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VimpelCom announces first quarter 2001 financial results

  • $ 5.1 Million net income
  •  $27.9 Million EBITDA and 35.0% EBITDA margin

Moscow and New York (May 30, 2001) - Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP) today announced financial results for the first quarter ended March 31, 2001. During the first quarter of 2001, VimpelCom achieved significant improvements in revenue, operating income and EBITDA resulting in a return to profitability with a reported net income of $5.1 million.

VimpelCom's total operating revenues for the first quarter of 2001 were approximately $80.7 million, a 22.6% increase from the $65.8 million reported for the same period in 2000. Net operating revenues (less revenue-based taxes) were $79.7 million for the first quarter of 2001, a 26.5% increase from the $63.0 million reported for the first quarter of 2000. Revenue growth was largely due to the overall increase in the number of subscribers.

In the first quarter of 2001, the Company's net income was approximately $5.1 million, or a net income of $0.16 per common share ($0.12 per ADS), compared with a net loss of $11.8 million, or $0.42 per common share ($0.32 per ADS) in the same period in 2000. Each ADS represents 0.75 of one share of common stock. Without the one-time non-cash write-down of D-AMPS-related assets in the fourth quarter of 2000, net income for the first quarter of 2001 would have been $3.1 million or a net income of $0.09 per common share ($0.07 per ADS).

EBITDA for the first quarter of 2001 was approximately $27.9 million, a 149.1% increase from the $11.2 million reported in the same period in 2000 and a 102.2% increase compared to the fourth quarter of 2000, when the Company reported an EBITDA of $13.8 million. The Company's EBITDA margin for the first quarter of 2001 was approximately 35.0% compared to approximately 17.8% for the same period of 2000. Growth in EBITDA in the first quarter of 2001 as compared to the first quarter of 2000 was due to the increase in revenues with no corresponding increase in operating expenses.

Commenting on the Company's first quarter results, Dr. Dmitri Zimin, President of VimpelCom said, "I am pleased to report a return to profitability and an EBITDA margin of 35%. This, combined with our new strategic alliance with the Alfa Group, begins a new phase in the development of VimpelCom and provides an appropriate opportunity for me to formally pass the torch. Accordingly, I have decided to leave the position of General Director. I will continue to serve as President of VimpelCom focusing on external corporate relations and remain committed to the continued success of VimpelCom. Jo Lunder will assume the post of General Director in addition to his role as VimpelCom's Chief Executive Officer."

Service costs in the first quarter of 2001 were approximately 5.4% higher than in the same period of 2000. However, service costs grew much slower than revenues which led to an improvement in the gross margin from 64.9% in the first quarter of 2000 to 69.1% in the same quarter of 2001. The improvement in service costs was largely due to the increased use by our subscribers of low cost federal telephone numbers and more favorable interconnect fees.

Selling, general and administrative expenses totaled $24.2 million in the first quarter of 2001, a decrease of 2.8% compared to the $24.9 million reported in the same period of 2000 and a decrease of 20.7% compared to the $30.5 million reported for the fourth quarter of 2000. This improvement, during a period of high subscriber growth, was largely due to the decrease of the acquisition cost per subscriber from $78 in the first quarter of 2000 to $39 in the same quarter of 2001. This reduced acquisition cost per subscriber was driven, in part, by the increased percentage of sales through the Company's own sales and distribution offices, including Mobile Center, a dealer network acquired in January 2001, thereby decreasing acquisition costs in spite of the increase in sales volumes.

Provision for doubtful accounts decreased to approximately $3.0 million in the first quarter of 2001 as compared to $4.8 million in the first quarter of 2000, which represents a 37.5% improvement. This is a result of the improved quality of VimpelCom's subscriber base and streamlined risk management procedures.

As a result of these improvements, operating income was $14.0 million in the first quarter of 2001, compared to an operating loss of $2.8 million recognized in the first quarter of 2000. Without the one-time non-cash write-down of D-AMPS-related assets in the fourth quarter of 2000, operating income for the first quarter of 2001 would have been $10.9 million.

Depreciation and amortization expense for the first quarter of 2001 was approximately $13.9 million, a 0.7% decrease compared to the $14.0 million reported in the same period of 2000. The decrease in the depreciation and amortization expense, notwithstanding the Company's continuing capital investments, was due to the one-time non-cash write-down of D-AMPS-related assets in the fourth quarter of 2000, which effectively decreased the depreciation and amortization expense in the first quarter of 2001 by approximately $3.1 million.

For the first quarter of 2001, VimpelCom's average monthly minutes of use per subscriber ("MOU") was approximately 94 minutes and average monthly revenue per user ("ARPU") was approximately $27. The decline in ARPU was primarily due to increased competition, which resulted in the reduction of tariffs, and a change in the Company's subscriber mix, as the cellular penetration rate continues to increase. The Company believes this trend will continue. Selected operational statistics are presented in the attached table.

As of May 30, 2001, VimpelCom had approximately 1,114,000 subscribers on all of its wireless networks, with approximately 1,024,000 subscribers in the Moscow License Area and 90,000 in the regional licensed territories including subscribers on the networks operated by VimpelCom's subsidiaries, among them the subscribers of "Cellular company", a cellular operator in the City of Novosibirsk in the Central Siberia, which VimpelCom acquired in April 2001.

As of March 31, 2001, VimpelCom had approximately 984,400 subscribers on all of its wireless networks, a 97.4% increase compared to the 498,700 subscribers recorded as of March 31, 2000. In the first quarter of 2001, subscriber growth in the Moscow License Area was entirely attributable to VimpelCom's GSM network. The number of D-AMPS subscribers decreased due to the ongoing migration to the GSM network. At the end of the first quarter 2001, GSM subscribers constituted approximately 65% of the total Moscow subscriber base. This trend is expected to continue. Selected subscriber statistics are presented in the attached table.

VimpelCom estimates that as of March 31, 2001, its market share in Moscow totaled approximately 40.0%.

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. VimpelCom 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 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
1(212) 704 8284
sigrid_peterson@edelman.com

 

Open Joint Stock Company "Vimpel-Communications"
Subscriber Statistics

 

 

 

As of March

31, 200

Change, q-to-q

Change, y-to-y

As of December 31, 2000

As of March 31, 2000

Moscow License Area

927,100

18.8%

95.5%

 

780,100

 

474,100

Postpaid

306,500

18.9%

96.7%

 

257,700

 

155,800

Prepaid

620,600

18.8%

95.0%

 

522,400

 

318,300

Regions

57,400

7.3%

133.3%

 

53,500

 

24,600

Total

984,500

18.1%

97.4%

 

833,600

 

498,700

 

VimpelCom Operational Statistics

 

 

 

 

1st Quarter

2001

Change, q-to-q

Change, y-to-y

4th Quarter

2000

 

1st Quarter

2000

 

 

ARPU (US$)

 

27

-16%

-37%

 

32

 

43

MOU (Minutes)

 

94

-3%

7%

 

97

 

88

Churn % (Quarterly)

 

6.5

 

8.3

 

6.5

 

 

Open Joint Stock Company "Vimpel-Communications"

Consolidated Condensed Statements of Operations


 

       
   

Three months ended

   

March 31,

   

2001

2000

   

(In thousands, except per share (ADS) amounts)

Operating revenues:

   
 

Service revenues and connection fees

US$71,257

US$56,568

 

Sales of handsets and accessories

9,135

8,968

 

Other revenues

339

299

Total operating revenues

80,731

65,835

 

Less revenue based taxes

988

2,860

Net operating revenues

79,743

62,975

       

Operating expenses

   
 

Service costs

15,129

14,357

 

Cost of handsets and accessories sold

9,470

7,717

 

Cost of other revenues

34

54

 

Selling, general and administrative expenses

24,223

24,904

 

Depreciation

10,808

11,006

 

Amortization

3,109

2,952

 

Provision for doubtful accounts

2,989

4,785

Total operating expenses

65,762

65,775

       

Operating income (loss)

13,981

(2,800)

       

Other income and expenses:

   
 

Other income

2,239

788

 

Gain on trading in securities

61

211

 

Interest expense

(7,205)

(3,859)

 

Net foreign exchange gain (loss)

805

(617)

Total other income and expenses

(4,100)

(3,477)

       

Income (loss) before income taxes and minority interest

9,881

(6,277)

       

Income taxes expense

4,755

5,527

Minority interest in net earnings of subsidiaries

0

29

       

Net income (loss)

US$5,126

(US$ 11,833)

       

Net income (loss) per common share

US$0.16

(US$ 0.42)

Net income (loss) per ADS equivalent

0.12

(US$ 0.32)

Weighted average common shares outstanding (thousands)

32,851

28,129

EBITDA

US$27,898

US$11,158

 

Open Joint Stock Company "Vimpel-Communications"

Consolidated Condensed Balance Sheets


 

         
         
         

Total assets

March 31,
2001
(unaudited)

December 31,
 2000

     

(In thousands US dollars)

Assets

       

Current assets

   
 

Cash and cash equivalents

US$ 148,668

US$ 152,141

 

Short-term investments

605

550

 

Accounts receivable

31,952

29,666

 

Other current assets

47,717

53,117

Total current assets

228,942

235,474

         

Non-current assets

   
 

Property and equipment, net

371,821

356,666

 

Intangible assets, net

77,197

79,649

 

Other assets

33,621

28,526

Total non-current assets

482,639

464,841

         

Total assets

US$ 711,581

US$ 700,315

         

Liabilities and shareholders' equity

   

Current liabilities

   
 

Accounts payable

US$ 21,338

US$ 28,356

 

Customer deposits

39,495

33,243

 

Deferred revenue

2,101

1,747

 

Due to related parties

1,369

2,003

       
 

Equipment financing, current portion

37,056

34,721

 

Accrued liabilities

13,308

13,134

Total current liabilities

114,667

113,204

         

Deferred income taxes

28,876

29,922

Bank loans

66,800

66,800

5.5% Senior convertible notes due July 2005

77,742

76,702

Equipment financing less current portion

49,747

44,541

         

Minority Interest

0

523

         

Shareholders' equity

373,749

368,623

         

Total liabilities and shareholders' equity

US$ 711,581

US$ 700,315

         
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