VimpelCom Delivers Solid Revenue and Subscriber Growth in 2Q11 INTERIM DIVIDEND 2011 OF USD 0.45 PER SHARE

KEY RESULTS AND DEVELOPMENTS*

- Total mobile subscriber base increased 11% YoY, reaching 193 million

- Pro forma revenue increased 9% YoY to USD 6.0 billion

- Pro forma EBITDA stable YoY at USD 2.4 billion

- Solid performance across Business Units, highlighted by continued subscriber growth in Russia, market outperformance in Italy and profitable growth in emerging markets

- Strong cash flow generation and long-term financing in place

- Interim dividend 2011 of USD 0.45 per common share (ADS) outstanding

AMSTERDAM, Sept. 7, 2011 /PRNewswire/ -- "VimpelCom Ltd" ("VimpelCom", "Company" or "Group") (NYSE: VIP), a leading global provider of telecommunications services, today announced operating and financial results for the quarter ended June 30, 2011.

JO LUNDER, CHIEF EXECUTIVE OFFICER COMMENTS:

"This quarter in which our transformational merger with Wind Telecom closed, shows solid performance across all of our Business Units. Our diligent efforts resulted in an improvement in our market position in Russia, relative outperformance of the market in Italy, and continued profitable growth across our operations in emerging markets. Moreover, we are leveraging our scale advantage, which is reflected by our ability to deliver synergies from the merger with Kyivstar ahead of expectations. And, although we are early in the process of integrating Wind Telecom, our confidence in significant synergies from our enlarged company is reaffirmed."

"Looking ahead, we will maintain our focus on integrating our businesses and driving sustainable, profitable growth and increased cash flows by capturing opportunities in our emerging markets and by increasing focus on both fixed and mobile broadband in our more mature markets."

"I am confident that we have a strong platform for improvement and for sustainable profitable growth."

CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS*

USD mln



Actual




Pro forma




2Q11   

2Q10   

YoY 


2Q11   

2Q10   

YoY 

Net operating revenues


5,532

2,642

109%


6,008

5,488

9%

EBITDA


2,184

1,260

73%


2,371

2,368

-

EBITDA margin


39.5%

47.7%



39.5%

43.1%


Net income attributable to VimpelCom Ltd.


239

335

-29%


312

219

42%

EPS, basic (USD)


0.16

0.28

-43%


0.19

0.14

36%

Capital expenditures


1,016

381

167%


1,027

728

41%

Net cash from operating activities


1,231

1,001

23%


-

-

-

Net debt / LTM EBITDA


-

0.9

-


2.6

-

-

Total mobile subscribers ('000)


192,742

89,372

116%


192,742

174,420

11%


*See definitions in Attachment E. Actual second quarter 2011 results reflect the consolidation of Wind Telecom as of April 15, 2011 and actual second quarter 2010 results reflected consolidation of Kyivstar as of April 22, 2010. For pro forma definition see next page.




STRATEGIC PROGRESS

  • Closed acquisition of Wind Telecom on April 15
  • Strengthened presence in Far East of Russia through acquisition of NTC and new 2G licenses
  • Announced Jo Lunder as new CEO

The highlight of the second quarter was the closing of the transformational merger with Wind Telecom, which elevated VimpelCom to a position as one of the leading global telecommunications operators in the world with an attractive and balanced portfolio in both developed and emerging markets. The Company has significant advantages in terms of scale, sharing of best practices across the organization, and ability to capture the next phase of growth in the industry from the paradigm shift from voice to data. Furthermore, the leadership team is focused on executing these priorities, both at the Group level, as well as at the business units. The strengthening of our position in the Far East of Russia is a significant addition to the coverage in the Russian market.

INTEGRATION UPDATE

  • Launched integration of Wind Telecom immediately following the close of the transaction
  • Expected synergies of at least NPV USD 2.5 billion from the integration of Wind Telecom reaffirmed
  • Synergies from the merger with Kyivstar are ahead of plan; since inception NPV USD 120 million realized
  • Implemented new organizational structure with 5 Business Units

Following the closing of the merger with Wind Telecom, the Company launched a comprehensive integration program to capture the benefits of the combination and to achieve the expected synergies from the enlarged group. The first results from the program are promising, with early savings in procurement already achieved through harmonization of current price levels across the Company. Savings are also being realized through benchmarking of costs and sharing of best practices. Phase 1 initiatives have already secured synergies in the amount of USD 1.6 billion on a NPV basis. Also the integration program in Ukraine continues to progress ahead of plan, with synergies of NPV USD 120 million realized since inception.

A new organizational structure has been implemented with five Business Units reporting to the Headquarters in Amsterdam.

PRESENTATION OF FINANCIAL RESULTS

Actual second quarter 2011 results reflect the consolidation of Wind Telecom as of April 15, 2011. The Company believes pro forma comparisons provide the most meaningful comparison of financial performance for the quarter and, unless otherwise stated, all comparisons in this press release are on a pro forma basis. 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.  

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 and Kyivstar occurred on January 1, 2010.

VimpelCom Ltd. consolidated results presented in this earnings release are based on US GAAP.  The results of Business Units Europe & North America and Asia & Africa, excluding SEA, are based on IFRS. The correction to US GAAP of these business units has been made at Group level.

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.

VIMPELCOM GROUP – FINANCIAL AND OPERATING RESULTS

  • Total mobile subscriber base increased by 11% YoY to 193 million
  • Revenues up 9% YoY to USD 6.0 billion driven by 3% organic growth and favorable forex
  • EBITDA stable at USD 2.4 billion
  • Net income increased 42% to USD 312 million
  • CAPEX at USD 1.0 billion, LTM capex/revenue 20%
  • Actual net cash from operating activities was USD 1.2 billion, 23% higher than a year ago
  • Net debt / LTM EBITDA was 2.6x at the end of the second quarter

OPERATING PERFORMANCE OVERVIEW

The total mobile subscriber base increased by 11% YoY to 193 million, with the largest absolute contribution coming from the accelerated growth in subscribers in Russia. The Company also achieved strong growth of broadband and mobile data in Russia, Italy and Ukraine.

In Russia, the Company had the highest net additions of mobile subscribers in the market during the first 6 months of 2011. The subscriber growth rate increased twofold over the first quarter of 2011 with more than 2 million additional subscribers. Mobile broadband subscribers increased by 82% YoY to 2.3 million and fixed broadband subscribers grew 39% YoY to 1.7 million.

In the Business Unit Europe and North America, the Company's Italian business continued to outperform the broader telecom market in the second quarter despite the ongoing weak macroeconomic environment and unfavorable regulatory developments. VimpelCom strengthened its market position in both mobile and fixed-line, increasing the market share in both segments. The fixed broadband subscriber base increased 18% YoY to 2.1 million, while Mobile Internet revenues increased 33% YoY.

In the Business Unit Africa and Asia, the Company achieved strong growth in its subscriber base across all countries of operation, reaching over 74 million in total. Improved performance was driven primarily by increased usage of voice traffic and focus on cost optimization.

The Business Unit Ukraine delivered stable growth in mobile subscribers, strong improvements in fixed residential broadband, and increased mobile data usage. Mobile data revenue grew 48% YoY to UAH 190 million driven by increased usage of data services in USB modem offers and within the new bundled tariff plans.

The CIS Business Unit continued to demonstrate strong operational results despite intensified competition in some key CIS countries, due to the improving macroeconomic situation in the region, product quality and efficient sales and marketing efforts. In the Company's largest CIS market, Kazakhstan, VimpelCom achieved subscriber growth of 24% YoY.

OPERATING FINANCIALS PER BUSINESS UNIT

USD mln




Pro forma




Pro forma





2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


6,008

5,488

9%


11,489

10,677

8%


of which:










BU Russia


2,329

2,042

14%


4,394

3,961

11%


BU Europe & North America


2,015

1,829

10%


3,878

3,646

6%


BU Africa & Asia


949

901

5%


1,840

1,748

5%


BU Ukraine


412

387

6%


787

745

6%


BU CIS


389

336

16%


740

631

17%


Other


-86

-7



-150

-54












EBITDA



2,371

2,368

0%


4,628

4,583

1%


of which:










BU Russia


968

963

1%


1,836

1,874

-2%


BU Europe & North America


664

669

-1%


1,314

1,304

1%


BU Africa & Asia


407

377

8%


811

748

8%


BU Ukraine


226

208

9%


429

382

12%


BU CIS


175

161

9%


334

300

11%


Other


-69

-10



-96

-25












EBITDA margin


39.5%

43.1%



40.3%

42.9%


*See definitions in Attachment E.



FINANCIAL PERFORMANCE OVERVIEW

Total net operating revenues in the second quarter 2011 increased by 9% YoY, with strong performance across all business units and favorable foreign exchange movements. In Russia, revenues increased by 14% in USD terms and 6% in local currency. In Italy, revenues in USD increased by 10%, while in local currency, excluding certain one off items in the same period a year ago, revenues increased by 1%. Business Unit Ukraine delivered growth of 6% in USD terms and 7% in local currency. Business Unit Africa and Asia reported revenue growth of 5%. Lastly, CIS continued to achieve strong performance with a revenue increase of 16%, driven primarily by a quality product offering, efficient sales and marketing efforts, and an improving macroeconomic situation.

The EBITDA of 2Q11 was impacted by one off expenses related to the Wind Telecom and GTEL transactions. Excluding these effects the pro forma EBITDA would have increased by 3%.

Net income increased by 42% YoY, as a result of favorable currency movements partly offset by increased depreciation and tax expenses. The increase in our tax expenses is mainly attributable to certain net operating losses not recognized.

CAPEX increased 41% to 1.0 billion US dollars. This is within our planned 21% CAPEX to revenue range for the year, and mainly reflects slow phasing of investments in Russia and the CIS last year. On a Last Twelve Months basis, 2Q11 CAPEX/Revenue is broadly in line with full year 2010 of 18% capex to revenues.

ACTUAL 2Q 2011

On an actual basis, revenues more than doubled YoY and EBITDA increased by 73% YoY, as a result of the combination with Wind Telecom in April this year.

Net income declined by 29%, mainly due to higher interest expenses, resulting from higher gross debt after the acquisition of Wind Telecom. In addition, net income was also negatively impacted by higher depreciation and amortization charges associated with the Wind Telecom transaction.


USD mln



Actual




Pro forma




2Q11   

2Q10   

YoY 


2Q11   

2Q10   

YoY 

Net operating revenues


5,532

2,642

109%


6,008

5,488

9%

EBITDA


2,184

1,260

73%


2,371

2,368

-

EBITDA margin


39.5%

47.7%



39.5%

43.1%


Net income attributable to VimpelCom Ltd.


239

335

-29%


312

219

42%

EPS, basic (USD)


0.16

0.28

-43%


0.19

0.14

36%

Capital expenditures


1,016

381

167%


1,027

728

41%


STATEMENT OF FINANCIAL POSITION

USD mln


Actual



2Q11   

FY10   


Total assets


58,873

19,928


Shareholders' equity


16,111

10,671


Gross debt


27,392

5,661


Net debt


24,104

4,740




The total assets almost tripled to USD 59 billion, primarily as a result of the acquisition of Wind Telecom in April, 2011. As a consequence of the acquisition gross debt increased to USD 27.4 billion, in line with the estimated preliminary pro forma gross debt as of the end of the first quarter of 2011. Net debt was USD 24.1 billion, slightly higher than the estimated preliminary pro forma net debt as of the end of the first quarter, leading to a small increase in the Net debt / LTM EBITDA to 2.6x at the end of the second quarter.

CASH FLOWS

USD mln 



Actual




Actual




2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net cash from operating activities


1,231

1,001

23%


2,235

1,804

24%

Net cash used in/(from) investing activities


1,010

-67



2,205

-75


Net cash used in/(provided) financing activities


-948

191



-2,079

928





The net cash from operating activities at the Group level was positively impacted by the strong cash flow generation from our operating activities offset by certain cash costs in relation to the acquisition of Wind Telecom. The net cash from investing activities was mainly impacted by higher investments in property and equipment and investments related to the Wind Telecom transaction. Net cash from financing activities was related to the repayment of the bridge loan associated with the acquisition of Wind Telecom, refinanced with the successful USD 2.2 billion bonds issued in the Eurobond market in June. Funds from VimpelCom were also used to refinance all outstanding indebtedness at Orascom Telecom Holding.

INTERIM DIVIDEND 2011

The Supervisory Board declared the payment of an interim dividend of USD 0.45 per American depositary share ("ADS") in relation to the 2011 results. Each ADS represents one common share. The total interim dividend payment will be approximately USD 733 million.

The record date for the Company's shareholders entitled to receive the interim dividend has been set for December 1, 2011. The ex-dividend date is November 29, 2011. The Company will make appropriate tax withholdings of up to 15% when the dividend is paid to the Company's ADS depositary, The Bank of New York Mellon. The dividend will be paid by the Company before December 31, 2011.

MAIN SECOND QUARTER EVENTS

  • Completion of the combination with Wind Telecom establishing an enhanced platform for global growth
  • Payment of a final dividend for 2010 in the amount of USD 244 million giving a total of USD 1.1 billion in dividends paid relating to 2010 results
  • Agreement on further financing of operations in Vietnam
  • Acquisition of NTC, a mobile operator in the Far East of Russia, improving the license footprint in the region
  • Appointment of Jo Lunder as CEO and announcement of key management positions
  • Election of the new Supervisory Board and Co-Founder Augie Fabela II as Chairman
  • Successful placement of USD 2.2 billion in Eurobond market

BUSINESS UNITS PERFORMANCE

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

BUSINESS UNIT RUSSIA – FINANCIAL AND OPERATING RESULTS

  • Improved market position, with more than 2 million mobile net additions
  • Strengthened presence in Far East of Russia through acquisition of NTC and new 2G licenses
  • Strong growth of fixed broadband and continued expansion of IPTV
  • Solid growth of mobile data subscribers and increased data ARPUs

In Russia, we continued to execute our development plan, which we adopted a year ago, aimed at enhancing our market position. We improved the trends of our mobile subscription and service revenue market share, and accelerated the development of the fixed-line segment. We intend to maintain this momentum. Our development plan puts pressure on our margins, and we are taking measures to improve profitability by offsetting the effects of the recent active investments and network development with operational efficiency.

  • For two quarters in a row we have achieved the highest net additions in Russia, accelerating subscriber growth to more than 2 million net additional mobile subscribers in 2Q11, a twofold increase in growth in comparison to 1Q11.
  • Total consolidated 2Q11 revenues reached 65.2 billion rubles, up 6% YoY, driven by growth in fixed and mobile revenues including sales of devices.
  • Mobile data revenues increased 38% YoY to 4.1 billion rubles. Our total number of mobile broadband subscribers (USB only) was 2.4 million, up 82% YoY.
  • Fixed-line broadband revenues were nearly 1.9 billion rubles, growing by 45% YoY, supported by strong growth in subscribers, which were up 39% YoY and positive ARPU performance, which increased by 7% versus last year. During the quarter, IPTV service was launched in 8 cities, bringing the total number of cities serviced to 32 as of the end of 2Q11.
  • Total consolidated 2Q11 EBITDA declined to 27.1 billion rubles and the EBITDA margin declined to 41.5%, reflecting the Company's intensified network development and increased sales and marketing expenses aimed at strengthening our market position.
  • We developed and launched a business excellence program aimed at enhancing the Company's profitability. This program will focus on an increase in efficiency of operations and will target annual cost reductions related to network maintenance expenses, rental costs, commissions and other G&A expenses.
  • Capex increased by 54% YoY, reflecting the acceleration of network development and improved phasing of capex throughout the year.

RUSSIA KEY INDICATORS

RUR mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


65,179

61,738

6%


125,513

119,087

5%

Total operating expenditures


38,103

32,624

17%


73,042

62,737

16%

EBITDA


27,076

29,114

-7%


52,471

56,350

-7%

EBITDA margin


41.5%

47.2%



41.8%

47.3%


Capex


11,348

7,363

54%


20,834

11,073

88%

Capex / revenues


17%

12%



17%

9%











Mobile









Mobile net operating revenues


54,360

51,825

5%


104,427

99,707

5%

- of which mobile data


4,118

2,994

38%


8,000

6,203

29%

Mobile EBITDA


24,069

26,437

-9%


46,831

50,960

-8%

Mobile EBITDA margin


44.3%

51.0%



44.8%

51.1%


Mobile subscribers ('000)


55,251

50,912

9%





- of which mobile broadband ('000)


2,362

1,300

82%





Mobile ARPU (RUR)


327

330

-1%





MOU


244

219

11%














Fixed-line









Fixed-line net operating revenues


10,818

9,913

9%


21,085

19,381

9%

Fixed-line EBITDA


3,007

2,677

12%


5,640

5,389

5%

Fixed-line EBITDA margin


27.8%

27.0%



26.7%

27.8%


Fixed-line broadband revenues


1,855

1,283

45%


3,590

2,596

38%

Fixed line broadband subscribers ('000)


1,671

1,199

39%





Fixed line broadband ARPU (RUR)


384

359

7%








BUSINESS UNIT EUROPE & NORTH AMERICA

FINANCIAL AND OPERATING RESULTS ITALY

  • Continued relative outperformance in the Italian market
  • Solid growth of fixed broadband coupled with an increase in ARPU
  • Strong growth of mobile Internet revenues, up 33% to EUR 56 million
  • Total revenues increased 1% excluding non organic items, decline 1% YoY on a reported basis
  • EBITDA in line with previous year on an organic basis (net of non-recurring items), declines 5% YoY on a reported basis

In Italy we strengthened our market position in both mobile and fixed-line, increasing market share in both segments. In the mobile segment, performance was driven by the ongoing success of the Company's targeted offerings for voice and messaging, both on-net and off-net, by the strong take-up of its post-paid offerings targeted at the high value consumer and SME/SOHO segments, and by the notable success of its Mobile Internet offerings for smartphones and tablet devices. In the fixed-line segment, performance was particularly strong in the consumer segment, which posted a 6.3% increase in revenues driven by the Company's simple and transparent set of offerings, which are easily adaptable to all customer needs and are supported by a highly effective promotional and advertising strategy.

  • WIND's total revenues reached EUR 1.4 billion in the second quarter, driven by a 1% increase in telecom service revenues.
  • EBITDA declined YoY as a result of certain non organic items recorded in 2Q10 (mainly settlements with other operators, active penalties and release of previous years over accrued provisions), combined with an increase in monthly access fees on Local Loop Unbundling (LLU) paid to the incumbent operator and by an increase in bad debt in the fixed-line business. On an organic basis WIND's EBITDA in the second quarter was in line with the same quarter a year ago. The EBITDA margin remained a solid 37.6%.
  • During the second quarter of 2011, WIND continued to deliver on its investment plan with EUR 234 million of capex invested in: i.) increasing the coverage of its 3G / HSDPA mobile footprint and in increasing the capacity of the mobile network; ii.) in the expansion of LLU coverage; and iii.) in the increase of capacity and quality of WIND's backbone, which serves both the mobile and fixed-line businesses.

ITALY KEY INDICATORS

Euro mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Revenues


1,399

1,411

-1%


2,750

2,706

2%

Total operating expenditures


(873)

(856)

2%


-1,727

-1,668

4%

EBITDA


526

556

-5%


1,022

1,039

-2%

EBITDA margin


37.6%

39.4%



37.2%

38.4%


Capex


234

203

15%


380

331

15%

Capex / revenues


17%

14%



14%

12%











Mobile









Total revenues


1,029

1,046

-2%


2,011

1,983

1%

EBITDA


455

477

-5%


886

894

-1%

EBITDA margin


44.2%

45.6%



44.1%

45.1%


Subscribers ('000)


20,559

19,263

7%





ARPU (euro)


16.0

17.2

-7%





MOU


198

185

7%














Fixed









Total revenues


370

366

1%


739

723

2%

EBITDA


71

79

-10%


136

145

-6%

EBITDA margin (%)


19.2%

21.6%



18.4%

20.0%


Total voice subscribers ('000)


3,128

2,904

8%





Total fixed-line ARPU (euro)


33.4

34.8

-4%





Broadband subscribers ('000)


2,082

1,765

18%





Broadband ARPU (euro)


19.2

18.4

5%





Dual-play subscribers ('000)


1,689

1,450

17%





Financials are based on IFRS



  • The performance of WIND's mobile business remained positive in the second quarter with a 7% increase in subscribers, reaching 20.6 million, reflecting 280 thousand net additions in 2Q11.
  • WIND's mobile data offerings continued to post strong results driven by the significant increase in mobile Internet revenues, up 33% over the previous year to EUR 56 million, and supported by the ongoing solid revenue growth posted by traditional data services.
  • WIND's mobile ARPU in 2Q11 declined 7% over the same period last year, as a result of the cut in mobile termination rates coupled with the strong growth in data-only SIM cards, which do not generate voice revenues. Net of these impacts, the decline would have been approximately 3%. Mobile Data ARPU in 2Q11 reached 21% of total mobile ARPU.
  • In fixed-line our voice subscribers increased by 8% to 3 million customers, mainly as a result of a 12% increase in higher value direct voice subscribers, which reached 2.4 million. Our performance in broadband was also particularly strong with an 18% growth in customer base to over 2.1 million. Finally in the dual-play market Infostrada grew its customer base by 16% to almost 1.7 million.
  • Fixed-line Internet and Data revenue growth was solid in the second quarter, delivering an 18% increase over the previous year, mainly driven by the 25% increase in broadband revenues only marginally offset by the decline in narrowband Internet services.
  • Fixed voice ARPU declined over the same period last year as a result of the cut in fixed termination rates coupled with a decrease in usage due to fixed-mobile substitution. Notwithstanding the intense competitive environment, which abated slightly in 2Q11, Infostrada was able to increase its Broadband ARPU by 5% to EUR 19.2.

CANADA

  • Active subscriber base increased significantly
  • Solid share of net additions drove growth to 317 thousand active subscribers

Globalive Wireless Management Corporation, operating under the brand name Wind Mobile in Canada, is accounted for under the equity method and therefore we only disclose operational information in the quarterly earnings release.

WIND Mobile's active subscriber base increased by 239% YoY to 317 thousand active subscribers, reinforcing its solid share of net additions despite a climate of increased competition and seasonal mild growth rates.

CANADA KEY INDICATORS

Mobile


2Q11   

2Q10   

YoY 






Subscribers ('000)


317

94

239%

ARPU (CAD)


27.8

n.a.

n.a.




BUSINESS UNIT AFRICA & ASIA - FINANCIAL AND OPERATING RESULTS

  • Subscriber base surpassed the 74 million mark
  • Net operating revenues increased 5% YoY
  • EBITDA grew 8% YoY, reflecting revenue growth and focus on cost optimization
  • Strong EBITDA margin of 42.9%

In the second quarter of 2011, net operating revenues in Africa and Asia increased by 5% YoY driven by strong subscriber growth across our countries. Total subscribers grew by 12% to 74 million. EBITDA increased by 8%, as a result of management's continued focus on cost optimization, leading to a strong EBITDA margin of 42.9%.

ALGERIA ("DJEZZY")

Revenue performance improved with a 5% YoY increase, despite a challenging operating and regulatory environment. However, revenue growth was affected by the limitations imposed on Djezzy. EBITDA increased 11% compared to the same quarter last year as a result of the aforementioned revenue increase coupled with tight cost management, which drove a strong EBITDA margin of 59.2%. The decrease in capex was mainly due to limitations on importing goods. Subscribers increased 5% YoY to 16 million, due to a continued focus on successful churn management. ARPU remained stable compared to the same quarter last year at DZD 711 as a result of careful acquisition of customers and efficient use of promotions. Market share remained stable at 58%, as a result of successful churn management and special loyalty programs.

PAKISTAN ("MOBILINK")

Subscribers exceeded 33 million, increasing by 4% compared to the same quarter last year as a result of targeting new subscribers through location-based promotions, as well as a continuing focus on mobile number portability. Revenues showed stable growth YoY, increasing 2% mainly as a result of a growing customer base, which was partially offset by a decrease in pre-paid average rate per minute as a result of competitive pressures. EBITDA displayed a corresponding increase of 2% as a result of applied cost efficiency measures. These kept EBITDA margin stable at 40.2%. Capex increased 37% to support IT and network development. We continue to focus on the youth segment through dedicated products and offerings, as well as rolling out a number of activities to promote value added services

BANGLADESH ("BANGLALINK")

Subscriber growth was strong, increasing almost 26% YoY to 20.2 million as a result of penetration in rural areas and in the younger lower end market segments. Revenues increased by nearly 17% YoY as a result of a growing customer base, as well as the launch of promotions and tariff amendments. EBITDA displayed a sharp increase of 85% YoY due to selective subscriber acquisition through the removal of SIM tax subsidies during most of the second quarter in anticipation of a reduction in the SIM tax. As expected, the government reduced the SIM tax by Tk194 at the end of the second quarter. Capex decreased by 67% when compared to the aggressive rollout plan in the previous year.

SUB SAHARAN AFRICA ("TELECEL GLOBE")

Subscribers increased 24%, however revenues showed a 2% decline YoY mainly due to significant competitive pressures in Burundi as well as to the country-wide economic slowdown in the Central African Republic (CAR). EBITDA decreased 68% YoY as a result of higher subscriber acquisition costs and offerings to counter competition in both highly competitive markets.

SOUTH EAST ASIA

The subscriber base increased by 279% YoY, reaching 2 million. In Vietnam, we developed a more focused strategy with a planned comprehensive commercial re-launch of our operations. Cambodia showed strong YoY growth in both revenues (up 50% YoY) and subscribers (up 56% YoY). In Laos, plans are in place to rebrand to Beeline.

AFRICA & ASIA KEY INDICATORS

USD mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Revenues


949

901

5%


1,840

1,748

5%

Total operating expenditures


542

524

3%


1,029

1,000

3%

EBITDA


407

377

8%


811

748

8%

EBITDA margin


42.9%

41.8%



44.1%

42.8%


Capex


97

94

3%


173

245

-29%

Capex / revenues


10%

10%



9%

14%


For details per country unit please see Attachment B



BUSINESS UNIT UKRAINE – FINANCIAL AND OPERATING RESULTS

  • Ukraine continued to deliver stable growth in mobile subscribers and revenues
  • Strong growth in fixed residential broadband
  • Improved operating margins through synergy realization and cost control

Overall, Kyivstar continued to deliver solid results in the second quarter with a strong revenue growth, driven by an increase in the subscriber base and ARPU, increased mobile data usage, and a growing fixed broadband business that almost doubled in revenue YoY. At the same time, Kyivstar has managed to improve operating margins due to lower mobile termination rates, realized synergies ahead of plan, and effective cost control.

  • Total revenue increased 7% YoY, mainly driven by growth in mobile revenue as our subscriber base increased 3% YoY to 24.7 million and ARPU increased 3.3% YoY to UAH 41. This growth was largely due to our continued transition towards new bundled tariff plans that stimulated an 11% increase in MOU.
  • Mobile data revenue grew 48% YoY to UAH 190 million driven by increased usage of data services in USB modem offers and within the new bundled tariff plans.
  • Fixed revenue showed 23% growth YoY due to an increase in wholesale revenues, as well as an 87% increase in fixed-line broadband revenues as a result of a 174% increase in fixed-line broadband subscribers, which reached 293,000 in the quarter. In April, the FTTB subscription base was revised for the period of the first quarter of 2010 through the first quarter of 2011 based on the VimpelCom definition for broadband subscribers to reflect 3-months active base.
  • EBITDA was up 9% YoY with EBITDA margin improving to 54.8% YoY on the back of higher revenues, higher mobile gross margin due to lower mobile termination rates, realized synergies ahead of plan, and effective cost control.
  • Capex was UAH 463 million, or 14% of revenue, which is below plan due to mobile equipment delivery delays and improved pricing terms.
  • The integration program in Ukraine continues to progress ahead of plan, with synergies of NPV USD 120 million realized since inception.

UKRAINE KEY INDICATORS

UAH mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


3,287

3,071

7%


6,267

5,925

6%

Total operating expenditures


1,485

1,425

4%


2,856

2,886

-1%

EBITDA


1,802

1,646

9%


3,411

3,040

12%

EBITDA margin


54.8%

53.6%



54.4%

51.3%


Capex


463

538

-14%


832

1,018

-18%

Capex / revenues


14%

18%



13%

17%











Mobile









Mobile net operating revenues


3,042

2,871

6%


5,808

5,533

5%

Mobile subscribers ('000)


24,695

24,059

3%





Mobile ARPU (UAH)


41.0

39.7

3%





MOU


474

427

11%














Fixed-line









Fixed-line net operating revenues


245

200

23%


459

392

17%

Fixed-line broadband revenues


36

19

87%


68

37

86%

Fixed-line broadband subscribers ('000)


293

107

174%





Fixed-line broadband ARPU (UAH)


46.2

65.5

-29%








BUSINESS UNIT CIS* – FINANCIAL AND OPERATING RESULTS

  • Continued strong growth in revenues and subscribers
  • Increased usage of voice and data traffic
  • Successful rollout of 2G and 3G networks

Overall, the CIS business continues to deliver strong operational and financial results. Despite intensified competition in some of the CIS countries, revenues are growing at double-digit rates YoY in nearly all CIS markets as a result of the improving macroeconomic situation, product quality and efficient sales and marketing efforts.

  • Comprehensive data strategy execution drove record revenue growth of 83% YoY in data services.
  • EBITDA increased 9% in absolute terms YoY, but EBITDA margin declined by 2.9 p.p. to 45%, primarily due to lower EBITDA in Kazakhstan
  • We substantially increased CAPEX related to mobile and fixed network expansion in the second quarter in order to support further growth in the CIS markets.
  • We maintained our efforts to enhance market position in all CIS markets, despite continuous and intensified competition in key markets.

KAZAKHSTAN

In our largest CIS market, Kazakhstan, we achieved mobile subscriber growth of 24% YoY and solid revenue growth of 9% in the second quarter.

EBITDA margin declined to 48.8%, primarily due to intensified competition in Kazakhstan, increasing volume of customer equipment sales, and higher sales and marketing expenses. EBITDA margin was also impacted by per second-rounding and mandatory cancelling of call set up fees in Kazakhstan, introduced by the national regulator in February 2011.

ARMENIA

In 2Q11 our revenues in Armenia increased by 2% YoY driven by organic growth as well as device sales. The decline in traditional fixed voice revenues was not fully compensated by the solid growth of fixed broadband revenues. To support data consumption in both mobile and fixed segment we accelerated customer devices sales that led to EBITDA margin erosion.

UZBEKISTAN

In Uzbekistan, our sales and marketing efforts resulted in a 34% increase in the number of mobile subscribers as compared with the second quarter of 2010. Our revenues have increased by 28% YoY with strong EBITDA margin of 42.9% demonstrating the underlying strength of our core business in the country. CAPEX grew by 42% YoY mainly to accelerate 3G network development to support data growth.

TAJIKISTAN

In 2Q11 we recorded YoY revenue growth of 29%. The EBITDA margin reached 51.9% up from 33.3% we reported a year ago. We attribute these strong results to our prudent marketing policy as well as to the high margin incoming traffic from Russia to our subscribers in Tajikistan.

GEORGIA

In 2Q11 our revenues in Georgia increased 21% YoY with substantial improvement of EBITDA margin which increased to 23.9% from 14.4% reported a year ago.

Our strong sales and marketing activities resulted in 53% growth of our mobile subscriber base YoY along with substantial increase in usage.

KYRGYZSTAN

In Kyrgyzstan we managed to strengthen our market position in 2Q11 and also all key financial and operating indicators. Strong growth of mobile subscriber base, reflected in a revenue increase of 27% and a solid EBITDA margin of 52.8%, which is the highest across all CIS countries.

CIS KEY INDICATORS

USD mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


389

336

16%


740

631

17%

Total operating expenditures


214

175

22%


440

297

48%

EBITDA


175

161

9%


334

300

11%

EBITDA margin


45.0%

47.9%



45.2%

47.6%


Capex


132

71

87%


205

103

99%

Capex / revenues


34%

21%



28%

16%











Mobile









Mobile subscribers ('000)


17,594

13,875

27%


17,594

13,875

27%

- of which mobile broadband ('000)


124

17

626%


124

17

626%

Fixed-line









Fixed-line broadband subscribers ('000)


132

65

103%


132

65

103%

  FTTB Subscribers


19

5

263%


19

5

263%

Fixed-line broadband revenues


7

3

154%


12

5

135%

* CIS operations include operations in Kazakhstan, Uzbekistan, Armenia, Kyrgyzstan (since the first quarter of 2010), Tajikistan, and Georgia.

For details per country unit please see Attachment B



CONFERENCE CALL INFORMATION

The Company's management will discuss second quarter 2011 results during a conference call and slide presentation on September 7, 2011 at 9:30 am CET (3:30 am US ET) for Europe-based shareholders and analysts, and 3:00 pm CET (9:00 am US ET) for the US-based shareholders and analysts. The call and slide presentation may be accessed at http://www.vimpelcom.com.

9:30 am CET (3:30 am US ET) conference call

3:00 pm CET (9:00 am US ET) conference call

US call-in number:

+ 1 877 616-4476

US call-in number:

+ 1 877 616-4476

International call-in number:

+ 1 402 875-4763

International call-in number:

+ 1 402 875-4763



The conference calls replay and the slide presentations webcast will be available through September 14, 2011 and October 7, 2011, respectively. The slide presentation will also be available for download on the Company's website.

9:30 am CET (3:30 am US ET) replay

3:00 pm CET (9:00 am US ET) replay

US replay number:

+1 855 859-2056

US Replay number:

+1 855 859-2056

Confirmation code:

95884159

Confirmation code:

95889150





International replay:

+1 404 537-3406 

International replay:

+1 404 537-3406 

Confirmation code:

95884159

Confirmation code:

95889150



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 benefits and synergies from the Company's transaction with Wind Telecom and the expected growth and development of the Company's operations. 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 the markets in which the Company operates, unforeseen developments from competition, governmental regulation of the telecommunications industries, general political uncertainties in the markets in which the Company operates and/or litigation with third parties. The actual outcome may also differ materially if the Company is unable to obtain all necessary corporate approvals relating to its business, if the Company is unable to successfully integrate Wind Telecom, its Ukrainian operations and other newly-acquired businesses, if the Company is unable to complete the demerger of certain Wind Telecom assets and other factors. 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 the parties are unable to successfully implement integration strategies or otherwise realize the synergies anticipated for the transaction; the possibility that Telenor may succeed in the arbitration against the Company and Altimo Holdings and Investments Ltd. or bring other legal challenge (including requests for injunctive relief) against the Company, its officers or directors and/or Altimo in respect of its claims to pre-emptive rights or otherwise; and other risks and uncertainties that are beyond the parties' 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, 2010 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 offering a wide range of wireless, fixed, and broadband services in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Vietnam, Cambodia, Laos, Algeria, Bangladesh, Pakistan, Burundi, Zimbabwe, Central African Republic, Italy and Canada. VimpelCom's operations around the globe cover territory with a total population of approximately 864 million people. VimpelCom provides services under the "Beeline", "Kyivstar", "djuice", "Wind", "Infostrada" "Mobilink", "Leo", "banglalink", "Telecel", and "Djezzy" brands. As of June 30, 2011 VimpelCom had 193 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

                                               16




Attachment B

Country units key indicators CIS and Asia & Africa

                                               19




Attachment C

Reconciliation Tables

                                               22


Average Rates of Functional Currencies to USD





Attachment D

Wind Italy condensed financial statement of income

                                               24




Attachment E

Definitions

                                               25



For more information on financial and operating data for specific countries, please refer to the supplementary file FactbookQ22011.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



USD (000)


Three months ended
June 30


Six months ended
June 30




2011  

2010  


2011  

2010  







Operating revenues








Service revenues


5,394,292

2,584,855


8,067,431

4,787,484


Sales of equipment and accessories


134,263

44,539


200,396

71,118


Other revenues


3,643

12,240


7,231

14,160


Net operating revenues


5,532,199

2,641,634


8,275,059

4,872,762









Operating expenses








Service costs


1,381,076

553,022


2,006,248

1,054,610


Cost of equipment and accessories


146,153

47,879


228,561

74,229


Selling, general and administrative expenses


1,773,538

766,416


2,586,459

1,409,713


Depreciation


829,493

376,648


1,304,925

729,201


Amortization


291,928

116,544


392,595

183,238


Impairment loss


-

-


-

-


Provision for doubtful accounts


40,017

12,485


52,925

31,129


Total operating expenses


4,462,204

1,872,994


6,571,712

3,482,120










Operating income


1,069,995

768,640


1,703,347

1,390,642









Other income and expenses








Interest income


19,751

16,079


34,810

27,625


Net foreign exchange gain/(loss)


(25,833)

(126,393)


113,697

(21,459)










Interest expense


(468,919)

(132,264)


(603,855)

(273,924)


Equity in net gain/(loss) of associates


(9,396)

11,088


46,192

7,304


Other expenses, net


(106,504)

(10,011)


(111,778)

(58,356)


Total other income and expenses


(590,901)

(241,501)


(520,934)

(318,810)










Income before income taxes


479,094

527,139


1,182,413

1,071,832










Income tax expense


206,515

177,958


301,125

331,007










Net income from continuing operations


272,579

349,181


881,288

740,825










Profit from discontinued operations


3,397

-


3,397

-










Net income/(loss)


275,977

349,181


884,686

740,825










Net income attributable to the noncontrolling interest


36,822

14,441


55,858

24,607










Net income attributable to VimpelCom


239,155

334,740


828,828

716,218










Basic EPS :








Net income attributable to VimpelCom* per common share


0.16

0.28


0.59

0.65










Weighted average common shares outstanding (thousand)


1,564,135

1,227,320


1,428,845

1,121,394










Diluted EPS :








Net income attributable to VimpelCom* per common share


0.16

0.28


0.59

0.65










Weighted average diluted shares (thousand)


1,564,275

1,227,780


1,428,871

1,121,991

*Adjusted for the impact through changes in redeemable noncontrolling interest



ATTACHMENT A: VIMPELCOM LTD FINANCIAL STATEMENTS


VIMPELCOM LTD UNAUDITED CONSOLIDATED BALANCE SHEETS



USD (000)


June 30,  


December 31,  




2011  


2010  

Assets






Current assets:






Cash and cash equivalents


3,190,214


885,125


Trade accounts receivable, net of allowance for doubtful accounts


2,725,943


506,322


Inventory


315,689


137,413


Deferred income taxes


94,164


117,236


Input value added tax


159,963


137,958


Due from related parties


96,840


87,151


Short-term bank deposits


63,143


34,305


Other current assets


2,379,186


383,964


Assets held for sale


1,526,237


-


Total current assets


10,551,378


2,289,474








Property and equipment, net


15,183,944


6,935,287


Telecommunications licenses, net


3,488,752


562,931


Goodwill


18,238,118


7,003,714


Other intangible assets, net


7,561,820


1,481,800


Software, net


1,034,869


627,330


Investments in associates


1,279,688


446,130


Due from related party


8,539


4,905


Other non-current assets


1,525,752


576,324


Total assets


58,872,861


19,927,895

Liabilities, redeemable non-controlling interest and equity






Current liabilities:






Accounts payable


4,149,840


963,450


Due to employees


267,488


108,050


Due to related parties


22,367


5,634


Accrued liabilities


1,323,825


212,323


Taxes payable


764,492


233,848


Customer advances, net of VAT


855,987


452,055


Customer deposits


66,933


33,835


Deferred income taxes


24,001


50,313


Short-term debt


1,636,640


1,162,444


Liabilities associated to assets held for sale


770,000


-


Total current liabilities


9,881,574


3,221,952








Deferred income taxes


2,414,396


688,206


Long-term debt


25,755,792


4,498,861


Other non-current liabilities


1,787,038


184,133


Total liabilities


39,838,800


8,593,152








Redeemable noncontrolling interest


528,855


522,076

Equity






Convertible voting preferred stock (0.001 US$ nominal value per share), 433,532,000 shares authorized; 433,532,000 shares issued and outstanding


434


129


Common stock (0.001 US$ nominal value per share), 2,630,639,827 shares authorized;  1,628,199,135 shares issued (December 31, 2010: 1,302,559,308);   1,618,120,527 shares outstanding (December 31, 2010: 1,292,050,700 )


1,628


1,303


Ordinary stock (0.001 US$ nominal value per share), 50,000,000 shares authorized; nil shares issued and outstanding


-


-


Additional paid-in capital


11,042,875


6,292,269


Retained earnings


5,483,596


5,153,819


Accumulated other comprehensive loss


(198,152)


(561,154)


Treasury stock, at cost, 10,078,608 shares of common stock (December 31, 2010: 10,508,608)


(219,463)


(215,763)


Total VimpelCom shareholders' equity


16,110,918


10,670,603








Noncontrolling interest


2,394,288


142,064








Total equity


18,505,206


10,812,667


Total liabilities, redeemable noncontrolling interest and equity


58,872,861


19,927,895




ATTACHMENT A: VIMPELCOM LTD FINANCIAL STATEMENTS


VIMPELCOM LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




USD (000)


Six months ended June 30,




2011


2010





Operating activities












Net cash provided by operating activities


2,235,411


1,804,243







Investing activities






Purchases of property and equipment


(1,363,017)


(380,308)


Purchases of intangible assets


(13,737)


(11,298)


Purchases of software


(104,314)


(88,587)


Proceeds from sale of property, plant and equipment


58,035


1,396


Acquisition of subsidiaries, net of cash acquired


(929,717)


171,878


Receipts from associates


12,500


-


Loan granted


-


(5,048)


Net flow from disposal of financial instruments


183,085


377,044


Loans receivable repayment / (granted)


(31,662)


22,910


Purchases of other assets, net


(15,892)


(13,216)


Net cash (used in)/provided by investing activities


(2,204,718)


74,771







Financing activities






Proceeds from bank and other loans


8,455,010


270,254


Repayments of bank and other loans


(5,806,544)


(1,158,204)


Payments of fees in respect of debt issues


(64,658)


(1,847)


Purchase of noncontrolling interest in consolidated subsidiaries


(3,775)


(2,294)


Payment of dividends


(500,397)


(2,049)


Payment of dividends to noncontrolling interest


-


(34,517)


Other (payments)/receipts, net


(198)


932


Net cash (used in)/from financing activities


2,079,439


(927,725)








Effect of exchange rate changes on cash and cash equivalents


49,670


(45,690)








Cash and cash equivalents of discontinued operations and assets held for sale at the end of the period


145,369


-








Net (decrease)/increase in cash and cash equivalents


2,305,171


905,599


Cash and cash equivalents at beginning of period


885,125


1,446,949


Cash and cash equivalents at end of period


3,190,214


2,352,548










Six months ended June 30,




2011


2010





Supplemental cash flow information






Non-cash activities:






Accounts payable for property, equipment and  other long-lived assets


847,695


214,485




ATTACHMENT B: COUNTRY UNITS KEY INDICATORS


AFRICA AND ASIA BUSINESS UNIT: COUNTRY DETAIL

ALGERIA

DZD bln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY   

Revenues


34

33

5%


66

63

5%

EBITDA


20

18

11%


39

35

11%

EBITDA margin


59.2%

56.4%



59.3%

56.2%


Capex (USD mln)


10

n.a.

n.a.


14

45

-69%

Capex / revenues (USD)


2%

n.a.

n.a.


2%

5%

-3%










Mobile









Subscribers ('000)


15,964

15,142

5%





ARPU


711

711

0%





MOU


296

279

6%








PAKISTAN

PKR bln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Revenues


25

24

2%


48

47

2%

EBITDA


10

10

2%


20

19

4%

EBITDA margin


40.2%

40.2%



40.4%

39.6%


Capex (USD mln)


52

38

37%


97

62

56%

Capex / revenues (USD)


18%

13%

5%


17%

11%

6%










Mobile









Subscribers ('000)


33,378

32,203

4%





ARPU


243

247

-2%





MOU


213

210

1%








BANGLADESH

BDT bln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Revenues


9

8

17%


18

15

23%

EBITDA


4

2

85%


7

5

41%

EBITDA margin


42.6%

27.1%



39.2%

34.4%


Capex (USD mln)


14

43

-67%


27

102

-74%

Capex / revenues (USD)


11%

38%

-27%


11%

48%

-37%










Mobile









Subscribers ('000)


20,203

16,097

26%





ARPU


153

172

-11%





MOU


211

237

-11%








SUB SAHARAN AFRICA (TELECEL GLOBE)

USD mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Revenues


24

25

-2%


49

49

0%

EBITDA


2

6

-68%


6

9

-34%

EBITDA margin


7.5%

23.2%



12.6%

19.1%











Mobile









Subscribers ('000)


2,789

2,250

24%








SEA (CONSOLIDATED)

USD mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Revenues


18

6

223%


28

10

181%

EBITDA


-37

-8

n.a.


-41

-17

n.a.

EBITDA margin


n.a.

n.a.



n.a.

n.a.











Mobile









Subscribers ('000)


1,993

525

279%








CIS BUSINESS UNIT: COUNTRY DETAIL


KAZAKHSTAN

KZT mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


29,530

27,054

9%


56,380

50,609

11%

EBITDA


14,414

15,449

-7%


28,028

28,470

-2%

EBITDA margin


48.8%

57.1%



49.7%

56.3%


Capex (USD mln)


68

26

164%


79

32

148%

Capex / revenues (USD)


34%

14%



20%

9%











Mobile









Subscribers ('000)


7,831

6,339

24%





ARPU (KZT)


1,249

1,411

-11%





MOU


144

125

15%








ARMENIA

AMD mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


17,490

17,073

2%


34,380

33,089

4%

EBITDA


6,699

7,193

-7%


12,392

14,555

-15%

EBITDA margin


38.3%

42.1%



36.0%

44.0%


Capex (USD mln)


6

4

63%


15

7

117%

Capex / revenues (USD)


13%

9%



16%

8%











Mobile









Subscribers ('000)


733

567

29%





ARPU (AMD)


3,089

3,975

-22%





MOU


263

270

-3%








UZBEKISTAN

USD mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


66

51

28%


125

97

29%

EBITDA


28

20

42%


55

40

39%

EBITDA margin


42.9%

38.9%



44.2%

41.0%


Capex (USD mln)


27

29

-7%


66

46

42%

Capex / revenues (USD)


40%

55%



53%

48%











Mobile









Subscribers ('000)


5,347

3,997

34%





ARPU (USD)


4.0

4.1

-2%





MOU


413

383

8%








TAJIKISTAN

USD mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


26

20

29%


47

35

33%

EBITDA


14

7

101%


23

11

105%

EBITDA margin


51.9%

33.3%



48.8%

31.8%


Capex (USD mln)


7

4

109%


11

4

194%

Capex / revenues (USD)


28%

17%



23%

10%











Mobile









Subscribers ('000)


870

784

11%





ARPU (USD)


9.4

6.1

54%





MOU


234

168

39%








GEORGIA

GEL mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


25

21

21%


46

40

16%

EBITDA


6

3

100%


10

5

100%

EBITDA margin


23.9%

14.4%



21.6%

12.6%


Capex (USD mln)


9

9

-4%


16

13

18%

Capex / revenues (USD)


56%

77%



58%

59%











Mobile









Subscribers ('000)


712

466

53%





ARPU (GEL)


11.4

14.5

-21%





MOU


224

141

59%








KYRGYZSTAN

KGS mln











2Q11   

2Q10   

YoY 


YTD11   

YTD10   

YoY 

Net operating revenues


1,603

1,261

27%


3,048

2,399

27%

EBITDA


847

589

44%


1,656

1,015

63%

EBITDA margin


52.8%

46.7%



54.3%

42.3%


Capex (USD mln)


15

0.2

nm


19

1

nm

Capex / revenues (USD)


43%

1%



29%

2%











Mobile









Subscribers ('000)


2,102

1,722

22%





ARPU (KGS)


261

240

9%





MOU


319

236

35%








ATTACHMENT C: RECONCILIATION TABLES


RECONCILIATION OF CONSOLIDATED EBITDA OF VIMPELCOM*

USD mln


Pro forma



2Q11  

2Q10  


YTD 2011  

YTD 2010  















EBITDA


2,371

2,368


4,628

4,583








Adjustment for certain non-operating items


8

3


10

5

Depreciation


(892)

(722)


(1,731)

(1,474)

Amortization


(342)

(379)


(700)

(765)

Impairment loss



(9)


23

(15)








Operating income


1,145

1,260


2,230

2,333








Adjustment for certain non-operating items


(8)

(3)


(10)

(5)








EBIT


1,137

1,257


2,220

2,329








Financial income and expenses


(486)

(448)


(971)

(1,028)

- including interest income


38

66


74

95

- including interest expense


(524)

(514)


(1,045)

(1,123)

Net foreign exchange (loss)/gain and others


(120)

(493)


77

(416)

- including net foreign exchange (loss)/gain


1

(299)


210

(199)








- including equity in net (loss)/gain of associates


(14)

(22)


12

(61)

- including other (expense)/income, net


(114)

(175)


(155)

(162)

- including adjustment for certain non-operating items


8

3


10

5








EBT


531

316


1,327

884








Income tax expense


(226)

(170)


(418)

(425)








Profit (loss) from discontinued operations


-

-


-

-








Net income


305

146


909

458








Net (loss)/income attributable to the noncontrolling interest


(7)

(73)


33

(42)








Net Income attributable to VimpelCom Ltd.


312

219


875

501


*See also the supplementary file FactbookQ22011.xls on our website at http://vimpelcom.com/ir/financials/results.wbp




ATTACHMENT C: RECONCILIATION TABLES


RECONCILIATION OF CONSOLIDATED EBITDA OF VIMPELCOM* (CONTINUED)

USD mln


Actual



2Q11  

2Q10  


YTD 2011  

YTD 2010  















EBITDA


2,184

1,260


3,391

2,300








Adjustment for certain non-operating items


8

2


10

3

Depreciation


(829)

(377)


(1,305)

(729)

Amortization


(292)

(117)


(393)

(183)

Impairment loss



-



-








Operating income


1,070

769


1,703

1,391








Adjustment for certain non-operating items


(8)

(2)


(10)

(3)








EBIT


1,062

766


1,693

1,388








Financial income and expenses


(449)

(116)


(569)

(246)

- including interest income


20

16


35

28

- including interest expense


(469)

(132)


(604)

(274)

Net foreign exchange (loss)/gain and others


(134)

(123)


58

(70)

- including net foreign exchange (loss)/gain


(26)

(126)


114

(21)








- including equity in net (loss)/gain of associates


(9)

11


46

7

- including other (expense)/income, net


(107)

(10)


(112)

(58)

- including adjustment for certain non-operating items


8

2


10

3








EBT


479

527


1,182

1,072








Income tax expense


(207)

(178)


(301)

(331)








Profit (loss) from discontinued operations


3

-


3

-








Net income


276

349


885

741








Net (loss)/income attributable to the noncontrolling interest


37

14


56

25








Net Income attributable to VimpelCom Ltd.


239

335


829

716


*See also the supplementary file FactbookQ22011.xls on our website at http://vimpelcom.com/ir/financials/results.wbp




ATTACHMENT C: RECONCILIATION TABLES


RECONCILIATION OF VIMPELCOM CONSOLIDATED NET DEBT

USD mln


2Q10  

3Q10  

4Q10  


1Q11  

2Q11  

Net debt


3,865

3,970

4,740


4,840

24,104

Cash and cash equivalents


(2,353)

(2,467)

(885)


(1,858)

(3,190)

Long - term and short-term deposits


(115)

(56)

(36)


(592)

(99)

Long - term debt


4,801

4,367

4,499


6,047

25,756

Short-term debt


1,532

2,126

1,162


1,243

1,637




AVERAGE RATES OF FUNCTIONAL CURRENCIES TO USD*



Average rates


Closing rates



YTD11   

YTD10   

YoY 


YTD11   

FY2010   

Delta 

Russian Ruble


28.62

30.07

5.1%


28.08

30.48

8.5%

Euro


1.40

1.32

-6.2%


1.45

1.34

-7.5%

Algerian Dinar


72.47

74.19

2.4%


72.06

74.29

3.1%

Pakistan Rupee


85.40

84.81

-0.7%


85.97

85.67

-0.4%

Bangladeshi Taka


72.37

69.66

-3.7%


74.15

70.60

-4.8%

Vietnamese Dong


20,409

-

n/a


20,618

-

n/a

Lao Kip


8,042

-

n/a


8,011

-

n/a

Ukrainian Hryvnia


7.96

7.95

-0.1%


7.97

7.96

-0.1%

Kazakh Tenge


146.00

147.24

0.8%


146.25

147.40

0.8%

Armenian Dram


370.09

384.32

3.8%


368.86

363.44

-1.5%

Georgian Lari


1.71

1.76

2.9%


1.67

1.77

6.0%

Kyrgyz Som


46.79

45.18

-3.4%


45.21

47.10

4.2%

*Functional currencies in Tajikistan, Uzbekistan and Cambodia are US dollars.



ATTACHMENT D: WIND TELECOMUNICAZIONI S.P.A. CONDENSED STATEMENTS OF INCOME

EUR mln


H1 2011   

H1 2010   

Change  

Revenue


2,707

2,645

2.3%

Other revenue


43

61

-29.2%

Total Revenue


2,750

2,706

1.6%

EBITDA


1,023

1,039

-1.6%

D&A


(508)

(490)

-3.8%

EBIT


514

549

-6.3%

Financial Income and expenses


(406)

(468)

13.4%

EBT


109

81

34.5%

Income Tax


(88)

(81)

-9.2%

Profit/(Loss) from discontinued operations


6

17

-65.1%

Net income


26

16

58.5%




ATTACHMENT E: DEFINITIONS

EBITDA is a non-U.S. GAAP financial measure. EBITDA is defined as earnings before interest, tax, depreciation and amortization. VimpelCom calculates EBITDA as operating income before depreciation, amortization and impairment loss and includes certain non-operating losses and gains mainly represented by litigation provisions for all of its Business Units except for its Russia Business Unit. The Russia Business Unit's EBITDA is calculated as operating income before depreciation and amortization. EBITDA should not be considered in isolation or as a substitute for analyses of the results as reported under U.S. GAAP. Historically our management used OIBDA (defined as operating income before depreciation, amortization and impairment losses) instead of EBITDA. Following the acquisition of Wind Telecom, our management concluded that EBITDA is a more appropriate measure because it is more widely used amongst European-based analysts and investors to assess the performance of an entity and compare it with other market players. Our management uses EBITDA and EBITDA margin as supplemental performance measures and believes that EBITDA and EBITDA margin provide useful information to investors because they are indicators of the strength and performance of the Company's business operations, including its ability to fund discretionary spending, such as capital expenditures, acquisitions and other investments, as well as indicating its ability to incur and service debt. In addition, the components of EBITDA include the key revenue and expense items for which the Company's operating managers are responsible and upon which their performance is evaluated. EBITDA also assists management and investors by increasing the comparability of the Company's performance against the performance of other telecommunications companies that provide EBITDA information. This increased comparability is achieved by excluding the potentially inconsistent effects between periods or companies of depreciation, amortization and impairment losses, which items may significantly affect operating income between periods. However, our EBITDA results may not be directly comparable to other companies' reported EBITDA results due to variances and adjustments in the components of EBITDA (including our calculation of EBITDA) or calculation measures. Additionally, a limitation of EBITDA's use as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues or the need to replace capital equipment over time. Reconciliation of EBITDA to net income attributable to VimpelCom Ltd., the most directly comparable U.S. GAAP financial measure, is presented above.

EBITDA margin is calculated as EBITDA divided by net operating revenues, expressed as a percentage.

EBIT is a non-U.S. GAAP measure and is calculated as EBITDA plus depreciation, amortization and impairment loss. Our management uses EBIT as a supplemental performance measure and believes that it provides useful information of earnings of the Company before making accruals for financial income and expenses and Net foreign exchange (loss)/gain and others. Reconciliation of EBIT to net income attributable to VimpelCom Ltd., the most directly comparable U.S. GAAP financial measure, is presented above.

Net foreign exchange (loss)/gain and others represents the sum of Net foreign exchange (loss)/gain, Equity in net (loss)/gain of associates and Other (expense)/income, net (primarily losses from derivative instruments), and is adjusted for certain non-operating losses and gains mainly represented by litigation provisions. Our management uses Net foreign exchange (loss)/gain and others as a supplemental performance measure and believes that it provides useful information about the impact of our debt denominated in foreign currencies on our results of operations due to fluctuations in exchange rates, the performance of our equity investees and other losses and gains the Company needs to manage to run the business.

EBT is a non-U.S. GAAP measure and is calculated as EBIT minus Financial income and expenses (which is calculated by subtracting interest income from interest expense) and Net foreign exchange (loss)/gain and others. Our management uses EBT as a supplemental performance measure and believes that it provides useful information about earnings of the Company before making accruals for income tax expenses. Reconciliation of EBT to net income attributable to VimpelCom Ltd., the most directly comparable U.S. GAAP financial measure, is presented above.

ARPU (Monthly Average Revenue per User) is calculated by dividing service revenue during the relevant period, including revenue from voice-, roaming-, interconnect-, and value added services (including mobile data, SMS, MMS), but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of subscribers during the period and dividing by the number of months in that period. For business unit Africa and Asia (except SEA) visitors roaming revenue is excluded from service revenues.

Broadband subscribers are the customer contracts that served as a basis for revenue generating activity in the three months prior to the measurement date, as a result of activities including monthly internet access using FTTB and xDSL technologies as well as mobile internet access via WiFi and USB modems using 3G/HSDPA technologies. Our Italian subsidiary measures broadband subscribers based on the number of active contracts signed.

Capital expenditures (Capex), purchases of new equipment, new construction, upgrades, software, other long lived assets and related reasonable costs incurred prior to intended use of the non current asset, accounted at the earliest event of advance payment or delivery. Long-lived assets acquired in business combinations are not included in capital expenditures.

Households passed are households located within buildings, in which indoor installation of all the FTTB equipment necessary to install terminal residential equipment has been completed.

Mobile subscribers are SIM-cards registered in the system as of a measurement date, users of which generated revenue at any time during the three months prior to the measurement date. This includes revenue coming from any incoming and outgoing calls, subscription fee accruals, debits related to service, outgoing SMS, Multimedia Messaging Service (referred to as MMS), data transmission and receipt sessions, but does not include incoming SMS and MMS sent by VimpelCom or abandoned calls. VimpelCom's total number of mobile subscribers also includes SIM-cards for use of mobile Internet service via USB modems and subscribers for WiFi. The number for Italy is based on SIM-cards, users of which generated revenue at any time during the twelve months prior to the measurement date. For the purpose of this earnings release, we include all subscribers of Zimbabwe, which is accounted for as investment at cost, into business unit Africa and Asia and subscribers of all our Canada equity investee into business unit Europe and North America, both of which are included into total subscribers of VimpelCom.

MOU (Monthly Average Minutes of Use per User) is calculated by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile subscribers during the period and dividing by the number of months in that period.

Net debt is a non-U.S. GAAP financial measure and is calculated as the sum of interest bearing long-term debt and short-term debt minus cash and cash equivalents and long-term and short-term deposits. The Company believes that net debt provides useful information to investors because it shows the amount of debt outstanding to be paid after using available cash and cash equivalent and long-term and short-term deposits. Net debt should not be considered in isolation as an alternative to long-term debt and short-term debt, or any other measure of the company financial position. Reconciliation of net debt to long-term debt and short-term debt, the most directly comparable U.S. GAAP financial measures, is presented below in the reconciliation tables section.

Reportable segments, the Company identified Russia, Europe and North America, Africa and Asia, CIS and Ukraine based on the business activities in different geographical areas. Although Georgia is no longer a member of the CIS, consistent with VimpelCom's historic reporting practice VimpelCom continues to include Georgia in its CIS reporting segment. Intersegment revenues are eliminated in consolidation.

SOURCE VimpelCom Ltd



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