MOSCOW and NEW YORK, Aug. 27 /PRNewswire-FirstCall/ -- Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP), the leading provider of telecommunications services in Russia and the Commonwealth of Independent States (CIS), today announced its financial and operating results for the quarter ended June 30, 2009.
Second Quarter 2009 Financial Highlights
- Net operating revenues reached 69.0 billion Russian rubles, an increase of 3.3% versus 1Q09
- OIBDA reached 35.0 billion rubles, an increase of 8.7% versus 1Q09
- Consolidated OIBDA margin improved to 50.6% from 48.1% reported in 1Q09
- Net income amounted to 22.6 billion rubles compared to a 8.5 billion rubles loss in 1Q09
Second Quarter 2009 Operating Highlights
- Mobile subscribers increased by 1.0 million versus 1Q09, reaching 63.7 million
- Launch of operations in Cambodia and Vietnam under Beeline brand
- Active 3G networks in 51 regions of Russia
Commenting on the performance of the Company, Boris Nemsic, Chief Executive Officer of VimpelCom, said, "We are pleased with our performance during the second quarter. We continue to demonstrate strong results with revenues of 69.0 billion rubles and OIBDA of 35.0 billion rubles. In spite of the economic crisis we achieved 12% year-on-year growth in revenue and 21% year-on-year growth in OIBDA.
"We increased the number of active mobile subscribers to 63.7 million, almost 19% more than we had last year. The residential broadband business grew in line with our expectations and we now serve 1.7 million fixed and mobile broadband subscribers compared to 0.6 million customers a year ago.
"I am especially proud to report that revenue growth coupled with successful business integration and ongoing cost control yielded a consolidated fixed and mobile OIBDA margin of 50.6%. The consolidated OIBDA margin is 2.5 percentage points above a strong first quarter figure and represents a 3.8 percentage point increase compared to the results of the second quarter of 2008.
"Cash flow from operations for the quarter amounted to 27.6 billion rubles or $858 million dollars*. We had a modest increase in capital expenditures compared to the first quarter of 2009. In line with our initial expectations we plan to increase CAPEX in the second half of the year to ensure the sustainability of our business and to capture growth opportunities going forward.
"Although our operations during the second quarter reflected the underlying robustness of the telecom markets and our successful business execution, macroeconomic uncertainty still remains a significant factor in the current environment. Hence, looking forward we maintain our stance of cautious optimism."
*The average exchange rate for the quarter ended June 30, 2009 was 32.2145 RUR/US$
Key Consolidated Financial and Operating Results
CONSOLIDATED OPERATIONS*
(RUR, millions) 2Q '09 2Q '08 y-o-y 1Q '09 q-o-q
Net operating revenues 69,035 61,684 11.9% 66,843 3.3%
OIBDA 34,958 28,889 21.0% 32,166 8.7%
OIBDA margin, % 50.6% 46.8% 48.1%
Operating income 22,250 17,409 27.8% 19,266 15.5%
Operating income
margin, % 32.2% 28.2% 28.8%
SG&A 18,458 18,278 1.0% 18,206 1.4%
including Sales &
Marketing Expenses 5,414 5,074 6.7% 5,302 2.1%
including General &
Administrative Costs 13,044 13,204 -1.2% 12,904 1.1%
SG&A percentage 26.7% 29.6% 27.2%
Net income (loss) 22,599 11,109 103.4% -8,514 n/a
Net income (loss) per
common share, basic (RUR) 446.43 218.69 -168.20
Net income (loss) per ADS
equivalent, basic (RUR) 22.32 10.93 -8.41
Capital expenditures 5,027 15,689 -68.0% 3,925 28.1%
Mobile subscribers ('000) 63,676 53,707 18.6% 62,724 1.5%
Broadband subscribers*)
('000) 1,712 617 177.5% 1,538 11.3%
* See definitions in Attachment A. Y-o-y stands for 2Q'09 vs. 2Q '08
comparison while q-o-q stands for 2Q '09 vs. 1Q '09.
Net operating revenues
2Q '09* (RUR, millions) Russia CIS Other Eliminations Total
Mobile business 49,410 8,859 28 -89 58,208
Fixed business 13,007 2,040 0 -472 14,575
Eliminations -3,281 -231 0 -236 -3,748
Total net operating
revenue 59,136 10,668 28 -797 69,035
* 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 11.9% year-on-year and 3.3% as compared with the previous quarter demonstrating the strength of our core business.
Synergies from business integration and focus on operational efficiency helped us to achieve 8.7% quarter-on-quarter OIBDA growth, and even more remarkably, 21.0% year-on-year OIBDA growth. Solid cash inflow from operations coupled with our prudent approach to working capital resulted in a 21.7% increase of quarterly operational cash flow compared to the same period of 2008.
During the second quarter we repaid $456 million dollars of debt. Additionally, in July of 2009 we raised 10 billion in Ruble bonds in order to optimize the structure of our debt portfolio through extended duration and a more balanced currency composition.
Our quarterly net income amounted to 22.6 billion rubles, including a 10.6 billion ruble net foreign exchange gain due to the strengthening ruble.
Russia - Financial and Operating Results
RUSSIA (RUR, millions) 2Q '09 2Q '08 y-o-y 1Q '09 q-o-q
Net operating revenues 59,136 52,915 11.8% 56,272 5.1%
OIBDA 30,279 25,041 20.9% 27,227 11.2%
OIBDA margin, % 51.2% 47.3% 48.4%
Operating income 20,574 16,269 26.5% 17,719 16.1%
Operating income margin, % 34.8% 30.7% 31.5%
SG&A 15,417 15,521 -0.7% 14,936 3.2%
including Sales & Marketing
Expenses 4,726 4,273 10.6% 4,485 5.4%
including General &
Administrative Costs 10,691 11,248 -5.0% 10,451 2.3%
SG&A percentage 26.1% 29.3% 26.5%
Net income (loss) 21,835 10,616 105.7% -6,722 n/a
Our quarterly net operating revenues in Russia amounted to 59.1 billion rubles, a growth of 5.1% compared to the previous quarter or 11.8% compared to the same period of 2008. The consolidated OIBDA margin in Russia was 51.2%, up from 47.3% reported a year ago.
In the mobile segment our revenues increased by 8.2% quarter-on-quarter. MOU was up by 4.3% compared with the previous quarter, reflecting a combination of the normal seasonal increase and slight downward pressure from the macroeconomic environment. The increase in usage, coupled with stable pricing, led to an increase in ARPU of 5.2%.
Our fixed-line revenues decreased by 2.3% quarter-on-quarter, and now represent 17.2% of the total revenues in Russia. The fixed-line OIBDA margin decreased slightly to 29.6% from 30.1% reported in the first quarter. The quarterly financial dynamics were impacted by the ruble appreciation as some of our corporate and wholesale tariffs are linked to foreign currencies, while the majority of the operating expenses is in Russian rubles.
In the second quarter of 2009 the total number of residential broadband subscribers in Russia including FTTB and mobile broadband reached 1.7 million.
RUSSIA REVENUES (RUR, millions) 2Q '09 2Q '08 y-o-y 1Q '09 q-o-q
Net operating revenues 59,136 52,915 11.8% 56,272 5.1%
Mobile revenues 49,410 44,004 12.3% 45,653 8.2%
Fixed revenues 13,007 9,788 32.9% 13,308 -2.3%
Eliminations -3,281 -877 -2,689
RUSSIA OIBDA DEVELOPMENT*
(RUR, millions) 2Q '09 2Q '08 y-o-y 1Q '09 q-o-q
OIBDA Total 30,279 25,041 20.9% 27,227 11.2%
Mobile OIBDA 26,427 22,895 15.4% 23,222 13.8%
Fixed OIBDA 3,852 2,146 79.5% 4,005 -3.8%
Total OIBDA margin, % 51.2% 47.3% 48.4%
Mobile OIBDA margin, % 53.5% 52.0% 50.9%
Fixed OIBDA margin, % 29.6% 21.9% 30.1%
RUSSIA OPERATING DEVELOPMENT 2Q '09 2Q '08 y-o-y 1Q '09 q-o-q
Mobile subscribers ('000) 49,971 42,485 17.6% 49,351 1.3%
Subscriber market share**), % 25.3% 24.6% 25.9%
MOU, min 211.8 220.3 -3.9% 203.0 4.3%
ARPU mobile, (RUR) 322.5 347.6 -7.2% 306.6 5.2%
Broadband subscribers ('000) 1,659 604 174.7% 1,498 10.7%
* Please find information on respective operating income amounts in the
supplementary file FinancialOperatingQ22009.xls which is an integral
part of this press release, on our website at http://www.vimpelcom.com/news/qrep.wbp.
** Source: AC&M-Consulting. Starting from January 1, 2008 VimpelCom's
market share is calculated on the basis of active subscribers. Published
data on the number of subscribers of other wireless service providers
may vary significantly because of different accounting methodologies for
calculating the active subscriber base.
CIS - Financial and Operating Results
CIS OPERATIONS
(RUR, millions) 2Q '09 2Q '08 y-o-y 1Q '09 q-o-q
Net operating revenues 10,668 9,170 16.3% 11,287 -5.5%
OIBDA 4,908 3,885 26.3% 5,079 -3.4%
OIBDA margin, % 46.0% 42.4% 45.0%
Operating income 1,929 1,177 63.9% 1,691 14.1%
Operating income margin, % 18.1% 12.8% 15.0%
SG&A 2,844 2,727 4.3% 3,140 -9.4%
including Sales &
Marketing Expenses 633 801 -21.0% 771 -17.9%
including General &
Administrative Costs 2,211 1,926 14.8% 2,369 -6.7%
SG&A percentage 26.7% 29.7% 27.8%
Net income (loss) 841 528 59.3% -374 n/a
Mobile subscribers ('000) 13,626 11,222 21.4% 13,373 1.9%
Broadband subscribers*)
('000) 53 13 307.7% 40 32.5%
In the CIS we continue to expand our subscriber base, which reached 13.6 million active users, 21.4% more than a year ago. The revenues from our CIS operations increased by 16.3% when compared to the second quarter of 2008, growing to 14.6%* of the Group consolidated revenues.
However, the reported financial results in the CIS countries were negatively affected by ruble appreciation versus the functional currency. In local currency terms, we see quarterly revenue growth in our major CIS markets. Please see Attachment F for the applicable exchange rates.
We are OIBDA positive in all segments and all markets where we operate. The consolidated fixed and mobile OIBDA margin from our CIS operations increased to 46.0%, a 3.6 percentage point increase during the second quarter of 2008 reflecting ongoing cost optimization efforts throughout the Group.
In the second quarter of 2009, our consolidated CIS fixed and mobile OIBDA amounted to almost 4.9 billion rubles with a net income of 0.8 billion rubles.
* Calculated on the basis of net operating revenues excluding inter-company transactions.
