VimpelCom Reports 60% Increase in EBITDA for 2nd Quarter 1998; 84% Year-to-Year Subscriber Growth
PR Newswire - August 27, 1998 09:16
MOSCOW and NEW YORK, Aug. 27 /PRNewswire/ -- Open Joint Stock Company
Vimpel-Communications ("VimpelCom" or the "Company") (NYSE: VIP) today reported higher
EBITDA and continuing subscriber growth for the second quarter ended June 30, 1998.
As of June 30, 1998, VimpelCom had over 135,400 subscribers on its networks. This represents a
growth of approximately 84% over the 73,681 subscribers at the end of the second quarter of 1997. At
the end of the second quarter of 1998, VimpelCom's 50% subsidiary in Samara had over 8,900
subscribers, a growth of 154% over the 3,500 subscribers at the end of the second quarter of 1997.
Commenting on today's announcement, Dmitri Zimin, President and Chief Executive Officer of
VimpelCom, said: "We are pleased with our second quarter results particularly with our continued
strong revenue and EBITDA growth. In the second quarter, however, we did start to experience some
of the effects of the deterioration in the economic situation in Russia, resulting in increased churn and
higher provision for doubtful accounts receivable. As telecommunications is a vital sector of the
economy, and with cellular penetration rates in Moscow just barely over 3%, there continues to be a
good opportunity for long-term growth for our company. In addition, despite the current economic
situation, July 1998 was the second highest subscriber sales month in our history and August 1998
subscriber sales are already over 20% ahead of August 1997 subscriber sales."
For the second quarter ended June 30, 1998, VimpelCom reported total operating revenues of $103.5
million, a 45% increase over the $71.3 million in total operating revenues reported in the same period in
1997. Net operating revenues (net of revenue-based taxes) in the second quarter of 1998 were $99.3
million, a 45% increase over the $68.3 million in net operating revenues reported in the same period in
1997. Operating income for the second quarter of 1998 was a record $30.4 million, an increase of 54%
compared with the $19.7 million in operating income reported in the same period a year ago.
For the six months ended June 30, 1998, VimpelCom reported total operating revenues of $195.9
million, a 42% increase over the $138.0 million in total operating revenues reported in the same period
in 1997. Net operating revenues (net of revenue-based taxes) for the six months ended June 30, 1998
were $188.3 million, a 42% increase over the $132.4 million in net operating revenues reported in the
same period in 1997. Operating income for the six months of 1998 was $58.8 million, an increase of
47% compared with the $40.0 million in operating income reported in the same period a year ago.
EBITDA for the second quarter of 1998 was strong, reaching $40.3 million, 60% higher than the $25.2
million in the same period in 1997. The EBITDA margin for the second quarter of 1998 was 40.6%, an
improvement over the 36.9% EBITDA margin in the same quarter in 1997. The increase in EBITDA
margin was due primarily to an improvement in service revenue margins, which more than offset the
reduction in the margin on sales of handsets and lower contributions from one-time activation fees.
Net income for the quarter ended June 30, 1998, was $13.7 million, or $0.71 per share ($0.53 per
ADS), compared to $15.8 million, or $0.82 per share ($0.61 per ADS), earned in the same period in
1997. Each ADS represents 0.75 of one share of common stock. Net income for the six months ended
June 30, 1998, was $30.2 million, or $1.57 per share ($1.17 per ADS), compared to $32.6 million, or
$1.69 per share ($1.27 per ADS), earned in the same period in 1997. Net income growth in the second
quarter of 1998 was constrained by higher depreciation and financing charges, reflecting the increased
investments the Company has been making in its networks, and higher provisions for accounts
receivable and income taxes when compared to the same period in 1997.
Selling, general and administrative expenses for the second quarter of 1998, increased 24% to $24.7
million compared to the $19.9 million reported in the same period in 1997. The absolute increase in
selling, general and administrative expenses in the second quarter of 1998 was due primarily to the a
general increase in the level of business activity compared with the same period in 1997.
For the second quarter of 1998, the Company recorded a $6.7 million provision for doubtful accounts
compared with $3.2 million in the same period in 1997. This increase in provision for doubtful accounts
receivable was in part due to the overall growth in business activity and in part intended to provide for
certain customers who are taking longer to pay their bills than they have in the past. The Company
continues to believe the provision for doubtful accounts is conservative and adequate.
Depreciation and amortization expense was $9.9 million for the second quarter of 1998, an 80%
increase compared to $5.5 million in the same period of 1997. The increase was due to the increased
depreciable asset base resulting from the Company's continuing capital investments in its D-AMPS and
GSM-1800 networks.
VimpelCom is the largest provider of cellular telecommunications in Russia, marketing its services under
the brand name "Bee Line." The VimpelCom Group operates the only Digital-AMPS cellular network
and the first Russian PCS network, using GSM technology, in the Moscow License Area, which
includes the City of Moscow and the Moscow Region. The VimpelCom Group holds various
GSM-1800 and AMPS/D-AMPS licenses covering a total population of approximately 100 million
(68% of Russia's population). VimpelCom was the first Russian company listed on the New York
Stock Exchange (November 1996), trading under the symbol "VIP."
This press release contains forward-looking statements related to the development of the Company's
business. These statements are based on Management's best assessment of future market conditions and
trends. The actual outcome may differ from these statements as a result of unforeseen developments
from competition, governmental regulations of the wireless telecommunications industry, general political
uncertainties in Russia and general economic developments in Russia. VimpelCom disclaims any
obligation to update developments of these risk factors or to announce publicly any revision to any of
the forward-looking statements contained in this release, or to make corrections to reflect future events
or developments.
Open Joint Stock Company Vimpel-Communications Unaudited Consolidated Condensed Statements
of Income
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
(In thousands, except per share (ADS) amounts)
Operating revenues
Service revenues and
connection fees US$ 93,154 US$63,477 US$177,545 US$121,911
Sales of handsets
and accessories 9,847 6,361 17,779 14,361
Installation and
equipment contracts 490 1,420 586 1,715
Total operating revenues 103,491 71,258 195,910 137,987
Less revenue-based taxes 4,227 2,979 7,564 5,561
Net operating revenues 99,264 68,279 188,346 132,426
Operating expenses:
Service costs 19,402 14,846 36,291 28,148
Cost of handsets and
accessories sold 7,739 4,332 13,562 9,564
Cost of installation
and equipment contracts 344 810 355 1,075
Selling, general and
administrative expenses24,715 19,882 48,446 37,222
Depreciation and
amortization 9,877 5,487 19,028 9,679
Provision for
doubtful accounts 6,738 3,210 11,884 6,711
Total Operating expenses68,815 48,567 129,566 92,399
Operating income 30,449 19,712 58,780 40,027
Other income and expenses:
Other income 352 137 722 137
Interest income (730) 3,425 (81) 4,592
Interest expense (3,603) (1,378) (6,016) (2,764)
Net foreign exchange
(loss) gain (260) 568 (2,482) 2,410
Total other income
and expenses (4,241) 2,752 (7,857) 4,375
Income before
income taxes 26,208 22,464 50,923 44,402
and minority interest
Provision for
income taxes 12,466 6,747 20,206 11,824
Minority interest in
net losses of subsidiaries 67 (91) 516 (39)
Net income US$13,675 US$15,808 US$30,201 US$32,617
Net income per
common share US$0.71 US$0.82 US$1.57 US$1.69
Net income per
ADS equivalent US$0.53 US$0.61 US$1.17 US$1.27
Weighted average
common shares 19,280 19,280 19,280 19,280
outstanding (thousands)
EBITDA US$40,326 US$25,199 US$77,808 US$49,706
Open Joint Stock Company Vimpel-Communications
Condensed Consolidated Balance Sheet
June 30, December 31,
1998 1997
(Unaudited)
(In thousands US dollars)
Assets
Current Assets:
Cash and cash equivalents US$34,290 US$14,333
Short-term investments 14,016 24,169
Accounts receivable 54,558 41,487
Other current assets 43,711 34,436
Total current assets 146,575 114,425
Property and equipment, net 398,714 347,653
Other assets 26,216 21,020
Total Assets US$571,505 US$483,098
Liabilities and shareholders' equity
Current liabilities:
Accounts payable US$15,786 US$12,287
Customer deposits 61,503 51,738
Bank loans 10,000 11,001
Equipment financing,
current portion 15,464 10,389
Other accrued liabilities 22,254 11,382
Total current liabilities 125,007 96,797
Deferred incomes taxes 42,851 35,201
Equipment financing and
other liabilities 158,793 136,962
Minority interest 7,002 6,487
Shareholders' equity 237,852 207,651
Total liabilities and
shareholders' equity US$571,505 US$483,098
SOURCE Vimpel-Communications
/CONTACT: Valery Goldin, of VimpelCom - Moscow, 7-095-974-5888 or
vgoldin@vimpelcom.com; or Mona Walsh or AJ Goodman of Edelman Financial,
212-704-4423 or -8101, or mona_walsh@edelman.com or adam_goodman@edelman.com/
(VIP)
Headlines Next Story
VIP %TLS %ERN V%PRN P%PRN
|
