Russian telecommunications service provider Vimpel-Communications (VIP) on Thursday reported a profit for the second quarter that doubled from last year in ruble terms, helped by a foreign exchange gain. In U.S. dollar terms, net income for the quarter increased 49%. Looking ahead, the company said it will maintain its stance of "cautious optimism" as the macroeconomic uncertainty still remained a significant factor in the current environment.
Second-Quarter Results
The Moscow-based company's net income for the second quarter doubled to RUR 22.60 billion, or RUR 446.18 per share, from RUR 11.11 billion, or RUR 218.69 per share, in the same period last year.
The results for the latest quarter included a net foreign exchange gain of RUR 10.61 billion due to the strengthening ruble. The company recorded a foreign exchange gain of RUR 608 million a year ago.
In U.S. dollar terms, net income for the second quarter surged 49% to US$702 million, or US$13.86 per share, up from US$470 million, or US$9.26 per share, in the prior-year quarter. Net income per ADS equivalent for the quarter increased to US$0.69 from US$0.46 in the year-ago quarter.
Net operating revenues for the quarter increased 12% to RUR 69.04 billion from RUR 61.68 billion in the same quarter last year. However, net operating revenues in U.S. dollars declined 17.9% to $2.14 billion from $2.61 billion in the comparable quarter a year ago.
VimpelCom's Mobile business segment generated net operating revenues for the quarter of RUR 58.21 billion, while fixed-line business recorded revenues of RUR 14.58 billion.
Commenting on the results, 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."
Peer Performance
In early August, Moscow, Russia-based Mobile TeleSystems OJSC (MBT), the largest mobile phone operator in Russia and the Commonwealth of Independent States or CIS, reported a 14.6% decline in profit for the second quarter from the year-ago period as revenues dropped 23%. The company's consolidated net income for the quarter was $563.04 million, or $0.30 per share, lower than $659.20 million, or $0.34 per share, reported in the prior-year quarter. Consolidated revenues for the quarter declined to $2.02 billion from $2.64 billion in the same quarter last year.
Other Metrics
VimpelCom's net operating revenues from Russia for the latest quarter were RUR 59.14 billion, up 11.8% from the year-ago quarter. Revenues from CIS markets, including Kazakhstan, Ukraine, Armenia, Uzbekistan, Tajikistan and Georgia, climbed 16.3% from the prior-year quarter to RUR 10.67 billion.
According to VimpelCom, the reported financial results in the CIS countries were negatively affected by ruble appreciation versus the functional currency. In local currency terms, the company said that in local currency terms, it saw quarterly revenue growth in the major CIS markets.
The company's total operating expenses for the quarter were RUR 46.79 billion, up from RUR 44.28 billion in the year-ago quarter.
Operating income before depreciation and amortization, or OIBDA, climbed 21% to RUR 34.96 billion from RUR 28.89 billion in the prior-year quarter. Consolidated OIBDA margin for the quarter was 50.6%, up from 46.8% in the year-ago quarter.
Operating income for the second quarter rose to RUR 22.25 billion from RUR 17.41 billion in the prior-year quarter. In U.S. dollar terms, however, operating income for the quarter declined 6.2% to $691 million from $737 million in the same period last year. Operating income margin for the quarter rose to 32.2% from 28.2% a year ago.
Russia's second largest mobile phone operator noted that during the second quarter, mobile subscribers increased 18.6% to reach 63.68 million from 53.71 million a year ago. Broadband subscribers at the end of the quarter totaled 1.71 million, a nearly three-fold increase from 0.62 million last year.
However, average revenue per user or ARPU for mobile, declined 7.2% from the previous-year quarter to RUR 322.5 in Russia, but increased 5.2% from the preceding quarter. ARPU decreased 19.8% to RUR 1,187.1 in Kazakhstan.
The company launched commercial operations in Cambodia in May 2009, offering services under the Beeline brand. The company noted that initial sales were strong and generated RUR 28 million in revenues since its launch. Further, the company said that by the end of 2009, it plans to expand coverage reaching more than two thirds of the country's population.
In Vietnam, the company launched commercial operations in July. By the end of 2009, the company plans to cover more than 40 provinces of Vietnam with a population of about 41 million.
VimpelCom's capital expenditure for the second quarter declined 76.5% to US$156.0 million from US$664.0 million in the previous-year quarter.
During the second quarter, Vimpel-Com repaid US$456 million dollars of debt. Additionally, in July, the company raised 10 billion in Ruble bonds, or the equivalent of approximately US$303 million, in order to optimize the structure of its debt portfolio through extended duration and a more balanced currency composition.
The company ended the second quarter with cash and cash equivalents of RUR 51.61 billion, compared with RUR 22.96 billion at end of the year-ago quarter.
Year-To-Date Results
For the first six months of fiscal year 2009, the company's net income dropped to RUR 14.09 billion, or RUR 278.22 per share, from RUR 25.70 billion, or RUR 505.96 per share, in the same period last year. Net income per ADS equivalent was RUR 13.91, down from RUR 25.30 a year ago.
However, net operating revenues for the half year increased to RUR 135.88 billion from RUR 112.82 billion in the same period last year.
Outlook
Looking ahead, VimpelCom said it will maintain its stance of "cautious optimism" as the macroeconomic uncertainty still remained a significant factor in the current environment.
The company also said it plans to increase capital expenditures in the second half of the year to ensure the sustainability of its business and to capture growth opportunities going forward.
Stock Quotes
In Thursday's regular trading session on the NYSE, VIP is trading at $14.77, down $0.28 or 1.86% on a volume of 1.50 million shares. In the past 52 weeks, the stock has been trading in a range of $4.81-$25.50.
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