VimpelCom regional expansion reaps record dividends

21 Nov 2003

Russia’s second-largest mobile operator VimpelCom, which operates under the brand Bee Line, saw its profits soar a record 78% in the third quarter thanks to 3.6 million new customer additions in the past twelve months. Russia’s wireless market has seen unprecedented growth this year on the back of an improving economy and increasing levels of disposable income among consumers, and VimpelCom has managed to gain ground on market leader MobileTeleSystems (MTS) by ploughing its increased profits back into the expansion of its network. VimpelCom, 29% owned by Nordic telco Telenor, provides coverage in 47 of Russia’s 89 and will add another eight, including expansion in the Urals, Volga and Siberian provinces, by year-end. Last month VimpelCom shareholders approved the merger of the cellco with its regional subsidiary VimpelCom Region (VimpelCom-R). It will issue 10.95 million new VimpelCom common shares in exchange for the 44.7% stake in VimpelCom-R that is currently owned by Eco Telecom, a joint venture between Alfa Group and Telenor.

For the three months to the end of September 2003 VimpelCom posted a net profit of USD72.2 million, compared to a profit of USD40.5 million in the year-earlier period. Revenues rose to USD387.9 million, from USD221.1 million, as the cellco took its customer base to the verge of the ten million mark. As of today, VimpelCom claimed 10.37 million subscribers, from 9.26 million at 30 September, which was itself up 130% from the year before; more than half of the operator’s subscribers are in the Moscow licence area. Whilst its rivals have yet to release official statistics for the third quarter period, VimpelCom estimates that it has a 31% share of the country’s wireless market, up from 26.5% a year earlier, mainly due to its successful regional expansion. However, its share in its core Moscow market fell by nearly four percentage points year-on-year, to 49%.

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