VimpelCom announces significant improvement in its second quarter and six month 2001 financial results
- $9.4 Million net income
- $35.9 Million EBITDA and 37.9% EBITDA margin
Moscow and New York (August 22, 2001) - Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP) today announced its financial results for the second quarter and six months ended June 30, 2001. During the second quarter of 2001 VimpelCom showed significant improvement in its net revenue, operating income and EBITDA, reporting net income of approximately $9.4 million for the second quarter ended June 30, 2001. Strong subscriber growth continued throughout 2001 and VimpelCom reported approximately 1,317,000 subscribers on all of its wireless networks as of August 22, 2001 (including subscribers on networks operated by VimpelCom's subsidiaries), with approximately 1,205,000 subscribers in the Moscow license area.
Key Financial and Operating Indicators
|
3 months ended |
6 months ended |
|
June 30,2001 |
June 30,2000 |
Change (%) |
June 30,2001 |
June 30,2000 |
Change (%) |
| Net revenue (US$,000) |
94,679 |
65,613 |
44.3% |
174,422 |
128,588 |
35.6% |
| EBITDA (US$,000) |
35,862 |
12,889 |
178.2% |
63,760 |
24,047 |
165.1% |
| EBITDA margin |
37.9% |
19.6% |
93.4% |
36.6% |
18.7% |
95.7% |
| Net income/(loss), (US$,000) |
9,414 |
(6,666) |
241.2% |
14,540 |
(18,499) |
178.6% |
| ARPU(US$) (1) |
27.7 |
38.6 |
-28.2% |
27.6 |
41.6 |
-33.7% |
| MOU (min) (2) |
107.7 |
85.5 |
26.0% |
101.4 |
86.7 |
17.0% |
| SAC, (US$) (3) |
42.3 |
91.5 |
-53.8% |
40.1 |
82.0 |
-51.1% |
|
Note:
-
ARPU (Monthly Average Revenue per User) is calculated for each month in the relevant period by dividing our service revenue during that month, including roaming revenue but excluding revenue from connection fees and sales of handsets and accessories, by the average number of our customers during the month.
-
MOU (Monthly Average Minutes of Use per User) is calculated for each month of the relevant period by dividing the total number of billable minutes of usage for incoming and outgoing calls during that month (excluding guest roamers) by the average number of customers during the month.
-
SAC (Subscriber Acquisition Cost) is calculated as dealer commissions, advertising expenses and handset subsidies for the period divided by the number of gross sales during the period.
VimpelCom's net operating revenues (net of revenue-based taxes) for the second quarter ended June 30, 2001 were approximately $94.7 million, a 44.3% increase from the $65.6 million reported for the second quarter of 2000 and an 18.8% increase from the $79.7 million reported for the first quarter of 2001. Revenue growth was largely due to the increase in the number of subscribers in the network.
In the second quarter of 2001, the Company's net income was approximately $9.4 million, or net income of $0.29 per common share ($0.22 per ADS), compared with a net loss of $6.7 million, or $0.24 per common share ($0.18 per ADS) in the same period in 2000. Each ADS represents 0.75 of one share of common stock.
EBITDA for the second quarter of 2001 was approximately $35.9 million, a 178.2% increase from the $12.9 million reported in the same period in 2000. The Company's EBITDA margin for the second quarter of 2001 was approximately 37.9% compared to approximately 19.6% for the same period of 2000. Growth in EBITDA in the second quarter of 2001 compared with previous periods was due to an increase in our revenues with a lower increase in the corresponding costs.
Service costs in the second quarter of 2001 grew much slower than revenues, which led to an improvement of gross margin from 65.1% in the second quarter of 2000 to 72.9% in 2001. This improvement was largely due to the continued growth in usage of low-cost federal telephone numbers and improved interconnect agreements with telephone line providers.
Selling, general and administrative expenses totaled approximately $30.2 million in the second quarter of 2001, an increase of 18.0% compared to the $25.6 million reported in the same period of 2000. This increase driven by higher sales volumes was significantly lower than the corresponding increase in revenues, primarily due to the decrease in the acquisition cost per subscriber to $42.3 in the second quarter of 2001 from $91.5 in the second quarter of 2000. The reduction in acquisition cost per subscriber was due in part to the increased percentage of sales through the Company's own offices, including through Mobile Center, a dealer network acquired in January 2001.
Another factor which contributed to the improvements in EBITDA and operating margin was the decrease in provision for doubtful accounts by 28.6% from $4.2 million in the second quarter of 2000 to approximately $3.0 million in the second quarter of 2001. This reduction in provision for doubtful accounts was the result of improved quality of VimpelCom's subscriber base and improved risk management procedures.
Depreciation and amortization expense for the second quarter of 2001 was approximately $15.2 million, a 5.6% increase compared to the $14.4 million reported in the same period of 2000. The relatively small increase in depreciation expense despite significant capital investments during the last 12 months is due to the one-time write-down of AMPS/D-AMPS related assets in the fourth quarter of 2000.
The growth in MOU reflects the growth in airtime usage among all subscriber segments over the second quarter of 2001 compared with previous periods. As a result of this increase, VimpelCom reported ARPU of $27.7 for the second quarter of 2001, which is slightly higher than the ARPU of $27.5 reported in the first quarter of 2001.
Key Subscriber Statistics
| |
June 30, 2001 |
June 30, 2000 |
Change,
year-to-year |
March 31, 2001 |
Change,
quarter-to-quarter |
| Moscow license area |
1,085,100 |
551,500 |
96.8% |
927,100 |
17.0% |
| Postpaid |
377,500 |
187,500 |
101.3% |
306,500 |
23.2% |
| Prepaid |
707,600 |
364,400 |
94.2% |
620,600 |
14.0% |
| Regions |
100,000 |
30,800 |
224.7% |
57,400 |
74.2% |
| Total Number of Subscribers. |
1,185,100 |
582,300 |
103.5% |
984,500 |
20.04% |
|
|
|
|
|
|
| Churn (quarterly) |
6.8% |
Not reported |
-- |
7.3%* |
-- |
|
* The previously reported 6.5% churn for the first quarter of 2001 was revised to 7.3% to reflect 6,271 prepaid subscribers who were deactivated after the first quarter figures were announced.
As of June 30, 2001, VimpelCom had approximately 1,185,100 subscribers on all of its wireless networks, a 103.5% increase compared to the 582,300 subscribers reported as of June 30, 2000. In the second quarter of 2001, subscriber growth in the Moscow license area was entirely attributable to VimpelCom's GSM network. At the end of the second quarter 2001, GSM subscribers constituted approximately 71% of the total Moscow subscriber base compared to 65% reported at the end of the first quarter of 2001. This trend is expected to continue.
VimpelCom estimates that as of June 30, 2001, its market share in Moscow was approximately 39.0%
Commenting on the Company's second quarter results, Jo Lunder, Chief Executive Officer of VimpelCom said,"We are very pleased that only two years after the launch of our GSM network in Moscow, we have recaptured the confidence of the Moscow subscriber market, and were able to report two solid quarters of profitability with increasing revenues and EBITDA. We believe we are well positioned to continue to build on this success in Moscow, and working with our partners Telenor and Alfa Group, we believe we are well positioned to capture the potential of the cellular markets in the regions."
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. The 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, 2000 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)
Tel: 7(095) 974-5888
vgoldin@vimpelcom.com
Christopher Mittendorf
Edelman Financial Worldwide
Tel: 1(212) 704-8134
Christopher.Mittendorf@edelman.com
Tables Attached
|
Open Joint Stock Company "Vimpel-Communications"
|
|
Consolidated Condensed Statements of Operations
|
| |
|
|
|
|
|
|
| |
|
Three months ended
|
|
Six Months Ended
|
| |
|
June 30,
|
|
June 30,
|
| |
|
2001
|
2000
|
|
2001
|
2000
|
| |
|
(In thousands of US dollars , except per share (ADS) amounts)
|
|
Operating revenues:
|
|
|
|
|
|
| |
Service revenues and connection fees
|
US$85,953
|
US$60,303
|
|
US$ 157,210
|
US$116,871
|
| |
Sales of handsets and accessories
|
9,599
|
7,989
|
|
18,734
|
16,957
|
| |
Other revenues
|
314
|
342
|
|
653
|
641
|
|
Total operating revenues
|
95,866
|
68,634
|
|
176,597
|
134,469
|
| |
Less revenue based taxes
|
(1,187)
|
(3,021)
|
|
(2,175)
|
(5,881)
|
|
Net operating revenues
|
94,679
|
65,613
|
|
174,422
|
128,588
|
| |
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
| |
Service costs
|
17,007
|
14,332
|
|
32,136
|
28,689
|
| |
Cost of handsets and accessories sold
|
8,579
|
8,514
|
|
18,049
|
16,231
|
| |
Cost of other revenues
|
33
|
50
|
|
67
|
104
|
| |
Selling, general and administrative expenses
|
30,179
|
25,583
|
|
54,402
|
50,487
|
| |
Depreciation and amortization
|
15,219
|
14,358
|
|
29,136
|
28,316
|
| |
Provision for doubtful accounts
|
3,019
|
4,245
|
|
6,008
|
9,030
|
|
Total operating expenses
|
74,036
|
67,082
|
|
139,798
|
132,857
|
| |
|
|
|
|
|
|
|
Operating income (loss)
|
20,643
|
(1,469)
|
|
34,624
|
(4,269)
|
| |
|
|
|
|
|
|
|
Other income and expenses:
|
|
|
|
|
|
| |
Other (loss) / income
|
(305)
|
387
|
|
(43)
|
739
|
| |
Interest income
|
1,708
|
205
|
|
3,685
|
641
|
| |
Gain (loss) on trading in securities
|
179
|
(49)
|
|
240
|
162
|
| |
Interest expense
|
(7,460)
|
(4,091)
|
|
(14,665)
|
(7,950)
|
| |
Net foreign exchange gain / (loss)
|
1,233
|
283
|
|
2,038
|
(334)
|
|
Total other income and expenses
|
(4,645)
|
(3,265)
|
|
(8,745)
|
(6,742)
|
| |
|
|
|
|
|
|
|
Income (loss) before income taxes and minority interest
|
15,998
|
(4,734)
|
|
25,879
|
(11,011)
|
| |
|
|
|
|
|
|
|
Income tax expense
|
6,551
|
1,930
|
|
11,306
|
7,457
|
|
Minority interest in net earnings
of subsidiaries
|
33
|
2
|
|
33
|
31
|
| |
|
|
|
|
|
|
|
Net income (loss)
|
US$ 9,414
|
(US$ 6,666)
|
|
US$ 14,540
|
(US$ 18,499)
|
| |
|
|
|
|
|
|
|
Net income (loss) per common share
|
US$ 0.29
|
(US$ 0.24)
|
|
US$ 0.44
|
(US$ 0.66)
|
| |
|
|
|
|
|
|
|
Net income (loss) per ADS equivalent
|
US$ 0.212
|
(US$ 0.18)
|
|
US$ 0.33
|
(US$ 0.50)
|
| |
|
|
|
|
|
|
|
Weighted average common shares outstanding (thousands)
|
32,851
|
28,178
|
|
32,851
|
28,154
|
| |
|
|
|
|
|
|
|
EBITDA
|
US$ 35,862
|
US$12,889
|
|
US$ 63,760
|
US$ 24,047
|
|
Open Joint Stock Company "Vimpel-Communications"
|
|
Consolidated Condensed Balance Sheets
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
June 30,
|
December 31,
|
| |
|
2001
|
2000
|
| |
|
|
(unaudited)
|
|
| |
(In thousands of US dollars)
|
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
| |
Cash and cash equivalents
|
US$119,250
|
US$152,141
|
| |
Short-term investments
|
4,389
|
550
|
| |
Accounts receivable
|
41,618
|
29,666
|
| |
Other current assets
|
55,262
|
53,117
|
|
Total current assets
|
220,519
|
235,474
|
| |
|
|
|
|
|
Non-current assets
|
|
|
| |
Property and equipment, net
|
412,303
|
356,666
|
| |
Intangible assets, net
|
75,894
|
79,649
|
| |
Other assets
|
38,466
|
28,526
|
|
Total non-current assets
|
526,663
|
464,841
|
| |
|
|
|
|
|
Total assets
|
US$747,182
|
US$700,315
|
| |
|
|
|
|
|
Liabilities and shareholders' equity
|
|
|
|
Current liabilities
|
|
|
| |
Accounts payable
|
27,333
|
US$28,356
|
| |
Customer deposits
|
44,702
|
33,243
|
| |
Deferred revenue
|
2,321
|
1,747
|
| |
Due to related parties
|
2,285
|
2,003
|
| |
Bank loans
|
491
|
-
|
| |
Capital lease obligation, current portion
|
5,106
|
-
|
| |
Equipment financing, current portion
|
40,622
|
34,721
|
| |
Accrued liabilities
|
145,998402
|
13,134
|
|
Total current liabilities
|
1378,858262
|
113,204
|
| |
|
|
|
|
|
Deferred income taxes
|
29,359
|
29,922
|
|
Bank loans
|
68,928
|
66,800
|
|
5.5% Senior convertible notes due July 2005
|
78,799
|
76,702
|
| |
|
|
|
Equipment financing, less current portion
|
48,340
|
44,541
|
| |
|
|
|
|
|
Minority Interest
|
331
|
523
|
| |
|
|
|
|
|
Shareholders' equity
|
383,163
|
368,623
|
| |
|
|
|
|
|
Total liabilities and shareholders' equity
|
US$747,182
|
US$ 700,315
|