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VimpelCom announces second quarter and six month financial results

  • 649,200 Total subscribers as of August 31, 2000

Moscow and New York (September 6, 2000) - Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE:VIP) today reported its financial results for the second quarter and six months ended June 30, 2000. The Company also reported that as of August 31, 2000 it had approximately 649,200 total subscribers on all its wireless networks, with approximately 615,000 subscribers in the Moscow license area and approximately 34,200 subscribers in the regions, including networks operated by VimpelCom's subsidiaries.

As of June 30, 2000, VimpelCom had approximately 551,500 subscribers in the Moscow license area, an increase of 256.7% over the 154,600 reported as of June 30, 1999, and a 57.3% increase over the 350,500 subscribers reported as of December 31, 1999. As of June 30, 2000, VimpelCom and its subsidiaries had approximately 30,800 subscribers outside of the Moscow license area, a 110% increase from the 14,700 subscribers recorded as of June 30, 1999.

As in the first quarter of 2000, the Company's subscriber growth in the second quarter of 2000 was mainly due to the increase in the GSM subscriber base in Moscow, which grew to approximately 253,000 as of June 30, 2000, constituting 45.6% of the Company's Moscow subscriber base, as compared to approximately 25,000 GSM subscribers, or 16.2% of the Company's Moscow subscriber base reported as of June 30, 1999. As of June 30, 2000, prepaid subscribers constituted approximately 66.0% of VimpelCom's Moscow subscriber base, compared to 64.8% at the end of 1999.

VimpelCom estimates that as of June 30, 2000, its subscriber market share in Moscow was approximately 45%.

VimpelCom's average monthly minutes of use per subscriber ("MOU") for the second quarter of 2000 was approximately 86 minutes, a 45.6% decrease from the 158 minutes recorded for the same period in 1999 and a 2.3% decrease from the 88 minutes reported for the first quarter of 2000. VimpelCom's ARPU for the second quarter of 2000 was approximately $39, a 68.0% decrease from the $122 recorded for the same period of 1999 and a 9.3% decrease from the $43 reported for the first quarter of 2000. As is typical in other markets, our MOU and ARPU declined as our subscriber base continued to increase. However, there was a significant decrease in the rate of decline in MOU and ARPU recorded in the second quarter of 2000 as compared to previous quarters.

For the second quarter ended June 30, 2000, VimpelCom reported total operating revenues of $68.6 million, an increase of 18.9% from the $57.7 million reported in the same period in 1999. Total net operating revenues (net of revenue-based taxes) in the second quarter of 2000 were $65.6 million, an increase of 19.5% from the $54.9 million reported in the same period last year. The Company's operating loss for the second quarter of 2000 was $1.5 million, an improvement over the operating loss of $3.1 million reported for the same period a year ago.

For the six months ended June 30, 2000, VimpelCom reported total operating revenues of $134.5 million, an increase of 16.3% from the $115.6 million reported in the same period in 1999. Total net operating revenues (net of revenue-based taxes) for the six months ended June 30, 2000 were $128.6 million, an increase of 16.7% from the $110.2 million reported in the same period last year. The Company's operating loss for the first six months of 2000 was $4.3 million, a decrease of $3.6 million compared to the operating loss of $7.9 million reported for the same period a year ago.

EBITDA for the second quarter of 2000 was $12.9 million, 13.2% higher than the $11.4 million reported in the same period in 1999 and 15.2 % higher than the $11.2 million EBITDA reported in the first quarter of 2000. The Company's EBITDA margin for the second quarter of 2000 was approximately 19.7%, slightly less than the 20.8% EBITDA margin recorded in the same quarter of 1999. EBITDA for the first half of 2000 was approximately $24.0 million, $4.3 million higher than the $19.7 million recorded in the same period in 1999. The Company's EBITDA margin for the first half of 2000 was approximately 18.7%, as compared to the 17.9% EBITDA margin recorded in the same period of 1999. The Company has shown an improvement in its EBITDA figures for two consecutive quarters since reporting a negative EBITDA in the fourth quarter of 1999.

For the second quarter of 2000, the Company reported a net loss of $6.7 million, or $0.24 per share ($0.18 per ADS), compared with a net loss of $5.7 million, or $0.27 per share ($0.20 per ADS) in the same period in 1999. Each ADS represents 0.75 of one share of common stock. The Company's net loss for the six months ended June 30, 2000 was $18.5 million, or $0.66 per share ($0.50 per ADS), compared with the Company's net loss of $10.7 million, or $0.53 per share ($0.40 per ADS) for the six months ended June 30, 1999.

Selling, general and administrative expenses for the second quarter of 2000 increased 41.4% to approximately $25.6 million compared to the $18.1 million reported for the same period in 1999. This increase was primarily due to higher total subscriber acquisition costs that resulted from a greater number of subscriber sales. VimpelCom's average subscriber acquisition cost in the second quarter 2000 was approximately $92 which is significantly less than the $252 recorded in the second quarter of 1999.

For the second quarter of 2000, the Company recorded a $4.2 million provision for doubtful accounts receivable, a $0.3 million increase compared with $3.9 million reported in the same period in 1999. The increase in provision for doubtful accounts receivable was due primarily to the greater number of postpaid subscribers in the second quarter of 2000 compared with the same period of 1999.

Depreciation and amortization expense was $14.4 million for the second quarter of 2000, slightly less than the $14.5 million reported in the same period of 1999.

Commenting on today's announcement, Dmitri Zimin, President and Chief Executive Officer of VimpelCom said, "We are pleased with our continued improvement in our financial performance. Service revenues, EBITDA and service margins, defined as service revenues minus service costs, have been improving for the past twelve months. In order to strengthen our competitive position we intend to continue to pursue our dual strategy. First, we will use our advantage in the network capacity in the City of Moscow and our superior customer service and innovations in order to continue to attract business and higher use customers who value the high quality of our service. Second, we will continue to actively market our services to the mass market subscriber base. The recently completed public offering of VimpelCom's securities in which we raised over $225 million provides us with the necessary resources to continue implementing this strategy".

VimpelCom is a leading wireless telecommunications service company in Russia, operating under the "Bee Line" family of brand names, which are among the most recognized brand names in Russia. VimpelCom's license portfolio covers approximately 70% of Russia's population (100 million people), including the City of Moscow and the Moscow Region, which is the Company's primary market. 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"

Consolidated Condensed Statements of Operations

             
             
   

Three months ended

 

Six Months Ended

   

June 30,

 

June 30,

   

2000

1999

 

2000

1999

   

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

Operating revenues:

         
 

Service revenues and connection fees

US$60,303

US$51,135

 

US$116,871

US$104,651

 

Sales of handsets and accessories

7,989

6,392

 

16,957

10,704

 

Other revenues

342

154

 

641

264

Total operating revenues

68,634

57,681

 

134,469

115,619

 

Revenue based taxes

(3,021)

(2,813)

 

(5,881)

(5,406)

Net operating revenues

65,613

54,868

 

128,588

110,213

             

Operating expenses

         
 

Service costs

14,332

14,507

 

28,689

29,116

 

Cost of handsets and accessories sold

8,514

6,797

 

16,231

11,577

 

Cost of other revenues

50

50

 

104

89

 

Selling, general and administrative expenses

25,583

18,138

 

50,487

36,312

 

Depreciation and amortization

14,358

14,511

 

28,316

27,610

 

Provision for doubtful accounts

4,245

3,936

 

9,030

13,434

Total operating expenses

67,082

57,939

 

132,857

118,138

             

Operating loss

(1,469)

(3,071)

 

(4,269)

(7,925)

             

Other income and expenses:

         
 

Other income

592

222

 

1,380

387

 

(Loss) /gain on trading securities

(49)

516

 

162

1,082

 

Interest expense

(4,091)

(4,285)

 

(7,950)

(8,665)

 

Net foreign exchange gain / (loss)

283

460

 

(334)

(1,135)

Total other income and expenses

(3,265)

(3,087)

 

(6,742)

(8,331)

             

Loss before income taxes and minority interest

(4,734)

(6,158)

 

(11,011)

(16,256)

             

Income tax expense / (benefit)

1,930

(1,378)

 

7,457

(7,412)

Minority interest in net earnings of subsidiaries

2

888

 

31

1,901

             

Net loss

(US$ 6,666)

(US$5,668)

 

(US$ 18,499)

(US$ 10,745)

             

Net loss per common share

(US$ 0.24)

( US$ 0.27)

 

(US$ 0.66)

(US$ 0.53)

             

Net loss per ADS equivalent

(US$ 0.18)

(US$ 0.20)

 

(US$ 0.50)

(US$ 0.40)

             

Weighted average common shares outstanding (thousands)

28,178

21,033

 

28,154

20,161

             

EBITDA

US$12,889

US$11,440

 

US$ 24,047

US$ 19,685

         

Open Joint Stock Company "Vimpel-Communications"

Consolidated Condensed Balance Sheets

         
         
         
     

June 30,

December 31,

     

2000

1999

     

(unaudited)

 
     

(In thousands US dollars)

Assets

       

Current assets

   
 

Cash and cash equivalents

 

US$ 27,076

US$ 35,609

 

Short-term investments

703

503

 

Trade accounts receivable

27,705

24,356

 

Other current assets

48,353

46,321

Total current assets

103,837

106,789

         

Non-current assets

   
 

Property and equipment and Intangible assets, net

471,223

453,187

 

Other assets

18,349

30,119

Total non-current assets

489,572

483,306

         

Total assets

 

US$ 593,409

US$ 590,095

         

Liabilities and shareholders' equity

   

Current liabilities

   
 

Accounts payable

US$ 40,728

US$ 33,396

 

Customer deposits

30,089

31,341

 

Loan payable

244

0

 

Deferred income

1,278

0

 

Due to related parties

580

348

 

Capital lease obligations, current portion

18,045

21,739

 

Equipment financing, current portion

33,211

46,334

 

Accrued liabilities

13,054

12,413

Total current liabilities

137,229

145,571

         

Deferred income taxes

47,657

40,329

Due to related parties

15,000

0

Bank loans, less current portion

15,459

0

Capital lease obligations, less current portion

34,541

41,293

Equipment financing, less current portion

43,310

51,972

         

Minority Interest

508

9,942

         

Shareholders' equity

299,705

300,988

         

Total liabilities and shareholders' equity

US$ 593,409

US$ 590,095

         



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