- VimpelCom awarded GSM-1800 licenses covering 84 million population
- 91% Year-to-year subscriber growth
Moscow and New York (June 4, 1998) - Open Joint Stock Company Vimpel-Communications ("VimpelCom") (NYSE:VIP) today reported higher EBITDA and continuing subscriber growth for the first quarter ended March 31, 1998, as well as the award of 4 new GSM-1800 (PCS) licenses. The new licenses increase VimpelCom’s population coverage to approximately 100 million, including Moscow.
For the first quarter ended March 31, 1998, VimpelCom reported total operating revenues of $92.4 million, a 39% increase over the $66.7 million in total operating revenues reported in the same period in 1997. For the first quarter of 1998, total net operating revenues (net of revenue-based taxes) were $89.1 million, a 39% increase over the $64.1 million in net operating revenues reported in the same period in 1997. Operating income for the first quarter of 1998 increased 39% to a record $28.3 million, compared with the $20.3 million in operating income reported in the same period a year ago.
Net income for the quarter ended March 31, 1998, was $16.5 million, or $0.86 per share ($0.64 per ADS), compared to $16.8 million, or $ 0.87 per share ($0.65 per ADS), earned in the same period in 1997. Each ADS represents 0.75 of one share of common stock. Net income growth in the first quarter of 1998 was constrained by higher depreciation and financing charges, reflecting the increased investments the company has been making in its networks, higher provision for income taxes and a net loss on foreign exchange when compared to the same period in 1997.
EBITDA for the first quarter ended March 31, 1998 was strong and reached a record $37.5 million, 53% higher than the $24.5 million in the first quarter of 1997. The EBITDA margin for the quarter ended March 31, 1998, was 42.1%, an increase over the 38.2% EBITDA margin in the same quarter of 1997. The increase in EBITDA margin is due primarily to an improvement in service revenue margins, which more than offset the reduction in the margin on sales of handsets and lower contributions from one-time activation fees.
Selling, general and administrative expenses for the first quarter of 1998, increased 37% to $23.7 million compared to the $17.3 million reported in the same period in 1997. The increase in selling, general and administrative expenses in the first quarter of 1998 was due primarily to the increase in the level of business activity compared with the same period in 1997 and growth in VimpelCom’s infrastructure to better support increases in business activity.
For the first quarter of 1998, the Company recorded a $5.1 million provision or 5.8% of net revenues for doubtful accounts compared with $3.5 million or 5.5% of net revenues in the same period in 1997. This increase in provision for doubtful accounts receivable was due to the growth in business activity.
Depreciation and amortization expense was $9.2 million for the first quarter of 1998, 118% increase compared to $4.2 million in the same period of 1997. The increase was due to the increased depreciable asset base resulting from the Company’s continuing capital investments in its D-AMPS and GSM-1800 networks.
At the end of the first quarter of 1998, VimpelCom had 123,324 subscribers on its networks. This represents a growth of approximately 91% over the 64,607 subscribers at the end of the first quarter of 1997. At the end of the first quarter of 1998, VimpelCom’s 50% subsidiary in Samara had 7,023 subscribers, a growth of 163% over the 2,675 subscribers at the end of the first quarter of 1997.
Commenting on today’s announcement, Dmitri Zimin, President and Chief Executive Officer of VimpelCom said: "We are delighted with our first quarter results and especially with our continued strong EBITDA performance. Subscriber growth is in line with our expectations as the Moscow market tends to be much stronger during the second half of the year. Recently we introduced new tariff plans for the full range of our services with the aim to better position our GSM-1800 product in the Moscow market and to stimulate sales growth. Early indications show that the market has responded well to these new tariff plans. We also continue to expand our D-AMPS Moscow central network, as we recently signed our 8th expansion contract for $22 million with Ericsson.
We are particularly delighted with the recent award of four new GSM-1800 licenses, which, together with the existing Moscow license, cover 52 administrative units of Russia. The new licenses cover multiple administrative units which are generally defined in the licenses as the Central and Central Black Earth Region, Volga Region, North Caucasus Region and Siberian Region. These licenses will provide the Company with new opportunities to continue its business strategy of extending our foot-print across Russia. These new licenses will bring our total pops to approximately 100 million or 68% of the Russian population."
VimpelCom is the largest provider of cellular telecommunications in Russia, marketing its services under the brand name "Bee Line". The VimpelCom Group operates the only Digital-AMPS cellular network and the first Russian PCS network, using GSM technology, in the Moscow License Area, which includes the City of Moscow and the Moscow Region. The VimpelCom Group holds various GSM-1800 and AMPS/D-AMPS licenses covering a total population of approximately 100 million (68% of Russia’s population). VimpelCom was the first Russian company listed on the New York Stock Exchange (November 1996), trading under the symbol "VIP".
This press release contains forward-looking statements related to the development of the Company’s business. These statements are based on Management’s best assessment of future market conditions and trends. The actual outcome may differ 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. 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
Mona Walsh/Joshua Hochberg
Edelman Financial
1 (212) 704 4423
mona_walsh@edelman.com
joshua_hochberg@edelman.com
Open Joint Stock Company Vimpel-Communications
Unaudited Consolidated Statements of Income
| |
Three months ended
March 31, |
| |
1998 |
1997 |
| |
(In thousands, except per share (ADS) amounts) |
| Operating revenues |
|
| |
Service revenues and connection fees |
US$ 84,391 |
US$ 58,434 |
| |
Sales of handsets and accessories |
8,028 |
8,295 |
| |
|
Total operating revenues |
92,419 |
66,729 |
| |
less revenue-based taxes |
3,337 |
2,582 |
| Net operating revenues |
89,082 |
64,147 |
| |
| Operating expenses: |
|
| |
Service costs |
16,889 |
13,302 |
| |
Cost of handsets and accessories sold |
5,834 |
5,497 |
| |
Selling, general and administrative expenses |
23,731 |
17,340 |
| |
Depreciation and amortization |
9,151 |
4,192 |
| |
Provision for doubtful accounts |
5,146 |
3,501 |
| Total Operating expenses |
60,751 |
43,832 |
| |
| Operating income |
28,331 |
20,315 |
| |
| Other income and expenses: |
|
| |
Other income |
370 |
0 |
| |
Interest income |
649 |
1,167 |
| |
Interest expense |
(2,413) |
(1,386) |
| |
Net foreign exchange (loss) gain |
2,222 |
1,842 |
| Total other income and expenses |
(3,616) |
1,623 |
| |
| Income before income taxes and minority interest |
24,715 |
21,938 |
| |
| Provision for income taxes |
7,740 |
5,077 |
| Minority interest in net losses of subsidiaries |
449 |
52 |
| Net income |
US$ 16,526 |
US$ 16,809 |
| |
| Net income per common share |
$0.86 |
$0.87 |
| Net income per ADS equivalent |
$0.64 |
$0.65 |
| Weighted average common shares outstanding (thousands) |
19,280 |
19,280 |
| |
| EBITDA |
US $37,482 |
US $24,507 |
Open Joint Stock Company Vimpel-Communications
Condensed Consolidated Balance Sheet
| |
March 31,
1998
(Unaudited)
|
December 31,
1997
|
| |
|
| |
(In thousands US dollars) |
| Assets |
|
| Current Assets: |
|
| |
Cash and cash equivalents |
US$ 14,864 |
US$ 14,333 |
| |
Short-term investments |
15,496 |
24,169 |
| |
Accounts receivable |
50,772 |
41,487 |
| |
Other current assets |
39,699 |
34,436 |
| Total current assets |
120,831 |
114,425 |
| |
| Property and equipment, net |
371,982 |
347,653 |
| Other assets |
24,890 |
21,020 |
| Total Assets |
517,703 |
483,098 |
| |
| Liabilities and shareholders' equity |
|
| Current liabilities: |
|
| |
Accounts payable |
US$ 15,135 |
US$ 12,287 |
| |
Customer deposits |
57,868 |
51,738 |
| |
Bank loans |
|
11,001 |
| |
Equipment financing, current portion |
12,530 |
10,389 |
| |
Other accrued liabilities |
16,967 |
11,382 |
| Total current liabilities |
102,500 |
96,797 |
| |
| Deferred incomes taxes |
35,424 |
35,201 |
| Equipment financing and other liabilities |
148,666 |
136,962 |
| |
| Minority interest |
6,936 |
6,487 |
| |
| Shareholders' equity |
224,117 |
207,651 |
| |
| Total liabilities and shareholders' equity |
US$ 517,703 |
US$ 483,098 |