2014

VimpelCom Ltd Announces Second Quarter 2010 Operating and Financial Results

AMSTERDAM and NEW YORK, Sept. 2 /PRNewswire-FirstCall/ -- "VimpelCom Ltd" ("VimpelCom" or the "Company") (NYSE: VIP), a leading international provider of telecommunications services, today announced its operating and financial results for the quarter ended June 30, 2010.

Quarterly highlights:

  • Combination of OJSC VimpelCom and Kyivstar into VimpelCom Ltd. completed April 21, 2010*
  • Number of mobile subscriptions up to 89.4 million; broadband subscriptions grew to 2.7 million
  • Net operating revenues increased by 23% year-on-year to $2.64 billion
  • Adjusted OIBDA** reached $1.26 billion, consolidated OIBDA margin comprised 47.8%
  • Net income attributable to VimpelCom was $334.7 million
  • Operating cash flow amounted to $1.0 billion

*  On April 21, 2010, following the successful completion of VimpelCom's exchange offer for common and American depositary shares of OJSC VimpelCom, VimpelCom's two strategic shareholders completed the acquisition of OJSC VimpelCom and Kyivstar by VimpelCom Ltd. This transaction was accounted for as the acquisition of Kyivstar by VimpelCom Ltd., an accounting successor of OJSC VimpelCom. Therefore, the financial results of Kyivstar have been included in the consolidated financial results of the Company since April 21, 2010. The financial results for the periods prior to April 21, 2010 represent the historical financial results of OJSC VimpelCom.

** Hereafter Adjusted OIBDA is referred to as OIBDA and Adjusted OIBDA margin is referred to as OIBDA margin (See definitions of Adjusted OIBDA and Adjusted OIBDA margin in Attachment A)

Consolidated Financial Results*


CONSOLIDATED OPERATIONS  (US$, millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

2,641.6

2,145.5

23.1%

2,231.1

18.4%

Adjusted OIBDA

1,261.8

1,087.6

16.0%

1,041.2

21.2%

Adjusted OIBDA margin, %

47.8%

50.7%


46.7%


SG&A

766.4

573.5

33.6%

643.3

19.1%

 including HQ cost**

19.9

n/a


10.8

84.3%

SG&A percentage

29.0%

26.7%


28.8%


Net income attributable to VimpelCom Ltd.

334.7

700.5

-52.2%

381.5

-12.3%

Net income attributable to VimpelCom Ltd. per ADS, basic (US$)

0.28

0.69


0.38


Operating cash flow

1,000.9

859.6

16.4%

803.3

24.6%

Capital expenditures

381.4

155.3

145.6%

179.3

112.7%

ROCE, %

22.7%

20.2%


24.3%



*  Please see the consolidated results on a pro-forma basis in the Attachment G.
** Includes $12.2 and $8.5 million Kyivstar transaction related costs for 2Q10 and 1Q10, respectively.




Commenting on the results, VimpelCom's Chief Executive Officer, Alexander Izosimov, said, "Our second quarter results show positive dynamics, reflecting economic recovery in major markets and seasonal trends. Revenues increased substantially as a result of both Kyivstar consolidation and strong organic growth across all key segments of our business. The mobile segment in Russia delivered its highest ever quarterly ruble revenues. Quarterly revenue and margin dynamics in Ukraine improved substantially on a like-for-like basis. In Kazakhstan, our largest market in the CIS segment, the strong quarterly results also reflect the macroeconomic recovery."

Mr. Izosimov continued, "During the last few months we made substantial progress from an organizational standpoint. We streamlined our structure, forming four operating segments – Russia, Ukraine, CIS and South-East Asia – with new lean headquarters in Amsterdam. This will allow the operating companies to focus on business development in their markets, while benefiting from being part of a global enterprise. We also strengthened our management team with Henk van Dalen joining us as our Chief Financial Officer.

Although return on capital employed has been growing during the previous two quarters the consolidation of Kyivstar brought in additional equity and goodwill affecting the ratio in the second quarter 2010. We aim to maintain ROCE at our targeted level of above 20%.

We see significant opportunities for growth in our core markets and we clearly understand the challenges. We are confident in our ability to take advantage of these opportunities to deliver value to our shareholders."

Russia - Financial and Operating Results

The Russian economy continues to demonstrate signs of recovery as indicated by major macroeconomic parameters. Healthy demand supported by seasonal trends helped us to grow revenues quarter-on-quarter across all of our business segments, including the fixed-line business.

  • In the mobile segment:
    • Increase in usage, coupled with stable pricing, led to a quarterly increase in ARPU of 7.2%
    • Mobile data traffic through USB modems increased more than threefold year-on-year, generating revenue growth of 69%  
    • Mobile OIBDA margin remains strong above 50%
  • In the fixed-line segment:
    • Business segment revenues returned to growth after four quarters of negative dynamics despite competitive pricing pressure
    • Number of broadband subscriptions up to 1.2 million, a 33.8% increase year-on-year
    • Broadband revenues up 23.8% year-on-year to 1.3 billion rubles

The Company substantially stepped up investments as the Russian telecom market resumed its growth. We continue to focus on the efficiency of our investments, aiming to maintain ROIC at above 30%. The organizational adjustments within the new corporate structure have been completed. The management team, led by Elena Shmatova, will focus on capturing re-emerging growth to ensure superior returns for our shareholders.


RUSSIA (RUR millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

61,738

59,136

4.4%

57,350

7.7%

Adjusted OIBDA

29,114

30,440

-4.4%

27,236

6.9%

Adjusted OIBDA margin, %

47.2%

51.5%


47.5%


SG&A

16,891

15,253

10.7%

15,664

7.8%

 including Sales & Marketing Expenses

5,594

4,726

18.4%

4,966

12.6%

 including General & Administrative Costs

11,297

10,527

7.3%

10,698

5.6%

SG&A percentage

27.4%

25.8%


27.3%


Net income attributable to VimpelCom Ltd.

9,962

22,295

-55.3%

11,708

-14.9%

Capital expenditures

7,364

3,450

113.4%

3,709

98.5%

Free cash flow

11,731

28,557

-58.9%

17,584

-33.3%

ROIC, %

33.0%

26.5%


33.0%






RUSSIA REVENUES*
(RUR millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

61,738

59,136

4.4%

57,350

7.7%

Mobile

51,825

49,231

5.3%

47,882

8.2%

Fixed-line

9,913

9,905

0.1%

9,468

4.7%

Business segment

4,614

5,278

-12.6%

4,479

3.0%

Wholesale

3,668

3,214

14.1%

3,391

8.2%

Residential

1,631

1,413

15.4%

1,598

2.1%





RUSSIA OIBDA DEVELOPMENT*
(RUR millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA Total

29,114

30,440

-4.4%

27,236

6.9%

Mobile

26,437

27,052

-2.3%

24,524

7.8%

Fixed-line

2,677

3,388

-21.0%

2,712

-1.3%

Adjusted Total OIBDA margin, %

47.2%

51.5%


47.5%


Mobile, %

51.0%

54.9%


51.2%


Fixed-line, %

27.0%

34.2%


28.6%






RUSSIA OPERATING DEVELOPMENT

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile operations






Subscriptions  ('000)

50,912

49,971

1.9%

51,254

-0.7%

including mobile broadband subscriptions

1,300

763

70.4%

1,168

11.3%

MOU, min

219.3

211.8

3.5%

203.9

7.6%

Adjusted MOU**, min

224.1

214.5

4.5%

208.4

7.5%

ARPU, RUR

329.9

322.8

2.2%

307.7

7.2%

ARPU, US$

10.9

10.1

7.9%

10.3

5.8%

Fixed-line operations






Broadband subscriptions ('000)

1,199

896

33.8%

1,167

2.7%

Broadband ARPU, RUR

358.8

392.0

-8.5%

394.7

-9.1%

Broadband ARPU, US$

11.9

12.2

-2.5%

13.2

-9.8%


*  Mobile and fixed revenues for all periods were recalculated; see definition of reportable segments in Attachment A.
** Adjusted MOU is calculated for mobile subscriptions excluding mobile broadband subscriptions using USB modems.




Ukraine Financial and Operating Results*

In Ukraine, we see improvement in the macroeconomic situation. During the second quarter, we observed less competitive pricing pressure in the mobile segment of the Ukrainian telecom market, which partly helped to offset the negative effect from declining mobile termination rates.

  • In the mobile segment (on a pro-forma basis):
    • Our marketing activities focused on the price sensitive segment resulting in stabilization of our active customer base  
    • ARPU increased quarter-on-quarter by 8.8% driven by further increase in usage, seasonal trends and changes in revenue mix
    • Mobile OIBDA margin was up to 55.1% with substantial improvements in Kyivstar's operational performance
  • In the fixed-line segment (on a pro-forma basis):
    • Revenues increased 2.9% year-on-year and 1.4% quarter-on-quarter
    • OIBDA margin decreased to 34.3%, reflecting higher wholesale revenues
    • Substantial ongoing investments in FTTB to support strong broadband revenue growth

Overall, despite the current positive signs, market uncertainty remains due to ongoing regulatory changes and the dynamic competitive situation. We continue to monitor the market and are ready to take all necessary steps to sustain our leadership position.

* Ukraine reporting segment includes operations of Kyivstar, URS and GTI.


UKRAINE PRO-FORMA (UAH millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

3,071

3,123

-1.7%

2,854

7.6%

Adjusted OIBDA

1,663

1,706

-2.5%

1,410

17.9%

Adjusted OIBDA margin, %

54.2%

54.6%


49.4%


SG&A

854

867

-1.5%

906

-5.7%

 including Sales & Marketing Expenses

165

175

-5.7%

160

3.1%

 including General & Administrative Costs

689

692

-0.4%

746

-7.6%

SG&A percentage

27.8%

27.8%


31.7%


Net income attributable to VimpelCom Ltd.

339

442

-23.3%

187

81.3%

Capital expenditures

538

304

77.0%

480

12.1%

Free cash flow

868

1,370

-36.6%

779

11.4%





UKRAINE ACTUAL (UAH millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

2,461.3

390.4

530.5%

359.2

585.2%

Adjusted OIBDA Total

1,304.4

76.4

1607.3%

80.7

1516.4%

Net income/(loss) attributable to VimpelCom Ltd.

236.1

-81.5

n/a

-62.4

n/a





UKRAINE PRO-FORMA REVENUES (UAH millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

3,071

3,123

-1.7%

2,854

7.6%

Mobile

2,928

2,984

-1.9%

2,713

7.9%

Fixed-line

143

139

2.9%

141

1.4%

Business segment

73

79

-7.6%

74

-1.4%

Wholesale

47

48

-2.1%

47

0.0%

Residential

23

12

91.7%

20

15.0%





UKRAINE PRO-FORMA OIBDA DEVELOPMENT (UAH millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA Total

1,663

1,706

-2.5%

1,410

17.9%

Mobile

1,614

1,659

-2.7%

1,359

18.8%

Fixed-line

49

47

4.3%

51

-3.9%

Adjusted Total OIBDA margin, %

54.2%

54.6%


49.4%


Mobile, %

55.1%

55.6%


50.1%


Fixed-line, %

34.3%

33.8%


36.2%






UKRAINE PRO-FORMA OPERATING DEVELOPMENT

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile operations






Subscriptions  ('000)

24,059

24,158

-0.4%

23,885

0.7%

MOU, min

426.7

296.2

44.1%

406.3

5.0%

ARPU mobile, UAH

39.7

40.2

-1.2%

36.5

8.8%

ARPU mobile, US$

5.0

5.3

-5.7%

4.6

8.7%

Fixed-line operations






Broadband subscriptions ('000)

164

53

209.4%

134

22.4%

Broadband ARPU, UAH

42.8

62.0

-31.0%

49.8

-14.1%

Broadband ARPU, US$

5.4

8.1

-33.3%

6.2

-12.9%




CIS - Financial and Operating Results*

Quarterly highlights:

In the CIS, we achieved considerable organic revenue growth both on a year-on-year and quarter-on-quarter basis. Consolidation of operations in Kyrgyzstan further improved our top line. The results from our largest CIS market, Kazakhstan, have shown very strong dynamics, with robust revenue growth and increased OIBDA margin.

  • In Kazakhstan, over 14% revenue growth in local currency both year-on-year and quarter-on-quarter, reflecting signs of economic recovery after more than two years of macroeconomic downturn
  • Consolidated OIBDA margin remains strong in the targeted level of high 40's  
  • Total number of broadband subscriptions increased 141% year-on-year as we continue to actively develop our broadband projects in Kazakhstan, Uzbekistan and Armenia
  • Capex for the CIS markets increased substantially both year-on-year and quarter-on-quarter to support our 2G and 3G rollout, affecting free cash flow

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


CIS OPERATIONS (US$ millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

336.2

280.1

20.0%

294.8

14.0%

Adjusted OIBDA

161.9

138.7

16.7%

139.6

16.0%

Adjusted OIBDA margin, %

48.2%

49.5%


47.4%


SG&A

90.1

72.5

24.3%

79.1

13.9%

 including Sales & Marketing Expenses

21.4

15.8

35.4%

18.2

17.6%

 including General & Administrative Costs

68.7

56.7

21.2%

60.9

12.8%

SG&A percentage

26.8%

25.9%


26.8%


Net income attributable to VimpelCom Ltd.

28.4

32.9

-13.7%

27.1

4.8%

Capital expenditures

70.6

21.7

225.3%

32.3

118.6%

Free cash flow

37.5

85.0

-55.9%

75.4

-50.3%

ROIC, %

10.1%

12.1%


9.3%


Mobile subscriptions ('000)

13,875

11,692

18.7%

13,125

5.7%

including mobile broadband subscriptions

17

-

n/a

15

13.3%

Broadband fixed-line subscriptions ('000)

65

27

140.7%

44

47.7%




South-East Asia – Overview

We continue developing our operations in South-East Asia and remain optimistic regarding the market potential in this region.

  • Our business in Cambodia continues to grow and after the first year of operations we became the 3rd largest player in a nine-player market
  • While our network in Vietnam covers approximately 60% of the population, we had to temporarily slow down further development as we and our JV partner determine the optimal way to finance the expansion of our Vietnamese operations


SEA (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating mobile revenues

5.5

0.9

511.1%

4.4

25.0%

Adjusted mobile OIBDA  

-8.1

-8.5

n/a

-8.6

n/a




For more information on financial and operating data for specific countries, as well as reconciliation of OIBDA, please refer to the supplementary file FinancialOperatingQ22010.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.

The Company's management will discuss its second quarter 2010 results during a conference call and slide presentation on September 2, 2010 at 4:30 pm CET, (10:30 am US ET). The call and slide presentation may be accessed via webcast at the following URL address http://www.vimpelcom.com. The conference call replay will be available through September 9, 2010. The slide presentation webcast will also be available for download on VimpelCom's website http://www.vimpelcom.com.

VimpelCom consists of telecommunications operators providing voice and data services through a range of wireless, fixed and broadband technologies. The VimpelCom group is headquartered in Amsterdam and has operations in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Georgia, Armenia, Kyrgyzstan, Vietnam and Cambodia, covering territory with a total population of about 345 million. VimpelCom operating companies provide services under the "Beeline" and "Kyivstar" brands. VimpelCom's ADSs are listed on the New York Stock Exchange under the symbol "VIP".  

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 expected growth and development of our 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 its Ukrainian operations and other newly-acquired businesses and other factors. 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 registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (the "SEC"), OJSC VimpelCom's public filings with the SEC, including its Annual Report on Form 20-F for the year ended December 31, 2009, 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.

- Definitions and tables are attached –

Attachment A: Definitions

Adjusted OIBDA is a non-U.S. GAAP financial measure. Adjusted OIBDA, previously referred to as EBITDA or OIBDA by OJSC VimpelCom, is defined as operating income before depreciation, amortization and impairment loss.  Our management uses adjusted OIBDA and adjusted OIBDA margin as supplemental performance measures and believes that adjusted OIBDA and adjusted OIBDA 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 adjusted OIBDA include the key revenue and expense items for which the Company's operating managers are responsible and upon which their performance is evaluated.  Adjusted OIBDA also assists management and investors by increasing the comparability of the Company's performance against the performance of other telecommunications companies that provide OIBDA or EBITDA (earnings before interest, taxes, depreciation and amortization) information. This increased comparability is achieved by excluding the potentially inconsistent effects between periods or companies of depreciation, amortization and impairment loss, which items may significantly affect operating income between periods. However, our  adjusted OIBDA results may not be directly comparable to other companies' reported OIBDA or EBITDA results due to variances and adjustments in the components of OIBDA (including our calculation of adjusted OIBDA) or calculation measures.  Additionally, a limitation of adjusted OIBDA'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 adjusted OIBDA to net income, the most directly comparable U.S. GAAP financial measure, is presented below in the reconciliation tables section as well as in the supplementary file FinancialOperatingQ22010.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.

Adjusted OIBDA margin is a non-U.S. GAAP financial measure.  We calculate adjusted OIBDA margin as adjusted OIBDA divided by net operating revenues, expressed as a percentage.  Reconciliation of adjusted OIBDA margin to net income as a percentage of net operating revenues, the most directly comparable U.S. GAAP financial measure, is presented below in the reconciliation tables section as well as in the supplementary file FinancialOperatingQ12010.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.

ARPU (Monthly Average Revenue per User) is calculated by dividing service revenue during the relevant period, including roaming revenue and interconnect revenue, but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of subscriptions during the period and dividing by the number of months in that period.

Broadband subscriptions 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, xDSL and WiFi technologies as well as mobile internet access  via USB modems using 3G/HSDPA technologies.

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.

CIS Geographic Segment for the purpose of VimpelCom's reporting includes our operations in the following countries: Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, Armenia and Georgia. Starting from the second quarter 2010 OJSC VimpelCom's operation in Ukraine was included into a separate reporting segment together with Kyivstar and reported on a pro-forma basis for all periods starting from the first quarter of 2010.

Free cash flow is a non-U.S. GAAP financial measure and is calculated as net income plus depreciation and amortization minus capital expenditures for the reported period (a quarter or a year, respectively). The Company believes that free cash flow provides useful information to investors because it is an indicator of our company's operational and financial performance and represents our ability to generate cash to maintain or expand our asset base. The Company also refers to free cash flow in determining its dividends. Free cash flow should not be considered in isolation as an alternative to operating cash flow or any other measure of the company's cash flows management. Reconciliation of free cash flow to net income, the most directly comparable U.S. GAAP financial measure, is presented below in the reconciliation tables section (Attachment C).

General and administrative costs (G&A) include salaries and outsourcing costs, including related social contributions required by law; stock price-based compensation expenses; repair and maintenance expenses; rent, including lease payments for base station sites; utilities; other miscellaneous expenses, such as insurance, operating taxes, license fees, and accounting, audit and legal fees.

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.

SEA Geographic segment – VimpelCom's operations in South-East Asia, which include operations in Cambodia and  VimpelCom's respective equity in net results of operations of its Vietnamese associate entity GTEL-Mobile JSC ("GTEL-Mobile").

Mobile subscriptions 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 subscriptions also includes SIM-cards for use of mobile Internet service via USB modems.

Mobile services are wireless voice and data transmission services excluding WiFi.

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 subscriptions 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 long-term debt and short-term debt minus cash and cash equivalents. 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, as well as short-term investments. 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 mobile, Russia fixed-line, CIS mobile, CIS fixed-line, Ukraine mobile, Ukraine fixed-line and Asia mobile reporting segments 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. Mobile lines include activities for the providing of wireless telecommunication services to the Company's subscribers; fixed-line includes all activities for providing wireline telecommunication services, broadband and consumer Internet. Revenues and expenses are shown net of intercompany transactions within one geographical segment. Intersegment revenues and expenses between different geographical segments are eliminated at the consolidated level. Starting second quarter of 2010 VimpelCom also started to consider VimpelCom's respective equities in net results of operations of the Company's associates Morefront Holdings Ltd. and GTEL-Mobile as part of operations of Russia mobile and Asia mobile reporting segments, respectively, as well as VimpelCom's DVB-T and DVB-H activities were allocated to Russia fixed-line and Russia mobile segments, respectively. The comparative information was retrospectively adjusted.

ROCE is a non-U.S. GAAP financial measure and is calculated as operating income for the last twelve months divided by the sum of net debt, total equity and redeemable noncontrolling interest calculated as an average of the quarter-end balances for the last four quarters. The Company believes that ROCE (return on capital employed) provides useful information to management of our company and investors because it is an indicator of our company's operational performance and represents a return on employed capital at the end of each reported period. Calculation of ROCE on the basis of U.S. GAAP financial measures is presented in the reconciliation tables section below (Attachment C).

ROIC is a non-U.S. GAAP financial measure and is calculated as operating income for the last twelve months divided by the sum of property and equipment, licenses, intangible assets, goodwill, software and frequency permissions as reflected on the balance sheet as of the end of the period. The Company believes that ROIC (return on invested capital) provides useful information to management of our company because it is an indicator of our company's operational performance and provides a useful indication of how profitably our company used its resources in each reportable segment over the reported period. Calculation of ROIC on the basis of U.S. GAAP financial measures is presented below in the reconciliation tables section below (Attachment C).

Sales and marketing costs (S&M) include marketing, advertising and dealer commissions expenses.

Ukraine segment – Due to change in the reporting structure of VimpelCom and in line with intentions made public by the Company in the previous quarter, Ukraine was considered to be a separate reporting segment apart from the CIS and includes the operations of VimpelCom's indirect Ukrainian subsidiaries Closed Joint Stock Company "Ukrainian Radio Systems" ("URS") and "Golden Telecom" Limited Liability Company ("GT LLC")), as well as Kyivstar.

VAS (value added services) includes short messages ("SMS"), multimedia messages ("MMS"), caller number identification, call waiting, data transmission, mobile Internet, downloadable content and other services.

Voice revenue – for the purpose of press-release voice revenue includes voice revenue generated by our subscribers, roaming revenues generated by our subscribers and guest roamers and interconnect revenue. In our annual report and annual report on Form 20-F we report each of these types of revenues separately.

Attachment B: VimpelCom Ltd financial statements


VimpelCom Ltd Unaudited Condensed Consolidated Statements of Income



Three months ended June 30,

Six months ended June 30,


2010

2009

2010

2009


(In thousands of US dollars, except share amounts)

Operating revenues:





Service revenues

$2,584,855

$2,109,735

$4,787,484

$4,052,496

Sales of equipment and accessories

44,539

32,188

71,118

60,868

Other revenues

12,240

5,335

14,160

9,171

Total operating revenues

2,641,634

2,147,258

4,872,762

4,122,535






Revenue based tax

-

(1,754)

-

(4,016)

Net operating revenues

2,641,634

2,145,504

4,872,762

4,118,519






Operating expenses:





Service costs

553,022

442,290

1,054,610

882,527

Cost of equipment and accessories

47,879

30,022

74,229

58,688

Selling, general and administrative expenses

766,416

573,471

1,409,713

1,111,012

Depreciation

376,648

325,525

729,201

634,162

Amortization

116,544

70,182

183,238

142,783

Provision for doubtful accounts

12,485

12,139

31,129

30,000

Total operating expenses

1,872,994

1,453,629

3,482,120

2,859,172






Operating income

768,640

691,875

1,390,642

1,259,347






Other income and expenses:





Interest income

16,079

18,791

27,625

33,604

Net foreign exchange (loss)/gain

(126,393)

324,056

(21,459)

(421,707)

Interest expense

(132,264)

(140,616)

(273,924)

(278,009)

Equity in net gain/(loss) of associates

11,088

4,697

7,304

(30,615)

Other (expenses)/income, net

(10,011)

555

(58,356)

(4,918)

Total other income and expenses

(241,501)

207,483

(318,810)

(701,645)






Income before income taxes

527,139

899,358

1,071,832

557,702






Income tax expense

177,958

191,429

331,007

157,329






Net income

349,181

707,929

740,825

400,373

Net income/(loss) attributable to the noncontrolling interest

14,441

7,404

24,607

(3,520)

Net income attributable to VimpelCom

$334,740

$700,525

$716,218

$403,893






Basic EPS :





Net income attributable to VimpelCom per common share restated

$0.28

$0.69

$0.65

$0.38

Weighted average common shares outstanding (thousand)

1,227,320

1,012,449

1,121,394

1,012,399






Diluted EPS :





Net income attributable to VimpelCom per common share restated

$0.28

$0.69

$0.65

$0.38

Weighted average diluted shares (thousand)

1,227,780

1,013,001

1,121,991

1,012,505




VimpelCom Ltd Unaudited Condensed Consolidated Balance Sheets



June 30,

December 31,


2010

2009


(In thousands of US dollars, except share amounts)

Assets



Current assets:



Cash and cash equivalents

$  2,352,548

$       1,446,949

Trade accounts receivable, net of allowance for doubtful accounts

516,272

392,365

Inventory

76,507

61,919

Deferred income taxes

109,189

91,493

Input value added tax

128,417

96,994

Due from related parties

146,483

249,631

Other current assets

381,545

627,257

Total current assets

3,710,961

2,966,608




Property and equipment, net

6,256,237

5,561,569

Telecommunications licenses, net

619,162

542,597

Goodwill

6,960,840

3,284,293

Other intangible assets, net

1,594,323

700,365

Software, net

577,443

448,255

Investments in associates

425,726

436,767

Other assets

798,652

792,087

Total assets

$20,943,344

$     14,732,541




Liabilities, redeemable noncontrolling interest and equity



Current liabilities:



Accounts payable

$    690,168

$          545,690

Due to employees

151,381

113,368

Due to related parties

4,421

9,211

Accrued liabilities

863,482

315,666

Taxes payable

344,586

212,767

Customer advances, net of VAT

362,472

376,121

Customer deposits

27,135

28,386

Short-term debt

1,531,937

1,813,141

Total current liabilities

3,975,582

3,414,350




Deferred income taxes

830,195

596,472

Long-term debt

4,800,701

5,539,906

Other non-current liabilities

177,199

164,636

Commitments, contingencies and uncertainties

-

-

Total liabilities

9,783,677

9,715,364




Redeemable noncontrolling interest

515,273

508,668

Equity:



Convertible voting preferred stock (0.001 US$ nominal value per share), 200,000,000 shares authorized; 128,532,000 shares issued and outstanding

129

129

Common stock (0.001 US$ nominal value per share), 1,800,000,000 shares authorized;  1,302,559,308 shares issued (December 31, 2009: 1,025,620,440);  1,291,232,105 shares outstanding (December 31, 2009: 1,014,291,580)

1,303

1,026

Additional paid-in capital

6,291,921

1,142,594

Retained earnings

4,790,710

4,074,492

Accumulated other comprehensive loss

(609,555)

(488,277)

Treasury stock, at cost, 11,327,203  shares of common stock (December 31, 2009: 11,328,860)

(223,406)

(223,421)

Total VimpelCom shareholders' equity

10,251,102

4,506,543

Noncontrolling interest

393,292

1,966

Total equity

10,644,394

4,508,509

Total liabilities, redeemable noncontrolling interest and equity

$20,943,344

$     14,732,541




VimpelCom Ltd Unaudited Condensed Consolidated Statements of Cash Flows



Six months ended June 30,


2010

2009


(In thousands of US dollars)




Operating activities






Net cash provided by operating activities

1,804,243

1,697,798




Investing activities



Purchases of property and equipment

(380,308)

(370,882)

Purchases of intangible assets

(11,298)

(11,913)

Purchases of software

(88,587)

(109,401)

Proceeds from sale of property, plant and equipment

1,396

-

Cash increase from acquisition of Kyivstar

167,176

-

Cash increase due to Sky Mobile consolidation

4,702

-

Loan granted

(5,048)

-

Loan receivable repayment

22,910

-

Proceeds from withdrawal of deposits

377,044

-

Purchases of other assets, net

(13,216)

(18,280)

Net cash provided by/(used in) investing activities

74,771

(510,476)




Financing activities



Proceeds from bank and other loans

270,254

589,473

Repayments of bank and other loans

(1,158,204)

(980,932)

Payments of fees in respect of debt issues

(1,847)

(46,547)

Share capital issued and paid

905

-

Net proceeds from employee stock options

27

1,852

Purchase of noncontrolling interest in consolidated subsidiaries

(2,294)

(441)

Payment of dividends

(2,049)

-

Payment of dividends to noncontrolling interest

(34,517)

(930)

Net cash used in financing activities

(927,725)

(437,525)




Effect of exchange rate changes on cash and cash equivalents

(45,690)

(15,219)




Net  increase in cash and cash equivalents

905,599

734,578

Cash and cash equivalents at beginning of period

1,446,949

914,683

Cash and cash equivalents at end of period

$      2,352,548

$       1,649,261




VimpelCom Ltd Unaudited Condensed Consolidated Statements of Cash Flows (Continued)



Six months ended June 30,


2010

2009


(In thousands of US dollars)

Supplemental cash flow information



Cash paid during the period:



Income tax

$         277,059

$          180,595

Interest

295,719

285,070




Non-cash activities:



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

214,485

165,295




Attachment C: Reconciliation Tables (Unaudited)

Reconciliation of Consolidated Adjusted OIBDA of VimpelCom

(In millions of US$)



2Q 10

2Q 09

1Q 10

Adjusted OIBDA

1,261.8

1,087.6

1,041.2

Depreciation

(376.7)

(325.5)

(352.5)

Amortization

(116.5)

(70.2)

(66.7)

Operating income

768.6

691.9

622.0

Interest income

16.1

18.8

11.5

Net foreign exchange (loss)/gain

(126.4)

324.0

104.9

Interest expense

(132.3)

(140.6)

(141.7)

Equity in net gain/(loss) of associates

11.1

4.7

(3.8)

Other (expense)/income, net

(10.0)

0.5

(48.3)

Income tax expense

(178.0)

(191.4)

(153.0)

Net income

349.1

707.9

391.6




Reconciliation of Consolidated Adjusted OIBDA Margin of VimpelCom



2Q 10

2Q 09

1Q 10

Adjusted OIBDA margin

47.8%

50.7%

46.7%

Less: Depreciation as a percentage of net operating revenues

(14.3%)

(15.2%)

(15.8%)

Less: Amortization as a percentage of net operating revenues

(4.4%)

(3.3%)

(3.0%)

Operating income as a percentage of net operating revenues

29.1%

32.2%

27.9%

Interest income

0.6%

0.9%

0.5%

Net foreign exchange (loss)/gain

(4.8%)

15.1%

4.7%

Interest expense

(5.0%)

(6.6%)

(6.4%)

Equity in net gain/(loss) of associates

0.4%

0.2%

(0.2%)

Other (expense)/income, net

(0.4%)

0.1%

(2.0%)

Income tax expense

(6.7%)

(8.9%)

(6.9%)

Net income

13.2%

33.0%

17.6%




Reconciliation of Free Cash Flow

(In millions of US$)


Russia,  Free Cash Flow

2Q 10

2Q 09

1Q 10

Free cash flow

392

887

587

Net income attributable to VIP Ltd.

332

691

391

Depreciation

262

264

279

Amortization

41

39

41

Capital expenditures

(243)

(107)

(124)





Ukraine,  Free Cash Flow, Actual

2Q 10

2Q 09

1Q 10

Free cash flow

79.0

5.3

1.1

Net income attributable to VIP Ltd.

29.8

(10.5)

(7.8)

Depreciation

54.3

11.9

10.6

Amortization

53.5

6.8

4.3

Capital expenditures

(58.6)

(2.9)

(6.0)





CIS,  Free Cash Flow

2Q 10

2Q 09

1Q 10

Free cash flow

37.5

85.0

75.4

Net income attributable to VIP Ltd.

28.4

32.9

27.1

Depreciation

58.1

49.7

60.0

Amortization

21.6

24.1

20.6

Capital expenditures

(70.6)

(21.7)

(32.3)




Reconciliation of Free Cash Flow

(In millions of local currencies)


Russia,  Free Cash Flow, RUR M

2Q 10

2Q 09

1Q 10

Free cash flow

11,731

28,557

17,584

Net income attributable to VIP Ltd.

9,962

22,295

11,708

Depreciation

7,902

8,458

8,346

Amortization

1,230

1,253

1,239

Capital expenditures

(7,363)

(3,449)

(3,709)





Ukraine,  Free Cash Flow, Actual, UAH million

2Q 10

2Q 09

1Q 10

Free cash flow

626.4

39.2

9.4

Net income attributable to VIP Ltd.

236.1

(81.5)

(62.4)

Depreciation

459.4

90.5

85.3

Amortization

395.0

52.5

34.1

Capital expenditures

(464.1)

(22.3)

(47.6)




Reconciliation of VimpelCom Consolidated ROCE

(In millions of US$)


VimpelCom Ltd. Actual ROCE, %

2Q '08

3Q '08

4Q '08

1Q '09

2Q '09

3Q '09

4Q '09

1Q '10

2Q '10

Consolidated operating income LTM

2,643

2,859

2,536

2,402

2,357

2,179

2,578

2,633

2,710

Net debt

6,772

7,276

7,528

6,729

6,325

5,547

5,906

5,118

3,980

Long - term debt

6,503

6,255

6,534

5,307

5,732

5,593

5,540

5,292

4,801

Short-term debt

1,248

1,748

1,909

2,388

2,242

2,476

1,813

1,356

1,532

Cash and cash equivalents

(979)

(727)

(915)

(966)

(1,649)

(2,522)

(1,447)

(1,530)

(2,353)

Total equity

6,436

5,639

4,140

3,146

4,038

4,569

4,509

5,376

10,644

Redeemable noncontrolling interest

0

470

470

500

500

505

509

512

515

Total capital employed (CE)

13,208

13,385

12,138

10,375

10,863

10,621

10,924

11,006

15,139

Average capital employed




12,277

11,690

10,999

10,696

10,854

11,923

ROCE consolidated




19.6%

20.2%

19.8%

24.1%

24.3%

22.7%




Reconciliation of ROIC


Russia,  ROIC, % (based on RUR millions)

2Q 10

2Q 09

1Q 10

Operating income LTM

76,048

65,802

76,795

         Property and equipment

119,880

131,573

120,740

         Licenses

5,252

7,615

5,740

         Intangible assets

13,491

16,274

14,189

         Goodwill

78,897

78,896

78,897

         Software

9,479

10,385

9,976

         Frequency permissions

3,172

3,143

3,143

Total Invested Capital

230,171

247,886

232,685

ROIC, %

33.0%

26.5%

33.0%





CIS,  ROIC, % (based on US$ millions)

2Q 10

2Q 09

1Q 10

Operating income LTM

260.7

285.3

243.3

         Property and equipment

1,117.9

1,132.3

1,102.7

         Licenses

233.8

274.7

247.4

         Intangible assets

172.3

194.7

178.3

         Goodwill

988.9

673.8

987.8

         Software

76.6

87.9

81.7

         Frequency permissions

0.0

2.8

4.6

Total Invested Capital

2,590.5

2,366.2

2,602.5

ROIC, %

10.1%

12.1%

9.3%




Attachment D:  Capex Development  


CAPEX (in US$ millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Total capex

381.4

155.3

145.6%

179.3

112.7%

Russia

243.4

107.1

127.3%

124.1

96.1%

Ukraine

58.6

2.9

1920.7%

6.0

876.7%

Other CIS

70.6

21.7

225.3%

32.3

118.6%

SEA

8.8

23.6

-62.7%

16.9

-47.9%




Attachment E: Financial and Operational Highlights in Functional Currencies

Ukraine


UKRAINE ACTUAL (UAH millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

2,461.3

390.4

530.5%

359.2

585.2%

Adjusted OIBDA

1,304.4

76.4

1607.3%

80.7

1516.4%

Adjusted OIBDA margin, %

53.0%

19.6%


22.5%


SG&A

697.5

149.3

367.2%

147.0

374.5%

 including Sales & Marketing Expenses

134.9

30.2

346.7%

26.7

405.2%

 including General & Administrative Costs

562.6

119.1

372.4%

120.3

367.7%

SG&A percentage

28.3%

38.2%


40.9%


Net income/(loss) attributable to VimpelCom Ltd.

236.1

-81.5

n/a

-62.4

n/a

Capital expenditures

464.1

22.3

1981.2%

47.6

875.0%

Free cash flow

626.4

39.2

1498.0%

9.4

6563.8%





UKRAINE ACTUAL REVENUES (UAH millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

2,461.3

390.4

530.5%

359.2

585.2%

Mobile

2,309.0

218.7

955.8%

183.0

1161.7%

Fixed-line

152.3

171.7

-11.3%

176.2

-13.6%

Business segment

72.8

78.9

-7.7%

74.0

-1.6%

Wholesale

56.8

80.7

-29.6%

81.7

-30.5%

Residential

22.7

12.1

87.6%

20.5

10.7%





UKRAINE ACTUAL ADJUSTED OIBDA DEVELOPMENT (UAH mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA Total

1,304.4

76.4

1607.3%

80.7

1516.4%

Mobile

1,255.1

27.7

4431.0%

28.3

4335.0%

Fixed-line

49.3

48.7

1.2%

52.4

-5.9%

Adjusted Total OIBDA margin, %

53.0%

19.6%


22.5%


Mobile, %

54.4%

12.7%


15.5%


Fixed-line, %

32.4%

28.4%


29.7%





CIS - Revenues Development


KAZAKHSTAN (KZT mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

27,054

23,679

14.3%

23,555

14.9%

Mobile

26,503

23,331

13.6%

23,079

14.8%

Fixed-line

551

348

58.3%

476

15.8%







ARMENIA (AMD mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

17,073

18,253

-6.5%

16,016

6.6%

Mobile

6,701

7,310

-8.3%

5,787

15.8%

Fixed-line

10,372

10,943

-5.2%

10,229

1.4%







UZBEKISTAN (US$ mln)*

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

51.4

52.6

-2.3%

45.3

13.5%

Mobile

48.9

49.5

-1.2%

42.9

14.0%

Fixed-line

2.5

3.1

-19.4%

2.4

4.2%







TAJIKISTAN (US$ mln)*

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

20.1

14.3

40.6%

14.8

35.8%

Mobile

14.9

14.3

4.2%

13.3

12.0%

Fixed-line

5.2

-

n/a

1.5

246.7%







GEORGIA (GEL mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

20.8

11.8

76.3%

18.8

10.6%

Mobile

20.0

11.8

69.5%

18.3

9.3%

Fixed-line

0.8

-

n/a

0.5

60.0%







KYRGYZSTAN (KGS mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile net operating revenues

1,261

-

n/a

1,138

10.8%






CIS REVENUES** (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

336.2

280.1

20.0%

294.8

14.0%

Mobile

297.4

245.3

21.2%

260.8

14.0%

Fixed-line

38.8

34.8

11.5%

34.0

14.1%


* US$ is the functional currency in Uzbekistan and Tajikistan.
** Mobile and fixed revenues for all periods were recalculated – please see definition of reportable segments in Attachment A.




CIS – Adjusted OIBDA Development


KAZAKHSTAN (KZT mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

15,526

12,856

20.8%

13,069

18.8%

Mobile

15,406

12,910

19.3%

13,008

18.4%

Fixed-line

120

-54

n/a

61

96.7%

Adjusted OIBDA margin, %

57.4%

54.3%


55.5%








ARMENIA (AMD mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

7,331

9,216

-20.5%

7,348

-0.2%

Mobile

2,711

3,434

-21.1%

2,377

14.1%

Fixed-line

4,620

5,782

-20.1%

4,971

-7.1%

Adjusted OIBDA margin, %

42.9%

50.5%


45.9%








UZBEKISTAN (US$ mln)*

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

20.1

26.9

-25.3%

19.6

2.6%

Mobile

19.2

25.7

-25.3%

18.6

3.2%

Fixed-line

0.9

1.2

-25.0%

1.0

-10.0%

Adjusted OIBDA margin, %

39.1%

51.1%


43.3%








TAJIKISTAN (US$ mln)*

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

6.7

5.4

24.1%

4.4

52.3%

Mobile

5.7

5.4

5.6%

4.1

39.0%

Fixed-line

1.0

-

n/a

0.3

233.3%

Adjusted OIBDA margin, %

33.3%

37.8%


29.7%








GEORGIA (GEL mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA Total

2.7

0.2

1250%

2.0

35.0%

Mobile

2.66

0.2

1230%

1.93

37.8%

Fixed-line

0.05

-

n/a

0.03

66.7%

Adjusted OIBDA margin, %

13.0%

1.7%


10.6%








KYRGYZSTAN (KGS mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted Mobile OIBDA

589

-

n/a

426

38.3%

Adjusted Mobile OIBDA margin, %

46.7%

-


37.4%






CIS OIBDA (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

161.9

138.7

16.7%

139.6

16.0%

Mobile

147.6

123.0

20.0%

125.4

17.7%

Fixed-line

14.3

15.7

-8.9%

14.2

0.7%

Adjusted OIBDA margin, %

48.2%

49.5%


47.4%



* US$ is the functional currency in Uzbekistan and Tajikistan.




CIS - Operating Highlights


KAZAKHSTAN

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile subscriptions ('000)

6,339

6,635

-4.5%

6,062

4.6%

MOU, min

125.1

90.7

37.9%

102.2

22.4%

ARPU mobile, US$

9.6

7.9

21.5%

8.4

14.3%

ARPU mobile, (KZT)

1,411

1,187

18.9%

1,264

11.6%

Broadband internet subscriptions ('000)

4.3

0.3

1333.3%

2.7

59.3%







ARMENIA

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile subscriptions ('000)

567

486

16.7%

549

3.3%

including mobile broadband subscriptions

6.6

-

n/a

6.8

-2.9%

MOU, min

270.1

238.4

13.3%

345.6

-21.8%

ARPU mobile, US$

10.3

13.6

-24.3%

9.0

14.4%

ARPU mobile, (AMD)

3,975

5,035

-21.1%

3,478

14.3%

Broadband internet subscriptions ('000)

49.7

19.2

158.9%

31.2

59.3%







UZBEKISTAN

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile subscriptions ('000)

3,997

3,605

10.9%

3,489

14.6%

including mobile broadband subscriptions

10.5

-

n/a

7.7

36.4%

MOU, min

383.0

225.6

69.8%

369.2

3.7%

ARPU mobile, US$

4.1

4.7

-12.8%

4.2

-2.4%

Broadband internet subscriptions ('000)

10.7

7.6

40.8%

10.0

7.0%







TAJIKISTAN

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile subscriptions ('000)

784

677

15.8%

820

-4.4%

MOU, min

167.6

173.1

-3.2%

157.9

6.1%

ARPU mobile, US$

6.1

6.9

-11.6%

5.6

8.9%







GEORGIA

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile subscriptions ('000)

466

289

61.2%

431

8.1%

MOU, min

140.5

123.1

14.1%

125.0

12.4%

ARPU mobile, US$

7.9

8.8

-10.2%

7.5

5.3%

ARPU mobile, (GEL)

14.5

14.5

0.0%

13.7

5.8%







KYRGYZSTAN

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile subscriptions ('000)

1,722

-

n/a

1,774

-2.9%

MOU, min

235.9

-

n/a

193.9

21.7%

ARPU mobile, US$

5.3

-

n/a

4.7

12.8%

ARPU mobile, (KGS)

240

-

n/a

208

15.4%


* We no longer provide information on subscriptions market share, because different churn policies used by mobile service providers result in reported subscriptions market share figures that are not representative.




Attachment F: Key Financial Results in US Dollars Russia


RUSSIA (US$ millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

2,042

1,838

11.1%

1,919

6.4%

Adjusted OIBDA

964

948

1.7%

911

5.8%

Adjusted OIBDA margin, %

47.2%

51.6%


47.5%


SG&A

558

474

17.7%

524

6.5%

 including Sales & Marketing Expenses

185

146

26.7%

166

11.4%

 including General & Administrative Costs

373

328

13.7%

358

4.2%

SG&A percentage

27.3%

25.8%


27.3%


Net income attributable to VimpelCom Ltd

332

691

-52.0%

391

-15.1%

Capital expenditures

243

107

127.1%

124

96.0%

Free cash flow

392

887

-55.8%

587

-33.2%

ROIC (based on RUR), %

33.0%

26.5%


33.0%






RUSSIA REVENUES (US$ millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

2,042

1,838

11.1%

1,919

6.4%

Mobile revenues

1,714

1,531

12.0%

1,602

7.0%

Fixed-line revenues

328

307

6.8%

317

3.5%

Business segment

153

164

-6.7%

150

2.0%

Wholesale

121

99

22.2%

114

6.1%

Residential

54

44

22.7%

53

1.9%





RUSSIA ADJUSTED OIBDA DEVELOPMENT (US$ millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

964

948

1.7%

911

5.8%

Mobile

875

842

3.9%

820

6.7%

Fixed-line

89

105

-15.2%

91

-2.2%

Adjusted total OIBDA margin, %

47.2%

51.6%


47.5%


Mobile, %

51.1%

55.0%


51.2%


Fixed-line, %

27.1%

34.2%


28.7%



* Please find information on respective operating income amounts in the supplementary file FinancialOperatingQ12010.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.




Ukraine


UKRAINE ACTUAL (US$ millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

310.6

51.1

507.8%

44.9

591.8%

Adjusted OIBDA

164.6

10.0

1546.0%

10.1

1529.7%

Adjusted OIBDA margin, %

53.0%

19.6%


22.5%


SG&A

88.1

19.5

351.8%

18.3

381.4%

 including Sales & Marketing Expenses

17.0

3.8

347.4%

3.3

415.2%

 including General & Administrative Costs

71.1

15.7

352.9%

15.0

374.0%

SG&A percentage

28.4%

38.2%


40.8%


Net income (loss) attributable to VimpelCom

29.8

-10.5

-383.8%

-7.8

-482.1%

Capital expenditures

58.6

2.9

1920.7%

6.0

876.7%

Free cash flow

79.0

5.3

1390.6%

1.1

7081.8%





UKRAINE ACTUAL REVENUES (US$ millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

310.6

51.1

507.8%

44.9

591.8%

Mobile

291.4

28.6

918.9%

22.9

1172.5%

Fixed-line

19.2

22.5

-14.7%

22.0

-12.7%

Business segment

9.2

10.2

-9.8%

9.4

-2.1%

Wholesale

11.0

10.7

2.8%

10.0

10.0%

Residential

2.9

1.6

81.3%

2.6

11.5%





UKRAINE ACTUAL ADJUSTED OIBDA DEVELOPMENT (US$ millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA Total

164.6

10.0

1546.0%

10.1

1529.7%

Mobile

158.4

3.8

4068.4%

3.5

4425.7%

Fixed-line

6.2

6.2

0.0%

6.6

-6.1%

Adjusted Total OIBDA margin, %

53.0%

19.6%


22.5%


Mobile, %

54.4%

13.3%


15.3%


Fixed-line, %

32.3%

27.6%


30.0%





CIS Revenues in US$


KAZAKHSTAN (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

184.3

157.1

17.3%

159.5

15.5%

Mobile

180.5

154.8

16.6%

156.3

15.5%

Fixed-line

3.8

2.3

65.2%

3.2

18.8%







ARMENIA (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

44.5

49.2

-9.6%

41.7

6.7%

Mobile

17.5

19.7

-11.2%

15.1

15.9%

Fixed-line

27.0

29.5

-8.5%

26.6

1.5%







UZBEKISTAN (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

51.4

52.6

-2.3%

45.3

13.5%

Mobile

48.9

49.5

-1.2%

42.9

14.0%

Fixed-line

2.5

3.1

-19.4%

2.4

4.2%







TAJIKISTAN (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

20.1

14.3

40.6%

14.8

35.8%

Mobile

14.9

14.3

4.2%

13.3

12.0%

Fixed-line

5.2

-

n/a

1.5

246.7%







GEORGIA (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

11.5

7.1

62.0%

10.9

5.5%

Mobile

11.1

7.1

56.3%

10.6

4.7%

Fixed-line

0.4

-

n/a

0.3

33.3%







KYRGYZSTAN (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Mobile net operating revenues

27.5

-

n/a

25.5

7.8%




CIS Adjusted OIBDA in US$


KAZAKHSTAN (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

105.7

85.2

24.1%

88.5

19.4%

Mobile

104.9

85.6

22.5%

88.1

19.1%

Fixed-line

0.8

-0.4

n/a

0.4

100.0%

Adjusted OIBDA margin, %

57.4%

54.2%


55.5%








ARMENIA (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

19.1

24.8

-23.0%

19.1

0.0%

Mobile

7.1

9.2

-22.8%

6.2

14.5%

Fixed

12.0

15.6

-23.1%

12.9

-7.0%

Adjusted OIBDA margin, %

42.9%

50.4%


45.8%








UZBEKISTAN (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

20.1

26.9

-25.3%

19.6

2.6%

Mobile

19.2

25.7

-25.3%

18.6

3.2%

Fixed-line

0.9

1.2

-25.0%

1.0

-10.0%

OIBDA Margin, %

39.1%

51.1%


43.3%








TAJIKISTAN (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

6.7

5.4

24.1%

4.4

52.3%

Mobile

5.7

5.4

5.6%

4.1

39.0%

Fixed-line

1.0

-

n/a

0.3

233.3%

Adjusted OIBDA margin, %

33.3%

37.8%


29.7%








GEORGIA (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted OIBDA total

1.5

0.1

1400.0%

1.1

36.4%

Mobile

1.5

0.1

1400.0%

1.1

36.4%

Fixed-line

0.03

-

n/a

0.02

50.0%

Adjusted OIBDA margin, %

13.0%

1.4%


10.1%








KYRGYZSTAN (US$ mln)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Adjusted mobile OIBDA  

12.8

-

n/a

9.5

34.7%

Adjusted mobile OIBDA margin, %

46.5%

-


37.3%



* Please find information on respective operating income amounts in the supplementary file FinancialOperatingQ22010.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.




Attachment G: VimpelCom Ltd Financial and Operational Highlights on Pro-Forma Basis


CONSOLIDATED OPERATIONS  (US$, millions)

2Q 10

2Q 09

2Q 10/
2Q 09

1Q 10

2Q 10/
1Q 10

Net operating revenues

2,716.1

2,494.1

8.9%

2,535.0

7.1%

Adjusted OIBDA

1,307.0

1,300.6

0.5%

1,207.7

8.2%

Adjusted OIBDA margin, %

48.1%

52.1%


47.6%


SG&A

786.2

666.8

17.9%

737.9

6.5%

 including HQ cost

19.9

n/a


10.8

84.3%

SG&A percentage

28.9%

26.7%


29.1%


Net income attributable to VimpelCom Ltd.

347.7

768.9

-54.8%

415.4

-16.3%

Operating cash flow

1,029.2

944.0

9.0%

959.8

7.2%

Capital expenditures

445.3

235.1

89.4%

233.5

90.7%




Attachment H: Average Rates of Functional Currencies to USD*


Functional Currency/
1 US$

1Q 09

2Q 09

3Q 09

4Q 09

1Q 10

2Q 10

Russia

RUR

33.93

32.21

31.33

29.47

29.89

30.24

Kazakhstan

KZT

138.85

150.47

150.75

149.77

147.68

146.81

Ukraine

UAH

7.70

7.66

7.82

7.99

7.99

7.92

Armenia

AMD

325.11

370.46

372.66

384.40

384.26

384.49

Georgia

GEL

1.67

1.66

1.68

1.68

1.72

1.80

Kyrgyzstan

KGS

-

-

-

-

44.55

45.75


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



SOURCE VimpelCom Ltd



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