,328 Impairment 2,151 - - 2,151 Disposals (19,218) (14) - (19,232)

At 31 December 2011 335,446 5,336 - 381,690

Amortization charge 15,640 1,128 - 18,579 Disposals (15,005) (16) - (15,021)

At 31 March 2012 336,081 6,448 - 385,248

Net book valueAt 31 December 2011 207,818 14,927 3,361 304,913 At 31 March 2012 198,566 14,858 2,053 292,693

10.

Licenses

As of 31 March 2012 and 31 December 2011 intangible assets on BTC stand alone bases are as follows:

118,989 726

- 220

1,811

-

119,935

-

42,719

77,216

The majority of other intangible assets represents the acquired distribution network in the business combinationwith Kimimpex – TL OOD and the capitalized customer acquisition and retention expenses with contractual periodlonger than one year. Their net book value as of 31 March 2012 is respectively BGN 10,351 thousand and BGN4,211 thousand.

40,908

7,251 33,657

- -

78,807

119,715

13


Investments

Investments available for sale on the Group level as of 31 March 2012 and 31 December 2011 are as follows:

Entity 31.03.2012 31.12.2011Intersputnik 178 178 Satbird 143 143 Sofia Commodity Exchange 14 14

Total investment 335 335

31.03.2012 31.12.2011SubsidiariesBTC Net 799 799

Total investments in subsidiaries 799 799

Other investments 335 335

Total investments 1,134 1,134

Trade payables

The payables to suppliers as of 31 March 2012 and 31 December 2011 are as follows:

31.03.2012 31.12.2011 31.03.2012 31.12.2011Payables to suppliers of non current assets 26,297 38,473 26,297 38,473 Payables to international accounts 12,008 8,813 12,008 8,813 Payables to telecom operators 3,770 3,066 3,770 3,066 Payables to suppliers of network maintenance 2,811 1,688 2,811 1,688 Payables to related parties (Note 27) - - 31 - Others 24,709 23,881 24,708 23,881

Total trade payables 69,595 75,921 69,625 75,921


12.


11.

In the separate financial statements the investments in subsidiaries are measured at cost, less any impairment.

Other payables include outstanding balances of suppliers of fuel, utilities, advertising, inventories, and other.

14


Other payables

Other payables as of 31 March 2012 and 31 December 2011 are as follows:

31.03.2012 31.12.2011 31.03.2012 31.12.2011Deferred income 18,150 17,098 18,151 17,098 Payables to employees 11,888 12,811 11,888 12,811 VAT 5,499 1,060 5,499 1,060 Social securities 1,757 1,878 1,757 1,878 Advances from clients 883 965 883 965 Personal income tax payable 754 835 754 835 Cable project MECMA 652 1,169 652 1,169 Payables for license fee 482 459 482 459 Withholding and other taxes 306 332 306 332 Interest payable 177 150 177 150 Others 4,110 4,635 4,110 4,635

Total other payables 44,658 41,392 44,659 41,392

Provisions for other liabilities and charges


Decommissioning Restructuring Legal claims Total

At 1 January 2012 7,329 1,100 11,360 19,789 Charged to the comprehensive income - - 3,967 3,967 Included in the balance sheet 82 - - 82 Used during the year (21) (262) (18) (301) Discount rate adjustment 103 - - 103

At 31 March 2012 7,493 838 15,309 23,640

Analysis of provision in consolidated financial statements

31.03.2012 31.12.2011Non-current (decommissioning costs) 7,493 7,329 Current 16,147 12,460

Total 23,640 19,789

13.


14.

The liabilities under Cable projects MECMA amounting to BGN 652 and 1,169 thousand originated as a result ofBTC’s role as a Central Billing Party in the MECMA 2004 Agreement for maintenance of submarine cables in theMediterranean Sea, Red Sea and Black Sea area.


15


Provisions for other liabilities and charges(continued)

Decommissioning

Restructuring

Legal claims

Borrowings

The long-term debts in the consolidated and separate financial statements are as follows:

31.03.2012 31.12.2011New Syndicated credit facility 965,323 994,907 Trade credits 2,672 2,677 Financial lease 735 734 Short-term portion (967,018) (994,925)

Total borrowings 1,712 3,393

A provision has been recognised for decommissioning costs associated with mobile sites.. The provision has beencapitalized to the cost of the sites with the amount of the present value of the decommissioning obligation afterceasing operation. The discount rate used for 2012 and 2011 is 5.7%.

14.

The amounts represent a provision for labour disputes, legal claim of customers and certain penalties imposed onthe Group by the Commission for Protection of Competition (CPC) and Communications Regulation Commission(CRC).

15.

The Provision for employment termination is related to the decision for restructuring the activities of the Group in2011 and is recognised as staff cost in the profit or loss for the period.

The margin is calculated depending on the ratio of the consolidated total net debt to the consolidated pro formaprofit before interest, taxes and amortization. As of October 31, 2007 the loan margins of BTC were changed andvaried between 2,25% and 2,75% for the first facility and between 1,5% and 2,25% for the second and therevolving facility. On November 14, 2007 BTC signed agreement to secure the payments of Company’s liabilitiesunder the new loan agreement. The agreement established a special pledge of BTC, including the shares held in thesubsidiaries, real estate property with net book value as of 31 March 2012 at the amount of BGN 18,268 thousand,and a pledge on the receivables from the Company’s bank accounts, and from its insurers.

On August 21, 2007 BTC refinanced its debt under the existing syndicated credit facility amounting to EUR 350million. On August 17, 2007 BTC became a party to a new loan agreement together with NEF Telecom BulgariaOOD and it’s parent NEF Telecom Company B.V. The loan is organized by Royal Bank of Scotland, Deutsche Bank AG, London branch, UBS Limited and Bank Austria Creditanstalt AG with amandate to organize syndicated financing Under the new loan agreement BTC has two term facilities and revolving facility. The first term loan whichmatures after 8 years can be used to pay existing financial liabilities. The second term loan which matures in 7years can be used to finance capital expenses of BTC and its subsidiaries. The third facility is on a revolving basisand it can be utilized for working capital, as well as for other needs of the companies in the Group. Interest rateaccrued for each interest period is calculated based on the respective value of EURIBOR plus margin.

16


Borrowings (continued)

Obligations under Finance lease

31.03.2012 31.12.2011 31.03.2012 31.12.2011Finance lease payables with maturity:Within one year 1,463 19 1,396 17 In the second to fifth years inclusive 1,405 2,855 1,276 2,660 Total payables 2,868 2,874 2,672 2,677 Less: future finance charges (196) (197) - -

Present value of lease obligations 2,672 2,677 2,672 2,677

Along with other securities, there is a pledge over the shares of BTC owned by NEF Telecom Bulgaria OOD.

In addition to the above covenants breech the loan agreement provides that certain events represent a technicalEvent of Default. Such an event is the garnishment (freezing order) imposed on 6 January 2010 over 10,230,187common registered book entry shares from the share capital of BTC. The shares are held by NEF Telecom BulgariaOOD and represent 3.54% of total BTC shares. The garnishment is in relation to an arbitration claim launched bythe Bulgarian Privatization and Post-Privatization Control Agency (PPCA) against the former owners of BTC (asprimary respondents) and NEF Telecom Bulgaria OOD (as secondary respondent). NEF Telecom Bulgaria OODcontinues to dispute the merits of the arbitration claim to which the freezing order relates. During the period ofJune – August 2010, the PPCA imposed statutory mortgages on some of the properties of BTC as disclosed in Note11 of the present financial statements. This Event of Default has been waived by the lenders in the waiver letterdisclosed above.

Taking into account the validity of the waiver BTC classified the outstanding facilities of the syndicated loan ascurrent liabilities at the balance sheet date in accordance with IAS 1.

Present value of minimum lease payments

15.

Certain part of BTC’s software is leased under the terms of finance lease. The average lease term is 3 years and theaverage effective borrowing rate is 4.95%.

Minimum lease payments

The net book value of the assets acquired under finance lease arrangements as of 31 March 2012 is BGN 3,788thousand.

The loan agreement includes provisions for certain financial covenants calculated based on the consolidatedfinancial statements of NEF Telecom Company B.V. According to the information received from the parentcompany there has been a breach of the leverage ratio covenant since the second quarter of 2010. Any breaching ofthe requirements of the financial covenants if not remedied or waived, constitutes an Event of Default. Such awaiver has been provided by the lenders and expires on 23 April 2012. According to information provided by themajor shareholder there are expectations that the waiver will be reissued.

The fair value of Group’s and Company’s lease obligations approximates their carrying amount.

17


Deferred tax assets and liabilities

Allowance for

impairment of receivables

Property, plant and

equipment

Expense accruals Total

At 01.01.2011 14 - - 79 Charged/(credited) to the profit/(loss) for the period - - - 3

At 31 March 2011 14 - - 82

At 01.01.2012 9 - - 73 Charged/(credited) to the profit/(loss) for the period - - - -

At 31 March 2012 9 - - 73

Allowance for


Property, plant and

equipment


At 01.01.2011 (7,860) 43,800 (2,784) 32,998 Charged/(credited) to the profit/(loss) for the period (383) (956) 49 (1,291) Charged to other comprehensive income for the period - - (21) (21) At 31 March 2011 (8,243) 42,844 (2,756) 31,686

At 01.01.2012 (6,405) 38,553 (4,777) 27,210 Charged/(credited) to the profit/(loss) for the period (82) (738) 472 (350) Charged to other comprehensive income for the period - - (42) (42) At 31 March 2012 (6,487) 37,815 (4,347) 26,818

Deferred tax charge(credit) to the profit/(loss) for the period31.03.2012 31.03.2011

Deferred tax liabilities 350 1,291 Deferred tax assets - 3

Total charged to the profit/(loss) for the period 350 1,294

(163)

(2)

-

Three months ended

Retirement benefit obligations

3

65

68

64

(158)

-

(161)

(1)

-

For the Group:As of 31 March 2012 and 2011 the deferred tax, are as it follows:

16.

Deferred tax liabilities

64

(159)

Tax loss carried forwardDeferred tax assets

18


Deferred tax assets and liabilities(continued)

For BTC:

Allowance for


Property, plant and

equipment


At 01.01.2011 (7,860) 43,800 (2,784) 32,998 Charged/(credited) to the profit/(loss) for the period (383) (956) 49 (1,291) Charged to other comprehensive income for the period - - (21) (21) Discontinued operations -

At 31 March 2011 (8,243) 42,844 (2,756) 31,686

At 01.01.2012 (6,405) 38,553 (4,777) 27,210 Charged/(credited) to the profit/(loss) for the period (82) (738) 472 (350) Charged to other comprehensive income for the period - - (42) (42)

At 31 March 2012 (6,487) 37,815 (4,347) 26,818

Deferred tax charge(credit) to the profit/(loss) for the period31.03.2012 31.03.2011

Deferred tax liabilities 350 1,291

Total charged to the profit/(loss) for the period 350 1,291

The last period audited by the tax authorities for BTC is 2006.

Three months ended

-

Deferred tax liabilities

16.

(163)


Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the yearsin which those temporary differences are expected to be recovered or settled. The deferred tax assets and liabilitiesas of 31 March 2012 and 31 December 2011 are calculated in these financial statements at 10% tax rate which iseffective as of 1 January 2007.

Deferred tax assets and liabilities for different taxable entities are not offset as they can not be settled on a net basisand it is not expected that the assets will be realised and the liabilities will be settled simultaneously in the future.

(161)

(2)

(1)

-

(159)

(158)

19



The movement of the liability, recognized in the balance sheet, is as follows:

31.03.2012 31.12.2011 31.03.2012 31.12.2011Liability at the beginning of the period 1,917 1,570 1,610 1,917

Past service cost - (75) - (96) Current service cost 247 532 17 (153) Interest cost 18 79 7 74

Total cost recognized in the comprehensive income 265 536 24 (175) Payments to retirees (44) (189) - (132)

Liability at the end of the period 2,138 1,917 1,634 1,610

The following principal assumptions have been used in the estimation of the liability:

Discount rate Future salary increases per year Average age of retirement – male employees Average age of retirement – female employees

Share capital and dividends

31.03.2012 31.12.2011Number of shares 288,764,840 288,764,840 Par value per share (in BGN) 1 1

Share capital per BTC’s registration 288,765 288,765

Share capital 288,765 288,765

In compliance with the Labour Code, the Parent company owes compensation at retirement to all the employees.The compensations of the employees with a 10 years experience in the Company is 6 gross monthly salaries; forthe employees having under 10 years experience the compensation is 2 gross monthly salaries.

5.70% 6.50%

Currently no assets have been allocated for covering the long-term staff revenue in a separate fund and there are nolegal requirements for the establishment of such.

31.12.2011

18.

63From 4% to 6%

17.

31.03.2012

60

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with publishedstatistics. Mortality assumptions are based on the statistical information, provided by the National StatisticalInstitute for the total mortality of the population in Bulgaria for the period 2008 – 2010.

From 3% to 6%65


63

The Management has used in the estimation of the liability for retirement benefit obligations the assumption thatvoluntary leave of personnel, without any compensation, will be negligible.

The present consolidated and separate financial statements include a provision for employee benefits obligationwhich is measured applying the projected unit credit method.

20


Share capital and dividends (continued)

Structure of the share capital: %

Number of ordinary shares:NEF Telecom Bulgaria OOD 94%Other shareholders 6%Total ordinary shares 100%Number of preference shares:The Republic of Bulgaria 100%

Total number of shares 100%

Earnings per share

31.03.2012 31.03.2011 31.03.2012 31.03.2011Profit for the period 10,237 10,683 10,253 10,383 Total profit for distribution 10,237 10,683 10,253 10,383 Weighted average number of ordinary shares 288,765 288,765 288,765 288,765

Earnings per share (BGN) 0.04 0.04 0.04 0.04

Dividends payable

31.03.2012 31.12.2011Dividend approved by the General shareholders’ meeting - 176,147 Non-distributed dividends for prior years 158,092 142,728 Tax on dividend - (518) Net dividends paid (68,062) (160,265)

Total dividend payable 90,030 158,092

Three months ended

As shown in Note 26, dividends payable outstanding as at 31 December 2011 includes the amount of BGN 89,561thousand – dividends to NEF Telecom Bulgaria OOD.

1


271,423,451

31.03.2012

18.

288,764,839 17,341,388

As of 31 March 2012, the share capital of BTC comprises 288,764,839 ordinary registered shares and a singlepreference share, held by the Government through the Ministry of Transport and Communications. The nominalshare value is BGN 1.

288,764,840


On 10 November 2004 BTC was registered as a public company. As part of the governmental project to privatizethe remaining state-owned 35% of share capital of BTC, the Bulgarian government subsequently floated its nearly35% stake on 27 January 2005 through a public offering on the Bulgarian Stock Exchange and since then theshares are freely traded on it.

Three months ended

21


Revenue


31.03.2012 31.03.2011 31.03.2012 31.03.2011Recurring charges 334,786 338,693 83,525 83,550 Outgoing traffic 180,687 195,429 42,506 42,270 Interconnect 148,835 131,552 41,090 33,120 Leased lines and data transmission 146,526 148,911 33,991 36,442 Other revenue 75,097 81,802 17,572 18,455

Total revenue 885,931 896,387 218,684 213,837


31.03.2012 31.03.2011 31.03.2012 31.03.2011Recurring charges 334,824 338,800 83,535 83,577 Outgoing traffic 180,512 194,937 42,505 42,200 Interconnect 148,935 131,879 41,100 33,178 Leased lines and data transmission 146,570 148,954 34,001 36,452 Other revenue 75,108 81,813 17,575 18,458

Total revenue 885,949 896,383 218,716 213,865

Other operating expenses


31.03.2012 31.03.2011 31.03.2012 31.03.2011Maintenance and repairs 88,826 77,855 20,699 22,145 Advertising, customer service, billing and collectio 50,468 41,308 12,102 10,624 Facilities 38,819 31,156 9,882 9,576 License fees 12,851 13,153 3,233 3,223 Administrative expenses 12,067 8,840 1,837 1,271 Cost of value added services (VAS) 7,569 7,149 1,371 1,746 Professional fees 5,482 26,673 1,167 1,230 Leased lines and data transmission 3,817 5,371 933 1,030 Vehicles and transport 3,718 5,795 886 950 Other 52,013 36,626 9,730 7,793

Total other operating expenses 275,630 253,926 61,840 59,588

Revenue of the Group and the Company for the three months ended 31 March 2012 and 2011 consist of:

19.

Other operating expenses for the three months ended 31 March 2012 and 2011 consist of:

Year ended

20.

Three months ended

Three months ended

Year ended

Three months ended Year ended

22


Other operating expenses(continued)


31.03.2012 31.03.2011 31.03.2012 31.03.2011Maintenance and repairs 88,823 77,852 20,699 22,145 Advertising, customer service, billing and collectio 50,476 41,320 12,128 10,629 Facilities 38,819 31,155 9,882 9,576 License fees 12,846 13,148 3,232 3,222 Administrative expenses 12,077 8,854 1,837 1,275 Cost of value added services (VAS) 7,569 7,149 1,371 1,746 Professional fees 5,482 26,673 1,167 1,230 Leased lines and data transmission 3,817 5,371 932 1,029 Vehicles and transport 3,718 5,795 886 950 Other 50,644 36,572 9,729 7,788

Total other operating expenses 274,271 253,889 61,863 59,590

Staff costs

Staff costs for the year ended three months ended 31 March 2012 and 2011 consist of:


31.03.2012 31.03.2011 31.03.2012 31.03.2011Salaries and wages 52,738 58,290 13,394 12,436 Pension, health and unemployment fund contributio 8,187 10,022 2,104 2,170 Other benefits 2,408 2,723 653 626 Other staff costs 1,718 1,452 186 194

Total staff costs 65,051 72,487 16,337 15,426

Year ended

Other expenses comprise the charged provisions for impairment of assets and the net book value of the scrappedinventories and fixed assets.

21.

Three months ended

20.

Three months ended Year ended

23


Staff costs(continued)


31.03.2012 31.03.2011 31.03.2012 31.03.2011Salaries and wages 52,735 58,286 13,393 12,435 Pension, health and unemployment fund contributio 8,187 10,022 2,104 2,170 Other benefits 2,408 2,723 653 626 Other staff costs 1,718 1,452 186 194

Total staff costs 65,048 72,483 16,336 15,425

Finance income and costs

Financial income and costs for the three months ended 31 March 2012 and 2011 consist of:


31.03.2012 31.03.2011 31.03.2012 31.03.2011Finance costsInterest expense: 8,760 8,874 8,760 8,874 -Bank borrowings 8,622 8,784 8,622 8,784 -Finance lease 23 7 23 7 -Provisions 110 74 110 74 -Other 5 8 5 8 Loss on financial instruments 98 13 98 13 Other finance costs 58 44 58 44

Total finance cost 8,916 8,930 8,916 8,930

Finance incomeInterest income: 2,622 2,195 2,622 2,195 -Bank deposits 2,238 1,698 2,238 1,698 -Finance lease 294 432 294 432 -Other 90 65 90 65 Gains on financial instruments 9 26 9 26 Equity investments income - 37 - 37

Total finance income 2,631 2,258 2,631 2,258

Net finance costs 6,285 6,672 6,285 6,672

Year ended

21.

As stated in note 17 the amounts of post employment termination benefits included in salaries and wages above forthe consolidated and separate financial statements for the three months ended 31 March 2012 and 2011 arerespectively BGN 17 thousand and BGN 62 thousand.

22.

Three months ended

Three months ended

Year ended

24


Finance income and costs(continued)

Separate financial statements31.03.2012 31.03.2011 31.03.2012 31.03.2011

Finance costsInterest expense: 8,760 8,874 8,760 8,873 -Bank borrowings 8,622 8,784 8,622 8,784 -Finance lease 23 7 23 7 -Provisions 110 74 110 74 -Other 5 8 5 8 Loss on financial instruments 98 13 98 13 Other finance costs 58 44 58 44

Total finance cost 8,916 8,930 8,916 8,930

Finance incomeInterest income: 2,622 2,195 2,619 2,190 -Bank deposits 2,238 1,698 2,235 1,693 -Finance lease 294 432 294 432 -Other 90 65 90 65 Gains on financial instruments 9 26 9 26 Equity investments income - 37 - 37

Total finance income 2,631 2,258 2,628 2,253

Net finance costs 6,285 6,672 6,288 6,677

Other gains, net

Other gains, net for the year ended 31 December 2011 and 2010 consist of:


31.03.2012 31.03.2011 31.03.2012 31.03.2011Gains from sales of non-current assets 8,380 37,429 1,751 27 Gain from sales of materials (109) (58) 3 12

Total other gains, net 8,271 37,371 1,754 39

Year ended Three months ended

22.

In the Consolidated and the Separate financial statements the income from sales of PPE and assets held for sale forthe three months ended 31 March 2012 was BGN 2,185 thousand and their net book value was BGN 434thousand. For the three months ended 31 March 2011 these figures are respectively BGN 489 thousand and BGN462 thousand. The income from sales of materials for the three months ended 31 March 2012 was BGN 7 thousandand cost of sales was BGN 4 thousand. For the three months ended 31 March 2011 these figures were BGN 28thousand and BGN 16 thousand respectively.

Three months ended

23.

Year ended

25


Tax expense


31.03.2012 31.03.2011 31.03.2012 31.03.2011Current income tax charge 6,471 12,470 1,520 2,148 Deferred tax credit to comprehensive income (5,479) (1,004) (349) (1,294)

Total tax expense 992 11,466 1,171 854


31.03.2012 31.03.2011 31.03.2012 31.03.2011Current income tax charge 6,471 12,470 1,520 2,148 Deferred tax credit to comprehensive income (5,484) (969) (350) (1,291)

Total tax expense/(credit) 987 11,501 1,170 857

Total tax expense can be reconciled to the accounting profit as follows:


31.03.2012 31.03.2011 31.03.2012 31.03.2011Profit before tax 35,344 103,594 11,408 11,537

Total profit before tax 35,344 103,594 11,408 11,537

Tax rate 10% 10% 10% 10%

Tax at the applicable tax rate 3,534 10,359 1,141 1,154 Effect of permanent tax differences 271 (41) 27 (21) Effect of current tax from previous periods,accounted during the year - - - (290) Effect of unrecognised tax losses and tax offsets not recognised as deferred tax assets 70 (10) 3 11

Income tax expense 3,875 10,308 1,171 854

Effective tax rate 10.96% 9.95% 10.26% 7.40%

Income tax expense in the comprehensive income 992 11,466 1,171 854

Total income tax expense 992 12,810 1,171 854

Three months ended

Three months ended

24.

Year ended


Income tax expenses for the three months ended 31 March 2012 and 2011 consist of:

Year ended

26


Tax expense(continued)


31.03.2012 31.03.2011 31.03.2012 31.03.2011Profit before tax 34,486 101,662 11,423 11,240

Total profit before tax 34,486 101,662 11,423 11,240

Tax rate 10% 10% 10% 10%

Tax at the applicable tax rate 3,449 10,166 1,142 1,124 Effect of permanent tax differences 69 160 27 12 Effect of current tax from previous periods,accounted during the year (290) 6 - (290) Effect of unrecognised tax losses and tax offsets not recognised as deferred tax assets 61 27 1 11

Income tax expense/(credit) 3,289 10,359 1,170 857

Effective tax rate 9.54% 10.19% 10.24% 7.62%

Income tax expense in the comprehensive income 987 11,501 1,170 857

Total income tax expense 987 12,845 1,170 857

Segment information

Three months ended

• Fixed line of business – voice and data services over the fixed network;• Mobile line of business – mobile services (GSM, and UMTS Standards)

Year ended

25.

The Board of Directors assesses the performance of the business segments based on a measure of gross margin.Revenue and gross margin information as reviewed by the Board of directors for the periods ended 31 March 2012and 2011 is presented below.

Management has determined the operating segments based on the reports reviewed by the Board of Directors thatare used to make strategic decisions. The business, considered on a product perspective is currently organized intotwo lines of business – Fixed line of business and Mobile line of business. Principal activities are as follows:

24.

27


Segment information(continued)

Three months ended 31 March 2012Fixed line of

businessMobile line of business Total

Revenue 124,493 94,191 218,684 Cost of sales (28,333) (29,702) (58,035)

Gross margin 96,160 64,489 160,649

Operating expenses (144,710) Financial expenses, net (6,285) Other gains, net 1,754

Profit before tax 11,408

Income tax expense (1,171) Net profit for the year 10,237

Three months ended 31 March 2011Fixed line of

businessMobile line of business Total

Revenue 131,825 82,012 213,837 Cost of sales (24,256) (30,233) (54,489) Gross margin 107,569 51,779 159,348

Operating expenses (141,505) Financial expenses, net (6,672) Other gains, net 39 Share of profit of JV 327

Profit before tax 11,537

Income tax expense (854)

Net profit for the year 10,683

25.

28


Related parties

The Group’s related parties are considered to be the following:

For the stand alone statements as a related parties are considered all consolidated subsidiaries as well.

For the Group31.03.2012 31.12.2011 31.03.2012 31.12.2011

NEF Telecom Bulgaria OOD 3 1 89,561 157,624 NEF Telecom Company BV 369 370 - -

Total for BTC group 372 371 89,561 157,624

For BTC31.03.2012 31.12.2011 31.03.2012 31.12.2011

BTC Net EOOD 136 285 31 - NEF Telecom Bulgaria OOD 3 1 89,561 157,624 NEF Telecom Company BV 369 370 - -

Total for BTC 508 656 89,592 157,624

The following table summarizes services received by BTC from related parties:

For the Group

31.03.2012 31.03.2011 31.03.2012 31.03.2011

NURTS Bulgaria AD - - - 1,624

Total for BTC group - - - 1,624

Payables

Year ended

Receivables

ParentParent

JV

Note

Receivables

Three months ended

Parent

Subsidiary

Note

The following table summarizes the balances of receivables and payables with related parties as of 31 March 2012and 31 December 2011:

Payables

• shareholders of which the Company is a subsidiary or an associate, directly or indirectly, and subsidiaries andassociates of these shareholders;• members of the Company’s statutory and supervisory bodies and parties close to such members, including thesubsidiaries and associates of the members and their close parties;• joint ventures in which the Company is a venturer

Note

The balance on NEF Telecom Bulgaria OOD payable represents outstanding dividend payable as of the balancesheet date.

26.

Parent

29


Related parties(continued)

For BTC

31.03.2012 31.03.2011 31.03.2012 31.03.2011

NURTS Bulgaria AD - - - 1,624 BTC Net EOOD - - 26 11

Total for BTC - - 26 1,635

The realised revenue for BTC from related parties is as follows:

31.03.2012 31.03.2011 31.03.2012 31.03.2011

NURTS Bulgaria AD 4,625 2,339 - 1,597 BTC Net EOOD 209 974 37 102 NEF Telecom Bulgaria OOD 13 9 2 5

Total for BTC group 4,847 3,322 39 1,704

Management remunerations

Commitments and contingencies

Contractual commitments for the acquisition of property, plant and equipment

Equipment descriptionAggregate contracted

amount

Delivered till 31.03.2012

Hardware and software 19,507 11,090 8,417 Construction and assembly works of the BTC 37,978 9,125 28,853 Network equipment 82,473 57,133 25,340

Total 139,958 77,348 62,610

Contingencies

26.

Three months ended

Three months ended Note

The parent company has entered into agreements with various suppliers relating to the capital expenditure asapproved in the investment program. Certain agreements have not been completed as of the balance sheet date. Asummary of the main commitments to acquire equipment under such contracts, effective as of 31 March 2012, forthe Group and the Company is presented in the table below:

27.

Note

There is no compensation paid by the company to the members of the Board of Directors as of 31 March 2012 and2011. Remuneration amounting to BGN 1,468 thousand relating to key management personnel has been accrued asof 31 March 2012.

Commitments outstanding

Year ended

The Company is a participant in several lawsuits and administrative proceedings. Based on the informationavailable, management is satisfied that there is no material unprovided liability arising from these lawsuits andadministrative proceedings.

SubsidiaryParent

JVSubsidiary

Year ended

JV

30


Operating lease

31.03.2012 31.03.2011 31.03.2012 31.03.2011Minimum lease payments 2,677 4,125 667 652

31.03.2012 31.12.2011

Within one year 9,264 9,530 In the second to fifth years inclusive 29,145 29,526 Later than five years 89,049 90,751

Total commitments 127,458 129,807

28.


In the amount of the non-cancellable operating lease payables are included payments related to contract for lease ofadministrative building that commenced in 2010 and the leasing term is above 5 years.

BTC has outstanding commitments under non-cancellable operating leases, which fall due as follows:

Operating lease payments represent rentals payable for certain part of the vehicles of the Group and the Company.Leases and rentals are negotiated for an average term of three years.


Minimum lease payments under operating leases recognized as an expense for the period are as follows:

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