Vimpelcom aims to deliver USD750m cash flow increase on annual basis

7 Aug 2015

Netherlands-based, Russian-backed telecoms group Vimpelcom announced its results for the quarter ended 30 June 2015, posting a 26% year-on-year decline in reported currency consolidated service revenues to USD3.610 billion, although adding that the organic service revenue decline was 2% y-o-y. The drop in service revenue was ‘in line with management expectations’, mainly due to continued market weakness in Italy (Wind Telecomunicazioni) and aggressive price competition in Algeria (Djezzy), partly offset by good service revenue growth in Bangladesh (Banglalink) and Ukraine (Kyivstar). Total mobile customers decreased by 1.8 million y-o-y to 213.4 million by the end of 2Q15, mainly due to the impact of regulation in Pakistan (Mobilink), requiring operators to block unverified SIMs. Excluding this effect the group customer base would have grown by 3.8 million y-o-y. EBITDA decreased organically 3% y-o-y to USD1.511 billion, although the reported y-o-y drop was 27%, reflecting the fall in revenue. In Russia, Vimpelcom’s largest operating market, service revenue declined organically 2% y-o-y and in reported terms by 35% y-o-y to USD1.257 million. Russian mobile service revenue was up slightly y-o-y, driven by growth in mobile data and interconnect revenue, partly offset by lower voice and roaming revenue driven by an average price per minute reduction as existing customers migrated to the operator’s newer price plans. Vimpelcom also announced that Ukrainian subsidiary Kyivstar, which launched commercial 3G services in June 2015, had more than one million 3G users by the end of that month.

New group CEO Jean-Yves Charlier gave a statement: ‘Vimpelcom closed 2Q15 with an improving set of financial results which put the company on track to meet the 2015 targets. At the same time, whilst reaffirming guidance for the year, we improved our CAPEX-to-revenue guidance as a result of our focus on increasing free cash flow without impacting network quality, and service. In addition to our Q2 results, we provided an update on the company’s new strategy framework with an objective to deliver USD750 million cash flow increase on an annual basis by year three.’ Vimpelcom’s new three-year strategy identifies six priority areas, reflecting ‘the major trends facing the telecoms industry including cost and pricing pressures, the rapid migration to data, the need to capture and monetise new revenue streams, and the requirement to be flexible in an increasingly digital world’.

Russia, Ukraine, Beeline (Russia), VEON