443 https 10.10.20.60 www.vimpelcom.com 10.10.20.80
/Templates/Index.aspx?id=610&epslanguage=en/Templates/Index.aspx?id=603&epslanguage=en/Templates/Index.aspx?id=3081&epslanguage=en Loaded page
VimpelCom Reports 25% Increase in Third Quarter Earnings 210% Nine-Month Subscriber Growth


MOSCOW (December 17, 1996) - Open Joint Stock Company Vimpel-Communications (ТVimpelComУ) (NYSE: VIP) today reported strong financial results for the quarter and nine months ended September 30, 1996. This record performance resulted from continued strong growth in subscribers on the Moscow D-AMPS cellular network.

For the third quarter of 1996, VimpelCom reported consolidated operating revenues of $60.2 million compared to operating revenues of $26.1 million in the same quarter a year ago, an increase of 131%. The Company reported operating income of $22.7 million during the third quarter, up 39% from the $16.3 million in operating income for the third quarter of 1995. Net income for the quarter ended September 30, 1996, was $16.5 million, or $1.00 per share ($0.75 per ADS), a 25% increase over the net income of $13.2 million, or $0.80 per share ($0.60 per ADS), earned in the third quarter of 1995. Each ADS represents three-quarters of one share of common stock.

For the nine months ended September 30, 1996, VimpelCom reported consolidated operating revenues of $146.1 million compared to operating revenues of $61.4 million in the same period in 1995, an increase of 138%. The Company reported operating income of $51.8 million during the first nine months of 1996, up 45% from the $35.8 million in operating income for the nine months ended September 30, 1995. Net income for the first nine months of 1996 was $34.4 million, or $1.96 per share ($1.47 per ADS), a 55% increase over the net income of $22.2 million, or $1.35 per share ($1.01 per ADS), earned in the same period one year ago.

As of September 30, 1996, VimpelCom had over 45,000 subscribers, representing a growth of 29% over the approximately 35,000 subscribers at the end of the second quarter of 1996, and a growth of 210% compared to the approximately 14,500 subscribers reported as of September 30, 1995.

EBITDA remained strong and reached $25.5 million in the third quarter of 1996, 48% higher than the $17.2 million in the third quarter of 1995. The EBITDA margin in the third quarter of 1996 was 42.4%, less than the 66% in the same period of 1995, primarily resulting from the increased selling, general and administrative expenses related to increased business activity.

Commenting on this quarter's results, Dmitri Zimin, President and Chief Executive Officer of VimpelCom, said: ТWe are very pleased to report our financial results, our first since becoming a public company. They reflect our dominant market position and strong subscriber growth.У

Total operating, selling, general and administrative expenses, excluding depreciation and amortization, increased 291% to $34.8 million in the third quarter of 1996 from the $8.9 million in the third quarter of 1995. This increase reflects the overall increase in the level of activity in the D-AMPS cellular business compared with the same period in 1995, including increases in operating and overhead expenses, total advertising, marketing and other customer-related administrative activities. In addition, this figure includes initial start-up expenses related to the development of the new PCS business, which is now under construction.

The Company recorded a $1.9 million provision for doubtful accounts receivable in the third quarter of 1996. At 3.2% of operating revenues, this amount is in line with standard industry levels. The Company first established a reserve for doubtful accounts in the fourth quarter of 1995 when the subscriber base started growing rapidly. The Company believes the current provision is adequate for our experience at this time.

In addition to the strong third quarter results, VimpelCom outlined several recent developments in its business:

 

License Updates

The Company reported that the Ministry of Communications of the Russian Federation has awarded VimpelCom a new AMPS license for Kaluga, a region bordering the southwest of Moscow. The Kaluga license will add approximately one million POPs to VimpelCom's existing base. The Company expects to commence service in Kaluga in the second half of 1997. Commenting on the new license, Dr. Zimin said: ТThe addition of Kaluga will allow us to pursue our strategy of concentrating on our service in Moscow and the surrounding regions. We will be able to expand our state-of-the-art service and continue to add Bee Line customers beyond Moscow.У

VimpelCom has held licenses in the Leningrad region (which does not include the City of St. Petersburg) and Novgorod region which have long been in violation. The Company has determined that the cost of developing these licenses without cooperation with a local operator to build a system centered around the City of St. Petersburg was not the best use of resources at this time. Therefore, the Leningrad license has been terminated and the Novgorod license will be terminated. VimpelCom believes that it is more economically viable at this time to concentrate on expanding its AMPS network in areas bordering Moscow, including Kaluga, and building its personal Communications System (ТPCSУ) in Moscow. Roaming will continue to be available between Moscow and St. Petersburg and is now available in over 40 regions throughout Russia and the CIS.

 

Moscow PCS Network Development

The Company also announced that the build out of the PCS network in Moscow was progressing on schedule, with the switch center and a number of base stations operational. Full commercial service is planned to begin in the first half of 1997. VimpelCom also noted that the Ministry of Communications has apparently accelerated development of the PCS market in Russia. There have been reports in the Russian press that a PCS license was granted to A.O. Rosico. The Company has no further information on the license or the availability of frequencies. Commenting on the development in the PCS market, Augie K. Fabela II, Chairman of the Board of VimpelCom, said, ТWe are proud that in a very competitive market, we became the leading cellular provider in Moscow. As we introduce our PCS network, we intend to continue to capitalize on our strengths that have made us the market leader.У

Having begun full-scale operations in 1994, VimpelCom is now the largest provider of cellular telecommunications in Russia, marketing its services under the brand name ТBee LineУ. The Group's primary operating area includes the City of Moscow and Moscow Region, which together cover a population of over 15 million people. The Group operates the only Digital Advanced Mobile Phone System (ТD-AMPSУ) cellular system in the Moscow License Area, and has also been granted a license to provide PCS in the Moscow License Area. VimpelCom completed an initial public offering of American Depository Receipts (ADRs) in November 1996 and is the first and only Russian company listed on the New York Stock Exchange.

 

For more information, contact:

Valery Goldin
VimpelCom (Moscow)
7(095) 974-5888
vgoldin@beeline.msk.ru


John McInerney or Perry Hall
Dewe Rogerson Inc.
(212) 688-6840

Open Joint Stock Company Vimpel-Communications


Unaudited Consolidated Condensed Statements of Income

 
 

Three months ended
September 30,

Nine months ended
September 30,

 

1995*

1996

1995*

1996

 
 

(In thousands, except per share amounts)

Operating revenues:        

Service revenues and connection fees

US$ 16,953

US$ 47,679

US$ 44,522

US$ 115,658

Sales of handsets and accessories

9,185

12,564

16,888

30,476

 

Total operating revenues

26,138

60,243

61,410

146,134

         
Operating expenses:        

Selling, general and administrative expenses

3,465

11,665

8,870

35,514

Cost of handsets and accessories sold

3,648

10,104

9,772

19,615

Service costs

1,798

11,118

4,749

27,135

Provision for doubtful accounts

-

1885

-

4,935

Depreciation and amortization

897

2,764

2,175

7,152

 
Total operating expenses

9,808

37,536

25,566

94,351

 
Operating income

16,330

22,707

35,844

51,783

         
Other income and expenses:        

Interest income

(143)

(963)

(143)

(20,056)

Interest expense

1,179

1,074

2,406

23,992

Net foreign exchange (gain) loss

(3,209)

101

(970)

303

 
Total other (income) expense

(2,173)

212

1,293

4,239

 
Income before income taxes

18,503

22,495

34,551

47,544

         
Provision for income taxes

5,334

5,996

12,341

13,141

 
Net income

US$ 13,169

US$ 16,499

US$ 22,210

US$ 34,403

 
Net income per common share

US$ 0.80

US$ 1.00

US$ 1.35

US$ 1.96

 
Weighted average shares outstanding

16,442

16,561

16,442

17,539

 

 

* 1995 has been restated to reflect KBI and the other transactions as disclosed in the registration statement dated November 15, 1996.

Open Joint Stock Company Vimpel-Communications
Consolidated Condensed Balance Sheet

 
 

December 31,

1995

September 30,

1996

(unaudited)

 
 

(In thousands)

Assets    
Current assets:    

Cash and short-term investments

US$ 19,919

US$ 29,844

Accounts receivable

10,219

23,300

Other current assets

12,900

31,437

 
Total current assets

43,038

84,581

 
Property and equipment

70,233

114,440

Other assets

9,327

46,040

 
Total assets

US$ 122,598

US$ 245,061

 
Liabilities and shareholders' equity    
Current liabilities:    

Accounts payable and customer deposits

US$ 13,830

US$ 40,947

Bank loans

18,463

42,519

Other accrued liabilities

16,129

22,400

 
Total current liabilities

48,422

105,866

     
Deferred income taxes

9,668

18,986

Equipment financing and other liabilities

21,111

45,525

     
Shareholders' equity

43,397

74,684

 
Total liabilities and shareholders' equity

US$ 122,598

US$ 245,061

 
 
/Templates/Index.aspx?id=608&epslanguage=en/Templates/Index.aspx?id=3441&epslanguage=en/Templates/IndexCareers.aspx?id=3579&epslanguage=enhttps://blog.veon.com//Templates/MyVimpelcom.aspx?id=745&epslanguage=en