/Templates/Index.aspx?id=610&epslanguage=en/Templates/Index.aspx?id=603&epslanguage=en/Templates/Index.aspx?id=3081&epslanguage=en Loaded page
VimpelCom announces second quarter and six month 2002 financial and operating results

  • 83% Year-to-year increase in net operating revenues
  • 100% Year-to-year increase in EBITDA
  • 133% Year-to-year increase in net income
  • Approximately 3.7 million subscribers as of today

Moscow and New York (August 27, 2002) - Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP) today announced its financial and operating results for the quarter and six months ended June 30, 2002. During the second quarter of 2002, VimpelCom showed strong subscriber growth and further improvement in net operating revenues, operating income and EBITDA. For the quarter ended June 30, 2002, VimpelCom reported net operating revenues of $173.4 million, an 83.1% increase from the $94.7 million reported for the same period in 2001; EBITDA of $71.8 million, a 100.1% increase from the $35.9 million reported for the same period in 2001; and net income of $21.9 million, an increase of 133.1% from the $9.4 million reported for the second quarter of 2001. The Company's EBITDA margin for the second quarter of 2002 was approximately 41.4% compared to approximately 37.9% for the same period of 2001.

As of June 30, 2002, VimpelCom had approximately 3.28 million subscribers on its wireless networks and networks operated by VimpelCom's subsidiaries and an affiliate, including 2.85 million subscribers in the Moscow license area, representing a total year-to-year growth of approximately 176%. As of today, VimpelCom's total number of subscribers is approximately 3.74 million, with approximately 3.11 million subscribers in the Moscow license area.

Using independent sources to estimate the number of subscribers of the Company's competitors in the Moscow license area, VimpelCom estimates that its market share in the Moscow license area was 52.0% at the end of the second quarter of 2002, a significant improvement compared to the Company's estimated market share of 39.0% reported at the end of the second quarter of 2001.

Commenting on today's announcement, Jo Lunder, Chief Executive Officer of VimpelCom, said, "Our second quarter results show the continued progress of our company. We are particularly, pleased with our growing revenue and EBITDA numbers and our strong position in Moscow. In addition, we have made good progress in our national expansion plans, and now have 20 GSM networks in commercial operation outside of Moscow. We plan to continue our controlled and balanced national build-out in the second half of this year."

 

Key Financial and Operating Indicators

 

  3 months ended 6 months ended
June 30,
2002
June 30,
2001
Change
(%)
June 30,
2002
June 30,
2001
Change
(%)
Net operating revenues (US$,000) 173,381 94,679 83.1% 318,441 174,422 82.6%
EBITDA (US$,000) 71,757 35,862 100.1% 135,027 63,760 111.8%
EBITDA margin 41.4% 37.9% 9.2% 42.4% 36.6% 15.8%
Net income (US$,000) 21,941 9,414 133.1% 49,987 14,540 243.8%
ARPU(US$) (1) 18.9 27.7 -31.8% 19.1 27.6 -30.8%
MOU (min) (2) 94.7 107.7 -12.1% 91.3 101.4 -10.0%
SAC (US$) (3) 31.3 42.3 -26.0% 30.9 40.1 -22.9%

 

Note:

  1. ARPU (Monthly Average Revenue per User) is calculated for each month in the relevant period by dividing the Company's service revenue during that month, including roaming revenue, but excluding revenue from connection fees and sales of handsets and accessories, by the average number of the Company's subscribers during the month.
  2. MOU (Monthly Average Minutes of Use per User) is calculated for each month of the relevant period by dividing the total number of billable minutes of usage for incoming and outgoing calls during that month (excluding guest roamers) by the average number of subscribers during the month.
  3. SAC (Subscriber Acquisition Cost) is calculated as dealer commissions, advertising expenses and handset subsidies for the period divided by the number of gross sales during the period.

In the second quarter of 2002, the Company's business continued the same pattern shown in recent quarters. It is characterized by rapid subscriber growth combined with the effects of economies of scale, efficient cost control and low acquisition costs per subscriber. On the expense side, in the second quarter of 2002, the Company recorded a number of charges not reflected in the first quarter of 2002. Specifically, the Company recorded a $2.3 million charge to reflect the liability related to its employee stock option plan, which will be settled by the sale of VimpelCom's treasury stock. Also, the Company incurred a $9.5 million net foreign currency exchange loss, primarily on its euro-denominated liabilities relating to network equipment purchases, as a result of the decline of the U.S. dollar against the euro. The Company is introducing additional measures designed to minimize its exposure to U.S. dollar/euro exchange rate fluctuations. Interest expense also increased in the second quarter due to the bond issuance, which resulted in a $250 million loan to the Company in April 2002. On the other hand, there was a decrease in the Company's provision for doubtful accounts in the second quarter of 2002 of $1.2 million compared to the first quarter of 2002. This resulted primarily from improved bad debt management which allowed a reduction in the provision. Primarily as a result of the above, net income in the second quarter of 2002 declined 21.8% to $21.9 million from the $28.0 million reported for the first quarter of 2002. EBITDA increased by 13.4% compared to the first quarter of 2002 to $71.8 million with an EBITDA margin of 41.4%. Net operating revenues grew to $173.4 million, a 19.5% increase compared to the $145.1 million reported for the first quarter of 2002.

The Company's financial results include the activities of VimpelCom-Region, which holds the Company's GSM licenses for areas outside of Moscow. VimpelCom-Region's expenses continue to exceed revenues as the Company's national operations are still predominantly in the phase of network build-out and infrastructure development. Total operating revenues, excluding intra-group transactions, for Moscow on a stand-alone basis and VimpelCom-Region in the second quarter of 2002 were $163.7 million and $12.4 million, respectively. Net income for Moscow on a stand-alone basis in the second quarter of 2002 was $27.3 million and VimpelCom-Region's net loss was $6.4 million.

VimpelCom's total capital expenditures for the second quarter of 2002 were approximately $109.6 million, with $65.6 million spent in the Moscow license area.

The Company's MOU in the second quarter of 2002 was 94.7 minutes, a decrease of approximately 12.1% compared to 107.7 minutes reported in the second quarter of 2001. ARPU for the second quarter of 2002 was approximately $18.9, a 31.8% decrease from $27.7 reported for the second quarter of 2001. The decrease in MOU and ARPU in the second quarter of 2002 was primarily related to the increased proportion of prepaid subscribers on the Company's networks.

 

Key Subscriber Statistics

 

  As of
June 30, 2002
As of
June 30, 2001
Change
(%)
As of
March 31, 2002
Change
q-to-q
(%)
Moscow license area 2,845,300 1,085,100 162.2% 2,377,000 19.7%
Contract 701,700 377,500 85.9% 667,000 5.2%
Prepaid 2,143,600 707,600 202.9% 1,710,000 25.4%
Regions 430,900 100,000 330.9% 284,500 51.5%
Total Number of Subscribers 3,276,200 1,185,100 176.4% 2,661,500 23.1%
 
Churn (quarterly) 6.9% 6.8% -- 5.7% --

 

Strong subscriber growth in Moscow continued through the second quarter of 2002 with prepaid subscribers growing faster than contract subscribers. As a result, the percentage of VimpelCom's prepaid subscribers in its Moscow subscriber base increased from approximately 71.9% at the end of the first quarter of 2002 to 75.3% at the end of the second quarter of 2002. VimpelCom's GSM subscribers in Moscow as a percentage of its overall Moscow subscriber base were 92.7% at the end of the second quarter of 2002, compared to 71.0% at the end of the second quarter of 2001. The Company also reported significant growth in its regional subscribers from 284,500 at the end of the first quarter of 2002 to approximately 430,900 at the end of the second quarter of 2002, or 51.5% of quarter-to-quarter growth.

The Company's quarterly churn rate in the second quarter of 2002 was 6.9%, compared to the Company's churn rate of 6.8% reported for the same period in 2001. The Company expects a rise in churn later this year as a result of high subscriber growth rates in recent periods.

The Company's management will discuss its second quarter 2002 results on a conference call on August 27, 2002 at 6:30 pm Moscow time (10:30 am EDT in New York). The call may be accessed via webcast at the following URL address http://audioevent.mshow.com/70168/

VimpelCom is a leading provider of telecommunications services in Russia, operating under the "Bee Line" family of brand names, which are among the most recognized brand names in Russia. The Group's license portfolio covers approximately 70% of Russia's population (100 million people), including the City of Moscow and the Moscow Region. 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". VimpelCom's convertible notes are listed on the NYSE under the symbol "VIP 05".

 

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 Company's development plans, including the Company's expectations that it will successfully implement its regional build-out plans in the second half of 2002 and reduce its exposure to changes in the U.S. Dollar/Euro exchange rate. 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 unforeseen developments from competition, most notably in the regions of Russia outside of Moscow, governmental regulations of the wireless telecommunications industry, general political uncertainties in Russia and general economic developments in Russia, the Company's ability to continue to grow its overall subscriber base, continued volatility in the world economy and other factors. As a result of such risks and uncertainties, there can be no assurance that the effects of competition or current or future changes in the political, economic and social environment or current or future regulation of the Russian telecommunications industry 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, 2001 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.

 

For more information, please contact:

Valery Goldin
VimpelCom (Moscow)
Tel: 7(095) 974-5888
vgoldin@VimpelCom.com

Christopher Mittendorf
Edelman Financial Worldwide
Tel: 1(212) 704-8134
christopher.mittendorf@edelman.com

 

- Tables attached -

Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Statements of Income

 

  Three months ended
June 30,
Six months ended
June 30,
2002 2001 2002 2001
(In thousands of US dollars,
except per share (ADS) amounts)
Operating revenues:  
  Service revenues and connection fees US$164,328 US$85,953 US$299,081 US$157,210
Sales of handsets and accessories 11,372 9,599 23,268 18,734
Other revenues 393 314 794 653
Total operating revenues 176,093 95,866 323,143 176,597
  Less revenue based taxes (2,712) (1,187) (4,702) (2,175)
Net operating revenues 173,381 94,679 318,441 174,422
 
Operating expenses  
  Service costs 24,048 17,007 44,125 32,136
Cost of handsets and accessories sold 10,272 8,579 17,348 18,049
Cost of other revenues 16 33 32 67
Selling, general and administrative expenses 63,809 30,179 113,763 54,402
Depreciation and amortization 21,881 15,219 40,831 29,136
Provision for doubtful accounts 3,479 3,019 8,146 6,008
Total operating expenses 123,505 74,036 224,245 139,798
 
Operating income (loss) 49,876 20,643 94,196 34,624
 
Other income and expenses:  
  Other income / (loss) 1,205 (305) 1,113 (43)
Interest income 1,835 1,708 3,046 3,685
Gain (loss) on trading in securities 6 179 58 240
Interest expense (11,998) (7,460) (18,606) (14,665)
Net foreign exchange (loss) / gain (9,460) 1,233 (9,881) 2,038
Total other income and expenses (18,412) (4,645) (24,270) (8,745)
 
Income before income taxes and minority interest 31,464 15,998 69,926 25,879
 
Income taxes expense 9,523 6,551 19,949 11,306
Minority interest in net earnings of subsidiaries - 33 (10) 33
 
Net income US$21,941 US$9,414 US$49,987 US$14,540
 
Net income per common share US$ 0.58 US$ 0.29 US$ 1.32 US$ 0.44
Net income per ADS equivalent US$ 0.44 US$ 0.22 US$ 0.99 US$ 0.33
Weighted average common shares
outstanding (thousands)
38,006 32,851 38,004 32,851
EBITDA US$71,757 US$35,862 US$135,027 US$63,760
 

 

Open Joint Stock Company "Vimpel-Communications"
Condensed Consolidated Balance Sheets
 
  June 30,
2002
(unaudited)
December 31,
2001
(In thousands of US dollars)
Assets  
Current assets
  Cash and cash equivalents US$359,127 US$144,172
Short-term investments 0 920
Accounts receivable 72,537 49,678
Other current assets 104,784 69,217
Total current assets 536,448 263,987
 
Non-current assets
  Property and equipment, net 673,401 535,405
Intangible assets, net 69,437 70,926
Other assets 72,966 55,488
Total non-current assets 815,804 661,819
 
Total assets US$1,352,252 US$925,806
 
Liabilities and shareholders' equity
Current liabilities:
  Accounts payable US$60,127 US$42,680
Due to related parties 784 883
Customer deposits 82,090 63,019
Deferred revenue 1,507 1,874
Bank loans, current portion 33,818 17,852
Capital lease obligation, current portion 3,265 4,208
Equipment financing obligation, current portion 121,958 68,290
Accrued liabilities 37,426 13,035
Total current liabilities 340,975 211,841
 
Deferred income taxes 14,918 18,214
Bank loans, less current portion 283,399 50,100
5.5% Senior convertible notes due July 2005 83,395 81,027
Equipment financing, less current portion 71,235 56,196
 
Minority Interest 0 307
 
Shareholders' equity 558,330 508,121
 
Total liabilities and shareholders' equity US$1,352,252 US$925,806




/Templates/Index.aspx?id=608&epslanguage=en/Templates/Index.aspx?id=2910&epslanguage=en/Templates/Index.aspx?id=3441&epslanguage=en/Templates/IndexCareers.aspx?id=3579&epslanguage=en/Templates/Index.aspx?id=609&epslanguage=en/Templates/MyVimpelcom.aspx?id=745&epslanguage=enhttp://www.theguardian.com/uk