Strong Organic Revenue And EBITDA Growth In 1Q12

May 15, 2012, 01:00 ET from VimpelCom Ltd

AMSTERDAM, May 15, 2012 /PRNewswire/ -- 

KEY RESULTS AND DEVELOPMENTS IN 1Q12*

  • Organic Revenue growth of 6% YoY; revenues of USD 5.6 billion
  • Organic EBITDA growth of 5% YoY; EBITDA of USD 2.3 billion
  • Total mobile subscriber base increased 12% YoY to 209 million
  • Organic EBITDA growth of 9% YoY in Russia, reversing previous negative trend
  • Double-digit organic EBITDA growth in Africa & Asia; strong performance in Pakistan
  • Net income of USD 318 million
  • Net cash from operating activities of USD 1.6 billion

"VimpelCom Ltd" ("VimpelCom", "Company" or "Group") (NYSE: VIP), a leading global provider of telecommunications services, today announces operating and financial results for the quarter ended March 31, 2012.

JO LUNDER, CHIEF EXECUTIVE OFFICER COMMENTS:

"We have delivered strong organic EBITDA and revenue growth leading to another quarter of good cash flows. The benefits of executing on our strategy can be seen across our businesses: in Russia, our focus on profitable growth has delivered a strong organic increase of 9% in EBITDA and 11% in revenues. In the Africa & Asia business unit organic revenues rose by 9%, with a particularly strong contribution from Pakistan. In Italy we again gained market share, outperforming our competitors and our Ukraine and our CIS business units delivered solid revenue increases. We will continue to review our portfolio of operations and we will remain focused on profitable growth and cash generation."

CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS

USD mln

Pro forma

Actual

1Q12

1Q11

YoY

1Q12

1Q11

YoY

Total operating revenues

5,619

5,481

3%

5,619

2,740

105%

EBITDA

2,311

2,285

1%

2,311

1,203

92%

EBITDA margin

41.1%

41.7%

41.1%

43.9%

EBIT

1,015

903

12%

1,015

627

62%

Net Income

318

450

-29%

318

500

-36%

EPS, basic (USD)

0.20

0.28

-29%

0.20

0.39

-49%

Capital expenditures

632

729

-13%

632

456

39%

Net cash from operating activities

1,607

-

-

1,607

1,017

58%

Net debt / LTM EBITDA

2.5

-

-

-

-

-

Total mobile subscribers (millions)

209

186

12%

209

95

120%

* Comparative figures are Pro forma - for pro forma definition see next page.   For all other definitions see Attachment E.

 

ORGANIC* GROWTH REVENUE AND EBITDA (PRO FORMA)

 

Revenue

 

EBITDA

Business Units

Organic

FX and

others

Reported

Organic

FX and

Others

Reported

Russia

11%

-3%

8%

9%

-3%

6%

Europe & NA

0%

-5%

-5%

-2%

-4%

-6%

Ukraine

3%

0%

3%

-2%

0%

-2%

Africa & Asia

9%

-5%

4%

12%

-7%

5%

CIS

9%

-1%

8%

2%

-1%

1%

Total

6%

-3%

3%

5%

-4%

1%

* Organic growth excludes the effect of foreign currency movements and certain items like liquidations and disposals. For more information please see the definition of Organic growth Revenue and EBITDA in Attachment E.

PRESENTATION OF FINANCIAL RESULTS

The Company believes pro forma comparisons provide the most meaningful comparison of financial performance and, unless otherwise stated, all comparisons in this press release are on a pro forma basis. The pro forma information presented in this press release reflects what the Company's results of operations would have looked like had the Company's transactions with Wind Telecom occurred on January 1, 2011. For further details about the adjustments and assumptions of our pro forma results, please refer to VimpelCom's press release issued on August 18, 2011 and available on our website.

VimpelCom Ltd. results presented in this earnings release are based on IFRS. The revised unaudited pro forma condensed combined financial information prepared in accordance with IFRS for 1Q11, 2Q11, 3Q11, 4Q11 and FY11 was published on May 14, 2012 and are available on the Company's website www.vimpelcom.com.

Certain amounts and percentages that appear in this earnings release have been subject to rounding adjustments. As a result, certain numerical figures shown as totals, including in tables, may not be exact arithmetic aggregations of the figures that precede or follow them.

The actual 1Q12 financial results in this earnings release have not been audited. As previously announced, the Company published its full year 2011 audited financial results under IFRS when it filed its annual report on Form 20-F for the year ended December 31, 2011 on April 30, 2012.

STRATEGIC UPDATE AND MAIN EVENTS

  • VimpelCom's subsidiary OTH submitted formal notice of arbitration against Algerian Government
  • Significant part of 2012 debt maturities refinanced by bonds issued in March and April
  • Sale of controlling interest in GTEL Mobile Vietnam
  • Final dividend to be paid before June 30th 2012  
  • Maximo Ibarra appointed to lead Italy Business

VimpelCom continued its progress in the first quarter against its strategic priorities as defined by the Company's Value Agenda for 2012-2014, which was presented on November 15, 2011.

In March, the Company announced that an Algerian Court of first instance handed down a judgment against Orascom Telecom Algerie ("OTA") and a member of OTA's senior executive team. The judgment relates to a previously disclosed claim brought in 2010 by the Algerian authorities alleging breaches of foreign exchange regulations. The judgment consists of fines of 99 billion Algerian Dinar (approximately USD 1.3 billion) and a criminal sentence against a member of OTA's senior executive team. OTA has appealed and accordingly the judgment was provisionally suspended.

In April, VimpelCom's subsidiary Orascom Telecom Holding S.A.E. ("OTH"), submitted a formal Notice of Arbitration against the government of the People's Democratic Republic of Algeria. The arbitration is in respect of actions taken by the Algerian government against Orascom Telecom Algerie ("OTA") and will be conducted in an international forum. OTA is 96.8% owned by OTH, which, in turn, is 51.9% owned by VimpelCom. VimpelCom continues to be open to finding an amicable resolution with the Algerian government that is mutually beneficial to both parties.

In March the Company issued non-convertible interest-bearing Russian Ruble-denominated bonds in an aggregate principal amount of RUB 35 billion (USD 1.2 billion) with a 10 year maturity and an 8.85% coupon. The proceeds of the offerings will be used for OJSC VimpelCom's general corporate purposes and refinancing of existing debt.

In early April, WIND prepaid its term loan A maturities for 2012 and 2013 for an amount of EUR 500 million. Concurrently, its subsidiary WAF SA issued a EUR 500 million equivalent tap of Senior Secured Notes due 2018 (EUR tranche is at 7.375% and the USD tranche is at 7.25%). The proceeds of the offering were used, in part, to repay EUR 250 million of indebtedness related to an outstanding bridge loan entered into in October 2011 in relation to the LTE spectrum purchase.

On April 23, 2012, VimpelCom announced the sale of its controlling 49% interest in GTEL Mobile in Vietnam. The Company continues its strategic portfolio analysis, focused on allocating capital to those markets where the Company sees the best opportunities to generate shareholder value.

The shareholders of OTH in their meeting held on May 3, 2012 approved OTH entering into a five-year USD 2.5 billion uncommitted Credit Facility Agreement with VimpelCom Amsterdam B.V. Advances under this Facility, which will be drawn from time to time based on the business development needs of OTH agreed upon with VimpelCom, will bear an interest rate of 12.5% and accrued interest will be paid in kind (payable by automatic addition to the principal balance).

In April, VimpelCom and its subsidiary VimpelCom Holdings B.V., which together own 100% of the Group's Russian subsidiary OJSC VimpelCom, were named as third parties in a claim brought by the Russian Federal Anti-Monopoly Service ("FAS") in a Moscow Arbitration Court against two of VimpelCom's strategic shareholders, Telenor East Holding II AS ("Telenor") and Weather Investments II S.a.r.l. ("Weather II"). The FAS claim alleges that Telenor's February 15, 2012 purchase of 234 million VimpelCom preferred shares from Weather II violated relevant Russian law and seeks to, among other things, invalidate the purchase.  In connection with this claim, FAS obtained from the Moscow court an order for interim relief which prohibits VimpelCom and VimpelCom Holdings from voting their shares in OJSC VimpelCom at shareholder meetings of OJSC VimpelCom, to change the OJSC VimpelCom Board of Directors and approve major transactions and interested party transactions, as such terms are defined under Russian law. The order does not prohibit VimpelCom and VimpelCom Holdings from exercising their other rights as shareholders of OJSC VimpelCom, including, among other things, rights to approve OJSC VimpelCom's annual accounts, to appoint OJSC VimpelCom's external auditor, to approve dividend payments by OJSC VimpelCom and to re-elect the current OJSC VimpelCom Board members.  According to the order, the first hearing on the merits of the FAS claim is scheduled for October 17, 2012.

The payment of the previously announced final dividend of USD 0.35 per American depositary share ("ADS") in relation to its 2011 results will be paid before June 30, 2012.

Finally, VimpelCom announced the appointment of Maximo Ibarra as CEO of WIND Telecomunicazioni in Italy effective May 11, 2012. Mr. Ibarra will focus on the further development of the Company's operations in Italy, aligned with VimpelCom's Value Agenda.

 VIMPELCOM GROUP – FINANCIAL AND OPERATING RESULTS 1Q12

  • Organic Revenue growth of 6% YoY; Revenues of USD 5.6 billion
  • Organic EBITDA growth of 5% YoY; EBITDA of USD 2.3 billion
  • Total mobile subscriber base increased 12% YoY to 209 million
  • Net cash from operating activities was USD 1.6 billion
  • CAPEX of USD 0.6 billion, with a CAPEX / Revenues of 11%
  • Net debt / LTM EBITDA was 2.5x at the end of the first quarter

OPERATING PERFORMANCE OVERVIEW

The total mobile subscriber base increased 12% YoY to 209 million at the end of the first quarter. The largest absolute contribution came from accelerated growth in subscribers in the Africa & Asia Business Unit. The Company also achieved strong growth in fixed and mobile broadband subscribers in Russia, Italy and Ukraine.

In line with the strategy of targeting profitable growth and resetting the overall commercial model to achieve this goal, VimpelCom in Russia engaged in more targeted sales activities in the first quarter of 2012. As a result, overall subscribers declined in the first quarter 2012 compared to the fourth quarter of 2011, which benefited from extensive pre-holiday sales. Mobile broadband subscribers in Russia increased 12% YoY to 2.6 million, while the Fixed broadband subscriber base reached over 2 million, up 42% YoY. Overall, organic revenue growth in Russia was strong at 11% YoY.

The Company's Italian business continued to outperform the broader Italian telecom market in the first quarter despite the ongoing weak macroeconomic environment and unfavorable regulatory developments. VimpelCom strengthened its market position in Italy in both mobile and fixed-line, increasing its revenue share in both segments. The fixed broadband subscriber base increased 9% YoY to more than 2.2 million, with an increase in Fixed broadband revenues of 9% YoY, while Mobile internet revenues increased 40% YoY.      

In the Africa & Asia Business Unit, the Company achieved strong growth in its subscriber base across all countries of operation, exceeding 86 million in total. Solid performance across the main operations led to organic revenue growth of 9% YoY. In particular Pakistan and Bangladesh contributed strongly. Reported total operating revenues increased by 4% YoY, adversely impacted by local currency devaluation against the USD in the main operating countries of Algeria, Pakistan and Bangladesh.

The Ukraine Business Unit continued to deliver solid revenue growth in mobile and fixed data revenues and almost doubled its Fixed broadband subscribers. Mobile revenues were up 2% YoY driven by growth of voice and data traffic as a result of the strategy of transition to bundles. Fixed-line revenues increased by 16% YoY, mainly due to an 82% increase in fixed residential broadband revenues.

The CIS Business Unit delivered strong revenue growth and was able to maintain high quality subscriber growth despite a sharpening competitive environment also affected by certain governmental measures in key markets.

OPERATING FINANCIALS PER BUSINESS UNIT (PRO FORMA)

Pro forma

USD mln

1Q12

1Q11

Reported YoY

Organic YoY

Total operating revenues

5,619

5,481

3%

6%

of which:

BU Russia

2,225

2,064

8%

11%

BU Europe & North America

1,766

1,862

-5%

0%

BU Africa & Asia

927

891

4%

9%

BU Ukraine

385

375

3%

3%

BU CIS

379

351

8%

9%

other

(63)

(62)

EBITDA

2,311

2,285

1%

5%

of which:

BU Russia

918

868

6%

9%

BU Europe & North America

639

679

-6%

-2%

BU Africa & Asia

424

404

5%

12%

BU Ukraine

197

202

-2%

-2%

BU CIS

161

159

1%

2%

other

(28)

(27)

EBITDA margin

41.1%

41.7%

Capital expenditures

632

729

-13%

* See definitions in Attachment E.

FINANCIAL PERFORMANCE OVERVIEW

PRO FORMA 1Q12

Total operating revenues in the first quarter 2012 increased by 3% YoY, with a strong performance across most business units. Overall organic revenue growth was 6%.

EBITDA increased 1% YoY, impacted by unfavorable currency movements. Excluding these forex effects, EBITDA increased 5% compared to the same period last year. Strong organic EBITDA growth was seen in the markets of the business units of Russia and Africa & Asia, up 9% and 12% respectively, while the performance in CIS showed a 2% increase YoY. Overall growth was partly offset by the YoY organic EBITDA decline in Ukraine and Italy.

EBIT, which increased by 12% YoY, was positively affected, as reported previously, by the declining amortization pattern applied to intangible assets associated with customer relationships as part of the Wind Telecom acquisition where amortization of later periods is lower than amortization in the year of acquisition.

Profit before tax was negatively impacted by the lower foreign exchange gain in 1Q12 compared to 1Q11, lower net gain realized in 1Q12 from investments in associated entities, mainly related to our investment in Euroset and fair value changes of embedded derivatives. In 1Q11 the foreign exchange gain was USD 168 million, while in 1Q12 the gain only amounted to USD 63 million, mainly due to the lower USD exposure in Russia.

Net income decreased by 29% YoY as a result of the increase in income tax expense of USD 54 million and USD 48 million change in profit for the period attributable to non-controlling interest, mainly resulting from a stronger performance in Orascom Telecom Holding.

CAPEX was USD 0.6 billion, excluding licenses, with investments in the further roll out of the mobile networks in Russia, Bangladesh and the CIS. In Italy, we continued to invest in the roll-out of HSDPA and in backbone capacity to support the growth in data.

ACTUAL 1Q12

On an actual basis, revenues more than doubled YoY and EBITDA and EBIT increased by 92% and 62% YoY respectively as a result of the combination with Wind Telecom in April 2011.

Profit before tax decreased by 9% YoY due to additional  finance costs as a result of the Wind Telecom acquisition; net losses from associated entities- mainly due to lower profits from Euroset and losses from the investment in Canada; as well as lower gains from foreign exchange rates movements, mainly attributable to the lower USD exposure in Russia.

The increase in the effective income tax rate, driven by higher non-deductible expenses and non-recognized losses in Wind Telecom entities as well as the effect of a reversal of tax provisions in Russia in 1Q11, has led to a decrease in net income of 36% to USD 318 million.

USD mln

Pro forma

Actual

1Q12

1Q11

YoY

1Q12

1Q11

YoY

Total operating revenues

5,619

5,481

3%

5,619

2,740

105%

EBITDA

2,311

2,285

1%

2,311

1,203

92%

EBITDA margin

41.1%

41.7%

41.1%

43.9%

EBIT

1,015

903

12%

1,015

627

62%

Financial income and expenses

(443)

(464)

-5%

(443)

(126)

252%

Net foreign exchange (loss)/gain and others

21

184

-89%

21

148

-86%

Profit before tax

593

623

-5%

593

649

-9%

Income tax expense

(239)

(185)

29%

(239)

(129)

85%

Profit for the period

354

438

-19%

354

520

-32%

Net income

318

450

-29%

318

500

-36%

Capital expenditures

632

729

-13%

632

456

39%

 

STATEMENT OF FINANCIAL POSITION & CASH FLOW (ACTUAL)

USD mln

1Q12

4Q11

QoQ

Total assets

56,121

54,039

4%

Shareholders' equity

14,343

14,037

2%

Gross debt

28,591

26,876

6%

Net debt

24,339

24,373

0%

1Q12

1Q11

YoY

Net cash from operating activities

1,607

1,017

58%

Net cash used (in)/from investing activities

(915)

(1,208)

-24%

Net cash used (in)/provided from financing activities

941

1,132

-17%

Total assets increased by 4% to USD 56.1 billion, primarily as a result of investments in the business, external financing and the appreciation of RUB and EUR against USD offset by the transfer of the spin-off assets to Weather II. Gross debt increased in the quarter from USD 26.9 billion to USD 28.6 billion, mainly due to the issuance of Ruble bonds for RUB 35 billion (approximately USD 1.2 billion) and FX movements. Net debt decreased to USD 24.3 billion, leading to a net debt to LTM EBITDA of 2.5x on a pro forma basis at the end of the first quarter.

Net cash from operating activities at the Group level was positively impacted by higher EBITDA, partially offset by higher interest and tax payments. Net cash used in investing activities was mainly impacted by a substantial movement from cash to deposits in 2011, partially offset by the higher investments in property, equipment and intangible assets in 2012 resulting from the consolidation of Wind Telecom.

Net cash from financing activities in 1Q12 was mainly the result of obtaining external financing (issuance of Ruble bonds), primarily in anticipation for repayment of maturing debt as scheduled.

BUSINESS UNITS PERFORMANCE IN 1Q12

  • Russia
  • Europe and North America
  • Africa & Asia
  • Ukraine
  • CIS

BUSINESS UNIT RUSSIA – FINANCIAL AND OPERATING RESULTS

  • Double-digit total Revenue growth of 11%
  • Continued strong Revenue growth in Mobile and Fixed broadband
  • EBITDA increase of 9% YoY; reversal of previously negative trend
  • EBITDA margin of 41.3%
  • Operational excellence program on track to deliver at least RUB 5 billion in annualized savings in 2012

In 1Q12 the Russian Business Unit was focused on clear actions to deliver sustainable and profitable growth in line with the announced new strategy as part of the Company's overall corporate Value Agenda.

The Russian Business Unit delivered double-digit revenue growth and a substantial improvement in EBITDA, reversing the EBITDA trend seen last year. The EBITDA margin in 1Q12 reached 41.3%, improving over the FY11 margin of 40.1%.

Mobile data continues to be one of the fastest growing revenue streams for VimpelCom in Russia. The Company continued to promote mobile data services to a wider audience, creating attractive bundled offerings and innovative tariffs with the main focus on small and medium screens. The total revenue growth of 11% YoY was accounted for by a 39% increase in mobile data growth.

In line with the strategy of targeting profitable growth and resetting the overall commercial model to achieve this goal, VimpelCom engaged in more targeted sales activities in the first quarter of 2012. As a result, overall subscribers declined in the first quarter 2012 compared to the fourth quarter of 2011, which also benefited from extensive pre-holiday sales, but was still 5% above 1Q11 level.

At the end of 2011, the Company launched a Customer Experience program focused on enhancing the Beeline brand and improving customer loyalty. Initiatives in this program are focused on improving the quality of services and increasing pricing transparency. As a result of these initiatives, in 1Q12 the Company received one of the highest ratings in the TRI*M Index, which is an indicator of increasing customer satisfaction across our products and services. This customer satisfaction indicator increased by approximately 7% YoY. Going forward, the Company will continue with the Customer Experience program in order to consistently improve the level of customer satisfaction with all Beeline brand products and services.

To optimize the expenses related to subscriber acquisition costs and to lower churn rates, the Company has also implemented a new dealer commission structure based on revenue sharing instead of upfront payments.

In 1Q12, the Russian Business Unit launched a number of initiatives aimed at increasing productivity through organizational structure optimization and through improving business process efficiency.

KEY DEVELOPMENTS 1Q12

  • Mobile subscriber base grew 5% YoY to 55.6 million, but declined 3% as compared with 4Q11; mobile broadband subscribers increased 12% YoY to 2.6 million
  • Total revenue in Russia grew by 11% YoY to RUB 67 billion primarily as a result of higher service revenues driven by growth in content and small screen internet activities.
  • EBITDA increased by 9% YoY reversing the declining trend seen last year, as a result of revenue growth, improvement in service margins and cost control measures.
  • EBITDA margin was 41.3% and declined compared to 1Q11, impacted primarily by a decrease in APPM driven by the competitive environment and growth in low-margin handset sales, as well as higher technical and IT costs and an increase in payroll tax.
  • Mobile revenues increased 11% YoY driven by solid mobile data revenue growth and sales of devices.
  • Mobile ARPU in Russia increased by 2% to RUB 314 from RUB 308 in 1Q11, stimulated by growing usage and VAS.
  • Mobile data traffic grew 118% YoY in 1Q12, leading to revenues totaling RUB 6 billion, an increase of 39% from 1Q11.
  • Fixed-line revenues increased 11% YoY due to continuing growth in fixed broadband revenues, up 48% YoY. The fixed broadband subscriber base reached over 2 million, up 42% YoY.
  • CAPEX/Revenues was 9% in 1Q12, in line with our network construction planning. Capex/Revenues LTM stood at 20.7%. The Company will continue to invest in its 3G network development and aims to match its main competitors in terms of population coverage in main cities in 43 key regions by 2013. The Company expects Capex for the full year 2012 to be below 1Q12 LTM level.

RUSSIA KEY INDICATORS

RUB mln

1Q12

1Q11

YoY

Total operating revenues

67,022

60,334

11%

Total operating expenditures

39,364

34,939

13%

EBITDA

27,658

25,395

9%

EBITDA margin

41.3%

42.1%

Capex

6,140

9,486

-35%

Capex / revenues

9%

16%

Mobile

Mobile total operating revenues

55,576

50,067

11%

- of which mobile data

5,510

3,960

39%

Mobile subscribers ('000)

55,622

52,991

5%

- of which mobile broadband ('000)

2,579

2,313

12%

Mobile ARPU (RUR)

314

308

2%

MOU

254

218

17%

Fixed

Fixed-line total operating revenues

11,445

10,267

11%

Fixed Broadband revenues

2,795

1,891

48%

Fixed Broadband subscribers ('000)

2,224

1,569

42%

Fixed Broadband ARPU (RUR)

426

409

4%

BUSINESS UNIT EUROPE & NA - FINANCIAL AND OPERATING RESULTS ITALY

  • Relative outperformance continues in Italy with 3% underlying Revenue growth, excl. MTR impact
  • EBITDA declines 2% YoY with stable result in mobile offset by decrease in fixed
  • Solid subscriber growth across all market segments: Mobile subscribers up 4%, fixed voice subscribers up 3% and fixed broadband subscribers up 9%
  • Data revenue growth momentum strong: Mobile Internet Revenues up 40%, messaging Revenues up 14%, fixed broadband Revenues up 9%

In the first quarter of 2012 WIND continued to deliver a solid performance in a market that remained highly competitive. Service revenues in the period declined marginally with mobile service revenues flat, with an underlying growth rate, excluding the impact of MTR cuts, of 5%. Fixed-line service revenues were negatively affected by the reduced commercial push on the indirect market and lower pay-per-use traffic. The marginal reduction in the top line coupled with an increase in commercial Opex and increasing collection periods in fixed-line, led to a 2% reduction in EBITDA.

In line with the VimpelCom Value Agenda, WIND continued to focus on delivering profitable growth. In Data, performance remained strong with Mobile Internet revenues recording an impressive 40% growth, messaging revenues increasing by 14% and fixed broadband revenues up 9%. In Mobile, the Company continued to concentrate its commercial efforts on bundled offerings both in pre-paid and postpaid with the aim of increasing customer loyalty and stabilizing the revenue stream.

In Fixed-line the growth trend in 1Q12 remained positive with a 6% increase in higher value direct subscribers and a 9% growth in fixed broadband subscribers. From a revenue perspective the quarter was however impacted by the promotional period on WIND's mainstream dual-play offerings and by the aforementioned reduction of commercial focus on the lower margin indirect segment.

KEY DEVELOPMENTS 1Q12

  • Total revenues were stable in 1Q12 at EUR 1,346 million with an underlying growth (excl. MTR cut) of 3%
  • Mobile service revenues in 1Q12 were flat YoY, impacted by the MTR reduction, net of which service revenues would have increased 5%.
  • Fixed-line service revenues in the quarter declined by 2% as a result of reduced commercial push on indirect, with a view to optimizing margins, and lower pay-per-use traffic driven by competitive pressure in the market.
  • EBITDA in 1Q12 declined 2% YoY to EUR 487 million, delivering a solid overall margin of 36.2%. EBITDA decreased mainly as a result of a phasing of advertising expenditure in 1Q12 and higher bad debt provisioning for fixed-line customers.
  • Capex in 1Q12 was EUR 193 million and was mainly invested in expanding coverage and capacity on the HSDPA mobile network and increasing the backhauling capacity to support the strong growth in data. The Capex amount also includes EUR 28 million of capitalized costs in relation to the LTE frequencies acquired. In the quarter the Company continued its site sharing initiatives.
  • Mobile subscriber growth remained strong in 1Q12 with WIND increasing its customer base by 4% to over 21.1 million driven by the success of its bundle offerings and ongoing growth in Mobile broadband, which saw subscribers increase by 12% YoY. Mobile churn remained high mainly driven by the continued market focus on MNP promotions to acquire new subscribers. Actions to reduce the churn level have been implemented, including processes to detect the early signals of churn in the customer base as well as a more disciplined approach to dealer remuneration for customers acquired in MNP.
  • In mobile, data ARPU grew 14% to EUR 3.8 representing 26% of the total mobile ARPU of EUR 14.7. Voice ARPU remained under pressure as a result of the cut in MTR, strong growth in data-only SIM cards, which do not generate voice revenues, and competitive intensity.
  • The fixed-line business continued to perform strongly in 1Q12 with voice subscribers growing 3% to 3.18 million, of which an increasing proportion are higher value direct voice subscribers, up 6% to 2.45 million. The Broadband segment also posted a strong result with subscribers exceeding 2.2 million, an increase of 9% over 1Q11. Dual-play subscribers grew by 9% YoY reaching 1.81 million.
  • Fixed-line ARPU decreased by 4% to EUR 32.3 in 1Q12 driven by the promotional activity resulting from competitive pressure. Broadband ARPU declined marginally to EUR 18.9.
  • In early April WIND prepaid its term loan A maturities for 2012 and 2013 for an amount of EUR 500 million. Concurrently, its subsidiary WAF SA issued a EUR 500 million equivalent tap of Senior Secured Notes due 2018. The proceeds of the offering were used, in part, to repay EUR 250 million of indebtedness related to an outstanding bridge loan entered into October 2011.

ITALY KEY INDICATORS*

Euro mln

1Q12

1Q11

YoY

Total operating revenues

1,346

1,351

0%

Total operating expenditures

859

854

1%

EBITDA

487

496

-2%

EBITDA margin

36.2%

36.8%

Capex

193

146

32%

Capex / revenues

14%

11%

Mobile

Total revenues

983

982

0%

Subscribers ('000)

21,132

20,279

4%

- of which mobile broadband ('000) (1)

4,525

4,027

ARPU (EUR)

14.7

15.4

-5%

MOU

205

187

9%

Fixed

Total revenues

363

369

-2%

Total voice subscribers ('000)

3,182

3,085

3%

Total fixed-line ARPU (EUR)

32.3

33.6

-4%

Broadband subscribers ('000)

2,211

2,030

9%

Broadband ARPU (EUR)

18.9

19.3

-2%

Dual-play subscribers ('000)

1,809

1,662

9%

(1) Mobile broadband includes consumer customers that have performed at least one mobile Internet event in the previous month on 2.5G/3G/3.5G

CANADA

During 1Q 2012, WIND Mobile continued its "Value Plus" strategy execution adding primarily postpaid subscribers while carefully managing pre-paid economics for both voice and mobile broadband customers. WIND Mobile continued to grow its distribution, ending the quarter with 481 total points of sale including 215 branded locations. The company also continued expanding its network and improving its quality in existing networks.

On March 14, 2012, the Minister of Industry announced that the Canadian government has made key telecom decisions on foreign ownership restrictions and spectrum policy. Specifically, he announced:

  • The Telecom Act will be amended to remove foreign investment restrictions for telecom companies that hold less than a 10% share of the total Canadian telecom market (i.e., all companies but Bell, Rogers and TELUS (the "Incumbents")).
  • Companies that are successful in growing their market share to greater than 10% organically (i.e. other than by way of merger or acquisitions) will continue to be exempt from the restrictions.
  • The government will be applying 2X5MHz caps in the upcoming 700MHz auction.
  • The 2,500MHz auction with take place in early 2014.
  • The government will improve and extend the existing policy on national roaming and tower sharing and will improve transparency and information sharing to facilitate agreements between companies.

WIND Mobile is assessing the 700 MHz spectrum auction rules and although clearly advantageous to wireless incumbents, there is a prime 2X5 MHz band available in certain regions that could be beneficial to WIND Mobile's long term strategy.

CANADA KEY INDICATORS

1Q12

1Q11

YoY

Subscribers ('000)

415

272

53%

ARPU (CAD)

27.3

26.7

2%

BUSINESS UNIT AFRICA & ASIA - FINANCIAL AND OPERATING RESULTS

  • Organic Revenue growth of 9% YoY; Revenues of USD 927 million, with currency devaluation in local markets adversely impacting Revenues in USD
  • Organic EBITDA growth of 12% YoY; EBITDA of USD 424 million
  • EBITDA margin stood at 46% compared to 45% in 1Q11, as a result of successful OPEX reduction as part of operational excellence initiatives
  • Subscriber base increased by 19% to over 86 million
  • Impressive performance in Pakistan with organic increase in Revenue and EBITDA of 10% and 15% respectively
  • Sale of controlling interest in GTEL Mobile in Vietnam

In the first quarter of 2012, total operating revenues in Africa and Asia increased by 4% YoY, adversely impacted by local currency devaluation against the USD in main operating countries - Algeria, Pakistan and Bangladesh. However, due to OPEX savings and cost management, EBITDA growth exceeded revenue growth for the quarter, increasing 5% YoY, leading to an improved EBITDA margin of 46%. Operational performance in local currency showed significant growth across the board. Total subscribers grew by 19% to over 86 million customers.

ALGERIA ("DJEZZY")

In Algeria, Djezzy's subscribers increased 14%, as a result of strong customer acquisitions coupled with successful loyalty campaigns aimed at customer retention. Revenues increased 7%, mainly due to a focus on high-value subscribers. EBITDA grew by 8%, supported by strong cost savings. ARPU for the 1Q12 declined 4%, showing some ARPU dilution partly due to lower MOU as a result of extreme weather conditions. CAPEX remained low due to the ongoing ban on foreign currency transfers preventing the payment of essential suppliers, as well as the import of equipment critical to network maintenance and necessary expansion.

PAKISTAN ("MOBILINK")

In Pakistan, despite heavy competition, subscriber acquisitions remained healthy for the quarter, due to Mobilink's focus on acquisition activities and promotions, as well as various retention initiatives, resulting in a 9% increase YoY. Revenues showed 10% growth in local currency terms YoY. The increase is a result of steady growth of the subscriber base, VAS and data uptake and higher administrative fees. EBITDA increased 15%, as a result of tariff optimization and improved cost control measures for cost of sales. Mobilink's ARPU showed an increase of 2%, mostly due to high uptake in VAS and data offerings. CAPEX has decreased by 47% as a result of a slowdown in capacity roll-out for the network before proceeding with network modernization.

BANGLADESH ("BANGLALINK")

In Bangladesh, subscribers grew by 23% compared to the first quarter last year, mostly driven by strong customer acquisitions following the reduction of the SIM Tax in June 2011. Revenues increased 19% in local currency terms YoY, boosted by effective subscriber acquisition strategy for the quarter, in addition to a higher level of VAS and data adoption. EBITDA increased 13%, mostly attributable to higher revenues for the quarter coupled with operational excellence initiatives with network OPEX focus. CAPEX grew by 123% in comparison to 1Q11 in order to accommodate banglalink's growing subscriber base.

SUB SAHARAN AFRICA ("TELECEL GLOBE")

Telecel Globe operations showed over 35% growth in their subscriber bases compared to the previous year. Customer retention and increased commercial activity in Burundi led to an increased share in the market. Meanwhile, successful rebranding in Zimbabwe aided in increasing the number of subscribers. Telecel Globe's EBITDA showed an organic growth of 29%, surpassing organic revenue growth of 25% for 1Q12. CAPEX for Telecel Globe decreased by 75% compared to the previous year's aggressive 3G roll-out and network expansion investments.

SOUTH EAST ASIA

The subscriber base exceeded 4 million customers, showing a 250% increase compared to last year. Laos saw a boost in VAS uptake after the launch of 3G services at the end of 4Q11, while Cambodia showed steady contribution to total subscribers in our South East Asia cluster. The Company sold its controlling, indirect 49% interest in GTEL Mobile in Vietnam in April 2012 for USD 45 million.

AFRICA & ASIA* KEY INDICATORS

USD mln

 1Q12

 1Q11

YoY

Total operating revenues

927

891

4%

Total operating expenditures

503

487

3%

EBITDA

424

404

5%

EBITDA margin

45.7%

45.3%

Capex

69

76

-9%

Capex / revenues

7%

9%

Mobile Subscribers ('000)

86,273

72,234

19%

*Africa & Asia operations include operations in Algeria, Pakistan, Bangladesh, Sub-Saharan Africa and South East Asia. For details per country unit please see Attachment B

 

AFRICA & ASIA BUSINESS UNIT: COUNTRY DETAIL

ALGERIA

DZD bln

 1Q12

 1Q11

YoY

Total operating revenues

34.3

32.0

7%

EBITDA

20.6

19.0

8%

EBITDA margin

60.0%

59.4%

 

PAKISTAN

PKR bln

 1Q12

 1Q11

YoY

Total operating revenues

25.9

23.5

10%

EBITDA

10.9

9.6

15%

EBITDA margin

42.2%

40.6%

 

BANGLADESH

BDT bln

 1Q12

 1Q11

YoY

Total operating revenues

10.7

9.0

19%

EBITDA

3.7

3.2

13%

EBITDA margin

34.0%

35.7%

 

BUSINESS UNIT UKRAINE – FINANCIAL AND OPERATING RESULTS

  • Total Revenue growth of 3% YoY to UAH 3.1 billion; growth in both mobile and fixed-line Revenue continued
  • Mobile subscriber base increased 2% YoY to almost 25 million
  • Fixed residential broadband subscriber base grew 96%
  • EBITDA margin at 51.1%

The Ukraine Business Unit delivered solid results in the first quarter of 2012 with growth in all revenue streams mainly supported by continued transition to bundles in mobile and strong sales in fixed residential broadband. To maintain cost efficiencies, the Company has launched various operational excellence projects, including optimization of the infrastructure portfolio.

  • Total revenues increased 3% YoY to UAH 3.1 billion due to growth in mobile and fixed-line revenues.
  • Mobile revenues were up 2% YoY backed by growth of voice and data traffic within the continued strategy of transition to bundles. VimpelCom solidified its market position in 1Q12 and increased its active mobile subscriber base by 2% YoY to 24.9 million.
  • Fixed-line revenues increased by 16% YoY, mainly due to a 82% increase in fixed residential broadband revenue driven by a significant increase in the fixed residential broadband subscriber base of 96% YoY to 461 thousand, resulting from increased buildings coverage and active sales in already connected buildings. 
  • EBITDA declined YoY primarily due to higher interconnect costs, growth of network costs and other operational expenses as a result of higher traffic and inflation. EBITDA margin was healthy at 51.1%, though lower than in 1Q11. EBITDA margin in 1Q11 was 54.0% when the Company capitalized on realized OPEX savings from integration, mainly in areas of commercial, HR and administrative costs. In 1Q12 EBITDA margin was lower than the FY11 margin of 53.2%, but the Company expects this to be temporary and has measures in place to improve the margin going forward.
  • Capex was 3% below 1Q11 in line with the infrastructure optimization program in the framework of the Value Agenda.

UKRAINE KEY INDICATORS

 UAH mln

1Q12

1Q11

YoY

Total operating revenues

3,079

2,981

3%

Total operating expenditures

1,505

1,372

10%

EBITDA

1,574

1,609

-2%

EBITDA margin

51.1%

54.0%

Capex

356

369

-3%

Capex / revenues

12%

12%

Mobile

Mobile total operating revenues

2,830

2,766

2%

Mobile subscribers ('000)

24,890

24,398

2%

Mobile ARPU (UAH)

37.5

37.7

-1%

MOU

484

466

4%

Fixed-line

Fixed-line total operating revenues

249

214

16%

Fixed-line broadband revenues

58

32

82%

Fixed-line broadband subscribers ('000)

461

235

96%

Fixed-line broadband ARPU (UAH)

45.2

49.2

-8%

BUSINESS UNIT CIS – FINANCIAL AND OPERATING RESULTS

  • Organic Revenue growth of 9% YoY; Revenue of USD 379 million
  • Mobile data Revenue growth of 80% to USD 28 million
  • Mobile subscribers up 28% to 20.7 million
  • Fixed broadband subscribers more than doubled
  • Organic EBITDA growth of 2% YoY; EBITDA of USD 161 million; EBITDA margin of 42.5%

The CIS markets continue to provide strong growth opportunities in an increasingly competitive environment which has also been affected by certain governmental measures in key markets. In Kazakhstan and Uzbekistan, our key CIS markets, VimpelCom strengthened its market positions as a result of both strong product offerings and efficient sales and marketing efforts.

To secure profitable growth in the CIS, the Company launched an operational excellence program in all markets. The main projects, focused on continued data development, are on schedule and the network expansion continues to support traffic and revenue growth.

  • In 1Q12, total revenues grew 9% organically YoY. However, reported revenues increased 8% YoY to USD 379 million due to unfavorable currency movements.
  • Total mobile revenue increased by 10% YoY in 1Q12. The slowdown in voice growth was compensated by significant data growth with increasing data services consumption.
  • In 1Q12, fixed-line revenue decreased 10% YoY, impacted mainly by voice and wholesale revenue declines in Armenia and Tajikistan.
  • EBITDA increased 2% YoY organically and reported EBITDA increased by 0.9% to USD 161 million.
  • EBITDA margin of 42.5% in 1Q12 was 2.8 p.p. lower than a year ago, primarily due to intensified competition in key markets, a new tax in Uzbekistan and increased network costs.
  • Capex decreased by 16% YoY in 1Q12 in line with investment plans. Network construction is in progress and the Company continues to roll out both 2G and 3G networks.

KAZAKHSTAN

Kazakhstan, the largest market in the CIS, achieved organic revenue growth of 5% YoY in 1Q12, affected by the competitive environment and a limitation on tariffs introduced by the regulator, which resulted in an APPM decline. EBITDA in local currency declined by 6.8%, as a result of the mentioned impacts on revenue and of the consolidation of the lower margin FTTB business since April 2011. Consequently EBITDA margin declined by 5.8 p.p. YoY, but the Company expects this to be partially recovered throughout the rest of the year.

UZBEKISTAN

In Uzbekistan, the subscriber base continued to grow in all segments and revenue was up 33% YoY in 1Q12. The EBITDA margin was 44.6%, a slight decline YoY, as a result of increased competition and higher Opex due to a newly introduced tax on customer base. EBITDA increased 30% YoY.

ARMENIA

Revenues in Armenia declined organically by 11% YoY in 1Q12 as a result of stagnating voice revenues and a lower level of terminated traffic in the fixed-line segment. In the mobile revenue stream, the decrease of 9% was mainly due to lower sales of devices and lower interconnect revenues. Fixed and mobile data services, however, demonstrated strong growth both in revenue and subscribers. EBITDA grew organically by 1.3% YoY and EBITDA margin was up 4.5 p.p. YoY to 38.2%.

KYRGYZSTAN

Kyrgyzstan continues to show positive dynamics in subscriber base and revenue growth. EBITDA grew organically 10% YoY resulting in a stable EBITDA margin in local currency of 55.5%. APPM remained stable YoY in 1Q12, accompanied by growth in usage of both voice and data services. Mobile data usage translated into a significant mobile data revenue increase of 134% YoY.

TAJIKISTAN

In Tajikistan, revenues increased 3% YoY for 1Q12 impacted by a decline in the wholesale segment. EBITDA remained flat and EBITDA margin declined 3 p.p. YoY.

GEORGIA

Georgia demonstrated strong results with subscriber base growth of 43%, organic revenue growth of 26% and a 44% increase in EBITDA YoY in 1Q12, despite APPM erosion due to the competitive environment. EBITDA margin increased 2.9 p.p. YoY.

 

CIS* KEY INDICATORS

USD mln

1Q12

1Q11

YoY

Total operating revenues

379

351

8%

Total operating expenditures

218

192

14%

EBITDA

161

159

1%

EBITDA margin

42.5%

45.3%

Capex

61

73

-16%

Capex / revenues

16%

21%

Mobile

Mobile subscribers ('000)

20,716

16,168

28%

- of which mobile broadband ('000)

644

38

n.m.

Fixed

Fixed-line broadband subscribers ('000)

243

113

115%

Fixed-line broadband revenues

10

6

60%

* CIS operations include operations in Kazakhstan, Uzbekistan, Armenia, Kyrgyzstan, Tajikistan, and Georgia. For details per country unit please see Attachment B

 

CIS BUSINESS UNIT: COUNTRY DETAIL

KAZAKHSTAN

KZT mln

1Q12

1Q11

YoY

Total operating revenues

28,237

26,850

5%

EBITDA

12,706

13,637

-7%

EBITDA margin

45.0%

50.8%

 

UZBEKISTAN

USD mln

1Q12

1Q11

YoY

Total operating revenues

79

59

33%

EBITDA

35

27

30%

EBITDA margin

44.6%

45.8%

CONFERENCE CALL INFORMATION

On May 15, 2012, the Company will host an analyst & investor conference call on its first quarter 2012 results. The call and slide presentation may be accessed at http://www.vimpelcom.com.

2:00 pm CET investor and analyst conference call

US call-in number:

+ 1 877 616-4476

International call-in number:

+ 1 402 875-4763

The conference calls replay and the slide presentation webcasts will be available until May 22, 2012 and June 15, 2012, respectively. The slide presentations will also be available for download on the Company's website.

2:00 pm CET investor and analyst call replay

US Replay number:                       +1 855 859-2056

Confirmation code :                       75544656

 

International replay:                       +1 404 537-3406

Confirmation code :                        75544656

 

DISCLAIMER

This press release contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's financial performance objectives, development plans and anticipated performance, and include statements relating to the Company's revenue and EBITDA expectations. The forward-looking statements included in this release 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 continued volatility in the economies in our markets, unforeseen developments from competition, governmental regulation of the telecommunications industries, general political uncertainties in our markets and/or litigation with third parties. In addition, there are risks related to the combination with Wind Telecom, including the possibility that the anticipated benefits of the combination may not materialize as expected, that we are unable to realize the synergies anticipated from the transaction and other risks and uncertainties that are beyond the Company's control. There can be no assurance that such risks and uncertainties will not have a material adverse effect on the Company. Certain factors that could cause actual results to differ materially from those discussed in any forward-looking statements include the risk factors described in the Company's Annual Report on Form 20-F for the year ended December 31, 2011 filed with the U.S. Securities and Exchange Commission (the "SEC") and other public filings made by the Company with the SEC, which risk factors are incorporated herein by reference. The Company 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.

ABOUT VIMPELCOM LTD

VimpelCom is one of the world's largest integrated telecommunications services operators providing voice and data services through a range of traditional and broadband mobile and fixed technologies in Russia, Italy, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Cambodia, Laos, Algeria, Bangladesh, Pakistan, Burundi, Zimbabwe, Central African Republic and Canada. VimpelCom's operations around the globe cover territory with a total population of approximately 782 million people. VimpelCom provides services under the "Beeline", "Kyivstar", "djuice", "Wind", "Infostrada" "Mobilink", "Leo", "banglalink", "Telecel", and "Djezzy" brands. As of March 31, 2012 VimpelCom had 209 million mobile subscribers on a combined basis. VimpelCom is traded on the New York Stock Exchange under the symbol (VIP). For more information visit: http://www.vimpelcom.com.

CONTENT OF THE ATTACHMENT TABLES

Attachment A             

VimpelCom Ltd Interim Financial Statements

21

Attachment B           

Country units key indicators CIS and Africa & Asia

24

Attachment C        

Reconciliation Tables

27

Average Rates of Functional Currencies to USD

Attachment D          

WIND Telecomunicazioni group condensed financial statement of income

29

Attachment E     

Definitions

30

 

For more information on financial and operating data for specific countries, please refer to the supplementary file Factbook1Q2012.xls on our website at http://vimpelcom.com/ir/financials/results.wbp.

 

ATTACHMENT A: VIMPELCOM LTD INTERIM FINANCIAL STATEMENTS

VIMPELCOM LTD UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF INCOME (ACTUAL)

(In millions of USD, except per share amounts)

1Q12

1Q11

Service revenues

5,436

2,672

Sale of equipment and accessories

133

66

Other revenues

50

2

Total operating revenues

5,619

2,740

Operating expenses

Service costs

1,226

624

Cost of equipment and accessories

135

82

Selling, general and administrative expenses

1,947

831

Depreciation

727

423

Amortization

532

143

Impairment loss/(gain)

(6)

-

Loss on disposals of non-current assets

43

10

Total operating expenses

4,604

2,113

Operating profit

1,015

627

Finance costs

484

141

Finance income

(41)

(15)

Other non-operating losses/(gains)

26

(6)

Shares of loss/(profit) of associates and joint ventures accounted for using the equity method

16

(44)

Net foreign exchange gain

(63)

(98)

Profit before tax

593

649

Income tax expense

239

129

Profit for the period

354

520

Attributable to:

Non-controlling interest

36

20

The owners of the parent

318

500

354

520

Earnings per share

Basic, profit for the period attributable to ordinary equity holders of the parent

$0.20

$0.39

Diluted, profit for the period attributable to ordinary equity holders of the parent

$0.20

$0.39

 

ATTACHMENT A: VIMPELCOM LTD INTERIM FINANCIAL STATEMENTS

VIMPELCOM LTD UNAUDITED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION (ACTUAL)

(In millions of USD)

31 March 2012, unaudited

31 December 2011, audited

Assets

Non-current assets

Property and equipment

15,572

15,165

Intangible assets

11,797

11,825

Goodwill

17,366

16,776

Investments in associates and joint ventures

457

388

Deferred tax asset

370

386

Financial assets

1,549

1,536

Other non-financial assets

46

92

Total non-current assets

47,157

46,168

Current assets

Inventories

227

227

Other non-financial assets

1,491

1,320

Trade and other receivables

2,649

2,711

Current income tax asset

233

293

Other financial assets

331

345

Cash and cash equivalents

4,033

2,325

Total current assets

8,964

7,221

Assets classified as held for sale

-

650

Total assets

56,121

54,039

Equity and liabilities

Equity

Equity attributable to equity owners of the parent

14,343

14,037

Non-controlling interests

947

865

Total equity

15,290

14,902

Non-current liabilities

Financial liabilities

27,510

25,724

Provisions

521

402

Other non-financial liabilities

458

442

Deferred tax liability

1,563

1,624

Total non-current liabilities

30,052

28,192

Current liabilities

Trade and other payables

4,140

4,566

Dividend payables

554

-

Other non-financial liabilities

2,563

2,030

Other financial liabilities

3,061

3,118

Current income tax payable

411

399

Provisions

50

182

Total current liabilities

10,779

10,295

Liabilities associated with assets held for sale

-

650

Total equity and liabilities

56,121

54,039

 

ATTACHMENT A: VIMPELCOM LTD INTERIM FINANCIAL STATEMENTS

VIMPELCOM LTD UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (ACTUAL)

(In millions of USD)

1Q12

1Q11

Operating activities

Profit after tax

354

520

Tax expense

239

129

Profit/(loss) from discontinued operations

-

-

Profit before tax

593

649

Non-cash adjustment to reconcile profit before tax to net cash flows:

Depreciation

727

423

Amortization

532

143

Impairment loss/(gain)

(6)

-

Loss on disposals of non-current assets

43

10

Finance income

(41)

(15)

Finance costs

484

141

Other non-operating (gains)/losses

26

(6)

Net foreign exchange loss (income)

(63)

(98)

Share of net profit of associate

16

(44)

Movements in provisions and pensions

6

-

Working capital adjustments:

(Increase)/Decrease in trade and other receivables and prepayments

(142)

(128)

(Increase)/Decrease in inventories

-

(50)

Increase/(decrease) in trade and other payables

(95)

119

Interest paid

(408)

(39)

Interest received

96

15

Income tax paid

(161)

(103)

Net cash flows from operating activities

1,607

1,017

Investing activities

Proceeds from sale of property and equipment and intangible assets

7

7

Purchase of property and equipment and intangible assets

(872)

(567)

Payments of loans granted

(50)

-

Receipts/(payments) from deposits and loans granted

1

(557)

Receipts from/(investments in) associates

-

13

Acquisition of subsidiaries, net of cash acquired

(1)

(104)

Net cash flows used in investing activities

(915)

(1,208)

Financing activities

Net proceeds from exercise of share options

-

-

Acquisition of non-controlling interest

(9)

-

Proceeds from borrowings net of fees paid

1,412

1,494

Repayment of borrowings

(463)

(102)

Purchase of treasury shares

-

(4)

Proceeds from sale of treasury stock

1

-

Dividends paid to equity holders of the parent

-

(256)

Dividends paid to non-controlling interests

-

-

Net cash flows used in financing activities

941

1,132

Net increase in cash and cash equivalents

1,633

941

Net foreign exchange difference

75

32

Cash and cash equivalents at beginning of period

2,325

885

Cash and cash equivalents at end of period

4,033

1,858

 

ATTACHMENT B: COUNTRY UNITS KEY INDICATORS

AFRICA & ASIA BUSINESS UNIT: COUNTRY DETAIL

ALGERIA

DZD bln

 1Q12

 1Q11

YoY

Total operating revenues

34.3

32.0

7%

EBITDA

20.6

19.0

8%

EBITDA margin

60.0%

59.4%

Capex (USD)

10

4

150%

Capex / revenues (USD)

2%

1%

Mobile

Subscribers ('000)

17,691

15,509

14%

ARPU

657

683

-4%

MOU

269

284

-5%

 

PAKISTAN

PKR bln

 1Q12

 1Q11

YoY

Total operating revenues

25.9

23.5

10%

EBITDA

10.9

9.6

15%

EBITDA margin

42.2%

40.6%

Capex (USD)

24

45

-47%

Capex / revenues (USD)

8%

16%

Mobile

Subscribers ('000)

35,788

32,707

9%

ARPU

239

235

2%

MOU

215

206

4%

 

BANGLADESH

BDT bln

 1Q12

 1Q11

YoY

Total operating revenues

10.7

9.0

19%

EBITDA

3.7

3.2

13%

EBITDA margin

34.0%

35.7%

Capex (USD)

29

13

123%

Capex / revenues (USD)

22%

10%

Mobile

Subscribers ('000)

24,742

20,127

23%

ARPU

145

148

-2%

MOU

217

205

6%

 

SUB SAHARAN AFRICA (TELECEL GLOBE)

USD mln

 1Q12

 1Q11

YoY

Total operating revenues

22.4

24.6

-9%

EBITDA

6.3

4.3

46%

EBITDA margin

28.1%

17.5%

Mobile

Subscribers ('000)

3,499

2,584

35%

 

SEA (CONSOLIDATED)

USD mln

 1Q12

 1Q11

YoY

Total operating revenues

22.8

10.0

128%

EBITDA

(6)

(3)

EBITDA margin

n.a.

n.a.

Mobile

Subscribers ('000)

4,554

1,307

248%

 

CIS BUSINESS UNIT: COUNTRY DETAIL

KAZAKHSTAN

KZT mln

1Q12

1Q11

YoY

Total operating revenues

28,237

26,850

5%

EBITDA

12,706

13,637

-7%

EBITDA margin

45.0%

50.8%

Capex (USD)

13

10

23%

Capex / revenues (USD)

7%

6%

Mobile

Subscribers ('000)

8,364

6,987

20%

ARPU (KZT)

1,049

1,174

-11%

MOU

180

113

59%

 

ARMENIA

AMD mln

1Q12

1Q11

YoY

Total operating revenues

15,104

16,890

-11%

EBITDA

5,766

5,693

1%

EBITDA margin

38.2%

33.7%

Capex (USD)

3

9

-63%

Capex / revenues (USD)

8%

19%

Mobile

Subscribers ('000)

753

699

8%

ARPU (AMD)

2,508

2,839

-12%

MOU

252

238

6%

 

UZBEKISTAN

USD mln

1Q12

1Q11

YoY

Total operating revenues

79

59

33%

EBITDA

35

27

30%

EBITDA margin

44.6%

45.8%

Capex (USD)

38

40

-3%

Capex / revenues (USD)

48%

68%

Mobile

Subscribers ('000)

7,344

5,102

44%

ARPU (USD)

3

4

-8%

MOU

376

391

-4%

 

TAJIKISTAN

USD mln

1Q12

1Q11

YoY

Total operating revenues

21

21

3%

EBITDA

9

9

-3%

EBITDA margin

41.9%

44.9%

Capex (USD)

3

3

-15%

Capex / revenues (USD)

14%

14%

Mobile

Subscribers ('000)

1,008

804

25%

ARPU (USD)

7

8

-12%

MOU

219

203

7%

 

GEORGIA

GEL mln

1Q12

1Q11

YoY

Total operating revenues

26.7

21.2

26%

EBITDA

6

4

44%

EBITDA margin

22.1%

19.2%

Capex (USD)

3

7

-62%

Capex / revenues (USD)

17%

59%

Mobile

Subscribers ('000)

875

611

43%

ARPU (GEL)

10

11

-9%

MOU

216

147

47%

 

KYRGYZSTAN

KGS mln

1Q12

1Q11

YoY

Total operating revenues

1,602

1,445

11%

EBITDA

889

808

10%

EBITDA margin

55.5%

56.0%

Capex (USD)

2

4

-57%

Capex / revenues (USD)

5%

12%

Mobile

Subscribers ('000)

2,373

1,965

21%

ARPU (KGS)

223

243

-8%

MOU

272

290

-6%

 

ATTACHMENT C: RECONCILIATION TABLES

RECONCILIATION OF CONSOLIDATED EBITDA OF VIMPELCOM* (PRO FORMA)

USD mln

1Q12

1Q11

Unaudited pro forma

EBITDA

2,311

2,285

Depreciation

(727)

(730)

Amortization

(532)

(665)

Impairment (loss)/gain

6

23

Loss on disposals of non-current assets

(43)

(10)

EBIT

1,015

903

Financial Income and Expenses

(443)

(464)

 - including finance income

41

36

 - including finance costs

(484)

(500)

Net foreign exchange (loss)/gain and others

21

184

 - including Other non-operating (losses)/gains

(26)

-

 - including Shares of (loss)/profit of associates and joint ventures accounted for using the    equity method

(16)

16

 - including Net foreign exchange (loss)/gain

63

168

Profit before tax

593

623

Income tax expense

(239)

(185)

Profit for the period

354

438

Profit for the period attributable to non-controlling interest

(36)

12

Net income

318

450

* See also the supplementary file Factbook1Q2012.xls on our website at http://vimpelcom.com/ir/financials/results.wbp

 

ATTACHMENT C: RECONCILIATION TABLES

RECONCILIATION OF CONSOLIDATED EBITDA OF VIMPELCOM* (ACTUAL)

USD mln

1Q12

1Q11

Unaudited

EBITDA

2,311

1,203

Depreciation

(727)

(423)

Amortization

(532)

(143)

Impairment (loss)/gain

6

-

Loss on disposals of non-current assets

(43)

(10)

EBIT

1,015

627

Financial Income and Expenses

(443)

(126)

 - including finance income

41

15

 - including finance costs

(484)

(141)

Net foreign exchange (loss)/gain and others

21

148

 - including Other non-operating (losses)/gains

(26)

6

 - including Shares of (loss)/profit of associates and joint ventures accounted for using the    equity method

(16)

44

 - including Net foreign exchange (loss)/gain

63

98

Profit before tax

593

649

Income tax expense

(239)

(129)

Profit for the period

354

520

Profit for the period attributable to non-controlling interest

(36)

(20)

Net income

318

500

* See also the supplementary file Factbook1Q2012.xls on our website at http://vimpelcom.com/ir/financials/results.wbp

 

ATTACHMENT C: RECONCILIATION TABLES

RECONCILIATION OF VIMPELCOM CONSOLIDATED NET DEBT (ACTUAL)

USD mln

1Q12

4Q11

Net debt

24,339

24,373

Cash and cash equivalents

4,033

2,325

Long - term and short-term deposits

219

178

Gross debt

28,591

26,876

Interest accrued related to financial liabilities

450

488

Fair value adjustment

148

161

Discounts, unamortized fees related to financial liabilities

(103)

(102)

Unamortised fair value adjustment under acquisition method of accounting

909

910

Derivatives not designated as hedges

403

365

Derivatives designated as hedges

173

144

Total other financial liabilities

30,571

28,842

 

AVERAGE RATES OF FUNCTIONAL CURRENCIES TO USD*

Average rates

Closing rates

1Q12

1Q11

YoY

1Q12

FY11

Delta

Russian Ruble

30.03

29.27

-2.5%

29.33

32.20

9.8%

Euro

0.76

0.71

-6.3%

0.75

0.77

3.1%

Algerian Dinar

75.13

73.01

-2.8%

73.91

75.33

1.9%

Pakistan Rupee

90.61

85.50

-5.6%

90.65

89.95

-0.8%

Bangladeshi Taka

82.78

71.39

-13.8%

81.79

81.83

0.1%

Ukrainian Hryvnia

7.99

7.95

-0.5%

7.99

7.99

0.0%

Kazakh Tenge

148.14

146.42

-1.2%

147.77

148.40

0.4%

Armenian Dram

388.47

365.93

-5.8%

390.64

385.77

-1.2%

Kyrgyz Som

46.71

47.39

1.5%

46.83

46.48

-0.7%

* Functional currencies in Tajikistan, Uzbekistan and Cambodia are USD.

 

ATTACHMENT D: WIND TELECOMUNICAZIONI GROUP CONDENSED STATEMENTS OF INCOME

EUR mln

1Q12

1Q11

Change

Total operating revenues

1,346

1,351

0%

EBITDA

487

497

-2%

D&A

(270)

(232)

16%

EBIT

217

264

-18%

Financial Income and expenses

(220)

(194)

13%

Profit before tax

(3)

70

-104%

Income tax

(38)

(50)

-24%

Profit/(Loss) from discontinued operations

-

5

n.m.