VimpelCom Announces Third Quarter 2009 Financial and Operating Results
MOSCOW and NEW YORK, Nov. 24 /PRNewswire-FirstCall/ -- Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP), a leading international provider of telecommunications services operating in Russia, the Commonwealth of Independent States (CIS) and South-East Asia, today announced its financial and operating results for the quarter ended September 30, 2009.
Third Quarter 2009 Highlights and Recent Developments
Operational
-- Mobile subscribers increased by 1.7 million versus 2Q09, reaching 65.4
million
-- Successful launch of operations in Vietnam under Beeline brand
-- Agreement signed to enter Laos mobile market
-- 3G presence in all regions of Russia as of November 21, 2009
Financial
-- Net operating revenues reached 71.3 billion Russian rubles, an increase
of 3.3% versus 2Q09
-- OIBDA reached a record 36.0 billion rubles, an increase of 2.9% versus
2Q09
-- Continued strong consolidated fixed and mobile OIBDA margin of 50.4%
-- Net income attributable to VimpelCom amounted to 13.5 billion rubles
Other
-- Interim dividend payment of 190.13 rubles per common share proposed by
the Board of Directors
-- Major shareholders agreed to combine their stakes in VimpelCom and
Kyivstar in a new company
Commenting on the performance of the Company, Boris Nemsic, Chief Executive Officer of VimpelCom, said, "During the third quarter we continued to demonstrate growth in challenging market conditions and delivered a record 71.3 billion rubles in revenues and 36.0 billion rubles in OIBDA with a consolidated fixed and mobile OIBDA margin of 50.4%.
We are particularly pleased with the OIBDA performance which demonstrates our ability to increase revenues and control costs in the new economic environment.
The number of active mobile subscribers reached 65.4 million, which is 13% more than we had a year ago. We serve 1.9 million fixed and mobile broadband subscribers, which makes us one of the largest broadband providers in Russia and the CIS.
Stable operational cash flow strengthened our financial position. As of today, we have repaid more than $2 billion dollars of our debt and fully funded capital expenditures. We continue to optimize our debt portfolio with the non-ruble portion of our debt decreasing to 76% of our total debt, compared with 85% at the beginning of the year.
On October 5th, 2009, Altimo and Telenor agreed to combine their interests in VimpelCom and Kyivstar, paving the way for the creation of one of the largest telecom operators in the emerging markets. Management of VimpelCom welcomes this transaction and believes that the transaction, when completed, will bring benefits to our shareholders, employees and customers."
Key Consolidated Financial and Operating Results*
CONSOLIDATED OPERATIONS*
(RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q
------------------------ ------ ------ ----- ------ -----
Net operating revenues 71,338 68,933 3.5% 69,035 3.3%
---------------------- ------ ------ --- ------ ---
OIBDA 35,980 33,636 7.0% 34,958 2.9%
----- ------ ------ --- ------ ---
OIBDA margin, % 50.4% 48.8% 50.6%
--------------- ---- ---- ----
Operating income 22,299 21,568 3.4% 22,250 0.2%
---------------- ------ ------ --- ------ ---
Operating income margin, % 31.3% 31.3% 32.2%
-------------------------- ---- ---- ----
SG&A 18,760 18,167 3.3% 18,458 1.6%
---- ------ ------ --- ------ ---
including Sales &
Marketing Expenses 5,766 5,867 -1.7% 5,414 6.5%
------------------- ----- ----- ---- ----- ---
including General &
Administrative Costs 12,994 12,300 5.6% 13,044 -0.4%
--------------------- ------ ------ --- ------ ----
SG&A percentage 26.3% 26.4% 26.7%
--------------- ---- ---- ----
Net income attributable to
VimpelCom 13,513 6,513 107.5% 22,599 -40.2%
-------------------------- ------ ----- ----- ------ -----
Net income attributable to
VimpelCom per common
share, basic (RUR) 266.83 128.68 446.43
-------------------------- ------ ------ ------
Net income attributable to
VimpelCom per ADS
equivalent, basic (RUR) 13.34 6.43 22.32
-------------------------- ----- ---- -----
Capital expenditures 3,842 16,799 -77.1% 5,027 -23.6%
-------------------- ----- ------ ----- ----- -----
Mobile subscribers ('000) 65,358 57,758 13.2% 63,676 2.6%
------------------------- ------ ------ ---- ------ ---
Broadband subscribers*)
('000) 1,930 785 145.9% 1,739 11.0%
----------------------- ----- --- ----- ----- ----
* See definitions in Attachment A. Y-o-y stands for 3Q09 vs. 3Q08 comparison while q-o-q stands for 3Q09 vs. 2Q09.
Net operating revenues 3Q '09* Russia CIS SEA Eliminations Total (RUR, millions) ------ --- --- ------------ ----- --------------- Mobile business 51,502 9,221 74 -138 60,659 --------------- ------ ----- --- ---- ------ Fixed business 13,583 2,167 0 -608 15,142 -------------- ------ ----- --- ---- ------ Eliminations -3,874 -312 0 -277 -4,463 ------------ ------ ---- --- ---- ------ Total net operating revenue 61,211 11,076 74 -1,023 71,338 --------------------------- ------ ------ --- ------ ------
* Due to the increasing integration between different parts of our business, we include inter-company transactions in the reported revenues of geographic and business segments and indicate the amount of inter-company eliminations within and between the segments.
The quarterly net operating revenues increased by 3.5% year-on-year and 3.3% as compared with the previous quarter demonstrating the strength of our core business.
Continued focus on operational efficiency helped us to maintain a strong consolidated fixed and mobile OIBDA margin of 50.4%.
We continue to maintain solid operational cash flow, which provides a basis for further investment in the development of our business. We invested 3.8 billion rubles during the third quarter of 2009. Taking into consideration the further strengthening of the Russian ruble, we have recalculated our CAPEX guidance for 2009 and expect CAPEX to be in the range of 10%-12% of our 2009 annual revenue.
During the third quarter we repaid $690 million of debt. Our net debt continued to decline from $6.3 billion at the end of the second quarter down to $5.5 billion at the end of the third quarter.
Our quarterly net income attributable to VimpelCom amounted to 13.5 billion rubles, including a modest 0.7 billion ruble net foreign exchange gain due to the strengthening of the ruble.
Russia - Financial and Operating Results
RUSSIA (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ---------------------- ------ ------ ----- ------ ----- Net operating revenues 61,211 58,816 4.1% 59,136 3.5% ---------------------- ------ ------ --- ------ --- OIBDA 30,951 29,457 5.1% 30,279 2.2% ----- ------ ------ --- ------ --- OIBDA margin, % 50.6% 50.1% 51.2% --------------- ---- ---- ---- Operating income 20,724 20,112 3.0% 20,574 0.7% ---------------- ------ ------ --- ------ --- Operating income margin, % 33.9% 34.2% 34.8% ------------------------ ---- ---- ---- SG&A 15,644 15,191 3.0% 15,417 1.5% ---- ------ ------ --- ------ --- including Sales & Marketing Expenses 4,940 4,918 0.4% 4,726 4.5% ------------------- ----- ----- --- ----- --- including General & Administrative Costs 10,704 10,273 4.2% 10,691 0.1% --------------------- ------ ------ --- ------ --- SG&A percentage 25.6% 25.8% 26.1% --------------- ---- ---- ---- Net income attributable to VimpelCom 13,754 6,274 119.2% 21,835 -37.0% ----------------------- ------ ----- ----- ------ -----
Our quarterly net operating revenues in Russia amounted to 61.2 billion rubles, growing 3.5% quarter-on-quarter. The quarterly net operating revenues in Russia grew 4.1% compared to the exceptionally strong third quarter of 2008, when we reported high revenues from roaming and handset sales.
The total Russia fixed and mobile OIBDA increased 5.1% year-on-year and reached 30.9 billion rubles with a total fixed and mobile OIBDA margin of 50.6%.
In the mobile segment our revenues increased by 4.2% quarter-on-quarter. Slight upward trends in usage coupled with a seasonal increase from roaming led to an increase in ARPU of 2.8%.
Our fixed-line revenues increased by 4.4% quarter-on-quarter. A seasonal decline in the usage by business customers during the summer months was offset by increasing wholesale revenues, which grew by 13.3% quarter-on-quarter. The fixed-line OIBDA margin decreased quarter-on-quarter from 29.6% to 26.4%. As a result the quarterly fixed-line revenues were also impacted by the appreciation of the Russian ruble as part of our contracts in the business segment are denominated in US dollars and Euro.
In the third quarter of 2009 the total number of residential broadband subscribers in Russia, including FTTB and mobile broadband, reached 1.8 million, a 140% increase year-on-year and a 10% increase quarter-on-quarter.
RUSSIA REVENUES (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ------------------------------- ------ ------ ----- ------ ----- Net operating revenues 61,211 58,816 4.1% 59,136 3.5% ---------------------- ------ ------ --- ------ --- Mobile revenues 51,502 49,401 4.3% 49,410 4.2% --------------- ------ ------ --- ------ --- Fixed revenues 13,583 10,789 25.9% 13,007 4.4% -------------- ------ ------ ---- ------ --- Eliminations -3,874 -1,374 -3,281 ------------ ------ ------ ------
RUSSIA OIBDA DEVELOPMENT*) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q (RUR, millions) ------ ------ ----- ------ ----- --------------- OIBDA Total 30,951 29,457 5.1% 30,279 2.2% ----------- ------ ------ --- ------ --- Mobile OIBDA 27,360 26,772 2.2% 26,427 3.5% ------------ ------ ------ --- ------ --- Fixed OIBDA 3,591 2,685 33.7% 3,852 -6.8% ----------- ----- ----- ---- ----- ---- Total OIBDA margin, % 50.6% 50.1% 51.2% --------------------- ---- ---- ---- Mobile OIBDA margin, % 53.1% 54.2% 53.5% ---------------------- ---- ---- ---- Fixed OIBDA margin, % 26.4% 24.9% 29.6% --------------------- ---- ---- ----
RUSSIA OPERATING DEVELOPMENT 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q
---------------------------- ------ ------ ----- ------ -----
Mobile subscribers ('000)**) 51,028 45,093 13.2% 49,971 2.1%
---------------------------- ------ ------ ---- ------ ---
MOU, min 213.6 228.5 -6.5% 211.8 0.8%
-------- ----- ----- ---- ----- ---
ARPU mobile, (RUR) 331.4 368.2 -10.0% 322.5 2.8%
------------------ ----- ----- ----- ----- ---
Broadband subscribers ('000) 1,833 764 139.9% 1,659 10.5%
---------------------------- ----- --- ----- ----- ----
* Please find information on respective operating income amounts in the supplementary file FinancialOperatingQ32009.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.
** Starting with this quarterly report, we no longer provide information on subscriber market share. This is because different churn policies used by mobile service providers result in reported subscriber market share figures that could be misleading.
CIS - Financial and Operating Results
CIS OPERATIONS (RUR,
millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q
-------------------- ------ ------ ----- ------ -----
Net operating revenues 11,076 10,663 3.9% 10,668 3.8%
---------------------- ------ ------ --- ------ ---
OIBDA 5,322 4,232 25.8% 4,908 8.4%
----- ----- ----- ---- ----- ---
OIBDA margin, % 48.0% 39.7% 46.0%
--------------- ---- ---- ----
Operating income 2,056 1,509 36.2% 1,929 6.6%
---------------- ----- ----- ---- ----- ---
Operating income margin,
% 18.6% 14.2% 18.1%
------------------------ ---- ---- ----
SG&A 2,851 2,945 -3.2% 2,844 0.2%
---- ----- ----- ---- ----- ---
including Sales &
Marketing Expenses 748 949 -21.2% 633 18.2%
------------------- --- --- ----- --- ----
including General &
Administrative Costs 2,103 1,996 5.4% 2,211 -4.9%
--------------------- ----- ----- --- ----- ----
SG&A percentage 25.7% 27.6% 26.7%
--------------- ---- ---- ----
Net income attributable
to VimpelCom 86 323 -73.4% 841 -89.8%
----------------------- --- --- ----- --- -----
Mobile subscribers ('000) 14,235 12,665 12.4% 13,626 4.5%
------------------------- ------ ------ ---- ------ ---
Broadband subscribers
('000) 97 21 361.9% 80 21.3%
--------------------- --- --- ----- --- ----
The total quarterly revenues from the CIS markets increased year-on-year by 3.9% to 11.1 billion rubles.
Our continued focus on cost control increased consolidated OIBDA margin for the CIS segment by 2 percentage points to a record high of 48.0%, a remarkable achievement in challenging market conditions.
In the third quarter of 2009, we observed a good increase in subscriber numbers across all markets where we operate. Our subscriber base in the CIS reached 14.2 million active users, 12.4% more than a year ago.
Net income attributable to VimpelCom in the CIS segment reached 86 million rubles in the third quarter, with a modest impact from the foreign exchange gain as compared with the second quarter of 2009.
CIS Revenues Development
KAZAKHSTAN (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q -------------------------- ------ ------ ----- ------ ----- Net operating revenues 5,387 4,815 11.9% 5,061 6.4% ---------------------- ----- ----- ---- ----- --- Mobile 5,311 4,750 11.8% 4,988 6.5% ------ ----- ----- ---- ----- --- Fixed 211 146 44.5% 190 11.1% ----- --- --- ---- --- ---- Elimination -135 -81 -117 ----------- ---- --- ---- Net operating revenues (KZT, millions) 25,928 23,830 8.8% 23,679 9.5% ---------------------------- ------ ------ --- ------ ---
UKRAINE (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ----------------------- ------ ------ ----- ------ ----- Net operating revenues 1,773 2,283 -22.3% 1,645 7.8% ---------------------- ----- ----- ----- ----- --- Mobile 1,066 1,653 -35.5% 956 11.5% ------ ----- ----- ----- --- ---- Fixed 879 787 11.7% 800 9.9% ----- --- --- ---- --- --- Elimination -172 -157 -111 ----------- ---- ---- ---- Net operating revenues (UAH, millions) 442 456 -3.1% 390 13.3% ---------------------------- --- --- ---- --- ----
ARMENIA (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ----------------------- ------ ------ ----- ------ ----- Net operating revenues 1,611 1,667 -3.4% 1,584 1.7% ---------------------- ----- ----- ---- ----- --- Mobile 637 764 -16.6% 634 0.5% ------ --- --- ----- --- --- Fixed 974 903 7.9% 950 2.5% ----- --- --- --- --- --- Elimination 0 0 0 ----------- --- --- --- Net operating revenues (AMD, millions) 19,167 20,786 -7.8% 18,253 5.0% ---------------------------- ------ ------ ---- ------ ---
UZBEKISTAN (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q -------------------------- ------ ------ ----- ------ ----- Net operating revenues 1,568 1,416 10.7% 1,693 -7.4% ---------------------- ----- ----- ---- ----- ---- Mobile 1,467 1,345 9.1% 1,594 -8.0% ------ ----- ----- --- ----- ---- Fixed 103 71 45.1% 100 3.0% ----- --- --- ---- --- --- Elimination -2 0 -1 ----------- --- --- --- Net operating revenues (US$, millions) 50 58 -13.8% 53 -5.7% ---------------------------- --- --- ----- --- ----
TAJIKISTAN (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q -------------------------- ------ ------ ----- ------ ----- Mobile net operating revenues 468 358 30.7% 461 1.5% ----------------------------- --- --- ---- --- --- Mobile net operating revenues (US$, millions) 14.9 14.8 0.7% 13.7 8.8% ----------------------------- ---- ---- --- ---- ---
GEORGIA (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ----------------------- ------ ------ ----- ------ ----- Mobile net operating revenues 279 131 113.0% 229 21.8% ----------------------------- --- --- ----- --- ---- Mobile net operating revenues (GEL, millions) 14.9 7.6 96.1% 11.8 26.3% ----------------------------- ---- --- ---- ---- ----
CIS (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ------------------- ------ ------ ----- ------ ----- Net operating revenues 11,076 10,663 3.9% 10,668 3.8% ---------------------- ------ ------ --- ------ --- Mobile 9,221 8,999 2.5% 8,859 4.1% ------ ----- ----- --- ----- --- Fixed 2,167 1,907 13.6% 2,040 6.2% ----- ----- ----- ---- ----- --- Elimination -312 -243 -231 ----------- ---- ---- ----
CIS OIBDA Development*
KAZAKHSTAN (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q -------------------------- ------ ------ ----- ------ ----- OIBDA total 3,187 2,573 23.9% 2,745 16.1% ----------- ----- ----- ---- ----- ---- Mobile 3,064 2,495 22.8% 2,643 15.9% ------ ----- ----- ---- ----- ---- Fixed 123 78 57.7% 102 20.6% ----- --- --- ---- --- ---- OIBDA margin, % 59.2% 53.4% 54.2% --------------- ---- ---- ----
UKRAINE (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ----------------------- ------ ------ ----- ------ ----- OIBDA total 380 -40 n/a 322 18.0% ----------- --- --- --- --- ---- Mobile 140 -215 n/a 82 70.7% ------ --- ---- --- --- ---- Fixed 240 175 37.1% 240 0.0% ----- --- --- ---- --- --- OIBDA margin, % 21.4% n/a 19.6% --------------- ---- --- ----
ARMENIA (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ----------------------- ------ ------ ----- ------ ----- OIBDA total 825 813 1.5% 799 3.3% ----------- --- --- --- --- --- Mobile 306 337 -9.2% 298 2.7% ------ --- --- ---- --- --- Fixed 519 476 9.0% 501 3.6% ----- --- --- --- --- --- OIBDA margin, % 51.2% 48.8% 50.4% --------------- ---- ---- ----
UZBEKISTAN (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q -------------------------- ------ ------ ----- ------ ----- OIBDA total 738 798 -7.5% 865 -14.7% ----------- --- --- ---- --- ----- Mobile 696 774 -10.1% 825 -15.6% ------ --- --- ----- --- ----- Fixed 42 24 75.0% 40 5.0% ----- --- --- ---- --- --- OIBDA margin, % 47.1% 56.4% 51.1% --------------- ---- ---- ----
TAJIKISTAN (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q -------------------------- ------ ------ ----- ------ ----- Mobile OIBDA 162 115 40.9% 173 -6.4% ------------ --- --- ---- --- ---- Mobile OIBDA margin, % 34.6% 32.1% 37.5% ---------------------- ---- ---- ----
GEORGIA (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ----------------------- ------ ------ ----- ------ ----- Mobile OIBDA 30 -27 n/a 4 650.0% ------------ --- --- --- --- ----- Mobile OIBDA margin, % 10.8% n/a 1.7% ---------------------- ---- --- ---
CIS (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ------------------- ------ ------ ----- ------ ----- OIBDA total 5,322 4,232 25.8% 4,908 8.4% ----------- ----- ----- ---- ----- --- Mobile 4,398 3,479 26.4% 4,025 9.3% ------ ----- ----- ---- ----- --- Fixed 924 753 22.7% 883 4.6% ----- --- --- ---- --- --- OIBDA margin, % 48.0% 39.7% 46.0% --------------- ---- ---- ----
* Please find information on respective operating income amounts in the supplementary file FinancialOperatingQ32009.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.
CIS Operating Highlights
KAZAKHSTAN 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q
---------- ------ ------ ----- ------ -----
Mobile subscribers*) ('000) 6,835 5,614 21.7% 6,635 3.0%
--------------------------- ----- ----- ---- ----- ---
MOU, min 98.1 108.1 -9.3% 90.7 8.2%
-------- ---- ----- ---- ---- ---
ARPU mobile, (RUR) 257.9 294.1 -12.3% 253.6 1.7%
------------------ ----- ----- ----- ----- ---
ARPU mobile, (KZT) 1,240.7 1,455.4 -14.8% 1,187.1 4.5%
------------------ ------- ------- ----- ------- ---
Broadband subscribers ('000) 0.3 n/a 0.3 0.0%
---------------------------- --- --- --- ---
UKRAINE 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q
------- ------ ------ ----- ------ -----
Mobile subscribers*) ('000) 2,199 2,403 -8.5% 1,934 13.7%
--------------------------- ----- ----- ---- ----- ----
MOU, min 203.7 261.5 -22.1% 217.8 -6.5%
-------- ----- ----- ----- ----- ----
ARPU mobile, (RUR) 168.3 234.9 -28.4% 166.8 0.9%
------------------ ----- ----- ----- ----- ---
ARPU mobile, (UAH) 42.0 47.4 -11.4% 39.7 5.8%
------------------ ---- ---- ----- ---- ---
Broadband subscribers ('000) 70 16 337.5% 53 32.1%
---------------------------- --- --- ----- --- ----
ARMENIA 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q
------- ------ ------ ----- ------ -----
Mobile subscribers*) ('000) 502 784 -36.0% 486 3.3%
--------------------------- --- --- ----- --- ---
MOU, min 269.0 139.9 92.3% 238.4 12.8%
-------- ----- ----- ---- ----- ----
ARPU mobile, (RUR) 429.7 336.9 27.5% 436.9 -1.6%
------------------ ----- ----- ---- ----- ----
ARPU mobile, (AMD) 5,117.2 4,200.1 21.8% 5,034.7 1.6%
------------------ ------- ------- ---- ------- ---
Broadband subscribers ('000) 18.1 5.4 235.2% 19.2 -5.7%
---------------------------- ---- --- ----- ---- ----
UZBEKISTAN 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q
---------- ------ ------ ----- ------ -----
Mobile subscribers*) ('000) 3,652 3,148 16.0% 3,605 1.3%
--------------------------- ----- ----- ---- ----- ---
MOU, min 409.3 298.5 37.1% 225.6 81.4%
-------- ----- ----- ---- ----- ----
ARPU mobile, (RUR) 140.7 157.5 -10.7% 150.6 -6.6%
------------------ ----- ----- ----- ----- ----
ARPU mobile, (US$) 4.5 6.5 -30.8% 4.7 -4.3%
------------------ --- --- ----- --- ----
Broadband subscribers ('000) 8.3 n/a 7.6 9.2%
---------------------------- --- --- --- ---
TAJIKISTAN 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q
---------- ------ ------ ----- ------ -----
Mobile subscribers*) ('000) 706 527 34.0% 677 4.3%
--------------------------- --- --- ---- --- ---
MOU, min 173.3 255.9 -32.3% 173.1 0.1%
-------- ----- ----- ----- ----- ---
ARPU mobile, (RUR) 224.1 250.7 -10.6% 221.6 1.1%
------------------ ----- ----- ----- ----- ---
ARPU mobile, (US$) 7.2 10.4 -30.8% 6.9 4.3%
------------------ --- ---- ----- --- ---
GEORGIA 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q
------- ------ ------ ----- ------ -----
Mobile subscribers*) ('000) 341 189 80.4% 289 18.0%
--------------------------- --- --- ---- --- ----
MOU, min 129.3 109.8 17.8% 123.1 5.0%
-------- ----- ----- ---- ----- ---
ARPU mobile, (RUR) 288.5 238.9 20.8% 283.6 1.7%
------------------ ----- ----- ---- ----- ---
ARPU mobile, (GEL) 15.4 14.0 10.0% 14.5 6.2%
------------------ ---- ---- ---- ---- ---
* Starting with this quarterly report, we no longer provide information on subscriber market share. This is because different churn policies used by mobile service providers result in reported subscriber market share figures that could be misleading.
South-East Asia
Cambodian operations have been actively developing since our launch in May 2009. As of the third quarter of 2009, our services are available in the 17 largest provinces reaching 42% of the country's population. By the end of 2009, we plan to expand coverage to reach more than two thirds of the country's population.
According to the latest independent research Beeline brand awareness was ranked third among 9 mobile operators in Cambodia with brand awareness at 62% on a country-wide level and 98% in the capital.
Two months after the network launch in Vietnam, our networks cover the capital and the two largest cities as well as the 8 most populated provinces. By the end of January 2010, we plan to cover more than 40 provinces of Vietnam with a population of about 41 million.
Our distribution network in Vietnam was extended to more than 10,000 points of sales including traditional retail outlets and new channels like Branded Trade Counters. According to the latest independent research, in the three largest cities of Vietnam the Beeline brand has reached 80% awareness level among the 15-65 year-old audience.
SEA*) (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q --------------------- ------ ------ ----- ------ ----- Net operating revenues 74 0 n/a 28 164.3% ---------------------- --- --- --- --- ----- OIBDA total -234 -4 n/a -174 n/a ----------- ---- --- --- ---- ---
*) See definitions in Attachment A.
For more information on financial and operating data for specific countries, please refer to the supplementary file FinancialOperatingQ32009.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.
The Company's management will discuss its third quarter 2009 results during a conference call and slide presentation on November 24, 2009 at 6:30 pm Moscow time (10:30 am US ET). The call and slide presentation may be accessed via webcast at the following URL address http://www.vimpelcom.com. The conference call replay will be available through December 1, 2009. The slide presentation webcast will also be available for download on VimpelCom's website http://www.vimpelcom.com.
The VimpelCom Group consists of telecommunications operators providing voice and data services through a range of mobile, fixed and broadband technologies. The Group includes companies operating in Russia, Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia, Armenia, as well as Vietnam and Cambodia, in territories with a total population of about 340 million. VimpelCom was the first Russian company to list its shares on the New York Stock Exchange ("NYSE"). VimpelCom's ADSs are listed on the NYSE under the symbol "VIP".
This press release contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements relate to the proposed combination with Kyivstar and its benefits, the Company's 2009 capital expenditures and the Company's development plans in Cambodia and Vietnam. These and other forward-looking statements are based on management's best assessment of the Company's strategic and financial position and of future market conditions and trends. These discussions involve risks and uncertainties. The actual outcome may differ materially from these statements as a result of continued volatility in the economies in the markets in which the Company operates, unforeseen developments from competition, governmental regulation of the telecommunications industries, general political uncertainties in the markets in which the Company operates and/or litigation with third parties. The actual outcome may also differ materially if the Company is unable to obtain all necessary corporate approvals relating to its business, if the Company is unable to successfully integrate newly-acquired businesses, including Golden Telecom, and other factors. There can be no assurance that such risks and uncertainties will not have a material adverse effect on the VimpelCom Group. Certain factors that could cause actual results to differ materially from those discussed in any forward-looking statements include the risks described in the Company's Annual Report on Form 20-F for the year ended December 31, 2008 and other public filings made by the Company with the United States Securities and Exchange Commission, which risk factors are incorporated herein by reference. VimpelCom disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments.
IMPORTANT NOTICE: The proposed exchange offer described in this communication has not yet commenced, and the description of the proposed exchange offer contained in this communication is not an offer to buy or the solicitation of an offer to sell securities.
If the proposed exchange offer is commenced, the Company expects that VimpelCom Ltd. will file with the SEC a registration statement and other related materials with respect to the proposed exchange offer, and the Company will file with the SEC a solicitation/recommendation statement on Schedule 14D-9 with respect to the proposed exchange offer. Investors and shareholders are urged to read the registration statement and other related materials, the solicitation/recommendation statement on Schedule 14D-9 and any amendments, exhibits or other applicable documents regarding the proposed exchange offer if and when they become available because they will contain important information. Those materials will be made available to the Company's shareholders at no expense to them. In addition, all of those materials (and all other exchange offer documents filed with the SEC) will be made available at no charge on the SEC's website at www.sec.gov.
- Definitions and tables are attached -
Attachment A: Definitions
Mobile subscribers are those subscribers in the registered subscriber base who were a party to a revenue generating activity in the past three months and remain in the base at the end of the reported period, except for the subscriber base in Cambodia which is calculated on a one month basis. Such activities include all incoming and outgoing calls, subscriber fee accruals, debits related to service, outgoing SMS, MMS, data transmission and receipt sessions, but do not include incoming SMS and MMS sent by our Company or abandoned calls. Total number of mobile subscribers also includes subscribers using mobile internet service via USB modems.
Each ADS represents 0.05 of one share of common stock. This ratio was established effective August 21, 2007.
ARPU (Monthly Average Revenue per User), a non-U.S. GAAP financial measure, is calculated by dividing the Company's service revenue during the relevant period, including roaming revenue and interconnect revenue, but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of the Company's subscribers during the period and dividing by the number of months in that period. The Company believes that ARPU provides useful information to investors because it is an indicator of the performance of the Company's business operations and assists management in budgeting. The Company also believes that ARPU provides management with useful information concerning usage and acceptance of the Company's services. ARPU should not be viewed in isolation or an alternative to other figures reported under U.S. GAAP.
Broadband subscribers are those subscribers in the registered subscriber base who were a party to a revenue generating activity in the past three months. Such activities include monthly internet access using FTTB, xDSL and WiFi technologies as well as mobile internet service via USB modems.
CIS Geographic Segment for the purpose of VimpelCom reporting includes our operations in the following countries: Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Armenia and Georgia
Fixed-line subscriber is an authorized user of fixed-line communications services.
General and administrative costs (G&A) include salaries and outsourcing costs, including related social contributions required by Russian law; stock price-based compensation expenses; repair and maintenance expenses; rent, including lease payments for base station sites; utilities; other miscellaneous expenses, such as insurance, operating taxes, license fees, and accounting, audit and legal fees.
Households passed are households located within buildings, in which indoor installation of all the FTTB equipment necessary to install terminal residential equipment has been completed.
Mobile services are wireless voice and data transmission services excluding WiFi.
MOU (Monthly Average Minutes of Use per User) is calculated by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile subscribers during the period and dividing by the number of months in that period.
OIBDA is a non-U.S. GAAP financial measure. OIBDA, previously referred to as EBITDA by the Company, is defined as operating income before depreciation, amortization and impairment loss. The Company believes that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our business operations, including our ability to finance capital expenditures, acquisitions and other investments and our ability to incur and service debt. While depreciation, amortization and impairment loss are considered operating costs under U.S. GAAP, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our OIBDA calculations are commonly used as bases for some investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the telecommunications industry. OIBDA should not be considered in isolation as an alternative to net income attributable to VimpelCom, operating income or any other measure of performance under U.S. GAAP. OIBDA does not include our need to replace our capital equipment over time. Reconciliation of OIBDA to operating income, the most directly comparable U.S. GAAP financial measure, is presented below in the reconciliation tables section.
OIBDA margin is OIBDA expressed as a percentage of net operating revenues. Reconciliation of OIBDA margin to operating income as a percentage of net operating revenues, the most directly comparable U.S. GAAP financial measure, is presented below in the reconciliation tables section.
Prepaid subscribers are those subscribers who pay for their services in advance.
Roaming revenues include both revenues from VimpelCom customers who roam outside of home country network and revenues from other wireless carriers for roaming by their customers on VimpelCom's network.
Sales and marketing costs (S&M) include marketing, advertising and dealer commissions expenses.
Take-up rate for the FTTB network is calculated by dividing the number of FTTB subscribers by the total number of households passed.
VAS (value added services) includes short messages ("SMS"), multimedia messages ("MMS"), caller number identification, call waiting, data transmission, mobile Internet, downloadable content and other services.
Capital expenditures (Capex) - purchases of new equipment, new construction, upgrades, software, other long lived assets and related reasonable costs incurred prior to intended use of the non current asset, accounted at the earliest event of advance payment or delivery. Long-lived assets acquired in business combinations are not included in capital expenditures.
SEA - VimpelCom operations in South-East Asia, which include operations in Cambodia and VimpelCom's respective equity in net results of operations of the Company's Vietnamese associate GTEL-Mobile JSC ("GTEL-Mobile").
Net debt is calculated as the sum of short-term debt and long-term debt minus cash and cash equivalents.
Attachment B: VimpelCom financial statements
Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Statements of Income
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
(In millions of Russian rubles, except
share (ADS) amounts)
Operating revenues:
Service revenues 70,359 67,913 204,047 180,516
Sales of equipment
and accessories 863 949 2,885 1,054
Other revenues 173 123 475 317
--- --- --- ---
Total operating
revenues 71,395 68,985 207,407 181,887
Revenue based tax (57) (52) (191) (132)
--- --- ---- ----
Net operating
revenues 71,338 68,933 207,216 181,755
Operating expenses:
Service costs 15,306 15,916 44,460 40,462
Cost of equipment
and accessories 886 921 2,841 1,016
Selling, general and
administrative
expenses 18,760 18,167 55,424 49,265
Depreciation 11,452 9,687 32,355 27,445
Amortization 2,229 2,381 6,934 6,399
Provision for
doubtful accounts 406 293 1,387 1,172
--- --- ----- -----
Total operating
expenses 49,039 47,365 143,401 125,759
------ ------ ------- -------
Operating income 22,299 21,568 63,815 55,996
Other income
and expenses:
Interest income 242 436 1,342 1,376
Net foreign
exchange gain/
(loss) 693 (8,269) (12,304) (3,173)
Interest expense (4,914) (3,439) (14,074) (8,220)
Equity in net
gain/(loss)
of associates 152 65 (862) 65
Other (expenses)/
income, net (105) (181) (290) (438)
---- ---- ---- ----
Total other income
and expenses (3,932) (11,388) (26,188) (10,390)
------ ------- ------- -------
Income before
income taxes
and noncontrolling
interest 18,367 10,180 37,627 45,606
Income tax expense 4,809 3,359 10,127 12,326
----- ----- ------ ------
Net income 13,558 6,821 27,500 33,280
Net income/(loss)
attributable to the
noncontrolling
interest 45 308 (98) 1,071
--- --- --- -----
Net income
attributable
to VimpelCom 13,513 6,513 27,598 32,209
====== ===== ====== ======
Basic EPS:
Net income
attributable
to VimpelCom
per common share 266.83 128.68 545.11 634.94
====== ====== ====== ======
Weighted average
common shares
outstanding
(thousand) 50,643 50,615 50,628 50,728
Net income
attributable
to VimpelCom
per ADS equivalent 13.34 6.43 27.26 31.75
===== ==== ===== =====
Diluted EPS:
Net income
attributable
to VimpelCom
per common share 261.01 128.68 525.36 634.94
====== ====== ====== ======
Weighted average
diluted shares
(thousand) 51,771 50,615 52,532 50,728
Net income
attributable
to VimpelCom
per ADS equivalent 13.05 6.43 26.27 31.75
===== ==== ===== =====
Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Balance Sheets
September December
30, 31,
2009 2008
---- ----
(In millions of Russian rubles,
except share amounts)
Assets
Current assets:
Cash and cash equivalents 75,902 26,873
Trade accounts receivable, net of allowance
for doubtful accounts 13,341 13,974
Inventory 2,461 4,191
Deferred income taxes 2,104 2,432
Input value added tax 3,994 5,349
Due from related parties 8,509 4,942
Other current assets 5,924 12,941
----- ------
Total current assets 112,235 70,702
Property and equipment, net 168,407 188,778
Telecommunications licenses, net 17,862 22,470
Goodwill 98,930 102,148
Other intangible assets, net 21,996 25,935
Software, net 12,584 16,134
Investments in associates 13,801 14,501
Other assets 22,707 21,314
------ ------
Total assets 468,522 461,982
======= =======
Liabilities and equity
Current liabilities:
Accounts payable 15,198 26,409
Due to employees 3,343 3,108
Due to related parties 502 142
Accrued liabilities 11,646 8,484
Taxes payable 10,476 4,471
Customer advances, net of VAT 9,302 12,492
Customer deposits 824 868
Short-term debt 74,516 56,093
------ ------
Total current liabilities 125,807 112,067
Deferred income taxes 16,453 18,934
Long-term debt 168,293 191,963
Other non-current liabilities 5,266 3,608
Commitments, contingencies and uncertainties - -
Equity:
Convertible voting preferred stock (.005
rubles nominal value per share), 10,000,000
shares authorized; 6,426,600 shares issued
and outstanding - -
Common stock (.005 rubles nominal value per
share), 90,000,000 shares authorized;
51,281,022 shares issued (December 31,
2008: 51,281,022); 50,683,660 shares
outstanding (December 31, 2008: 50,617,408) 3 3
Additional paid-in capital 42,688 42,624
Retained earnings 115,194 87,599
Accumulated other comprehensive
(loss)/income (5,105) 3,992
Treasury stock, at cost, 597,362 shares of
common stock (December 31, 2008: 663,614) (5,692) (5,983)
------ ------
Total VimpelCom shareholders' equity 147,088 128,235
Noncontrolling interest 5,615 7,175
----- -----
Total equity 152,703 135,410
------- -------
Total liabilities and equity 468,522 461,982
======= =======
Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Statements of Cash Flows
Nine months ended September
30,
2009 2008
---- ----
(In millions of Russian rubles)
Operating activities
Net cash provided by operating activities 88,998 62,117
Investing activities
Purchases of property and equipment (15,699) (33,206)
Purchases of intangible assets (435) (1,747)
Purchases of software (4,180) (5,093)
Acquisition of subsidiaries, net of cash
acquired - (100,348)
Late payment for investment in associate (389) -
Exercise of escrow cash deposit - 4,856
Loan granted - (8,491)
Short-term deposits - (2,368)
Purchases of other assets, net (958) (1,578)
---- ------
Net cash used in investing activities (21,661) (147,975)
Financing activities
Proceeds from bank and other loans 38,920 130,718
Proceeds from sale of treasury stock - 608
Repayments of bank and other loans (54,817) (10,227)
Payments of fees in respect of debt issues (1,671) (1,322)
Net proceeds from employee stock options 171 -
Purchase of noncontrolling interest in
consolidated subsidiaries (14) (23,462)
Payment of dividends to noncontrolling
party (23) (14,240)
Purchase of treasury stock - (2,751)
--- ------
Net cash (used in)/provided by financing
activities (17,434) 79,324
Effect of exchange rate changes on cash
and cash equivalents (875) 259
---- ---
Net increase/(decrease) in cash and cash
equivalents 49,029 (6,275)
Cash and cash equivalents at beginning of
period 26,873 24,637
------ ------
Cash and cash equivalents at end of period 75,902 18,362
====== ======
Supplemental cash flow information
Cash paid during the period:
Income tax 8,917 12,603
Interest 9,335 4,905
Non-cash activities:
Equipment acquired under financing agreements 6 1,448
Accounts payable for equipment and other
long-lived assets 3,856 7,495
Acquisitions :
Fair value of assets acquired - 64,159
Fair value of noncontrolling interest acquired - 4,968
Difference between the amount paid and the
fair value of net assets acquired - 85,062
Consideration for the acquisition of
subsidiaries - (129,430)
--- --------
Change in fair value of liabilities
assumed - 24,759
=== ======
Attachment C: Reconciliation Tables (Unaudited)
Reconciliation of Consolidated OIBDA
(In millions of Russian rubles)
OIBDA Consolidated Total 3Q '09 3Q '08 2Q '09 ------------------------ ------ ------ ------ OIBDA 35,980 33,636 34,958 ----- ------ ------ ------ Depreciation (11,452) (9,687) (10,451) ------------ ------- ------ ------- Amortization (2,229) (2,381) (2,257) ------------ ------ ------ ------ Operating income 22,299 21,568 22,250 ---------------- ------ ------ ------
Reconciliation of OIBDA Margin
OIBDA Margin Consolidated Total 3Q '09 3Q '08 2Q '09
------------------------------- ------ ------ ------
OIBDA margin 50.4% 48.8% 50.6%
------------ ---- ---- ----
Less: Depreciation as a percentage
of net operating revenues (16.0%) (14.0%) (15.1%)
---------------------------------- ------- ------- -------
Less: Amortization as a percentage
of net operating revenues (3.1%) (3.5%) (3.3%)
---------------------------------- ------ ------ ------
Operating income as a percentage of
net operating revenues 31.3% 31.3% 32.2%
----------------------------------- ---- ---- ----
Attachment D: Capex Development
CAPEX (RUR, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q --------------------- ------ ------ ----- ------ ----- Total capex 3,842 16,799 -77.1% 5,027 -23.6% ----------- ----- ------ ----- ----- ----- Russia 2,827 12,224 -76.9% 3,440 -17.8% ------ ----- ------ ----- ----- ----- CIS 756 4,527 -83.3% 817 -7.5% --- --- ----- ----- --- ---- Kazakhstan 310 1,868 -83.4% 376 -17.6% ---------- --- ----- ----- --- ----- Ukraine 95 1,137 -91.6% 95 0.0% ------- --- ----- ----- --- --- Armenia 48 462 -89.6% 12 300.0% ------- --- --- ----- --- ----- Uzbekistan 207 688 -69.9% 241 -14.1% ---------- --- --- ----- --- ----- Tajikistan 16 156 -89.7% 24 -33.3% ---------- --- --- ----- --- ----- Georgia 80 216 -63.0% 69 15.9% ------- --- --- ----- --- ---- SEA 258 9 2767% 761 -66.1% --- --- --- ---- --- -----
Attachment E: Key Financial Results in US Dollars (Convenience Translation)
CONSOLIDATED OPERATIONS (US$, millions) 3Q '09 3Q '08 y-o-y 2Q '09 q-o-q ----------------------- ------ ------ ----- ------ ----- Net operating revenues 2,277 2,843 -19.9% 2,143 6.3% ---------------------- ----- ----- ----- ----- --- OIBDA 1,149 1,388 -17.2% 1,085 5.9% ----- ----- ----- ----- ----- --- OIBDA margin, % 50.5% 48.8% 50.6% --------------- ---- ---- ---- Operating income 712 890 -20.0% 691 3.0% ---------------- --- --- ----- --- --- Operating income margin, % 31.3% 31.3% 32.2% ------------------------ ---- ---- ---- SG&A 599 749 -20.0% 573 4.5% ---- --- --- ----- --- --- including Sales & Marketing Expenses 184 242 -24.0% 168 9.5% ------------------- --- --- ----- --- --- including General & Administrative Costs 415 507 -18.1% 405 2.5% --------------------- --- --- ----- --- --- SG&A percentage 26.3% 26.3% 26.7% --------------- ---- ---- ---- Net income attributable to VimpelCom 431 269 60.2% 702 -38.6% ----------------------- --- --- ---- --- ----- Net income attributable to VimpelCom per common share, basic (US$) 8.52 5.31 13.86 ------------------------ ---- ---- ----- Net income attributable to VimpelCom per ADS equivalent, basic (US$) 0.43 0.27 0.69 ------------------------ ---- ---- ---- Capital expenditures 123 692.9 -82.2% 156.0 -21.2% -------------------- --- ----- ----- ----- -----
Attachment F: Average Rates of Functional Currencies to Ruble*
Functional
Currency/
1 RUR 1Q '08 2Q '08 3Q '08 4Q '08 1Q '09 2Q '09 3Q '09
--------------- ------ ------ ------ ------ ------ ------ ------
Kazakhstan KZT 4.9690 5.1038 4.9540 4.4077 4.0948 4.6771 4.8200
---------- --- ------ ------ ------ ------ ------ ------ ------
Ukraine UAH 0.2081 0.2101 0.2003 0.2274 0.2281 0.2376 0.2496
------- --- ------ ------ ------ ------ ------ ------ ------
Tajikistan USD 0.0412 0.0423 0.0412 0.0367 0.0295 0.0311 0.0319
---------- --- ------ ------ ------ ------ ------ ------ ------
Uzbekistan USD 0.0412 0.0423 0.0412 0.0367 0.0295 0.0311 0.0319
---------- --- ------ ------ ------ ------ ------ ------ ------
Armenia AMD 12.6926 13.0012 12.4664 11.2309 9.6090 11.5227 11.9095
------- --- ------- ------- ------- ------- ------ ------- -------
Georgia GEL 0.0641 0.0612 0.0582 0.0568 0.0495 0.0515 0.0535
------- --- ------ ------ ------ ------ ------ ------ ------
Cambodia USD 0.0311 0.0319
-------- --- ------ ------
* Functional currencies in Tajikistan, Uzbekistan and Cambodia are US dollars.
SOURCE Vimpel-Communications