VimpelCom Delivers Profitable Growth And Strong Increase In Cash Flow In 4Q12 And FY12

AMSTERDAM, March 6, 2013 /PRNewswire/ --

KEY RESULTS AND DEVELOPMENTS IN 2012*

Q4

  • Revenues of USD 6.0 billion; organic1) growth of 3% YoY
  • EBITDA of USD 2.4 billion, up 13% YoY organically
  • EBITDA margin increased 3.3 p.p. YoY to 41.1%
  • Total mobile subscriber base grew 5% YoY to 214 million
  • Net income increased to USD 801 million
  • Net Cash from Operating Activities up 24% YoY to USD 2.3 billion

FY

  • Revenues of USD 23.1 billion; organic growth of 4% YoY
  • EBITDA of USD 9.8 billion, up 8% YoY organically
  • EBITDA margin increased 1.8 p.p. YoY to 42.4%
  • Net income increased to USD 2.1 billion
  • Net Cash from Operating Activities up 19% YoY to USD 7.3 billion

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

JO LUNDER, CHIEF EXECUTIVE OFFICER COMMENTS:

"I am very pleased to report strong performances from all of our Business Units in the fourth quarter of 2012. Russia delivered a 4% increase in revenue year-on-year with mobile ARPU up 5%, stimulated by usage and Value Added Services growth with mobile data revenues up 37%. EBITDA in Russia increased 15% as a result of the revenue improvement and strong execution on our operational excellence programs. In Italy, we have again outperformed the market, strengthening our market position in both the mobile and fixed-line segments. Excluding the impact of mobile termination rate cuts, mobile service revenues were up 2% year-on-year, with mobile internet revenues growing 37%. In Africa & Asia, we experienced strong increases in subscribers leading to organic revenue growth of 11%. We have made good progress on the transition to bundled tariff plans in Ukraine, resulting in a return to growth, while at the same time increased our subscriber numbers by 5%. Finally, our CIS business continued to deliver double digit revenue and EBITDA growth. The Group EBITDA margin in 4Q12 rose to 41.1%. Our 2012 results, with clear operational improvements, demonstrate our ability to deliver on our strategy and objectives. In 2013 we expect to deliver results in line with our enhanced Value Agenda objectives for 2013-2015."

CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS (FY11 IS PRO FORMA)*

USD mln

4Q12

4Q11

Reported
YoY

Organic
YoY


FY12

FY11

Reported
YoY

Organic
YoY

Net operating revenues

5,950

5,889

1%

+3%


23,061

23,477

-2%

+4%

EBITDA

2,446

2,227

10%

+13%


9,768

9,525

3%

+8%

EBITDA margin

41.1%

37.8%

-



42.4%

40.6%

-


EBIT

709

214

241%



4,171

3,175

31%


Net income

801

(381)

n.m.



2,145

525

309%


Capital expenditures**

1,631

3,734

-56%



4,120

6,683

-38%


Net cash from operating activities

2,301

1,858

24%



7,257

-

-


Net debt / LTM EBITDA

2.2

2.6

-



2.2

2.6

-


Total mobile subscribers (millions)***

214

204

5%



214

204

5%


*          Comparative FY11 figures are Pro forma - for pro forma definition see next page.
**       Including licenses of USD 1.8 billion in 4Q11 & FY11 and USD 0.1 billion in FY12
***     Following the sale of Vietnam the subscriber numbers for 4Q12 exclude the Vietnam subscriber numbers while 4Q11 included 2 million subs in Vietnam
For all other definitions see Attachment E.

1)  Organic revenue and EBITDA growth are non-GAAP financial measures that exclude the effect of foreign currency movements and certain items like liquidations and disposals. A reconciliation of organic to reported Revenue and EBITDA growth can be found on page 2. For more information please see the definition of Organic growth Revenue and EBITDA in Attachment E.

CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS (ACTUAL REPORTED)







USD mln


FY12

FY11

Reported
YoY

Net operating revenues


23,061

20,262

14%

EBITDA


9,768

8,256

18%

EBITDA margin


42.4%

40.7%

-

EBIT


4,171

2,854

46%

Net income attributable to VimpelCom Ltd.


2,145

543

295%

Capital expenditures


4,120

6,349

-35%

Net cash from operating activities


7,257

6,106

19%

Net debt / LTM EBITDA


2.2

2.6

-

Total mobile subscribers (millions)


214

204

5%

















ORGANIC GROWTH REVENUE AND EBITDA (FY11 IS PRO FORMA)


4Q12 versus 4Q11


FY12 versus FY11

USD mln

Revenue

EBITDA


Revenue

EBITDA

Business Units

Organic

FX and

others

Reported

Organic

FX and

others

Reported


Organic

FX and

others

Reported

Organic

FX and

Others

Reported

Russia

4%

0%

4%

15%

1%

16%


7%

-6%

1%

13%

-6%

7%

Europe & NA

-4%

-4%

-8%

-4%

-2%

-6%


-3%

-7%

-10%

-3%

-7%

-10%

Africa & Asia

11%

-9%

2%

36%

-3%

33%


9%

-9%

0%

15%

-4%

11%

Ukraine

4%

0%

4%

9%

0%

9%


2%

0%

2%

-1%

-1%

-2%

CIS

21%

-5%

16%

45%

-8%

37%


15%

-5%

10%

22%

-6%

16%

Total

3%

-2%

1%

13%

-3%

10%


4%

-6%

-2%

8%

-5%

3%

















 

PRESENTATION OF FINANCIAL RESULTS

Actual twelve months 2011 results reflect the consolidation of Wind Telecom as of April 15, 2011. The Company believes pro forma of FY11 results versus FY12 actual reported results provide the most meaningful comparison of financial performance. For further details about the presentation of the adjustments and assumptions of our pro forma results, please refer to VimpelCom's press release issued on August 18, 2011 and May 14, 2012 both which are available on the Company's website.

 

The pro forma full year 2011 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.

 

VimpelCom Ltd. consolidated results presented in this earnings release are based on IFRS and have not been audited. The full year 2012 audited financial results under IFRS will be published when the Company files its annual report on Form 20-F for the year ended December 31, 2012.

 

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.

STRATEGIC UPDATE

  • Enhanced Value Agenda for 2013-2015 announced highlighting medium-term objectives
  • Successful issuance of USD 2.0 billion Eurobonds for debt refinancing
  • AGM elected new Supervisory Board
  • Acquisition of 0.1% in Euroset, increasing total stake to 50.0%
  • Paid final dividend 2011 and interim dividend 2012 of in total USD 1.3 billion 

In January, VimpelCom hosted its second annual Analyst & Investor Day in London, where the Company presented its enhanced business strategy, the Value Agenda 2013-2015. This Value Agenda, which is focused on increasing Net Cash from Operating Activities, has four main pillars: Profitable Growth, Customer Excellence, Operational Excellence and Capital Efficiency.

VimpelCom's objectives* for the period 2013 - 2015 are:

  • Revenue and EBITDA CAGR of around mid-single digit;
  • Net Debt/EBITDA below 2x in 2015; and
  • CAPEX/Revenues, excl. licenses, below 15% in 2015.

As a result of the execution of the Value Agenda the Company indicated its intention to have annual cash flow improvements of USD 2 billion from operations and of between USD 0.6 billion and USD 0.9 billion from finance optimization by the end of 2015.

In December 2012, Altimo delivered a notice to VimpelCom that it intends to convert 128,532,000 Convertible Preferred Shares into Common Shares at a ratio of one Convertible Preferred Share for one Common Share. Altimo set the conversion date for April 16, 2013 and the conversion premium to be paid by Altimo to the Company upon conversion is USD 10.835 per Convertible Preferred Share. Based on this conversion premium, the Company will receive approximately USD 1.4 billion from Altimo for the conversion. Altimo's voting percentage will remain 47.9%, while its economic interest in the Company will increase from 52.7% to 56.2%.

VimpelCom held its Annual General Meeting of Shareholders (AGM) in Amsterdam in December 2012. The AGM approved that the Supervisory Board will continue to consist of nine directors, four nominated by Altimo, three nominated by Telenor and two independent directors.  In addition, the Supervisory Board unanimously elected Alexey Reznikovich as its Chairman. As announced yesterday, the Company will have its AGM 2013 on April 24, 2013.

In December 2012, VimpelCom increased its stake in Russian mobile retailer Euroset to 50.0% by acquiring 0.1% of the shares of Euroset. As a result, VimpelCom and Lefbord, a company owned by Megafon and Garsdale Services Investment, have equal economic and governance rights in Euroset.  VimpelCom will continue to account for Euroset using the equity method.

Also in December 2012, VimpelCom signed a USD 500 million bilateral credit facility with China Development Bank for financing equipment and services from Huawei. The Facility has a tenor of 8 years and is to date undrawn. In February 2013, VimpelCom completed approximately USD 2 billion in debt refinancing, by issuing 6-year USD 600 million 5.20% guaranteed notes, 10-year USD 1.0 billion 5.95% guaranteed notes and 5-year RUB 12.0 billion 9.0% guaranteed notes. The proceeds will be used for the repayment of maturing debt in VimpelCom and general corporate purposes. The coupon on the USD notes was the lowest coupon in VimpelCom's history. Additionally, the RUB denominated Eurobonds represent the first such issuance by a non-financial services or non-state-owned company. Following the recent debt refinancing,  VimpelCom has secured its refinancing requirements into 2014.

The Company announced a final dividend 2011 of USD 0.35 per common share and an interim dividend 2012 of USD 0.45 per common share in December 2012, which has been paid in January 2013 for a total amount of USD 1.3 billion. The dividend guideline of USD 0.80 per common share, assuming 1,628 million common shares are issued and outstanding, is currently under review following the aforementioned intended conversion of Convertible Preferred Shares by Altimo. The Company expects a decision on the dividend policy by the Supervisory Board in 2Q13. The Company also expects to announce the final dividend 2012 and a possible extra-ordinary dividend related to proceeds of a conversion in 2Q13.

The Company recently announced the appointment of Ziad Shatara to the position of CEO of banglalink in Bangladesh and of Taras Parkhomenko as CEO of VimpelCom's operating company in Kazakhstan.

VimpelCom's 51.9%-owned subsidiary Orascom Telecom Holding ("OTH") took steps to increase its stake in WIND Mobile in Canada to 100%, subject to Canadian regulatory approvals.

Finally, negotiations with the Algerian Government are still progressing and the Company aims to reach a mutually beneficial resolution.


* The above objectives assume constant currency exchange rates, no major regulatory changes, current asset portfolio mix and a stable macroeconomic environment.

VIMPELCOM GROUP – FINANCIAL AND OPERATING RESULTS 4Q12

  • Organic revenue growth of 3% YoY; revenues of USD 6.0 billion
  • EBITDA growth of 13% YoY on an organic basis, reaching USD 2.4 billion
  • Total mobile subscriber base grew by 5% YoY to 214 million
  • Net cash from operating activities increased 24% YoY to USD 2.3 billion
  • CAPEX of USD 1.6 billion
  • Net debt / LTM EBITDA was 2.2 at end 4Q12

OPERATING PERFORMANCE OVERVIEW 4Q12

4Q12 results were strong on an organic basis, but in USD terms the results were significantly impacted by the YoY appreciation of the USD against the local currencies in most of VimpelCom´s operating businesses. The organic development is highlighted below.

The total mobile subscriber base increased 5% YoY to 214 million by the end of the fourth quarter. The largest absolute contribution came from accelerated growth in subscribers in the Africa & Asia Business Unit and a large increase in subscribers in the CIS Business Unit from growth in Uzbekistan. The Company also achieved solid growth in fixed and mobile broadband subscribers in Russia, Italy and Ukraine.

In Russia, the Company continued the positive trend of the first nine months of the year, delivering organic revenue growth of 4% YoY. Mobile broadband subscribers in Russia increased 5% YoY to 2.7 million and fixed broadband subscribers grew 15% YoY to 2.4 million.

In Italy, the Company continued to outperform the broader Italian, highly competitive telecom market in the fourth quarter, in a highly competitive environment. VimpelCom strengthened its market position in Italy in both mobile and fixed-line, increasing its market  share in both segments. The fixed broadband subscriber base increased 4% YoY to more than 2.2 million. Mobile broadband consumer subscribers grew 24% YoY.

In the Africa & Asia Business Unit, the Company exceeded the 85 million subscribers mark, an increase of 8% YoY,  through strong subscriber growth in most of its operations. Solid performance across the main operations, Algeria, Pakistan and Bangladesh, led to organic revenue growth of 11% YoY.

The Ukraine Business Unit continued to solidify its market position in the mobile segment through the ongoing transition to bundled tariff plans. The transition is showing good results with mobile total operating revenues returning to growth. Mobile subscribers increased by 5% YoY to 26.0 million.

The CIS Business Unit delivered double digit organic revenue growth, mainly resulting from a temporary decrease in competition in Uzbekistan. The Company continues to face particularly strong competition in Kazakhstan, but also in Armenia and Tajikistan.

OPERATING FINANCIALS PER BUSINESS UNIT (FY11 IS PRO FORMA)



USD mln

4Q12

4Q11

Reported
YoY

Organic

YoY 


FY12

FY11

Reported
YoY

Organic

YoY 

Net operating revenues

5,950

5,889

1%

3%


23,061

23,477

-2%

4%


of which:











BU Russia

2,371

2,274

4%

4%


9,190

9,064

1%

7%


BU Europe & North America

1,778

1,924

-8%

-4%


6,982

7,771

-10%

-3%


BU Africa & Asia

937

922

2%

11%


3,721

3,719

0%

9%


BU Ukraine

432

417

4%

4%


1,676

1,641

2%

2%


BU CIS

488

419

16%

21%


1,755

1,589

10%

15%


Other

(56)

(67)

-

-


(263)

(307)

-

-












EBITDA


2,446

2,227

10%

13%


9,768

9,525

3%

8%


of which:











BU Russia

978

844

16%

15%


3,878

3,641

7%

13%


BU Europe & North America

674

718

-6%

-4%


2,658

2,952

-10%

-3%


BU Africa & Asia

426

321

33%

36%


1,741

1,566

11%

15%


BU Ukraine

227

209

9%

9%


859

873

-2%

-1%


BU CIS

235

171

37%

45%


813

703

16%

22%


Other

(94)

(36)

-

-


(181)

(210)

-

-

EBITDA margin

41.1%

37.8%

-

-


42.4%

40.6%

-

-

CAPEX

1,631

3,734

-56%

-


4,120

6,683

-38%

-














FINANCIAL PERFORMANCE OVERVIEW 4Q12

Total operating revenues in the fourth quarter of 2012 increased by 1% YoY impacted by unfavorable currency movements. Organic revenue growth was 3%, with solid performance across most Business Units.

EBITDA increased 10% YoY, also impacted by unfavorable currency movements. Excluding these forex effects, EBITDA increased 13% compared to 4Q11. In addition to the focus on operational excellence throughout the businesses, EBITDA in 4Q11 included certain one-off charges, including provisions for HR costs in Russia, Africa & Asia and Ukraine and inventory write-offs in Russia. In addition, 4Q11 included a provision in Africa & Asia  for a corporate contingent liability and costs associated with the demerger of OTMT. These combined effects resulted in a more favorable comparison for 4Q12.

Strong  EBITDA organic growth YoY was seen in the Russia, Africa & Asia, Ukraine and CIS Business Units, up 15%, 36%, 9% and 45%, respectively. The strong increase in Africa & Asia is also driven by the doubling of the EBITDA in Bangladesh as a result of significantly lower commercial opex in 4Q12, while in 4Q11 banglalink recorded very high customer acquisition costs. Italy showed an EBITDA decline of 4% YoY in local currency, mainly due to the MTR cut in July 2012. Net of the MTR cut, EBITDA would have increased by 2% YoY, supported by cost efficiency measures.

EBIT in 4Q12 grew by 231% compared to 4Q11. The 4Q11 results were negatively impacted by impairments for a total of USD 527 million and the impact of the Purchase-Price Allocation related to the acquisition of Wind Telecom in addition to the one-offs mentioned above. EBIT in 4Q12 was positively affected by the declining amortization schedule applied to intangible assets as part of the Wind Telecom acquisition. EBIT in 4Q12 was also impacted by negative forex and an impairment of OTH's shareholder loan to WIND Mobile Canada of USD 328 million, following a detailed business plan review.

Excluding these combined effects for 4Q11 and 4Q12, EBIT would have grown by 24%. 

Profit before tax increased to USD 764 million, compared to a loss of USD 559 million in the same period a year ago.  This increase was primarily the result of a substantially higher EBIT and a Euroset fair value adjustment of USD 606 million, due to IFRS requirements, as a result of the acquisition of the additional 0.1%. Net foreign exchange loss was USD 30 million in 4Q12, while in 4Q11 there was a loss of USD 119 million.

Net income increased to USD 801 million compared to a net loss in 4Q11 of USD 381 million. The increase is mainly the result of the aforementioned increase in Profit before tax.

CAPEX was USD 1,631 million with investments in the further roll out of the mobile networks in Russia, Bangladesh and the CIS. In Italy, Wind continued to invest in the roll-out of HSPA+ and in backbone capacity to support the growth in data.



Actual

USD mln

4Q12

4Q11

YoY

Total operating revenues

5,950

5,889

1%

EBITDA

2,446

2,227

10%

EBITDA margin

41.1%

37.8%

-

EBIT

709

214

231%

Financial income and expenses

(484)

(467)

4%

Net foreign exchange (loss)/gain and others

539

(306)

n.m

Profit before tax

764

(559)

n.m

Income tax expense

(195)

(101)

93%

Profit for the period

569

(660)

n.m

Net income

801

(381)

n.m

Capital expenditures

1,631

3,734

-56%






STATEMENT OF FINANCIAL POSITION & CASH FLOW (ACTUAL)


USD mln

4Q12

3Q12

QoQ


FY12

FY11

YoY

Total assets

55,360

53,490

3%


55,360

54,039

2%

Shareholders' equity

14,869

14,779

1%


14,869

14,037

6%

Gross debt

26,987

26,637

1%


26,987

26,733

1%

Net debt

21,971

22,681

-3%


21,971

24,230

-9%











4Q12

4Q11

YoY


FY12

FY11

YoY

Net cash from operating activities

2,301

1,858

24%


7,257

6,106

19%

Net cash used (in)/from investing activities

(515)

(3,363)

-85%


(4,008)

(6,945)

-42%

Net cash used (in)/provided financing activities

(125)

691

n.m.


(587)

2,583

n.m.













Total assets in the  quarter increased by 3% to USD 55.4 billion, primarily as a result of cash generation, investments in fixed assets and the positive impact of currency translation YoY. Gross debt increased marginally in the quarter to USD 27.0 billion, mainly due to foreign exchange movements. Net debt decreased to USD 22.0 billion, leading to a net debt to LTM EBITDA of 2.2x at the end of the fourth quarter.

Net cash from operating activities increased 24% YoY to USD 2.3 billion positively impacted by the increase in EBITDA and improvement in working capital, partially offset by higher  tax payments compared to the same period last year. The decrease in net cash used in investing activities compared to 3Q12 was mainly impacted by lower cash out for investments in property, equipment and intangible assets in 2012. The decrease in net cash used in financing activities in 4Q12 compared to 4Q11 was mainly the result of the net repayment of debt. Net cash from operating activities in FY12 is USD 7.3 billion, or 19% higher than in FY11.

NON-CASH ITEMS IN 4Q12 AND FY12 IMPAIRMENTS

On a regular basis the Company performs an impairment test per cash generating unit. Following a detailed business plan review of Wind Mobile in Canada, the Company has recorded an impairment of USD 328 million.

REVALUATIONS

As a result of the acquisition of the additional 0.1% in Euroset, the Company had to adjust the fair value of the previously held interest in Euroset by USD 606 million due to IFRS requirements.

VIMPELCOM GROUP – FINANCIAL RESULTS FULL YEAR 2012

  • Revenues reached USD 23.1 billion; organic growth of 4% YoY
  • EBITDA of USD 9.8 billion, up 8% YoY organically
  • EBITDA margin increased 1.8 p.p. YoY to 42.4%
  • Net Income increased to USD 2.1 billion
  • CAPEX excl. licenses of USD 4.0 billion leading to CAPEX/LTM Revenues of 17%
  • Net cash from operating activities increased by 19% to USD 7.3 billion


FULL YEAR 2012

On a pro forma basis, total operating revenues in 2012 decreased by 2% YoY. Overall organic revenue growth was 4%, with strong performance across all Business Units. In Russia, revenues increased by 1% in USD terms and 7% in local currency. In Italy, revenues in USD decreased by 10% and decreased in local currency by 3%, as a result of the sharp MTR cuts. Excluding MTR effect, net operating revenues improved by 5%.  The Africa & Asia Business Unit reported organic revenue growth of 9% and had stable revenues in USD terms, while the Ukraine Business Unit delivered growth of 2% in both USD and in local currency. Lastly, the CIS Business Unit continued to achieve strong performance with a revenue increase of 15% organically, primarily as a result of the network closure of a competitor by the Uzbek authorities.

On a pro forma basis, EBITDA increased by 3% YoY. Strong organic EBITDA growth of 13% was seen in the Russia Business Unit, while EBITDA growth in the Africa & Asia and CIS Business Units were up 15% and 22%, respectively. In the Europe & North America Business Unit, EBITDA decreased 10% in USD terms and declined by 3% in local currency, mainly due to the impact of the MTR cuts. The Ukraine Business Unit EBITDA decreased by 1% in local currency and by 2% in USD terms.

CAPEX excluding licenses stood at USD 4.0 billion, with investments in the further roll out of the mobile networks in Russia, Bangladesh, Pakistan and the CIS. The CAPEX/LTM Revenues excluding licenses for FY12 is 17%.

The Company expects FY13 CAPEX, excluding licenses, to be approximately 21% of revenue.



 

Pro-forma

 


 

Actual

 

USD mln

FY12

FY11

YoY


FY12

FY11

YoY

Total operating revenues

23,061

23,477

-2%


23,061

20,262

14%

EBITDA

9,768

9,525

3%


9,768

8,256

18%

EBITDA margin

42.4%

40.6%

-


42.4%

40.7%

-

EBIT

4,171

3,175

31%


4,171

2,854

46%

Financial income and expenses

(1,875)

(1,850)

1%


(1,875)

(1,467)

28%

Net foreign exchange (loss)/gain and others

592

(486)

n.m.


592

(533)

n.m

Profit before tax

2,888

839

244%


2,888

854

238%

Income tax expense

(906)

(650)

39%


(906)

(585)

55%

Profit for the period

1,982

189

949%


1,982

269

637%

Net income

2,145

525

309%


2,145

543

295%

Capital expenditures*

4,120

6,683

-38%


4,120

6,349

-35%

*  Including licenses of USD 1.8 billion in 4Q11 & FY11 and USD 0.1 billion in FY12

 

ORGANIC REVENUE AND EBITDA GROWTH FY12 VERSUS FY11 (FY 11 IS PRO FORMA)

USD mln


Revenue


EBITDA

Business Units


Organic

FX and
others

Reported


Organic

FX and
others

Reported

Russia


7%

-6%

1%


13%

-6%

7%

Europe & NA


-3%

-7%

-10%


-3%

-7%

-10%

Africa & Asia


9%

-9%

0%


15%

-4%

11%

Ukraine


2%

0%

2%


-1%

-1%

-2%

CIS


15%

-5%

10%


22%

-6%

16%

Total


4%

-6%

-2%


8%

-5%

3%


BUSINESS UNITS PERFORMANCE IN 4Q12

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

BUSINESS UNIT RUSSIA – FINANCIAL AND OPERATING RESULTS

  • Positive operational trend of previous quarters continued in 4Q12
  • Revenue growth of 4% YoY, supported by 37% increase YoY in mobile data revenues
  • EBITDA increase of 15% YoY leading to EBITDA margin growth of 4.2 p.p. YoY to 41.3%
  • Operational Excellence program delivered more than double of targeted RUB 5 billion annualized savings

The Russian Business Unit continued the positive trend of the previous quarters, delivering profitable growth with a revenue increase of 4% YoY and EBITDA growing double digit YoY in 4Q12. The strong EBITDA YoY performance was partly the result of a relatively low comparable EBITDA in 4Q11, which was impacted by relatively high commercial and technical costs and one-offs of RUB 800 million in total, including a provision for HR costs and an inventory write-down. During 4Q12, VimpelCom continued its strong execution of its operational excellence program and realized more than double its initial target of RUB 5 billion in annualized savings in 2012.

The mobile subscriber base in Russia declined by 2% YoY to 56.1 million, but the impact on revenue was offset by an increase in ARPU of 5% YoY due to strong increase of mobile data revenues.

Mobile revenues grew by 4% YoY, driven by an increase in ARPU and strong equipment sales. Mobile data revenues increased by 37% YoY with revenues for small screens up by 52%.

Fixed-line revenue growth slowed to 0.4% YoY, mainly due to a decline in wholesale fixed-line voice revenues, while FTTB revenue recorded a strong growth of 24% YoY.

EBITDA margin in 4Q12 was 41.3%, an increase of 4.2 p.p. YoY. This includes the negative effect of forex changes in 4Q12, which impacted EBITDA margin by 0.2 p.p. Savings in commercial costs were among the biggest contributors to the EBITDA margin improvement, primarily driven by the shift to a revenue share model with distributors as part of the Operational Excellence program.

VimpelCom remains on track to deliver continued improvement in network quality to support the growth of mobile data. In 2012, VimpelCom significantly increased IP-zation to 48% from 11% at the start of the year and grew the number of node-Bs by 22%. Improving network quality continues to be the Company's focus with the aim to be on par with its peers in the key regions at the end of 2013. As a result of these efforts, the Company expects CAPEX/Revenues to increase to 22% in 2013.

KEY DEVELOPMENTS 4Q12

  • Total revenue in Russia grew by 4% YoY to RUB 73.6 billion driven by the increase in mobile revenues.
  • Mobile revenues increased 4% YoY mainly as a result of growth in data revenue by 37% YoY, as well as in equipment revenues. Mobile ARPU increased by 5% YoY to RUB 343.
  • Fixed-line revenue increased 0.4% YoY with continuing growth in fixed broadband revenues, up 23% YoY, offset by a 9% decline YoY in wholesale voice revenues.
  • EBITDA increased by 15% YoY and EBITDA margin was 41.3%, an increase of 4.2 p.p. compared to 4Q11, mainly driven by the strong execution of the Operational Excellence program.
  • Mobile subscriber base decreased by 2% YoY to 56.1 million; mobile broadband subscribers increased 5% YoY to 2.7 million. The fixed broadband subscriber base grew  15% YoY to 2.4 million.
  • CAPEX/Revenues was 34% in 4Q12, in line with the network construction schedule. CAPEX/Revenues for FY12 stood at 18%.

RUSSIA KEY INDICATORS


RUB mln


4Q12

4Q11

YoY


FY12

FY11

YoY

Total operating revenues


73,637

71,022

4%


285,375

266,087

7%

Total operating expenditures


43,259

44,664

-3%


164,897

159,407

3%

EBITDA


30,378

26,358

15%


120,478

106,681

13%

EBITDA margin


41.3%

37.1%



42.2%

40.1%


CAPEX


25,076

25,318

-1%


50,699

59,795

-15%

CAPEX / Revenues


34%

36%



18%

22%












Mobile










Mobile total operating revenues


61,579

59,012

4%


236,922

221,534

7%

- of which mobile data


7,036

5,118

37%


24,330

17,604

38%

Mobile subscribers ('000)


56,110

57,224

-2%





- of which mobile broadband ('000)


2,654

2,538

5%





Mobile ARPU (RUB)


343

327

5%





MOU (min)


290

259

12%














Fixed









Fixed-line total operating revenues


12,058

12,009

0%


48,453

44,554

9%

Fixed Broadband revenues


3,148

2,564

23%


11,719

8,676

35%

Fixed Broadband subscribers ('000)


2,378

2,073

15%





Fixed Broadband ARPU (RUB)


445

432

3%















BUSINESS UNIT EUROPE & NA - FINANCIAL AND OPERATING RESULTS ITALY

  • Continued relative outperformance of the market
  • Total Revenues, excluding MTR impact, increasing 2% YoY
  • EBITDA margin increased 0.1 p.p. YoY to 37.5%; MTR cut partially offset by cost efficiency
  • EBITDA-CAPEX increased YoY in 4Q12 and FY12  
  • Strong Data revenue growth: Mobile Internet up 37%, messaging up 6%, fixed broadband up 5%
  • 55% share of mobile net additions driven by positive MNP inflow balance

WIND posted a solid performance in 4Q12 with the strong commercial success of WIND's offerings offsetting the regulatory and macroeconomic challenges in the market. Despite the challenging context and the intense competitive environment, WIND was able to further strengthen its competitive position in the market.

Total revenues in 4Q12 declined 4% YoY mainly as a result of the 6% reduction in service revenues arising from the 53% cut in the mobile termination rate (MTR), which occurred in July, partially offset by a strong increase in handset sales driven by the success of WIND's "All Inclusive" mobile offerings and certain settlements with third parties. Excluding the impact from the MTR cut, total revenues grew 2% YoY with total service revenues up 1% YoY.

Mobile service revenues declined by 7% YoY due to the aforementioned MTR cut, net of which growth would have been 2% YoY. WIND's mobile subscriber base increased by 3% YoY due to strong net additions in the quarter, securing over 55% share of mobile network operator (MNO) net additions. The quarter was, however, characterized by a high churn rate due to an acceleration of MNP, but WIND managed to maintain a positive inflow balance.

In fixed-line, the results of the new strategy based on LLU focus and profitability, resulted in a slight decline in total subscribers. The decline in the overall customer base, coupled with a lower pay per use price and traffic driven by competitive pressure and economic slowdown, resulted in a 3% decline in fixed line service revenues, while the new strategy delivered a solid improvement in marginality.

In 4Q12, WIND continued to deliver strong performance in Data with Mobile Internet revenues growing 37%, messaging revenues up 6%, and fixed BB revenues increasing by 5%. The success of WIND's offerings in both fixed and mobile, under the "All Inclusive" umbrella proposition, was clearly demonstrated by the solid increase in mobile broadband subscribers, up 24% YoY, driven by the 23% increase in consumer small screen users which account for 66% of total consumer mobile internet revenues in 2012. Fixed broadband customers grow by 4%, mainly driven by the 6% increase in the more profitable LLU BB subscriber base.

EBITDA in 4Q12 declined by approximately 4% driven by the reduction in top-line, due to the MTR cut, partially offset by structural cost saving initiatives implemented in the period. The EBITDA margin increased by 0.1 percentage point YoY. Excluding the impact from MTRs, underlying EBITDA grew 2% YoY. MTR reductions will also impact 2013 with a first cut having taken place in January 2013 and a final cut scheduled for July 2013.  As part of the overall Cost Efficiency Project WIND launched its Network Transformation Project aimed at achieving OPEX savings of approximately EUR 40-45mln per annum starting in 2013.

KEY DEVELOPMENTS 4Q12


  • Total revenues declined 4% YoY to EUR 1,369 million with an underlying increase, excluding MTR impact, of 2%.
  • EBITDA in 4Q12 declined 4% to EUR 514 million, with a margin increase of 0.1 percentage points to 37.5%.
  • CAPEX in 4Q12, excluding LTE spectrum, was EUR 326 million bringing FY 2012 total CAPEX to EUR 905 million.
  • Mobile subscriber base increased 3% to over 21.6 million. Mobile broadband consumer subscribers grew 24% YoY.
  • Mobile data ARPU increased by 8% to EUR 4.1 accounting for 30% of the total ARPU of EUR 13.7 declining 10% vs. 4Q11; the voice ARPU decline was due to the July MTR cut and competitive intensity, coupled with the ongoing success of WIND's data only SIM card offerings for tablets, PCs and dongles, which do not generate voice revenues.
  • In fixed-line, WIND continued to focus on the direct market, achieving a 4% growth in voice LLU subscribers which reached 2.45 million. LLU customers now account for 79% of the overall fixed voice customer base of 3.11 million. In fixed broadband, the momentum remained strong, with subscribers growing by 4% to 2.21 million, driven by a 6% increase in LLU Broadband customers. Dual-play subscribers grew by 6% YoY reaching 1.85 million.
  • Fixed-line ARPU decreased by 8% to EUR 30.7 in 4Q12 driven by the reduction of pay per use traffic and price decline resulting from competitive pressure. Broadband ARPU was stable YoY at EUR 19.1.

ITALY KEY INDICATORS

Euro mln


4Q12

4Q11

YoY


FY12

FY11

YoY

Total operating revenues


1,369

1,424

-3.9%


5,427

5,570

-3%

Total operating expenditures


856

892

-4%


3,365

3,451

-2%

EBITDA


514

533

-4%


2,062

2,120

-3%

EBITDA margin


37.5%

37.4%



38.0%

38.1%


CAPEX


342

1,533

-78%


1,000

2,139

-53%

CAPEX / Revenues


25%

108%



18%

38%










Mobile








Total revenues


1,001

1,037

-4%


3,958

4,073

-3%

Subscribers ('000)


21,650

21,014

3%


21,650

21,014

3%

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


5,541

4,479

24%


5,541

4,479

24%

ARPU (€)


13.7

15.2

-10%


14.4

15.6

-8%

MOU (min)


212

205

3%


207

197

5%










Fixed









Total revenues


369

387

-5%


1,469

1,497

-2%

Total voice subscribers ('000)


3,110

3,142

-1%


3,110

3,142

-1%

Total fixed-line ARPU (€)


30.7

33.2

-8%


31.2

33.2

-6%

Broadband subscribers ('000)


2,210

2,135

4%


2,210

2,135

4%

Broadband ARPU (€)


19.1

19.1

0%


18.8

19.3

-2%

Dual-play subscribers ('000)


1,848

1,743

6%


1,848

1,743

6%











 (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

In 4Q12 Wind Mobile continued to strongly deliver on its "Value Plus" strategy, adding primarily postpaid subscribers, while carefully managing prepaid economics for both voice and mobile broadband customers. Wind  Mobile became the fastest growing new entrant wireless operator in the Canadian market. The Company added over 80 thousand subscribers during the quarter, increasing its active subscriber base to 590 thousand, with over 70% of the net additions during the quarter being postpaid subscribers. On the commercial side, Wind Mobile enjoyed a strong holiday season supported by a new media campaign and the launch of promotional offers. The Company continued to grow its distribution footprint and branded points of sale increased to 335 at the end of 2012. Wind Mobile also continued to expand its network and launched in Peterborough and Windsor in 4Q12, increasing its population coverage to over 14 million. The Company continues to focus on improving network quality and increased sites on air to 1,300 sites.

CANADA KEY INDICATORS

Mobile


4Q12

4Q11

YoY


FY12

FY11

YoY

Subscribers ('000)


590

403

47%


590

403

47%

ARPU (CAD)


28.1

26.4

6%


27.8

27.0

3%










BUSINESS UNIT AFRICA & ASIA – FINANCIAL AND OPERATING RESULTS

  • Revenues reached USD 937 million, with organic growth of 11% YoY
  • EBITDA increased to USD 426 million, with organic growth of 36% YoY
  • EBITDA margin of 45.5%, supported by operational excellence and cost saving initiatives
  • Subscriber base increased by 8% to more than 85 million


Revenues in the Africa & Asia Business Unit reached USD 937 million, with organic growth of 11% YoY. However, actual results in US dollar terms were adversely affected by local currency devaluation against the US dollar, mainly in Algeria and Pakistan. Revenue growth was driven by strong subscriber growth, an increase in APPM in Pakistan and Bangladesh, and further supported by growth in mobile data and Value-Added Services (VAS). EBITDA increased to USD 426 million, achieving an organic growth of 36% YoY, partially as a result of the ongoing operational excellence initiatives. The strong increase in Africa & Asia is also driven by the doubling of the EBITDA in Bangladesh as a result of significantly lower commercial opex (SIM tax subsidy) in 4Q12, while in 4Q11 banglalink recorded very high customer acquisition costs. In addition, EBITDA for 4Q11 was adversely affected by provisions for corporate contingent liabilities and costs associated with the demerger of OTMT.

ALGERIA ("DJEZZY")
During 4Q12, Djezzy was able to maintain its leadership position with a market share of 55%, growing its subscriber base by 8% YoY to 17.8 million customers. Revenues increased by 9% YoY in local currency terms, mainly due to the growth in the number of subscribers. Mobile data revenues grew by 12% YoY. EBITDA increased by 8% YoY in local currency terms. During the quarter, Djezzy celebrated its 10th anniversary.

PAKISTAN ("MOBILINK")
In 4Q12, Mobilink focused on voice, data and VAS offerings, as well as churn management, leading to a 6% increase YoY in the subscriber base to 36.1 million customers. New regulatory restrictions on retail channel sales led to a decline in gross additions for the quarter. Revenues increased by 9% YoY in local currency terms, driven by the increase in data and VAS uptake. Mobile data revenues achieved a growth of 44% YoY. During the quarter, all cellular networks in major cities were shut down upon government request for security reasons on several occasions, resulting in revenue loss for all cellular operators. Despite these issues, EBITDA increased by 13% YoY in local currency terms, mostly on the back of strong measures of the operational excellence initiative. On November 29th 2012, Mobile Financial Services (MFS) were launched in collaboration with Waseela Microfinance Bank Limited. Initial services offered include domestic money remittance and bill payment.

BANGLADESH ("BANGLALINK")
banglalink increased its subscriber base by 9% YoY, reaching 25.9 million customers at the end of 4Q12. Revenues grew 13% YoY in local currency terms, driven by a higher level of VAS and data adoption, which led to mobile data revenues increasing by 130% YoY, and targeted start-up and reactivation promotions. The new self-regulations set by the local regulator, BTRC, regarding VoIP usage forced banglalink to disconnect suspected VoIP users with high ARPU. This negatively affected revenues and is expected to have significant negative impact during 2013. EBITDA in 4Q12 doubled YoY in local currency terms due to savings on commercial opex resulting from lower gross additions. EBITDA in 4Q11 was adversely affected by the aggressive acquisition strategy that followed the reduction in SIM tax in June 2011, which led to an adjustment in SIM tax subsidy allocation.

SUB SAHARAN AFRICA ("TELECEL GLOBE")
Telecel Globe subscribers increased by 42% YoY to approximately 4.5 million, with the number of subscribers in Zimbabwe increasing by 70% YoY. Despite the political situation and armed rebellion that erupted in CAR during December 2012, the network continues to function normally. Nevertheless, revenues decreased by 6% YoY in local currency terms due to lower revenues achieved during December compared to the same period last year, as a result of the security situation in the country. In Burundi, revenues grew by 21% YoY in local currency terms, mainly driven by 21% growth in subscribers to 1.4 million customers. During the quarter, Mobile Financial Services ("Leo Manoti") were launched in Burundi. Telecel Globe EBITDA showed a significant improvement YoY due to cost optimization initiatives, reversing the loss seen in 4Q11.

SOUTH EAST ASIA
Revenues for South East Asia decreased by 45% YoY, mainly due to the sale of Vietnam. EBITDA recovered due to the sale of Vietnam and savings on dealer commissions and lower interconnect costs. In Laos, Beeline continued to offer SMS, voice, and data bundles, which were launched in November, and introduced VAS for the first time.

AFRICA & ASIA KEY INDICATORS










USD mln


4Q12

4Q11

YoY


FY12

FY11

YoY

Revenues


937

922

2%


3,721

3,719

0%

Total operating expenditures


511

601

-15%


1,981

2,153

-8%

EBITDA


426

321

33%


1,741

1,566

11%

EBITDA margin


45.5%

34.8%



46.8%

42.1%


CAPEX


193

646

-70%


400

976

-59%

CAPEX / revenues


21%

70%



11%

26%


For details per country unit please see Attachment B


AFRICA & ASIA BUSINESS UNIT: COUNTRY DETAIL

ALGERIA

DZD bln











4Q12

4Q11

YoY


FY12

FY11

YoY

Total operating revenues


37

34

9%


143

136

6%

EBITDA


22

20

8%


85

80

6%

EBITDA margin


58.9%

59.5%



59.4%

59.3%


PAKISTAN

PKR bln











4Q12

4Q11

YoY


FY12

FY11

YoY

Total operating revenues


27.2

25.0

9%


105.8

97.9

8%

EBITDA


11.7

10.4

12%


45.6

40.0

14%

EBITDA margin


43.0%

41.7%



43.1%

40.9%


BANGLADESH


BDT bln











4Q12

4Q11

YoY


FY12

FY11

YoY

Total operating revenues


11.2

9.9

13%


45.4

37.9

20%

EBITDA


4.2

2.1

104%


15.7

12.5

26%

EBITDA margin


37.4%

20.8%



34.7%

33.0%


BUSINESS UNIT UKRAINE – FINANCIAL AND OPERATING RESULTS

  • Revenues increased 4% YoY to UAH 3.5 billion
  • Successful transition to mobile bundled tariff plans, leading to recovery in mobile revenues  growth
  • EBITDA increased by 9% YoY to UAH 1.8 billion; EBITDA margin up 2.2 p.p. to 52.5%
  • Mobile subscriber base grew 5% YoY to 26.0 million; Fixed BB subscribers up 54% YoY to 613 thousand

During the fourth quarter, VimpelCom continued to solidify its market position in the mobile segment. The Company showed a solid YoY improvement in revenues and EBITDA, driven by a successful migration of its customers to bundled tariff plans and by strong dynamics in fixed broadband revenues. VimpelCom recorded an EBITDA margin of 52.5% in 4Q12 driven by growth of mobile revenues and cost measures as part of the operational excellence program.


  • Total revenues grew 4% to UAH 3.5 billion. The mobile service revenues trend was inverted and returned to a growth of 3% in 4Q12 versus 4Q11, driven by successful transition to bundled tariff plans and a 5% YoY growth of the mobile subscriber base to 26.0 million. The Company transitioned 75% of subscribers to bundled tariffs as of YE 2012 and the transition is expected to be finalized in 2013. Strong YoY growth of handset sales added to the YoY revenue growth of 4%. Fixed-line revenues were up 3% YoY as a result of strong FTTB revenue growth. Fixed residential broadband revenue continued to outgrow the market,  increasing by 77% YoY, driven by a growth in the fixed broadband (FBB) subscriber base of 54% YoY to 613 thousand and an 8% YoY growth of fixed broadband ARPU to UAH 47.2.
  • EBITDA increased 9% YoY to UAH 1.8 billion and EBITDA margin was up 2.2 p.p. YoY to 52.5% in 4Q12, mainly due to the growth in mobile service revenue and residential broadband margin, but the YoY comparison was also positively impacted by a one-off provision for HR costs in 4Q11. EBITDA margin was also positively affected by the improved revenue mix in fixed-line with less wholesale voice and a larger share of interconnect revenues.
  • CAPEX was UAH 602 million in 4Q12 resulting in a  CAPEX/Revenues of 14% for FY12. CAPEX FY12 was 18% below FY11 as a result of reduced investments in the FTTB network following the completion of the rollout.

UKRAINE KEY INDICATORS










 UAH mln


4Q12

4Q11

YoY


FY12

FY11

YoY

Net operating revenues


3,453

3,326

4%


13,392

13,078

2%

Total operating expenditures


1,639

1,654

-1%


6,525

6,125

7%

EBITDA


1,814

1,672

9%


6,867

6,953

-1%

EBITDA margin


52.5%

50.3%



51.3%

53.2%


CAPEX


602

788

-24%


1,848

2,264

-18%

CAPEX / revenues


17%

24%



14%

17%











Mobile









Mobile net operating revenues


3,190

3,070

4%


12,326

12,106

2%

Mobile subscribers ('000)


25,960

24,776

5%





Mobile ARPU (UAH)


40.7

41.1

-1%





MOU (min)


497.7

482.8

3%














Fixed-line









Fixed-line net operating revenues


264

256

3%


1,066

972

10%

Fixed-line broadband revenues


82

47

77%


275

158

74%

Fixed-line broadband subscribers ('000)


613

397

54%





Fixed-line broadband ARPU (UAH)


47.2

43.7

8%





BUSINESS UNIT CIS* – FINANCIAL AND OPERATING RESULTS

  • Organic growth of revenues of 21% YoY, with strong positive impact from Uzbekistan
  • EBITDA of USD 235 million, with organic growth of 45% YoY
  • EBITDA margin of 48.1%
  • Mobile subscribers up 23% YoY to 24 million
  • Mobile broadband subscribers up 29% YoY to 12 million; Fixed BB subscriber base up 54% to 326 thousand

The CIS Business Unit continued to perform strongly, delivering profitable double digit growth in 4Q12. However, since 3Q12 the results were substantially positively  impacted by the situation in Uzbekistan, following the network closure of a competitor by the Uzbek authorities.

VimpelCom increased its mobile subscriber base in the CIS by 23% YoY, mainly driven by a 60% YoY growth in subscribers in Uzbekistan. The Company continued to face particularly strong competition in Kazakhstan, but also in Armenia and Tajikistan.

  • In 4Q12, total revenues grew organically by 21% YoY, with the main contribution coming from Uzbekistan. Reported revenues grew 16% to USD 488 million, impacted by negative forex movements. If Uzbekistan would have been adjusted to the growth level of 1H12, the revenue organic growth in 4Q12 would have been 9% YoY.
  • Total mobile revenues increased organically by 23% YoY in 4Q12 supported by 71% YoY mobile data revenue growth, primarily resulting from small screen subscribers, which more than offset the slowdown in voice growth and decline in revenue from sales of devices.
  • Fixed-line revenues increased organically by 3% YoY, due to strong growth in Kazakhstan, partially offset by voice and wholesale revenue decline in Armenia and Tajikistan.
  • EBITDA grew organically 45%, or 37% on a reported basis, mainly due to strong mobile revenue growth in Uzbekistan. If Uzbekistan would have been adjusted to the growth level of 1H12, EBITDA organic growth would have been 17% YoY.
  • EBITDA margin reached 48.1% in 4Q12 up 7.3 p.p. over 4Q11, due to strong performance in Uzbekistan and cost measures undertaken as part of the ongoing Operational Excellence programs in all CIS countries. 
  • In 4Q12 CAPEX was USD 128 million, bringing FY 2012 CAPEX/Revenues to 22%. The Company's main investment projects, focused on data development, are on schedule and network expansion continues to support both traffic and revenue growth.

* CIS operations include operations in Kazakhstan, Uzbekistan, Armenia, Kyrgyzstan, Tajikistan, and Georgia.

KAZAKHSTAN
The market in Kazakhstan remained highly competitive and VimpelCom is transitioning its subscriber base to bundled tariff plans, causing a temporary negative impact on revenues. This negative impact is expected to continue in the coming quarters, but improvements in revenue dynamics are expected to be visible after the transition is completed, as a result of upselling of the subscriber base. Revenues in Kazakhstan increased by 2% YoY organically in 4Q12, driven by a 2% YoY growth of mobile service revenues and a 54% YoY increase in fixed-line revenues. Mobile data revenues showed strong growth of  40% YoY in 4Q12, as a result of the Company´s focus on increasing data usage for small screens, causing data revenue growth for smartphones to grow by 50% YoY. EBITDA grew 8% YoY and EBITDA margin improved 2.6 p.p. to 46.2%, supported by cost control measures as part of the Operational Excellence program.

UZBEKISTAN
In Uzbekistan, VimpelCom continued to strengthen its market position substantially in 4Q12 after the closure of a competitor´s network. Revenue was up 99% YoY in local currency, supported by a 60% YoY increase of the subscriber base as well as 26% YoY ARPU increase as a result of the growth of high value subscribers and increasing mobile data revenues. EBITDA grew 192% YoY and EBITDA margin was 60.3%, a sharp increase from 41.0% in 4Q11. These results were supported by exceptional revenue growth, positively driven by the competitor's network closure, and control of structural OPEX. The main focus of management in Uzbekistan is to sustain quality of service and further improve network capacity.

ARMENIA
Revenues in Armenia declined organically by 10% YoY in 4Q12, primarily due to stagnating fixed voice as a result of fixed to mobile convergence and a lower level of terminated traffic revenues in the fixed-line segment.

The mobile segment faces strong competition and revenues were impacted by a slowdown in mobile interconnect, while at the same time mobile data revenues showed an increase of 29% YoY. EBITDA declined 13% YoY and EBITDA margin declined 1.1 p.p. to 39.5%.

KYRGYZSTAN
Kyrgyzstan continued to show positive dynamics in revenue and EBITDA growth. In local currency, revenues grew 15% YoY, supported by subscriber base growth of 5% YoY and ARPU growth of 10% YoY. EBITDA grew organically by 23% YoY due to structural OPEX decline, resulting in an increased EBITDA margin in local currency of 58.3%. Mobile broadband subscriber growth of 16% YoY coupled with the increase in mobile data usage resulted in significant mobile data revenue growth, up 63% YoY.

TAJIKISTAN
In Tajikistan, revenues increased organically by 14% YoY  in 4Q12, while EBITDA increased by 19% YoY, leading to a 1.8 p.p. increase in EBITDA margin to 45.9%. VimpelCom maintained its market position by growing its subscriber base by 17% YoY in 4Q12. Data revenue grew strongly by 63% supported by an 11% increase in mobile broadband subscribers, in line with increasing usage of mobile data services.

GEORGIA
Georgia continued to deliver strong results in 4Q12, with subscriber base growth of 16%, revenue growth of 19% and a 52% increase in EBITDA YoY in local currency. EBITDA margin increased 6.3 p.p. YoY to 28.9% due to structural OPEX control measures and focus on efficiency improvement. The Company was able to further strengthen its market position in 4Q12.

CIS* KEY INDICATORS










USD mln


4Q12

4Q11

YoY


FY12

FY11

YoY

Total operating revenues


488

419

16%


1,755

1,589

10%

Total operating expenditures


253

248

2%


943

886

6%

EBITDA


235

171

37%


813

703

16%

EBITDA margin


48.1%

40.8%



46.3%

44.3%


CAPEX


128

241

-47%


384

626

-39%

CAPEX / revenues


26%

58%



22%

39%











Mobile









Mobile subscribers ('000)


24,167

19,703

23%





- of which mobile broadband ('000)


11,967

9,287

29%





Fixed-line









Fixed-line broadband subscribers ('000)


326

212

54%





Fixed-line broadband revenues


13

9

46%


34

30

15%

* 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











4Q12

4Q11

YoY


FY12

FY11

YoY

Total operating revenues


32,055

31,566

2%


123,665

120,672

2%

EBITDA


14,822

13,749

8%


58,811

57,708

2%

EBITDA margin


46.2%

43.6%



47.6%

47.8%


UZBEKISTAN


USD mln











4Q12

4Q11

YoY


FY12

FY11

YoY

Total operating revenues


158

80

99%


463

277

67%

EBITDA


95

33

193%


253

122

107%

EBITDA margin


60.3%

41.0%



54.6%

44.1%


 

CONFERENCE CALL INFORMATION

On March 6, 2013, the Company will host an analyst & investor conference call on its fourth quarter 2012 results.  The call and slide presentation may be accessed at http://www.vimpelcom.com

2:30 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 call replay and the slide presentations webcast will be available until March 13, 2013. The slide presentation will also be available for download on the Company's website.

Investor and analyst call replay
US Replay number: +1 855 859-2056
Confirmation code : 11312009

International replay: +1 404 537-3406
Confirmation code : 11312009


DISCLAIMER

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 include those relating to the Company's strategy, development plans and anticipated performance, including the Company's Value Agenda objectives, CAPEX projections, cost optimization plans, expected cash flow improvements, intentions regarding its interest in WIND Mobile in Canada, expectations regarding negotiations with the Algerian Government and anticipated dividends.  These and other forward-looking statements 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. Future dividend payments are subject to Supervisory Board approval and there can be no assurance as to the timing and amount of such payments. 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 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 780 million people. VimpelCom provides services under the "Beeline", "Kyivstar", "djuice", "Wind", "Infostrada" "Mobilink", "Leo", "banglalink", "Telecel", and "Djezzy" brands. As of December 31, 2012 VimpelCom had 214 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 Financial Statements         

21




Attachment B 

Country units key indicators CIS and Africa & Asia   

26




Attachment C 

Reconciliation Tables                                   

28


Average Rates of Functional Currencies to USD





Attachment D 

Wind Telecomunicazioni group condensed financial statement of income   

31




Attachment E 

Definitions  

31




For more information on financial and operating data for specific countries, please refer to the supplementary file Factbook4Q2012.xls on our website at http://vimpelcom.com/ir/financials/results.wbp

ATTACHMENT A: VIMPELCOM LTD FINANCIAL STATEMENTS

VIMPELCOM LTD UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (ACTUAL)


USD (millions)


Actual

Three months ended

 December 31


Actual

Full Year




2012

2011


2012

2011









Operating revenues








Service revenues


5,605

5,594


22,122

19,579


Sales of equipment and accessories


234

190


677

516


Other revenues


111

105


262

167


Total operating revenues


5,950

5,889


23,061

20,262









Operating expenses








Service costs


1,762

1,440


5,439

4,962


Cost of equipment and accessories


241

254


693

663


Selling, general and administrative expenses


1,501

1,968


7,161

6,381


Depreciation


758

790


2,926

2,726


Amortization


519

664


2,080

2,059


Impairment of GWMC*


328

-


328

-


Impairment loss


58

527


58

527


Loss on disposals of non-current assets


74

32


205

90


Total operating expenses


5,241

5,675


18,890

17,408










 Operating profit


709

214


4,171

2,854










Finance costs


522

501


2,029

1,587


Finance income


(38)

(34)


(154)

(120)


Revaluation of previously held interest in Euroset


(606)

-


(606)

-


Other non-operating losses


44

152


75

308


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


(7)

35


9

35


Net foreign exchange  loss/(gain)


30

119


(70)

190










Profit/(loss) before tax


764

(559)


2,888

854










Income tax expense


195

101


906

585










Profit/(loss)  for the year from continuing operations


569

(660)


1,982

269










Profit/(loss)  for the period


569

(660)


1,982

269









 Attributable to:








The owners of the parent


801

(381)


2,145

543


Non-controlling interest


(232)

(279)


(163)

(274)




569

(660)


1,982

269









Earnings/loss per share








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


$0.49

-$0.24


$1.33

$0.36


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


$0.49

-$0.24


$1.32

$0.36









*Globalive Wireless Management Company

ATTACHMENT A: VIMPELCOM LTD FINANCIAL STATEMENTS

VIMPELCOM LTD UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (PRO-FORMA)


USD (millions)


Pro-forma

Three months ended

 December 31


Pro-forma

Full Year




2012

2011


2012

2011







Operating revenues








Service revenues


5,605

5,594


22,122

22,794


Sales of equipment and accessories


234

190


677

516


Other revenues


111

105


262

167


Total operating revenues


5,950

5,889


23,061

23,477









Operating expenses








Service costs


1,762

1,440


5,439

5,693


Cost of equipment and accessories


241

254


693

771


Selling, general and administrative expenses


1,501

1,968


7,161

7,488


Depreciation


758

790


2,926

3,094


Amortization


519

664


2,080

2,663


Impairment of GWMC*


328

-


328

-


Impairment loss


58

527


58

504


Loss on disposals of non-current assets


74

32


205

89


Total operating expenses


5,241

5,675


18,890

20,302










 Operating profit


709

214


4,171

3,175










Finance costs


522

501


2,029

2,010


Finance income


(38)

(34)


(154)

(160)


Revaluation of previously held interest in Euroset


(606)

-


(606)

-


Other non-operating losses


44

152


75

323


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


(7)

35


9

69


Net foreign exchange loss/(gain)


30

119


(70)

94










Profit/(loss) before tax


764

(559)


2,888

839










Income tax expense


195

101


906

650










Profit/(loss) for the year from continuing operations


569

(660)


1,982

189










Profit/(loss) for the period


569

(660)


1,982

189









 Attributable to:








The owners of the parent


801

(381)


2,145

525


Non-controlling interest


(232)

(279)


(163)

(336)




569

(660)


1,982

189









Earnings/loss per share








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


$0.49

-$0.24


$1.33

$0.32


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


$0.49

-$0.24


$1.32

$0.32

*Globalive Wireless Management Company

 

ATTACHMENT A: VIMPELCOM LTD INTERIM FINANCIAL STATEMENTS

VIMPELCOM LTD UNAUDITED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION


USD (millions)


31 December 2012,
audited

31 December 2011,
audited

Assets




Non-current assets




Property and equipment


15,666

15,165

Intangible assets


10,601

11,825

Goodwill


16,964

16,776

Investments in associates and joint ventures


1,168

388

Deferred tax asset


312

386

Financial assets


1,091

1,536

Other non-financial assets


18

92

Total non-current assets


45,820

46,168





Current assets




Inventories


167

227

Trade and other receivables


2,495

2,711

Other non-financial assets


1,290

1,320

Current income tax asset


292

293

Other financial assets


270

345

Cash and cash equivalents


4,949

2,325

Total current assets


9,463

7,221

Assets classified as held for sale


77

650





Total assets


55,360

54,039

Equity and liabilities




Equity




Equity attributable to equity owners of the parent


14,869

14,037

Non-controlling interests


503

865

Total equity


15,372

14,902

Non-current liabilities




Financial liabilities


25,955

25,724

Provisions


548

402

Other non-financial liabilities


410

442

Deferred tax liability


1,416

1,624

Total non-current liabilities


28,329

28,192

Current liabilities




Trade and other payables


4,585

4,566

Dividend payables


1,274

-

Other non-financial liabilities


2,243

2,030

Other financial liabilities


3,126

3,118

Current income tax payable


202

399

Provisions


192

182

Total current liabilities


11,622

10,295

Liabilities associated with assets held for sale


37

650

Total equity and liabilities


55,360

54,039

 

ATTACHMENT A: VIMPELCOM LTD FINANCIAL STATEMENTS

VIMPELCOM LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

USD (millions)


2012

2011

Operating activities




Profit after tax


2,093

269

Tax expense


866

585

Profit before tax


2,959

854

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




Depreciation


2,926

2,726

Amortization


2,080

2,059

Impairment of GWMC


328

-

Impairment loss


37

527

Loss on disposals of non-current assets


205

90

Finance income


(154)

(120)

Finance costs


2,029

1,587

Revaluation of previously held interest in Euroset


(658)

-

Other non-operating losses/(gains)


77

308

Net foreign exchange (gain)/ loss


(70)

190

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

9

35

Movements in provisions and pensions


36

(25)

Cash from operations


9,804

8,231

Working capital adjustments:




Change in trade and other receivables and prepayments


10

(176)

Change in inventories


14

(69)

Change in trade and other payables


421

332

Interest paid


(2,144)

(1,528)

Interest received


383

106

Income tax paid


(1,231)

(790)

Net cash flows from operating activities


7,257

6,106

Investing activities




Proceeds from sale of property, plant and equipment and intangible assets


42

34

Purchase of property, plant and equipment and intangible assets


(3,886)

(6,260)

Payments of loans granted


(189)

(118)

Receipts/(payments) from deposits


107

212

Receipts from/(investments in) associates


(2)

25

Divested cash net of proceeds from sale of shares in subsidiaries


(75)

-

Receipt of dividends


8

-

Acquisition of subsidiaries, net of cash acquired


(13)

(838)

Net cash flows used in investing activities


(4,008)

(6,945)

Financing activities




Net proceeds from exercise of share options


-

5

Acquisition of non-controlling interest


(9)

-

Proceeds from borrowings net of fees paid


3,094

10,389

Repayment of borrowings


(3,650)

(6,581)

Purchase of treasury shares


-

(1)

Proceeds from sale of treasury stock


3

-

Dividends paid to equity holders of the parent


-

(1,216)

Dividends paid to non-controlling interests


(25)

(13)

Net cash flows used in financing activities


(587)

2,583

Net increase in cash and cash equivalents


2,662

1,744

Net foreign exchange difference


(38)

(304)

Cash and cash equivalents at beginning of period


2,325

885

Cash and cash equivalents at end of period


4,949

2,325

 

ATTACHMENT B: COUNTRY UNITS KEY INDICATORS

AFRICA & ASIA BUSINESS UNIT: COUNTRY DETAIL

ALGERIA

DZD bln











 4Q12

 4Q11

YoY


 FY12

 FY11

YoY

Revenues


37.0

33.9

9%


143.3

135.6

6%

EBITDA


21.8

20.1

8%


85.2

80.4

6%

EBITDA margin


58.9%

59.5%



59.4%

59.3%


CAPEX (USD mln)


30

21

45%


47

40

18%

CAPEX / revenues (USD)


5%

5%



2%

2%











Mobile









Subscribers ('000)


17,846

16,595

8%





ARPU (DZD)


674

673

0%





MOU (min)


254

278

-9%





PAKISTAN










PKR bln


 4Q12

 4Q11

YoY


 FY12

 FY11

YoY

Revenues


27.2

25.0

9%


105.8

97.9

8%

EBITDA


11.7

10.4

13%


45.6

40.0

14%

EBITDA margin


43.0%

41.7%



43.1%

40.9%


CAPEX (USD mln)


89.2

109.7

-19%


172.7

261.2

-34%

CAPEX / revenues (USD)


32%

38%



15%

23%











Mobile









Subscribers ('000)


36,141

34,214

6%





ARPU (PKR)


243

235

3%





MOU (min)


215

209

3%





BANGLADESH










BDT bln


 4Q12

 4Q11

YoY


 FY12

 FY11

YoY

Revenues


11.2

9.9

13%


45.4

37.9

20%

EBITDA


4.2

2.1

104%


15.7

12.5

26%

EBITDA margin


37.4%

20.8%



34.7%

33.0%


CAPEX (USD mln)


43.2

336.8

-87%


116.4

428.2

-73%

CAPEX / revenues (USD)


31%

261%



21%

84%











Mobile









Subscribers ('000)


25,883

23,754

9%





ARPU (BDT)


138

140

-1%





MOU (min)


191

207

-8%





SUB SAHARAN AFRICA (TELECEL GLOBE)

USD mln











 4Q12

 4Q11

YoY


 FY12

 FY11

YoY

Revenues


23

24

-3%


91

94

-3%

EBITDA


7.0

(5.1)

n.m.


33.3

7.9

322%

EBITDA margin


27%

n.a



34%

8%











Mobile









Subscribers ('000)


4,464

3,140

42%