Russian telecommunications service provider Vimpel-Communications (VIP), known as OJSC VimpelCom, reported Tuesday a surge in its third-quarter profit, in Russian rubles, reflecting strong mobile as well as fixed revenues on higher subscribers. In US dollar terms, profit for the quarter grew 60.2%, despite lower revenues.
The Moscow-based company's third-quarter net income attributable to VimpelCom surged 107.5% to RUR 13.51 billion or RUR 261.01 per share from RUR 6.51 billion or RUR 128.68 per share in the year ago quarter. On a per American Depository share, or ADS equivalent basis, net income attributable to VimpelCom was RUR 13.05, compared to RUR 6.43 per ADS in the year ago quarter.
The company noted that its latest quarter results included a modest RUR 0.7 billion net foreign exchange gain due to the strengthening of the ruble.
In the terms of US dollar, third-quarter net income attributable to VimpelCom grew 60.2% to US$431 million or US$8.52 per basic share from US$269 million or US$5.31 per basic share last year. Net income attributable to VimpelCom per ADS equivalent was US$0.43, higher than prior year's US$0.27 per basic ADS equivalent.
On average, two analysts polled by Thomson Reuters expected the company to post earnings of US$0.45 per share for the quarter. Analysts estimate typically exclude special items.
Sequentially, net income attributable to VimpelCom, in Russian rubles, fell 40.2% from RUR 22.599 billion, or RUR 446.43 per basic share, or RUR 22.32 per basic ADS equivalent. In US dollar terms, attributable net income dropped 38.6% from second quarter's US$702 million or US$13.86 per basic share or US$0.69 per basic ADS equivalent.
The company's third-quarter net operating revenues rose 3.5% to RUR 71.34 billion from RUR 68.93 billion in the same quarter last year, and 3.3% from RUR 69.04 billion in the preceding second quarter. The company pointed out that the revenue growth demonstrated the strength of its core business.
In US dollars, net operating revenues for the quarter dropped 19.9% to US$2.28 billion from last year's US$2.84 billion, while increased 6.3% from US$2.14 billion recorded in the second quarter. Wall Street analysts projected revenues of US$2.28 billion for the quarter.
On a geographical basis, third-quarter net operating revenues from Russia grew 4.1% to RUR 61.21 billion from prior year's RUR 58.82 billion. Mobile revenues in the region increased 4.3% year-over-year to RUR 51.50 billion, and fixed revenues climbed 25.9% to RUR 13.58 billion.
Commonwealth of Independent States, or CIS, recorded quarterly net operating revenues of RUR 11.08 billion, up 3.9% from prior year's RUR 10.66 billion. Mobile revenues in the region rose 2.5% to RUR 9.22 billion, and fixed revenues went up 13.6% to RUR 2.17 billion.
Among CIS countries, net revenues from Kazakhstan grew 11.9%, and Uzbekistan rose 10.7%, while revenues from Ukraine dropped 22.3% and from Armenia declined 3.4%. Tajikistan mobile net operating revenues climbed 30.7% in the quarter, and Georgia mobile net operating revenues surged 113%.
In the quarter, total mobile subscribers increased 13.2% to 65.36 million from last year's 57.76 million, while the growth was 2.6% from second quarter's 63.68 million subscribers. Broadband subscribers surged 145.9% to 1.93 million from 785 thousand a year ago, and the growth was 11% from 1.74 million recorded in the second quarter.
In the third quarter, the total number of residential broadband subscribers in Russia, including FTTB and mobile broadband, reached 1.8 million, up 140% from last year.
Third-quarter OIBDA grew 7% to RUR 35.98 billion from RUR 33.64 billion a year ago, and OIBDA margin increased to 50.4% from prior year's 48.8%. Operating income was RUR 22.30 billion, up 3.4% from RUR 21.57 billion last year, while operating income margin remained at the prior year level of 31.3%.
In US dollars, OIBDA dropped 17.2% to US$1.15 billion from last year's US$1.39 billion. Operating income fell to US$712 million from prior year's US$890 million.
Commenting on the results, Boris Nemsic, Chief Executive Officer of VimpelCom, said, "During the third quarter we continued to demonstrate growth in challenging market conditions and delivered a record 71.3 billion rubles in revenues and 36.0 billion rubles in OIBDA with a consolidated fixed and mobile OIBDA margin of 50.4%. We are particularly pleased with the OIBDA performance which demonstrates our ability to increase revenues and control costs in the new economic environment."
Among peers, Mobile TeleSystems OJSC (MBT), the largest mobile phone operator in Russia and the Commonwealth of Independent States, on November 13 reported a 4.1% decline in profit for the third quarter, hurt by a 19.4% drop in revenues, higher debt levels and lower non-cash foreign exchange gain on U.S. dollar-denominated debt. Moscow, Russia-based Mobile TeleSystems reported net income attributable to the group of $494.4 million or $0.26 per share, lower than $515.6 million or $0.27 per share in the prior-year quarter. Consolidated revenues for the third quarter declined to $2.27 billion from $2.81 billion last year.
For the nine months of fiscal 2009, VimpelCom's net income attributable to the company fell to RUR 27.60 billion or RUR 525.36 per share from prior year's RUR 32.21 billion or RUR 634.94 per share. Net income attributable to VimpelCom per ADS equivalent was RUR 26.27, lower than last year's RUR 31.75. Nine-month net operating revenues surged to RUR 207.22 billion from RUR 181.76 billion.
Further, the company said that it has recalculated its CAPEX guidance for 2009, taking into consideration the further strengthening of the Russian ruble, and now expects CAPEX to be in the range of 10% to 12% of its 2009 annual revenue,.
The company also said its Board of Directors proposed an interim dividend payment of 190.13 rubles per common share.
In a recent development, Norwegian telecom operator Telenor ASA (TELNY.PK) and Altimo, the telecom arm of Russian conglomerate Alfa Group, announced in early October their agreement to combine their holdings in VimpelCom, and Ukraine's largest mobile operator Kyivstar into a new jointly-owned mobile telecoms operator. The decision puts an end to a 5-year legal battle. Following a successful exchange offer by the new entity, VimpelCom Ltd., VimpelCom would become its wholly-owned subsidiary. The companies expect to complete the transactions by mid-2010.
According to VimpelCom, the combination would pave the way for the creation of one of the largest telecom operators in the emerging markets.
VIP closed Monday's regular trading session at US$21.15, up US$0.49, on a volume of 4.2 million shares. In the past 52 weeks, shares have been trading in a broad range of US$4.81 to US$22.55.
For comments and feedback: editorial@rttnews.com