Vimpelcom 1Q14 revenues slump 10%; Russian sales drop 18% y-o-y

14 May 2014

Amsterdam-based telecoms group Vimpelcom Ltd has announced revenues of USD5.024 billion for the three months ended 31 March 2014, down 10% from USD5.591 billion one year earlier. The weaker top-line figure was impacted by a poor performance in Russia it said, as well as by intense price competition in Italy, regulatory and governmental actions in Africa and Asia, and unstable macro-economic situations in Ukraine and Pakistan. EBITDA for 1Q14 dropped 11% on an annualised basis, from USD2.348 billion to USD2.088 billion, while net income was reported at just USD39 million, a drop of 90% year-on-year. Vimpelcom blamed the decrease on lower profit before tax. ‘The high effective tax rate in 1Q14 is mainly due to non-deductible interest expenses and the change in geographical profit mix, with less profit from countries with a lower nominal tax rate,’ the statement read. CAPEX for 1Q14 increased 24%y-o-y to USD736 million, reflecting the continued investment in 3G (Algeria, Bangladesh) and 4G technology (Russia, Italy).

Vimpelcom’s Russian operation weighed in with the lion’s share of first-quarter revenues, reporting earnings of USD1.893 billion, albeit down 18% y-o-y. Elsewhere, Wind Telecomunicazioni (Wind Italy) posted revenues of USD1.568 billion, down 3%. Meanwhile, all of the company’s other business divisions also saw their sales decrease y-o-y, with ‘Africa & Asia’ dropping 3% to USD399 million, ‘Ukraine’ falling to USD162 million (-16%) and ‘CIS’ edging down 1% to USD217 million. In operational terms, Vimpelcom reported a consolidated mobile subscriber base of 218 million as at 31 March 2014, up almost 3% from 212 million one year earlier.

Vimpelcom CEO Jo Lunder commented: ‘We previously indicated our expectation that 2014 would be a challenging year and the Q1 results reflect the more difficult trading environment. All of our Business Units have reported double-digit data revenue increases and we continue to invest in high speed networks to drive future growth’.

Russia, Beeline (Russia), VEON