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VimpelCom announces third quarter and nine month financial results

  • Revenue and EBITDA growth trend continuing
  • 98% Increase in subscribers since beginning of year

Moscow and New York (November 28, 2000) - Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP) today announced financial results for the third quarter and nine months ended September 30, 2000. The Company also reported that as of November 28, 2000, it had approximately 739,100 subscribers on all its wireless networks, with approximately 699,500 subscribers in the Moscow license area and approximately 39,600 subscribers in the regions, including networks operated by VimpelCom's subsidiaries. This represents an increase in the total number of subscribers of 98.5% over the 372,300 total subscribers recorded as of December 31, 1999.

As of September 30, 2000, VimpelCom had approximately 646,900 subscribers on its Moscow GSM and D-AMPS networks. This represents a growth of approximately 227.9% over the 197,300 subscribers reported at the end of the third quarter of 1999 and a growth of approximately 84.6% over the 350,500 subscribers reported at the end of 1999. As of September 30, 2000, VimpelCom and its subsidiaries had approximately 34,200 subscribers outside of the Moscow license area, a 98.8% increase from the 17,200 subscribers recorded as of September 30, 1999.

In the third quarter of 2000, the GSM network continued to attract more subscribers than the D-AMPS network, with approximately 84% of the total new subscribers joining the Company's GSM network. As of September 30, 2000, the Company's Moscow GSM subscriber base was approximately 333,000, constituting approximately 51.5% of VimpelCom's total Moscow subscriber base. This represents an increase of 152.3% from the 132,000 GSM subscribers reported as of December 31, 1999 and an increase of 493.6% from the 56,100 GSM subscribers reported as of September 30, 1999. As of September 30, 2000, prepaid subscribers constituted approximately 64.0% of VimpelCom's Moscow subscriber base, compared to 64.8% at the end of 1999.

VimpelCom estimates that as of September 30, 2000, its subscriber market share in Moscow was approximately 40.5%.

VimpelCom's average monthly minutes of use per subscriber ("MOU") for the third quarter of 2000 was approximately 89 minutes, a 31.5% decrease from the 130 minutes recorded for the same period in 1999 and a 3.5% increase, as compared to the 86 minutes reported for the second quarter of 2000. VimpelCom's average monthly revenue per user ("ARPU") for the third quarter of 2000 was approximately $36, a 62.1% decrease from the $95 recorded for the same period of 1999 and a 7.7% decrease from the $39 reported for the second quarter of 2000. The increase in MOU in the third quarter of 2000 compared to the second quarter of 2000 as well as the reduced rate of decline in ARPU is due to the increase in the number of high-end users.

For the third quarter ended September 30, 2000, VimpelCom reported total operating revenues of $73.8 million, an increase of 29.7% from the $56.9 million reported in the same period in 1999. Total net operating revenues (net of revenue-based taxes) in the third quarter of 2000 were $70.7 million, an increase of 33.4% from the $53.0 million reported in the same period last year. The Company's operating loss for the third quarter of 2000 was $0.9 million, an improvement over the operating loss of $1.7 million reported for the same period a year ago.

For the nine months ended September 30, 2000, VimpelCom reported total operating revenues of $208.3 million, an increase of 20.7% from the $172.5 million reported in the same period in 1999. Total net operating revenues (net of revenue-based taxes) for the nine months ended September 30, 2000 were $199.3 million, an increase of 22.1% from the $163.2 million reported in the same period last year. The Company's operating loss for the first nine months of 2000 was $5.2 million, a decrease of $4.5 million compared to the operating loss of $9.7 million reported for the same period a year ago.

EBITDA for the third quarter of 2000 was $14.1 million, 20.5% higher than the $11.7 million reported in the same period in 1999 and 9.3 % higher than the $12.9 million EBITDA reported in the second quarter of 2000. The Company's EBITDA margin for the third quarter of 2000 was approximately 20.0%, as compared to the 22.1% EBITDA margin recorded in the same quarter of 1999. EBITDA for the nine months of 2000 was approximately $38.2 million, $6.8 million higher than the $31.4 million recorded in the same period in 1999. The Company's EBITDA margin for the nine months of 2000 was approximately 19.2%, which is equal to the EBITDA margin recorded in the same period of 1999. The Company has shown an improvement in its EBITDA figures in each quarter of 2000.

For the third quarter of 2000, the Company reported a net loss of $5.9 million, or $0.19 per share ($0.14 per ADS), compared with a net loss of $2.6 million, or $0.10 per share ($0.08 per ADS) in the same period in 1999. Each ADS represents 0.75 of one share of common stock. The Company's net loss for the nine months ended September 30, 2000 was $24.4 million, or $0.83 per share ($0.62 per ADS), compared with the Company's net loss of $13.3 million, or $0.61 per share ($0.46 per ADS) for the nine months ended September 30, 1999.

Selling, general and administrative expenses for the third quarter of 2000 increased 50.3% to approximately $27.5 million compared to the $18.3 million reported for the same period in 1999. This increase was primarily due to higher total subscriber acquisition costs that resulted from a greater number of subscriber sales. VimpelCom's average subscriber acquisition cost in the third quarter of 2000 was approximately $75 which is significantly less than the $144 recorded in the third quarter of 1999.

For the third quarter of 2000, the Company recorded a $5.2 million provision for doubtful accounts receivable, a $3.5 million increase compared with $1.7 million reported in the same period in 1999. The increase in provision for doubtful accounts receivable was due primarily to the greater number of postpaid subscribers in the third quarter of 2000 compared with the same period of 1999.

Depreciation and amortization expense was $15.1 million for the third quarter of 2000, as compared to the $13.5 million reported in the same period of 1999. The increase in depreciation and amortization expense reflects the continued build out of the Company's GSM network.

Commenting on today's announcement, Dmitri Zimin, Chief Executive Officer of VimpelCom said, "We are very pleased that the positive trends in our financial performance continue to grow. It validates our strategy of maintaining adequate growth as we concentrate on return to profitability. We will continue to use our advantages in the network capacity in the City of Moscow, customer service and product innovations to further strengthen our competitive positions".

VimpelCom is a leading wireless telecommunications service company in Russia, operating under the "Bee Line" family of brand names, which are among the most recognized brand names in Russia. VimpelCom's license portfolio covers approximately 70% of Russia's population (100 million people), including the City of Moscow and the Moscow Region, which is the Company's primary market. 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 and 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, governmental regulations of the wireless telecommunications industry, general political uncertainties in Russia and general economic developments in Russia 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, 1999 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)
7(095) 974-5888
vgoldin@vimpelcom.com

Sigrid Peterson
Edelman Financial Worldwide
Tel: (212) 704-8284
sigrid_peterson@edelman.com

Open Joint Stock Company "Vimpel-Communications"

Unaudited Consolidated Condensed Statements of Operations

             
             
   

Three months ended

 

Nine months ended

   

September 30,

 

September 30,

   

2000

1999

 

2000

1999

   

In thousands, except per share (ADS) amounts

Operating revenues:

         
 

Service revenues and connection fees

US$66,534

US$49,832

 

US$183,405

US$154,483

 

Sales of handsets and accessories

6,936

6,877

 

23,893

17,581

 

Other revenues

347

203

 

988

467

Total operating revenues

73,817

56,912

 

208,286

172,531

 

Revenue based taxes

(3,101)

(3,894)

 

(8,982)

(9,300)

Net operating revenues

70,716

53,018

 

199,304

163,231

             

Operating expenses

         
 

Service costs

15,941

14,074

 

44,630

43,190

 

Cost of handsets and accessories sold

7,872

7,212

 

24,103

18,789

 

Cost of other revenues

13

86

 

117

175

 

Selling, general and administrative expenses

27,525

18,258

 

78,012

54,570

 

Depreciation and amortization

15,052

13,463

 

43,368

41,073

 

Provision for doubtful accounts

5,231

1,669

 

14,261

15,103

Total operating expenses

71,634

54,762

 

204,491

172,900

             

Operating income (loss)

(918)

(1,744)

 

(5,187)

(9,669)

             

Other income and expenses:

         
 

Other income

1,673

950

 

3,053

1,337

 

Gain (loss) on trading securities

7

201

 

169

1,283

 

Interest expense

(6,501)

(3,519)

 

(14,451)

(12,184)

 

Net foreign exchange gain (loss)

(7)

(370)

 

(341)

(1,505)

Total other income and expenses

(4,828)

(2,738)

 

(11,570)

(11,069)

             

Loss before income taxes and minority interest

(5,746)

(4,482)

 

(16,757)

(20,738)

             

Income tax expense (benefit)

119

(1,502)

 

7,576

(8,914)

Minority interest in net earnings (losses) of subsidiaries

10

(420)

 

41

1,481

             

Net income (loss)

(US$5,875)

(US$2,560)

 

(US$ 24,374)

(US$ 13,305)

             

Net income (loss) per common share

(US$ 0.19)

( US$ 0.10)

 

(US$ 0.83)

(US$ 0.61)

             

Net income (loss) per ADS equivalent

(US$ 0.14)

(US$ 0.08)

 

(US$ 0.62)

(US$ 0.46)

             

Weighted average common shares outstanding (thousands)

31,627

25,396

 

29,320

21,925

             

EBITDA *

US$14,134

US$11,719

 

US$38,181

US$31,404


*EBITDA has been defined as operating income before depreciation and amortization. Our management and industry analysts generally consider EBITDA to be one measure of the financial performance of a company that provides a relevant basis for comparison among companies. EBITDA is presented to assist you in analyzing our performance. You should note that this calculation of EBITDA might differ from similarly titled measures of other companies. EBITDA should not be considered as a substitute for operating profits, net income or cash flow from operating activities as determined in accordance with generally accepted accounting principles for the purpose of analyzing a companyЎs operating performance, financial position and cash flows.

         

Open Joint Stock Company "Vimpel-Communications"

Consolidated Condensed Balance Sheets

         
         
         
     

September 30,

December 31,

     

2000

1999

     

(unaudited)

 
     

In thousands

Assets

       

Current assets

   
 

Cash and cash equivalents

 

US$175,873

US$35,609

 

Short-term investments

714

503

 

Trade accounts receivable

33,568

24,356

 

Other current assets

55,080

46,321

Total current assets

265,235

106,789

         

Non-current assets

   
 

Property and equipment and Intangible assets, net

479,092

453,187

 

Other assets

27,773

30,119

Total non-current assets

506,865

483,306

         

Total assets

 

US$772,100

US$590,095

         

Liabilities and shareholders' equity

   

Current liabilities

   
 

Accounts payable

US$31,073

US$33,396

 

Customer deposits

33,257

31,341

 

Loan payable

440

 
 

Deferred income

1,344

0

 

Due to related parties

369

348

 

Capital lease obligations, current portion

0

21,739

 

Equipment financing, current portion

25,569

46,334

 

Accrued liabilities

11,800

12,413

Total current liabilities

103,852

145,571

         

Deferred income taxes

48,950

40,329

Bonds payable

75,796

 

Bank loans, less current portion

66,800

 

Capital lease obligations, less current portion

0

41,293

Equipment financing, less current portion

49,168

51,972

         

Minority Interest

519

9,942

         

Shareholders' equity

427,015

300,988

         

Total liabilities and shareholders' equity

US$772,100

US$590,095

     



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