VimpelCom Announces Fourth Quarter and Full-Year 2009 Financial and Operating Results
MOSCOW and NEW YORK, March 18 /PRNewswire-FirstCall/ -- Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP), a leading international provider of telecommunications services operating in Russia, the Commonwealth of Independent States (CIS) and South-East Asia, today announced its operating and financial results for the quarter and year ended December 31, 2009.
The Company changed its reporting currency from the US dollar to the Russian ruble effective as of January 1, 2009. The Company presented certain financial information for the first three quarters of 2009 in Russian rubles.
Following the plans announced in October 2009 by the Company's two strategic shareholders to combine their holdings under a new company, VimpelCom Ltd., and in connection with regulatory filings relating to that transaction, the Company decided to change its reporting currency to the US dollar. The audited consolidated financial statements for the year ended December 31, 2009 are prepared in US dollars. Amounts included in quarterly financial statements for the first three quarters of 2009 were recast using the current rate method of currency translation as though the US dollar was the reporting currency in those periods. Financial information in this press release is presented in US dollars for the consolidated Group and in functional currencies for Russia and the CIS countries.
Although Georgia is no longer a member of the CIS, consistent with our historical reporting practice we continue to include Georgia in our CIS reporting segment.
2009 Highlights and Recent Developments
Operational
- 3.6 million new mobile subscribers, with the total subscriber base up to 64.6 million
- 2.3 million broadband subscribers, an 85% growth year-on-year
- 3G networks rollout in Russia on schedule, all current license requirements fulfilled
- Launch of operations in Cambodia and Vietnam under Beeline brand
Financial
- Revenues of $8.7 billion and OIBDA* of $4.3 billion, 14% and 12% down year-on-year, respectively. In ruble terms, revenues of 275.2 billion and OIBDA of 135.2 billion, 10% and 12% increase year-on-year
- Full-year consolidated ruble revenues in Russia increased 10% year-on-year and reached 235.4 billion rubles
- Substantially improved consolidated fixed and mobile margin of 49.1% compared to 48.0% in 2008
- Free cash flow amounted to $2.7 billion after $0.8 billion spent on Capex
- Net income attributable to VimpelCom of $1.1 billion or 114% increase year-on-year
- Basic EPS up 110% year-on-year to $21.71 ($1.09 per ADS)
- Net debt decreased to $5.9 billion bringing the Net Debt/OIBDA ratio to 1.4
Other
- Interim dividend of $0.32 per ADS was paid out
- Strategic shareholders initiated the process of combining their stakes in VimpelCom and Kyivstar in a new company, VimpelCom Ltd., and launched a public exchange offer for all of VimpelCom's outstanding shares
_______________
*Here and thereafter refers to adjusted OIBDA (See definition)
Commenting on the performance of the Company, Boris Nemsic, Chief Executive Officer of VimpelCom, said, "By the end of 2008, in the depths of the global macroeconomic crisis, we took decisive actions to address the market uncertainties. We committed to our shareholders that we would preserve cash, improve liquidity, control costs, and integrate the newly acquired fixed-line business, all while maintaining our leading market positions. I am very pleased that we have delivered on each of these commitments, which is clearly demonstrated by our full-year results.
The growth in our mobile subscriber base to over 64.6 million customers was good especially in light of the high penetration in our markets. Moreover, subscriber growth did not come at the expense of subscriber quality and profitability, as we improved our consolidated fixed and mobile OIBDA margins to more than 49% on average for the year. Furthermore, our focus on operational excellence and profitability resulted in a record $3.5 billion of operational cash flow, allowing us to substantially improve our liquidity and pay dividends. We paid out a dividend of $0.32 per ADS based on the Company's operating results for the first nine months of 2009, while substantially reducing our net debt to a comfortably manageable $5.9 billion, a 22% reduction compared to December 31, 2008.
Finally, our strategic shareholders recently took another important step toward positioning VimpelCom as a global player in the telecommunications industry by launching an exchange offer through VimpelCom Ltd., which if completed, will combine VimpelCom with Kyivstar, the largest mobile operator in Ukraine. We believe that this transaction will support our strategic objectives and create value for the Company's stakeholders. The Company's Board of Directors unanimously recommended that the Company's shareholders and holders of American depositary shares exchange their Company shares and ADSs for VimpelCom Ltd. depositary shares in the exchange offer launched by VimpelCom Ltd".
Key Consolidated Financial and Operating Results*
CONSOLIDATED OPERATIONS
(US$, millions) 4Q '09/ 4Q '09/
4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 2,309 2,555 -9.6% 2,276 1.4%
Adjusted OIBDA 1,088 1,124 -3.2% 1,148 -5.2%
Adjusted OIBDA margin, % 47.1% 44.0% 50.4%
Operating income 608 208 192.3% 711 -14.5%
Operating income margin, % 26.3% 8.1% 31.2%
SG&A 680 787 -13.6% 599 13.5%
including Sales & Marketing
Expenses 218 285 -23.5% 184 18.5%
including General &
Administrative Costs 462 502 -8.0% 415 11.3%
SG&A percentage 29.4% 30.8% 26.3%
Net income (loss) attributable
to VimpelCom 283 -816 n/a 433 -34.6%
Net income (loss) attributable
to VimpelCom per common share,
basic, (US$) 5.47 -16.12 8.36
Net income (loss) attributable
to VimpelCom per ADS
equivalent, basic, (US$) 0.27 -0.81 0.42
Capital expenditures 422.7 855.5 -50.6% 123.2 243.1%
Mobile subscribers ('000) *** 64,596 61,029 5.8% 65,358 -1.2%
Broadband subscribers ('000) 2,257 1,221 84.8% 1,930 16.9%
CONSOLIDATED OPERATIONS
(US$, millions) 2009/
2009 2008** 2008
---- ------ -----
Net operating revenues 8,703 10,117 -14.0%
Adjusted OIBDA 4,272 4,860 -12.1%
Adjusted OIBDA margin, % 49.1% 48.0%
Operating income 2,578 2,536 1.7%
Operating income margin, % 29.6% 25.1%
SG&A 2,390 2,839 -15.8%
including Sales & Marketing
Expenses 727 929 -21.7%
including General &
Administrative Costs 1,663 1,910 -12.9%
SG&A percentage 27.5% 28.1%
Net income (loss) attributable
to VimpelCom 1,122 524 114.1%
Net income (loss) attributable
to VimpelCom per common share,
basic, (US$) 21.71 10.32
Net income (loss) attributable
to VimpelCom per ADS
equivalent, basic, (US$) 1.09 0.52
Capital expenditures 814.1 2,570.8 -68.3%
Mobile subscribers ('000) *** 64,596 61,029 5.8%
Broadband subscribers ('000) 2,257 1,221 84.8%
* See definitions in Attachment A. References to "year-on-year"
are to comparisons of 4Q09 vs. 4Q08, while references to "quarter-
on-quarter" are to 4Q09 vs. 3Q09.
** 2008 results include only 10 months of consolidation of Golden
Telecom's operations.
*** In 3Q09 we reported 95 thousands as active subscribers in
Cambodia which was calculated on a one month basis. Starting from
4Q09 we will report active subscriber base in Cambodia calculated on
a three month basis.
Net operating revenues
4Q '09**** Russia CIS SEA Eliminations Total
(US$ millions) ------ --- --- ------------ -----
Mobile business 1,671 284 2 -2 1,955
Fixed-line business 458 67 0 -18 507
Eliminations -133 -9 0 -11 -153
Total net operating revenue 1,996 342 2 -31 2,309
**** Due to the increasing integration between different parts of
our business, we include inter-company transactions in the reported
revenues of geographic and business segments and indicate the amount
of inter-company eliminations within and between the segments.
The quarterly net operating revenues increased by 1.4% quarter-on-quarter, reflecting seasonality supported by favorable exchange rate dynamics. Full-year revenues amounted to $8.7 billion, demonstrating the robustness of our core business and our ability to maintain our market positions.
Our continuous efforts on cost optimization, price rebalancing and streamlining integration resulted in more than one percentage point improvement of the full-year consolidated fixed and mobile OIBDA margin, which reached 49.1%. The fourth quarter OIBDA margin, despite being seasonally affected, showed substantial improvement when compared to the fourth quarter of the previous year.
A consistent focus on cash generation and working capital optimization helped us to achieve a record $3.5 billion of operational cash flow, which is $100 million higher than reported a year ago.
Capital expenditures in 2009 were significantly lower than in the previous year, utilizing massive investments made in 2007-2008, including the acquisition of Golden Telecom's networks, and meeting the overall level of demand throughout 2009. In 2010, we intend to increase our capital expenditures compared with the 2009 level and plan to invest approximately 15-20% of our revenues.
During the fourth quarter we repaid in total $742 million of debt including a $315 million bond buy-back we completed in October 2009. Our net debt declined by $1.6 billion in 2009 and reached $5.9 billion at the end of the year.
Our net income attributable to VimpelCom amounted to $283 million for the fourth quarter and $1.1 billion for the full year 2009, which is 114.1% more than we reported in 2008.
Russia - Financial and Operating Results
RUSSIA (RUR millions) 4Q '09/ 4Q '09/
4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 58,819 58,809 0.0% 61,211 -3.9%
Adjusted OIBDA 27,725 25,849 7.3% 30,951 -10.4%
Adjusted OIBDA margin, % 47.1% 44.0% 50.6%
Operating income 17,393 7,847 121.7% 20,724 -16.1%
Operating income margin, % 29.6% 13.3% 33.9%
SG&A 17,033 18,198 -6.4% 15,644 8.9%
including Sales & Marketing
Expenses 5,862 6,706 -12.6% 4,940 18.7%
including General &
Administrative Costs 11,171 11,492 -2.8% 10,704 4.4%
SG&A percentage 29.0% 30.9% 25.6%
Net income (loss)
attributable to VimpelCom 9,267 -12,132 n/a 13,754 -32.6%
2009/
RUSSIA (RUR millions) 2009 2008 2008
---- ---- -----
Net operating revenues 235,438 214,136 9.9%
Adjusted OIBDA 116,181 104,426 11.3%
Adjusted OIBDA margin, % 49.3% 48.8%
Operating income 76,410 60,489 26.3%
Operating income margin, % 32.5% 28.2%
SG&A 63,030 59,424 6.1%
including Sales & Marketing
Expenses 20,013 19,720 1.5%
including General &
Administrative Costs 43,017 39,704 8.3%
SG&A percentage 26.8% 27.8%
Net income (loss)
attributable to VimpelCom 38,133 19,713 93.4%
Our quarterly net operating revenues in Russia amounted to 58.8 billion rubles. The quarterly dynamics reflect seasonality, with revenues in local currency declining by 3.9% quarter-on-quarter. Overall, our full-year 2009 consolidated fixed and mobile revenues in Russia increased by 9.9% in ruble terms, when compared to 2008.
In the mobile segment, our quarterly ruble revenues remained flat when compared to the fourth quarter of 2008. Full year mobile revenues were up 7.0%. We also saw an increase in revenues from value added services driven by demand for infotainment and mobile data. Minutes of use increased in the past three quarters supporting our view that voice traffic continues to be one of the key drivers of revenue growth. In our marketing activities we aim to maintain pricing discipline and be competitive in every segment of the mobile market.
We achieved a mobile OIBDA margin of 49.3% in the fourth quarter of 2009, which is 2.5 percentage points higher than reported in the fourth quarter of 2008. In ruble terms, our quarterly mobile OIBDA reached 24.3 billion rubles, a 6.0% increase year-on-year.
Our quarterly fixed-line revenues increased by 12.7% year-on-year in ruble terms reflecting the sustainability of our diverse revenue base. To the extent that we will begin to see economic recovery in 2010, we expect to see revenue growth in the corporate segment and increasing demand for data from both corporate and residential customers.
Fixed-line OIBDA margin, although slightly down quarter-on-quarter, increased on a full-year basis from 24.1% to 27.9%. In ruble terms, in 2009 the full-year fixed-line OIBDA reached 14.9 billion rubles, a 73.2%* increase as compared to 2008.
In the fourth quarter of 2009, our total number of residential broadband subscribers in Russia, including FTTB and mobile broadband, exceeded 2.1 million, a 78.6% increase year-on-year and a 15.2% increase quarter-on-quarter. Revenues from residential broadband were up 151.0% year-on-year.
RUSSIA REVENUES (RUR millions) 4Q '09/ 4Q '09/
4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 58,819 58,809 0.0% 61,211 -3.9%
Mobile 49,250 48,987 0.5% 51,502 -4.4%
Fixed-line 13,485 11,962 12.7% 13,583 -0.7%
Eliminations -3,916 -2,140 -3,874
RUSSIA REVENUES (RUR millions) 2009/
2009 2008 2008
---- ---- -----
Net operating revenues 235,438 214,136 9.9%
Mobile 195,816 183,036 7.0%
Fixed-line 53,383 35,730 49.4%
Eliminations -13,761 -4,630
RUSSIA OIBDA DEVELOPMENT 4Q '09/ 4Q '09/
(RUR millions) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA Total 27,725 25,849 7.3% 30,951 -10.4%
Mobile 24,286 22,902 6.0% 27,360 -11.2%
Fixed-line 3,439 2,947 16.7% 3,591 -4.2%
Adjusted Total OIBDA
margin, % 47.1% 44.0% 50.6%
Mobile, % 49.3% 46.8% 53.1%
Fixed-line, % 25.5% 24.6% 26.4%
RUSSIA OIBDA DEVELOPMENT 2009/
(RUR millions) 2009 2008 2008
---- ---- -----
Adjusted OIBDA Total 116,181 104,428 11.3%
Mobile 101,293 95,834 5.7%
Fixed-line 14,888 8,594 73.2%
Adjusted Total OIBDA
margin, % 49.3% 48.8%
Mobile, % 51.7% 52.4%
Fixed-line, % 27.9% 24.1%
4Q '09/ 4Q '09/
RUSSIA OPERATING DEVELOPMENT 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile subscribers ('000) 50,886 47,677 6.7% 51,028 -0.3%
MOU, min 217.7 227.8 -4.4% 213.6 1.9%
ARPU mobile, US $10.8 12.5 -13.6% 10.6 1.9%
ARPU mobile, RUR 316.9 340.6 -7.0% 331.8 -4.5%
Broadband subscribers ('000) 2,111 1,182 78.6% 1,833 15.2%
2009/
RUSSIA OPERATING DEVELOPMENT 2009 2008 2008
---- ---- -----
Mobile subscribers ('000) 50,886 47,677 6.7%
MOU, min 211.4 219.1 -3.5%
ARPU mobile, US $10.1 13.9 -27.3%
ARPU mobile, RUR 319.6 344.4 -7.2%
Broadband subscribers ('000) 2,111 1,182 78.6%
* 2008 results include only 10 months of consolidation of Golden
Telecom's operations.
CIS - Financial and Operating Results
4Q '09/ 4Q '09/
CIS OPERATIONS (US$ millions) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------ ------ ------
Net operating revenues 341.6 419.6 -18.6% 353.6 -3.4%
Adjusted OIBDA 154.7 179.3 -13.7% 169.8 -8.9%
Adjusted OIBDA margin, % 45.3% 42.7% 48.0%
Operating income 28.5 -38.7 n/a 65.6 -56.6%
Operating income margin, % 8.3% -9.2% 18.6%
SG&A 94.1 116.9 -19.5% 91.0 3.4%
including Sales & Marketing
Expenses 24.9 39.5 -37.0% 24.6 1.2%
including General &
Administrative Costs 69.2 77.4 -10.6% 66.4 4.2%
SG&A percentage 27.5% 27.9% 25.7%
Net (loss) income attributable
to VimpelCom -7.6 -278.5 n/a 2.7 n/a
Mobile subscribers ('000) 13,342 13,352 -0.1% 14,235 -6.3%
Broadband subscribers ('000) 146 39 274.4% 97 50.5%
2009/
CIS OPERATIONS (US$ millions) 2009 2008 2008
---- ---- -----
Net operating revenues 1,358.9 1,564.3 -13.1%
Adjusted OIBDA 626.7 652.6 -4.0%
Adjusted OIBDA margin, % 46.1% 41.7%
Operating income 203.9 105.8 92.7%
Operating income margin, % 15.0% 6.8%
SG&A 365.9 448.0 -18.3%
including Sales & Marketing
Expenses 91.9 141.6 -35.1%
including General &
Administrative Costs 274.0 306.4 -10.6%
SG&A percentage 26.9% 28.6%
Net (loss) income attributable
to VimpelCom 10.3 -257.1 n/a
Mobile subscribers ('000) 13,342 13,352 -0.1%
Broadband subscribers ('000) 146 39 274.4%
In 2009, our net operating revenues in the CIS grew in local currency terms in the majority of our markets, including Kazakhstan and Ukraine. However, in dollar terms, we reported a 13.1% decline due to dollar appreciation against the local currencies.
Our focus on operational efficiencies increased our full-year consolidated OIBDA margin by more than 4 percentage points to 46.1% in 2009 compared to 2008, a remarkable achievement in challenging market conditions.
Mobile subscriber numbers in the CIS in 2009 stayed essentially flat, reflecting the Company's focus on subscriber quality. The number of broadband subscribers increased almost fourfold compared to 2008 as we started to actively develop our broadband projects in Ukraine, Kazakhstan, Uzbekistan and Armenia.
CIS Revenues Development
4Q '09/ 4Q '09/
KAZAKHSTAN (KZT mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------ ------ ------
Net operating revenues 25,564 23,661 8.0% 25,928 -1.4%
Mobile 25,181 23,277 8.2% 25,563 -1.5%
Fixed 1,119 853 31.2% 1,017 10.0%
Elimination -736 -469 -652
4Q '09/ 4Q '09/
UKRAINE (UAH mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------ ------ ------
Net operating revenues 385 424 -9.2% 442 -12.9%
Mobile 202 284 -28.9% 265 -23.8%
Fixed 220 161 36.6% 219 0.5%
Elimination -37 -21 -42
4Q '09/ 4Q '09/
ARMENIA (AMD mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 18,202 19,532 -6.8% 19,167 -5.0%
Mobile 7,046 8,339 -15.5% 7,575 -7.0%
Fixed 11,156 11,194 -0.3% 11,592 -3.8%
Elimination 0 0 0
4Q '09/ 4Q '09/
UZBEKISTAN (US$ mln)* 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 50.2 66.5 -24.5% 50.1 0.2%
Mobile 47.5 63.5 -25.2% 46.8 1.5%
Fixed 2.8 3.0 -6.7% 3.3 -15.2%
Elimination -0.1 0.0 0.0
4Q '09/ 4Q '09/
TAJIKISTAN (US$ mln)* 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile net operating
revenues 15.6 16.4 -4.9% 14.9 4.7%
4Q '09/ 4Q '09/
GEORGIA (GEL mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile net operating
revenues 17.1 9.2 85.9% 14.9 14.8%
2009/
KAZAKHSTAN (KZT mln) 2009 2008 2008
---- ---- -----
Net operating revenues 96,543 89,439 7.9%
Mobile 95,142 88,311 7.7%
Fixed 3,703 2,294 61.4%
Elimination -2,302 -1,166
2009/
UKRAINE (UAH mln) 2009 2008 2008
---- ---- -----
Net operating revenues 1,582 1,460 8.4%
Mobile 898 1,025 -12.4%
Fixed 818 503 62.6%
Elimination -134 -68
2009/
ARMENIA (AMD mln) 2009 2008 2008
---- ---- -----
Net operating revenues 72,687 78,368 -7.2%
Mobile 28,819 33,013 -12.7%
Fixed 43,868 45,355 -3.3%
Elimination 0 0
2009/
UZBEKISTAN (US$ mln)* 2009 2008 2008
---- ---- -----
Net operating revenues 211.3 216.4 -2.4%
Mobile 199.3 207.1 -3.8%
Fixed 12.2 9.3 31.2%
Elimination -0.2 0.0
2009/
TAJIKISTAN (US$ mln)* 2009 2008 2008
---- ---- -----
Mobile net operating
revenues 59.2 50.8 16.5%
2009/
GEORGIA (GEL mln) 2009 2008 2008
---- ---- -----
Mobile net operating
revenues 54.0 26.2 106.1%
CIS REVENUES 4Q 4Q 3Q
(US$ mln) '09 '08 y-o-y '09 q-o-q 2009 2008 y-o-y
------------ --- --- ----- --- ----- ---- ---- -----
Net operating
revenues 341.6 419.6 -18.6% 353.6 -3.4% 1,358.9 1,564.3 -13.1%
Mobile 284.4 354.1 -19.7% 294.3 -3.4% 1,128.7 1,315.0 -14.2%
Fixed 66.8 73.0 -8.5% 69.2 -3.5% 263.2 272.7 -3.5%
Elimination -9.6 -7.5 -9.9 -33.0 -23.4
* US$ is the functional currency in Uzbekistan and Tajikistan.
CIS OIBDA Development
4Q '09/ 4Q '09/
KAZAKHSTAN (KZT mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA total 14,083 11,740 20.0% 15,341 -8.2%
Mobile 13,409 11,276 18.9% 14,747 -9.1%
Fixed 674 464 45.3% 594 13.5%
Adjusted OIBDA margin, % 55.1% 49.6% 59.2%
4Q '09/ 4Q '09/
UKRAINE (UAH mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA total 60.8 73.7 -17.5% 94.6 -35.7%
Mobile 4.2 38.5 -89.1% 34.0 -87.6%
Fixed 56.6 35.2 60.8% 60.6 -6.6%
Adjusted OIBDA margin, % 15.8% 17.4% 21.4%
4Q '09/ 4Q '09/
ARMENIA (AMD mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA total 8,748 9,735 -10.1% 9,812 -10.8%
Mobile 2,902 3,819 -24.0% 3,633 -20.1%
Fixed 5,846 5,916 -1.2% 6,179 -5.4%
Adjusted OIBDA margin, % 48.1% 49.8% 51.2%
4Q '09/ 4Q '09/
UZBEKISTAN (US$ mln)* 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA total 23.0 34.2 -32.7% 23.5 -2.1%
Mobile 21.9 33.0 -33.6% 22.2 -1.4%
Fixed 1.1 1.2 -8.3% 1.3 -15.4%
Adjusted OIBDA margin, % 45.8% 51.4% 46.9%
4Q '09/ 4Q '09/
TAJIKISTAN (US$ mln)* 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted Mobile OIBDA 7.1 5.3 34.0% 5.2 36.5%
Adjusted Mobile OIBDA
margin, % 45.5% 32.3% 34.9%
4Q '09/ 4Q '09/
GEORGIA (GEL mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted Mobile OIBDA 0.6 -1.8 n/a 1.6 -62.5%
Adjusted Mobile OIBDA
margin, % 3.5% n/a 10.7%
2009/
KAZAKHSTAN (KZT mln) 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 53,244 45,969 15.8%
Mobile 51,139 44,810 14.1%
Fixed 2,105 1,159 81.6%
Adjusted OIBDA margin, % 55.2% 51.4%
2009/
UKRAINE (UAH mln) 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 281.7 129.0 118.4%
Mobile 57.5 13.4 329%
Fixed 224.2 115.6 93.9%
Adjusted OIBDA margin, % 17.8% 8.8%
2009/
ARMENIA (AMD mln) 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 36,625 38,114 -3.9%
Mobile 13,376 14,366 -6.9%
Fixed 23,249 23,748 -2.1%
Adjusted OIBDA margin, % 50.4% 48.6%
2009/
UZBEKISTAN (US$ mln)* 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 106.6 115.9 -8.0%
Mobile 101.7 112.8 -9.8%
Fixed 4.9 3.1 58.1%
Adjusted OIBDA margin, % 50.4% 53.6%
2009/
TAJIKISTAN (US$ mln)* 2009 2008 2008
---- ---- -----
Adjusted Mobile OIBDA 22.5 14.0 60.7%
Adjusted Mobile OIBDA
margin, % 38.0% 27.6%
2009/
GEORGIA (GEL mln) 2009 2008 2008
---- ---- -----
Adjusted Mobile OIBDA 1.5 -9.9 n/a
Adjusted Mobile OIBDA
margin, % 2.8% n/a
4Q '09/ 4Q '09/
CIS OIBDA (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA total 154.7 179.3 -13.7% 169.8 -8.9%
Mobile 126.9 149.1 -14.9% 140.4 -9.6%
Fixed 27.8 30.2 -7.9% 29.4 -5.4%
Adjusted OIBDA margin, % 45.3% 42.7% 48.0%
2009/
CIS OIBDA (US$ mln) 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 626.7 652.6 -4.0%
Mobile 515.0 540.1 -4.6%
Fixed 111.7 112.5 -0.7%
Adjusted OIBDA margin, % 46.1% 41.7%
* US$ is the functional currency in Uzbekistan and Tajikistan.
CIS Operating Highlights
4Q '09/ 4Q '09/
KAZAKHSTAN 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile subscribers ('000) 6,135 6,270 -2.2% 6,835 -10.2%
MOU, min 102.3 100.5 1.8% 98.1 4.3%
ARPU mobile, US $8.5 10.8 -21.3% 8.2 3.7%
ARPU mobile, (KZT) 1,279 1,298 -1.5% 1,241 3.1%
Broadband internet
subscribers ('000) 1.3 0.2 550.0% 0.3 333.3%
2009/
KAZAKHSTAN 2009 2008 2008
---- ---- -----
Mobile subscribers ('000) 6,135 6,270 -2.2%
MOU, min 93.1 104.3 -10.7%
ARPU mobile, US $8.1 11.7 -30.8%
ARPU mobile, (KZT) 1,202 1,402 -14.3%
Broadband internet
subscribers ('000) 1.3 0.2 550.0%
4Q '09/ 4Q '09/
UKRAINE 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile subscribers ('000) 2,005 2,052 -2.3% 2,199 -8.8%
MOU, min 201.3 230.0 -12.5% 203.7 -1.2%
ARPU mobile, US $3.9 7.0 -44.3% 5.4 -27.8%
ARPU mobile, (UAH) 31.9 42.1 -24.2% 42.0 -24.0%
Broadband internet
subscribers ('000) 109.3 24.1 353.5% 70.1 55.9%
2009/
UKRAINE 2009 2008 2008
---- ---- -----
Mobile subscribers ('000) 2,005 2,052 -2.3%
MOU, min 208.7 231.8 -10.0%
ARPU mobile, US $4.7 7.6 -38.2%
ARPU mobile, (UAH) 37.1 39.8 -6.8%
Broadband internet
subscribers ('000) 109.3 24.1 353.5%
4Q '09/ 4Q '09/
ARMENIA 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile subscribers ('000) 545 544 0.2% 502 8.6%
MOU, min 268.2 150.0 78.8% 269.0 -0.3%
ARPU mobile, US $11.5 13.6 -15.4% 13.7 -16.1%
ARPU mobile, (AMD) 4,433 4,182 6.0% 5,117 -13.4%
Broadband internet
subscribers ('000) 26.2 9.2 184.8% 18.1 44.8%
2009/
ARMENIA 2009 2008 2008
---- ---- -----
Mobile subscribers ('000) 545 544 0.2%
MOU, min 237.8 152.1 56.3%
ARPU mobile, US $13.2 14.6 -9.6%
ARPU mobile, (AMD) 4,782 4,460 7.2%
Broadband internet
subscribers ('000) 26.2 9.2 184.8%
4Q '09/ 4Q '09/
UZBEKISTAN 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile subscribers ('000) 3,515 3,636 -3.3% 3,652 -3.8%
MOU, min 387.3 288.6 34.2% 409.3 -5.4%
ARPU mobile, US $4.6 6.5 -29.2% 4.5 2.2%
Broadband internet
subscribers ('000) 9.0 5.8 55.2% 8.3 8.4%
2009/
UZBEKISTAN 2009 2008 2008
---- ---- -----
Mobile subscribers ('000) 3,515 3,636 -3.3%
MOU, min 314.0 287.8 9.1%
ARPU mobile, US $4.7 6.4 -26.6%
Broadband internet
subscribers ('000) 9.0 5.8 55.2%
4Q '09/ 4Q '09/
TAJIKISTAN 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile subscribers ('000) 743 625 18.9% 706 5.2%
MOU, min 173.6 243.4 -28.7% 173.3 0.2%
ARPU mobile, US $7.2 9.6 -25.0% 7.2 0.0%
2009/
TAJIKISTAN 2009 2008 2008
---- ---- -----
Mobile subscribers ('000) 743 625 18.9%
MOU, min 172.9 238.9 -27.6%
ARPU mobile, US $7.1 9.5 -25.3%
4Q '09/ 4Q '09/
GEORGIA 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile subscribers ('000) 399 225 77.3% 341 17.0%
MOU, min 131.1 129.8 1.0% 129.3 1.4%
ARPU mobile, US $8.4 9.7 -13.4% 9.2 -8.7%
ARPU mobile, (GEL) 15.2 15.1 0.7% 15.4 -1.3%
2009/
GEORGIA 2009 2008 2008
---- ---- -----
Mobile subscribers ('000) 399 225 77.3%
MOU, min 138.3 113.6 21.7%
ARPU mobile, US $8.9 9.0 -1.1%
ARPU mobile, (GEL) 14.9 13.0 14.6%
* We no longer provide information on subscriber market share, because
different churn policies used by mobile service providers result in
reported subscriber market share figures that are not representative.
South-East Asia
In Cambodia we successfully continue development of our operations. We achieved network coverage of more than 70% of the population and our services are available in the 18 largest provinces. Good network quality, effective marketing and a pro-active approach to distribution helped us to establish a solid footprint for further expansion. We now serve more than 370 thousand subscribers.
Six months after the network launch in Vietnam, our networks cover approximately 32% of the population with presence in 40 out of 63 provinces. By the end of 2009, we served approximately 1.1 million subscribers counted on a one month active basis.
We are satisfied with the pace of business development and remain optimistic about the potential of the South-East Asia mobile market.
4Q '09/ 4Q '09/
SEA (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating mobile revenues 2.4 0.0 n/a 2.4 0.0%
Adjusted mobile OIBDA -6.4 -0.8 n/a -7.5 n/a
2009/
SEA (US$ mln) 2009 2008 2008
---- ---- -----
Net operating mobile revenues 5.7 0.0 n/a
Adjusted mobile OIBDA -21.0 -1.0 n/a
*) See definitions in Attachment A.
For more information on financial and operating data for specific countries, please refer to the supplementary file FinancialOperatingQ42009.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.
The Company's management will discuss its fourth quarter and annual 2009 results during a conference call and slide presentation on March 18, 2010 at 6:30 pm Moscow time (11:30 am US EDT). 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 March 25, 2010. The slide presentation webcast will also be available for download on VimpelCom's website http://www.vimpelcom.com.
The VimpelCom Group consists of telecommunications operators providing voice and data services through a range of mobile, fixed and broadband technologies. The Group includes companies operating in Russia, Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia, Armenia, as well as Vietnam and Cambodia, in territories with a total population of about 340 million. VimpelCom was the first Russian company to list its shares on the New York Stock Exchange ("NYSE"). VimpelCom's ADSs are listed on the NYSE 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 proposed combination with Kyivstar and its benefits, the Company's 2010 capital expenditures, the Company's future revenues, pricing and competitive position, and the Company's development plans in Cambodia and Vietnam. 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 newly-acquired businesses, including Golden Telecom, and other factors. There can be no assurance that such risks and uncertainties will not have a material adverse effect on the VimpelCom Group. Certain factors that could cause actual results to differ materially from those discussed in any forward-looking statements include the risks described in the Company's Amended Annual Report on Form 20-F/A for the year ended December 31, 2008 and other public filings made by the Company with the United States Securities and Exchange Commission, which risk factors are incorporated herein by reference. 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.
IMPORTANT NOTICE: In connection with the exchange offer, VimpelCom Ltd. has filed with the SEC a registration statement on Form F-4, which includes a preliminary prospectus and related U.S. offer acceptance materials, and a Statement on Schedule TO. In addition, the Company has filed a Solicitation/Recommendation Statement on Schedule 14D-9. Holders of the Company's securities are urged to carefully read the VimpelCom Ltd. registration statement (including the preliminary prospectus), the VimpelCom Ltd. Statement on Schedule TO, any other documents relating to the U.S. offer filed by VimpelCom Ltd. with the SEC, and the Company's Solicitation/Recommendation Statement on Schedule 14D-9, as well as any amendments and supplements to these documents, because they contain important information. Free copies of the registration statement, including the preliminary prospectus and related U.S. offer acceptance materials, the Statement on Schedule TO, the Solicitation/Recommendation Statement on Schedule 14D-9, amendments and supplements to these documents, and other relevant documents filed with the SEC in respect of the U.S. offer, can be obtained at the SEC's website at www.sec.gov.
This announcement is not an offering document and does not constitute an offer to exchange or the solicitation of an offer to exchange securities or a solicitation of any vote or approval, nor shall there be any sale or exchange of securities in any jurisdiction in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The solicitation of offers to exchange the Company's securities for VimpelCom Ltd. DRs in the United States is being made pursuant to the preliminary prospectus and related U.S. offer acceptance materials that have been mailed to holders resident in the United States (including its territories and possessions) of Company shares and all holders of Company ADSs, wherever located.
This announcement does not constitute advertisement of securities, including securities of foreign issuers, in the Russian Federation within the meaning of Federal Law No. 39-FZ "On the Securities Market" dated April 22, 1996, as amended (the "Securities Law"), Federal Law No. 46-FZ "On the Protection of Rights and Lawful Interests of Investors on the Securities Market" dated March 5, 1999, as amended, and Federal Law No. 38-FZ "On Advertising" dated March 13, 2006, as amended, or a public offer to purchase, sell, exchange or transfer to or for the benefit of any person resident, incorporated, established or having their usual residence in the Russian Federation, or to any person located within the territory of the Russian Federation, that does not fall under a legal definition of a "qualified investor" within the meaning of Article 51.2 of the Securities Law, or an invitation to or for the benefit of any such person, to make offers to purchase, sell, exchange or transfer any such securities. The securities of VimpelCom Ltd. have not been and will not be admitted for placement, public placement or public circulation in the Russian Federation within the meaning of Article 51.1 of the Securities Law. This announcement is not for publication, release or distribution in or into or from any jurisdiction where it would otherwise be prohibited.
- Definitions and tables are attached –
Attachment A: Definitions
Mobile subscribers are subscribers in the registered subscriber base as of a measurement date who engaged in a revenue generating activity at any time during the three months prior to the measurement date. Such activity includes any incoming and outgoing calls, subscriber 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 subscribers also includes subscribers using mobile Internet service via USB modems.
Each ADS represents 0.05 of one share of common stock. This ratio was established effective August 21, 2007.
ARPU (Monthly Average Revenue per User) is calculated by dividing the Company's 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 the Company's subscribers during the period and dividing by the number of months in that period.
Broadband subscribers are those subscribers in the registered subscriber base who were a party to a revenue generating activity in the past three months. Such activities include monthly internet access using FTTB, xDSL and WiFi technologies as well as mobile internet service via USB modems.
CIS Geographic Segment for the purpose of VimpelCom reporting includes our operations in the following countries: Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Armenia and Georgia
Fixed-line subscriber is an authorized user of fixed-line communications services.
General and administrative costs (G&A) include salaries and outsourcing costs, including related social contributions required by Russian 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.
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 subscribers during the period and dividing by the number of months in that period.
Adjusted OIBDA is a non-U.S. GAAP financial measure. Adjusted OIBDA, previously referred to as EBITDA or OIBDA by the Company, is defined as operating income before depreciation, amortization and impairment loss. The Company believes that adjusted OIBDA provides useful information to investors because it is an indicator of the strength and performance of our business operations, including our ability to finance capital expenditures, acquisitions and other investments and our ability to incur and service debt. While depreciation, amortization and impairment loss are considered operating costs under U.S. GAAP, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our adjusted OIBDA calculations are commonly used as bases for some investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the telecommunications industry. Adjusted OIBDA should not be considered in isolation as an alternative to net income attributable to VimpelCom, operating income or any other measure of performance under U.S. GAAP. Adjusted OIBDA does not include our need to replace our capital equipment over time. Reconciliation of adjusted OIBDA to operating income, the most directly comparable U.S. GAAP financial measure, is presented below in the reconciliation tables section.
Adjusted OIBDA margin is adjusted OIBDA expressed as a percentage of net operating revenues. Reconciliation of adjusted OIBDA margin to operating 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.
Prepaid subscribers are those subscribers who pay for their services in advance.
Roaming revenues include both revenues from VimpelCom customers who roam outside of home country network and revenues from other wireless carriers for roaming by their customers on VimpelCom's network. Roaming revenues do not include revenues from our own subscribers roaming while travelling across Russian regions within our network (so called 'intranet roaming')
Sales and marketing costs (S&M) include marketing, advertising and dealer commissions expenses.
Take-up rate for the FTTB network is calculated by dividing the number of FTTB subscribers by the total number of households passed.
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.
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.
SEA – VimpelCom operations in South-East Asia, which include operations in Cambodia and VimpelCom's respective equity in net results of operations of the Company's Vietnamese associate GTEL-Mobile JSC ("GTEL-Mobile").
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. 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.
Free cash flow is a non-U.S. GAAP financial measure and is calculated as operating cash flow less Capex. 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 after accruals required to maintain or expand our asset base. Free cash flow should not be considered in isolation as an alternative to operating cash flow or any other measure of the company cash flows management. Reconciliation of free cash flow to operating cash flow, the most directly comparable U.S. GAAP financial measure, is presented below in the reconciliation tables section.
Attachment B: VimpelCom financial statements
Open Joint Stock Company "Vimpel-Communications"
Audited Consolidated Statements of Income
Years ended December 31,
2009 2008 2007
---- ---- ----
(In thousands of US dollars, except
share (ADS) amounts)
Operating revenues:
Service revenues $8,580,815 $9,999,850 $7,161,833
Sales of equipment and
accessories 109,959 107,946 6,519
Other revenues 19,788 17,190 6,528
----- ----- ----
Total operating revenues 8,710,562 10,124,986 7,174,880
Revenue based tax (7,660) (8,054) (3,782)
------ ------ ------
Net operating revenues 8,702,902 10,116,932 7,171,098
Operating expenses:
Service costs 1,878,443 2,262,570 1,309,287
Cost of equipment and
accessories 110,677 101,282 5,827
Selling, general and
administrative expenses 2,389,998 2,838,508 2,206,322
Depreciation 1,393,431 1,520,184 1,171,834
Amortization 300,736 360,980 218,719
Impairment loss - 442,747 -
Provision for doubtful
accounts 51,262 54,711 52,919
Total operating expenses 6,124,547 7,580,982 4,964,908
-------- -------- --------
Operating income 2,578,355 2,535,950 2,206,190
Other income and expenses:
Interest income 51,714 71,618 33,021
Net foreign exchange
(loss)/gain (411,300) (1,142,276) 72,955
Interest expense (598,531) (495,634) (194,839)
Equity in net (loss)/gain of
associates (35,763) (61,020) (211)
Other (expenses)/income, net (32,114) (17,404) 3,240
Total other income and
expenses (1,025,994) (1,644,716) (85,834)
---------- ---------- -------
Income before income taxes 1,552,361 891,234 2,120,356
Income tax expense 435,030 303,934 593,928
------ ------ ------
Net income 1,117,331 587,300 1,526,428
Net (loss)/income
attributable to the
noncontrolling interest (4,499) 62,966 63,722
Net income attributable to
VimpelCom $1,121,830 $524,334 $1,462,706
========== ======== ==========
Basic EPS :
Net income attributable to
VimpelCom per common share $21.71 $10.32 $28.78
====== ====== ======
Weighted average common
shares outstanding
(thousand) 50,647 50,700 50,818
Net income attributable to
VimpelCom per ADS equivalent $1.09 $0.52 $1.44
===== ===== =====
Diluted EPS :
Net income attributable to
VimpelCom per common share $21.69 $10.32 $28.78
====== ====== ======
Weighted average diluted
shares (thousand) 50,678 50,703 50,818
Net income attributable to
VimpelCom per ADS equivalent $1.08 $0.52 $1.44
===== ===== =====
Dividends per share $6.30 $11.46 $6.47
Dividends per ADS equivalent $0.31 $0.57 $0.32
Open Joint Stock Company "Vimpel-Communications"
Audited Consolidated Balance Sheets
December 31, December 31,
2009 2008
------------ ------------
(In thousands of US dollars,
except share amounts)
Assets
Current assets:
Cash and cash equivalents $1,446,949 $914,683
Trade accounts receivable, net of
allowance for doubtful accounts 392,365 475,667
Inventory 61,919 142,649
Deferred income taxes 91,493 82,788
Input value added tax 96,994 182,045
Due from related parties 249,631 168,196
Other current assets 627,257 440,479
------- -------
Total current assets 2,966,608 2,406,507
Property and equipment, net 5,561,569 6,425,873
Telecommunications licenses, net 542,597 764,783
Goodwill 3,284,293 3,476,942
Other intangible assets, net 700,365 882,830
Software, net 448,255 549,166
Investments in associates 436,767 493,550
Other assets 792,087 725,502
Total assets $14,732,541 $15,725,153
=========== ===========
Liabilities, redeemable noncontrolling
interest and equity
Current liabilities:
Accounts payable $545,690 $896,112
Due to employees 113,368 105,795
Due to related parties 9,211 7,492
Accrued liabilities 315,666 288,755
Taxes payable 212,767 152,189
Customer advances, net of VAT 376,121 425,181
Customer deposits 28,386 29,557
Short-term debt 1,813,141 1,909,221
--------- ---------
Total current liabilities 3,414,350 3,814,302
Deferred income taxes 596,472 644,475
Long-term debt 5,539,906 6,533,705
Other non-current liabilities 164,636 122,825
Commitments, contingencies and
uncertainties - -
--- ---
Total liabilities 9,715,364 11,115,307
Redeemable noncontrolling interest 508,668 469,604
Equity:
Convertible voting preferred stock
(.005 rubles nominal value per
share), 10,000,000 shares authorized;
6,426,600 shares issued and
outstanding - -
Common stock (.005 rubles nominal
value per share), 90,000,000 shares
authorized; 51,281,022 shares issued
(December 31, 2008: 51,281,022);
50,714,579 shares outstanding
(December 31, 2008: 50,617,408) 92 92
Additional paid-in capital 1,143,657 1,165,188
Retained earnings 4,074,492 3,271,878
Accumulated other comprehensive (loss) (488,277) (90,021)
Treasury stock, at cost, 566,443
shares of common stock (December 31,
2008: 663,614) (223,421) (239,649)
Total VimpelCom shareholders' equity 4,506,543 4,107,488
Noncontrolling interest 1,966 32,754
Total equity 4,508,509 4,140,242
--------- ---------
Total liabilities, redeemable
noncontrolling interest and equity $14,732,541 $15,725,153
=========== ===========
Open Joint Stock Company "Vimpel-Communications"
Audited Consolidated Statements of Cash Flows
Years ended December 31,
2009 2008 2007
---- ---- ----
(In thousands of US dollars)
Operating activities
Net income $1,117,331 $587,300 $1,526,428
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 1,393,431 1,520,184 1,171,834
Amortization 300,736 360,980 218,719
Impairment loss - 442,747 -
Loss from associates 35,763 61,020 211
Provision for deferred
taxes (19,541) (92,654) 32,858
Loss (gain) on foreign
currency translation 411,300 1,142,276 (72,955)
Provision for doubtful
accounts 51,262 54,711 52,919
Stock-based compensation
expense/(gain) 2,323 (121,890) 171,242
Loss from early debt
redemption 19,063 - -
Other adjustments (380) (5,078) -
Changes in operating
assets and liabilities:
Trade accounts receivable (57,452) (240,629) (333)
Inventory 64,927 (90,221) (3,021)
Input value added tax 78,972 (103,941) 45,383
Other current assets 135,212 (415,735) (351)
Accounts payable (69,290) 281,725 (157,901)
Customer advances and
deposits (23,010) 75,098 85,135
Taxes payable and accrued
liabilities 72,122 (34,035) (32,478)
------ ------- -------
Net cash provided by
operating activities 3,512,769 3,421,858 3,037,690
Investing activities
Purchases of property and
equipment (691,445) (2,002,452) (1,238,305)
Purchases of intangible
assets (15,685) (75,012) (73,814)
Purchases of software (184,481) (313,652) (293,956)
Acquisition of
subsidiaries, net of
cash acquired - (4,134,609) (301,355)
Investments in associates (12,500) (491,265) -
Exercise of escrow cash
deposit - 200,170 (200,170)
Loan granted - (350,000) -
Investments in deposits (488,580) 43,179 (42,356)
Purchases of other
assets, net (40,799) (53,575) (84,596)
------- ------- -------
Net cash used in
investing activities (1,433,490) (7,177,216) (2,234,552)
Financing activities
Proceeds from bank and
other loans 1,270,248 6,209,392 666,348
Proceeds from sale of
treasury stock - 25,488 39,787
Repayments of bank and
other loans (2,432,862) (721,222) (365,657)
Payments of fees in
respect of debt issues (53,071) (68,159) (14,380)
Repayments of equipment
financing obligations - - (106,888)
Net proceeds from
employee stock options 18,142 - -
Purchase of
noncontrolling interest
in consolidated
subsidiaries (18,198) (992,825) -
Payment of dividends (315,644) (587,302) (331,885)
Payment of dividends to
noncontrolling interest (13,977) - -
Purchase of treasury
stock - (114,476) (81,069)
--- -------- -------
Net cash (used
in)/provided by
financing activities (1,545,362) 3,750,896 (193,744)
Effect of exchange rate
changes on cash and cash
equivalents (1,651) (84,566) 49,823
------ ------- ------
Net increase/(decrease)
in cash and cash
equivalents 532,266 (89,028) 659,217
Cash and cash equivalents
at beginning of year 914,683 1,003,711 344,494
Cash and cash equivalents
at end of year $1,446,949 $914,683 $1,003,711
========== ======== ==========
Open Joint Stock Company "Vimpel-Communications"
Audited Consolidated Statements of Cash Flows (Continued)
Years ended December 31,
2009 2008 2007
---- ---- ----
(In thousands of US dollars)
Supplemental cash flow
information
Cash paid during the period:
Income tax $428,761 $647,597 $601,939
Interest 571,964 406,020 201,259
Non-cash activities:
Equipment acquired under
financing agreements - 2,726 48,514
Accounts payable for property,
equipment and other long-
lived assets 210,159 448,218 417,478
Non–cash discounts from
suppliers of equipment 239 2,464 (5,441)
Issue of promissory notes - 81,660 -
Acquisitions :
Fair value of assets acquired - 2,645,655 84,125
Fair value of noncontrolling
interest acquired - 206,129 41,636
Difference between the amount
paid and the fair value of net
assets acquired - 3,517,062 182,034
Consideration for the
acquisition of subsidiaries - (5,348,180) (291,928)
Fair value of liabilities
assumed $- $1,020,666 $15,867
=== ========== =======
Attachment C: Reconciliation Tables (Unaudited)
Reconciliation of Adjusted Consolidated OIBDA
(In millions of US$)
4Q '09 4Q '08 3Q '09 2009 2008
------ ------ ------ ---- ----
Adjusted OIBDA 1,088 1,124 1,148 4,272 4,860
Depreciation (393) (379) (366) (1,393) (1,520)
Amortization (87) (94) (71) (301) (361)
Impairment loss 0 (443) 0 0 (443)
Operating income 608 208 711 2,578 2,536
Reconciliation of Adjusted Consolidated OIBDA Margin
4Q '09 4Q '08 3Q '09 2009 2008
------ ------ ------ ---- ----
Adjusted OIBDA margin 47.1% 44.0% 50.4% 49.1% 48.0%
Less: Depreciation as a
percentage of net
operating revenues (17.0%) (14.9%) (16.1%) (16.0%) (15.0%)
Less: Amortization as a
percentage of net
operating revenues (3.8%) (3.7%) (3.1%) (3.5%) (3.5%)
Less: Impairment loss as
a percentage of net
operating revenues 0.0% (17.3%) 0.0% 0.0% (4.4%)
Operating income as a
percentage of net
operating revenues 26.3% 8.1% 31.2% 29.6% 25.1%
Reconciliation of Consolidated Net Debt
(In millions of US$)
2009 2008
---- ----
Net debt 5,906 7,528
Long - term debt 5,540 6,534
Short-term debt 1,813 1,909
Cash and cash equivalents (1,447) (915)
Reconciliation of Consolidated Free Cash Flow
(In millions of US$)
2009 2008
---- ----
Free cash flow 2,699 851
-------------- ----- ---
Net cash provided by operating
activities 3,513 3,422
Capital expenditures (814) (2,571)
Attachment D: Capex Development
CAPEX 4Q '09/ 4Q '09/
(in US$ millions) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Total capex 422.7 855.5 -50.6% 123.2 243.1%
Russia 331.5 641.5 -48.3% 90.3 267.1%
CIS 68.1 203.5 -66.5% 24.5 178.0%
Kazakhstan 19.5 79.7 -75.5% 10.0 95.0%
Ukraine 11.0 57.8 -81.0% 3.0 266.7%
Armenia 7.8 23.7 -67.1% 1.3 500.0%
Uzbekistan 21.1 17.2 22.7% 7.2 193.1%
Tajikistan 5.4 18.0 -70.0% 0.5 980.0%
Georgia 3.3 7.1 -53.5% 2.5 32.0%
SEA 22.8 7.4 208.1% 8.2 178.0%
CAPEX 2009/
(in US$ millions) 2009 2008 2008
---- ---- -----
Total capex 814.1 2,570.8 -68.3%
Russia 619.1 1,776.4 -65.1%
CIS 126.8 775.1 -83.6%
Kazakhstan 43.8 254.8 -82.8%
Ukraine 19.8 185.4 -89.3%
Armenia 9.7 78.3 -87.6%
Uzbekistan 36.9 176.3 -79.1%
Tajikistan 7.1 45.1 -84.3%
Georgia 9.5 35.2 -73.0%
SEA 67.6 7.7 777.9%
Attachment E: Key Financial Results in US Dollars
Russia
4Q '09/ 4Q '09/
RUSSIA (US$ millions) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 1,996 2,157 -7.5% 1,953 2.2%
Adjusted OIBDA 941 948 -0.7% 988 -4.8%
Adjusted OIBDA margin, % 47.1% 43.9% 50.6%
Operating income 590 288 104.9% 661 -10.7%
Operating income margin, % 29.6% 13.4% 33.8%
SG&A 578 667 -13.3% 500 15.6%
including Sales & Marketing
Expenses 191 246 -22.4% 158 20.9%
including General &
Administrative Costs 387 421 -8.1% 342 13.2%
SG&A percentage 29.0% 30.9% 25.6%
Net income (loss)
attributable to VimpelCom 313 -445 n/a 440 -28.9%
2009/
RUSSIA (US$ millions) 2009 2008 2008
---- ---- -----
Net operating revenues 7,448 8,619 -13.6%
Adjusted OIBDA 3,674 4,215 -12.8%
Adjusted OIBDA margin, % 49.3% 48.9%
Operating income 2,413 2,476 -2.5%
Operating income margin, % 32.4% 28.7%
SG&A 1,998 2,384 -16.2%
including Sales & Marketing
Expenses 628 787 -20.2%
including General &
Administrative Costs 1,370 1,597 -14.2%
SG&A percentage 26.8% 27.7%
Net income (loss)
attributable to VimpelCom 1,188 880 35.0%
RUSSIA REVENUES 4Q '09/ 4Q '09/
(US$ millions) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 1,996 2,157 -7.5% 1,953 2.2%
Mobile revenues 1,671 1,797 -7.0% 1,643 1.7%
Fixed-line revenues 458 439 4.3% 434 5.5%
Eliminations -133 -79 -124
RUSSIA REVENUES 2009/
(US$ millions) 2009 2008 2008
---- ---- -----
Net operating revenues 7,448 8,619 -13.6%
Mobile revenues 6,198 7,372 -15.9%
Fixed-line revenues 1,687 1,429 18.1%
Eliminations -437 -182
RUSSIA OIBDA DEVELOPMENT 4Q '09/ 4Q '09/
(US$ millions) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA total 941 948 -0.7% 988 -4.8%
Mobile 824 840 -1.9% 873 -5.6%
Fixed-line 117 108 8.3% 115 1.7%
Adjusted total OIBDA
margin, % 47.1% 43.9% 50.6%
Mobile, % 49.3% 46.7% 53.1%
Fixed-line, % 25.5% 24.6% 26.5%
RUSSIA OIBDA DEVELOPMENT 2009/
(US$ millions) 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 3,674 4,215 -12.8%
Mobile 3,205 3,872 -17.2%
Fixed-line 469 343 36.7%
Adjusted total OIBDA
margin, % 49.3% 48.9%
Mobile, % 51.7% 52.5%
Fixed-line, % 27.8% 24.0%
* Please find information on respective operating income amounts in
the supplementary file FinancialOperatingQ42009.xls on our website
at http://www.vimpelcom.com/news/qrep.wbp.
CIS Segment Revenues in US$
4Q '09/ 4Q '09/
KAZAKHSTAN (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 170.4 196.9 -13.5% 171.9 -0.9%
Mobile 167.8 193.7 -13.4% 169.5 -1.0%
Fixed 7.5 7.1 5.6% 6.7 11.9%
Elimination -4.9 -3.9 -4.3
2009/
KAZAKHSTAN (US$ mln) 2009 2008 2008
---- ---- -----
Net operating revenues 653.3 743.6 -12.1%
Mobile 643.8 734.2 -12.3%
Fixed 25.0 19.1 30.9%
Elimination -15.5 -9.7
4Q '09/ 4Q '09/
UKRAINE (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 48.1 70.5 -31.8% 56.6 -15.0%
Mobile 25.2 47.5 -46.9% 34.0 -25.9%
Fixed 27.5 26.4 4.2% 28.1 -2.1%
Elimination -4.6 -3.4 -5.5
2009/
UKRAINE (US$ mln) 2009 2008 2008
---- ---- -----
Net operating revenues 203.2 280.7 -27.6%
Mobile 115.3 197.8 -41.7%
Fixed 105.0 96.1 9.3%
Elimination -17.1 -13.2
4Q '09/ 4Q '09/
ARMENIA (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------ ------ -------
Net operating revenues 47.3 63.7 -25.7% 51.4 -8.0%
Mobile 18.3 27.2 -32.7% 20.3 -9.9%
Fixed 29.0 36.5 -20.5% 31.1 -6.8%
Elimination 0.0 0.0 0.0
2009/
ARMENIA (US$ mln) 2009 2008 2008
---- ---- -----
Net operating revenues 200.6 256.2 -21.7%
Mobile 79.6 108.0 -26.3%
Fixed 121.0 148.2 -18.4%
Elimination 0.0 0.0
4Q '09/ 4Q '09/
UZBEKISTAN (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Net operating revenues 50.2 66.5 -24.5% 50.1 0.2%
Mobile 47.5 63.5 -25.2% 46.8 1.5%
Fixed 2.8 3.0 -6.7% 3.3 -15.2%
Elimination -0.1 0.0 0.0
2009/
UZBEKISTAN (US$ mln) 2009 2008 2008
---- ---- -----
Net operating revenues 211.3 216.4 -2.4%
Mobile 199.3 207.1 -3.8%
Fixed 12.2 9.3 31.2%
Elimination -0.2 0.0
4Q '09/ 4Q '09/
TAJIKISTAN (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile net operating
revenues 15.6 16.4 -4.9% 14.9 4.7%
2009/
TAJIKISTAN (US$ mln) 2009 2008 2008
---- ---- -----
Mobile net operating
revenues 59.2 50.8 16.5%
4Q '09/ 4Q '09/
GEORGIA (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Mobile net operating
revenues 10.2 5.9 72.9% 8.9 14.6%
2009/
GEORGIA (US$ mln) 2009 2008 2008
---- ---- -----
Mobile net operating
revenues 32.3 17.7 82.5%
CIS Segment Adjusted OIBDA in US$
4Q '09/ 4Q '09/
KAZAKHSTAN (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------ ------ -------
Adjusted OIBDA total 93.9 97.7 -3.9% 101.7 -7.7%
Mobile 89.4 93.8 -4.7% 97.8 -8.6%
Fixed 4.5 3.9 15.4% 3.9 15.4%
Adjusted OIBDA margin, % 55.1% 49.6% 59.2%
2009/
KAZAKHSTAN (US$ mln) 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 359.6 382.2 -5.9%
Mobile 345.4 372.5 -7.3%
Fixed 14.2 9.7 46.4%
Adjusted OIBDA margin, % 55.0% 51.4%
4Q '09/ 4Q '09/
UKRAINE (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA total 7.6 11.6 -34.5% 12.1 -37.2%
Mobile 0.6 5.7 -89.5% 4.5 -86.7%
Fixed 7.0 5.9 18.6% 7.6 -7.9%
Adjusted OIBDA margin, % 15.8% 16.5% 21.4%
2009/
UKRAINE (US$ mln) 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 36.0 22.5 60.0%
Mobile 7.5 0.4 1775%
Fixed 28.5 22.1 29.0%
Adjusted OIBDA margin, % 17.7% 8.0%
4Q '09/ 4Q '09/
ARMENIA (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA total 22.7 31.7 -28.4% 26.3 -13.7%
Mobile 7.5 12.5 -40.0% 9.7 -22.7%
Fixed 15.2 19.2 -20.8% 16.6 -8.4%
Adjusted OIBDA margin, % 48.0% 49.8% 51.2%
2009/
ARMENIA (US$ mln) 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 101.1 124.6 -18.9%
Mobile 37.0 47.0 -21.3%
Fixed 64.1 77.6 -17.4%
Adjusted OIBDA margin, % 50.4% 48.6%
4Q '09/ 4Q '09/
UZBEKISTAN (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted OIBDA total 23.0 34.2 -32.7% 23.5 -2.1%
Mobile 21.9 33.0 -33.6% 22.2 -1.4%
Fixed 1.1 1.2 -8.3% 1.3 -15.4%
Adjusted OIBDA Margin, % 45.8% 51.4% 46.9%
2009/
UZBEKISTAN (US$ mln) 2009 2008 2008
---- ---- -----
Adjusted OIBDA total 106.6 115.9 -8.0%
Mobile 101.7 112.8 -9.8%
Fixed 4.9 3.1 58.1%
Adjusted OIBDA Margin, % 50.4% 53.6%
4Q '09/ 4Q '09/
TAJIKISTAN (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted mobile OIBDA 7.1 5.3 34.0% 5.2 36.5%
Adjusted mobile OIBDA
margin, % 45.5% 32.3% 34.9%
2009/
TAJIKISTAN (US$ mln) 2009 2008 2008
---- ---- -----
Adjusted mobile OIBDA 22.5 14.0 60.7%
Adjusted mobile OIBDA
margin, % 38.0% 27.6%
4Q '09/ 4Q '09/
GEORGIA (US$ mln) 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
------ ------ ------- ------ -------
Adjusted mobile OIBDA 0.4 -1.2 n/a 1.0 -60.0%
Adjusted mobile OIBDA
margin, % 3.9% n/a 11.2%
2009/
GEORGIA (US$ mln) 2009 2008 2008
---- ---- -----
Adjusted mobile OIBDA 0.9 -6.6 n/a
Adjusted mobile OIBDA
margin, % 2.8% n/a
* Please find information on respective operating income amounts in
the supplementary file FinancialOperatingQ42009.xls on our website
at http://www.vimpelcom.com/news/qrep.wbp.
Attachment F: Average Rates of Functional Currencies to USD*
Functional Currency/ 3q '08 4q '08 1q '09 2q '09 3q '09 4q '09
1 US$ ------ ------ ------ ------ ------ ------
Russia RUR 24.25 27.27 33.93 32.21 31.33 29.47
Kazakhstan KZT 119.99 120.16 138.85 150.47 150.75 149.77
Ukraine UAH 4.85 6.21 7.70 7.66 7.82 7.99
Armenia AMD 302.27 306.47 325.11 370.46 372.66 384.40
Georgia GEL 1.41 1.55 1.67 1.66 1.68 1.68
* Functional currencies in Tajikistan, Uzbekistan and Cambodia are
US dollars.
Attachment G: Key Financial Results in Russian Rubles (Convenience
Translation)
4Q '09/ 4Q '09/
CONSOLIDATED OPERATIONS 4Q '09 4Q '08 4Q '08 3Q '09 3Q '09
(RUR, millions) ------ ------ ------- ------ -------
Net operating revenues 68,053 69,677 -2.3% 71,338 -4.6%
Adjusted OIBDA 32,066 30,648 4.6% 35,980 -10.9%
Adjusted OIBDA margin, % 47.1% 44.0% 50.4%
Operating income 17,919 5,674 215.8% 22,299 -19.6%
Operating income margin, % 26.3% 8.1% 31.3%
SG&A 20,042 21,465 -6.6% 18,760 6.8%
including Sales & Marketing
Expenses 6,428 7,784 -17.4% 5,766 11.5%
including General &
Administrative Costs 13,614 13,681 -0.5% 12,994 4.8%
SG&A percentage 29.4% 30.8% 26.3%
Net income (loss) attributable
to VimpelCom 8,341 -22,243 n/a 13,513 -38.3%
Net income (loss) attributable
to VimpelCom per common share,
basic, (RUR) 161.27 -439.55 266.83
Net income (loss) attributable
to VimpelCom per ADS
equivalent, basic, (RUR) 8.06 -21.98 13.34
Capital expenditures 12,458 23,328 -46.6% 3,842 224.3%
Mobile subscribers ('000) 64,596 61,029 5.8% 65,358 -1.2%
Broadband subscribers ('000) 2,257 1,221 84.8% 1,930 16.9%
2009/
CONSOLIDATED OPERATIONS 2009 2008 2008
(RUR, millions) ---- ---- -----
Net operating revenues 275,269 251,432 9.5%
Adjusted OIBDA 135,170 120,488 12.2%
Adjusted OIBDA margin, % 49.1% 47.9%
Operating income 81,734 61,670 32.5%
Operating income margin, % 29.7% 24.5%
SG&A 75,466 70,730 6.7%
including Sales & Marketing
Expenses 22,910 23,250 -1.5%
including General &
Administrative Costs 52,556 47,480 10.7%
SG&A percentage 27.4% 28.1%
Net income (loss) attributable
to VimpelCom 35,939 9,966 260.6%
Net income (loss) attributable
to VimpelCom per common share,
basic, (RUR) 709.16 196.57
Net income (loss) attributable
to VimpelCom per ADS
equivalent, basic, (RUR) 35.46 9.83
Capital expenditures 25,252 64,512 -60.9%
Mobile subscribers ('000) 64,596 61,029 5.8%
Broadband subscribers ('000) 2,257 1,221 84.8%
Net operating revenues
4Q '09 Russia CIS SEA Eliminations Total
(RUR millions) ------ --- --- ------------ -----
Mobile business 49,249 8,370 59 -59 57,619
Fixed-line business 13,499 1,975 0 -531 14,943
Eliminations -3,920 -265 0 -324 -4,509
Total net operating
revenue 58,828 10,080 59 -914 68,053
SOURCE Vimpel-Communications
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