VimpelCom Posts 4th Quarter and 2012 Year End Results [Professional Services Close - Up]
(Professional Services Close - Up Via Acquire Media NewsEdge) VimpelCom, a global provider of telecommunications services, announced operating and financial results for the quarter and full year ended December 31, 2012.
Jo Lunder, CEO comments:
"I am very pleased to report strong performances from all of our Business Units in the fourth quarter of 2012. Russia delivered a 4 percent increase in revenue year-on-year with mobile ARPU up 5 percent, stimulated by usage and Value Added Services growth with mobile data revenues up 37 percent. EBITDA in Russia increased 15 percent as a result of the revenue improvement and strong execution on our operational excellence programs. In Italy, we have again outperformed the market, strengthening our market position in both the mobile and fixed-line segments. Excluding the impact of mobile termination rate cuts, mobile service revenues were up 2 percent year-on-year, with mobile internet revenues growing 37 percent. In Africa & Asia, we experienced strong increases in subscribers leading to organic revenue growth of 11 percent. We have made good progress on the transition to bundled tariff plans in Ukraine, resulting in a return to growth, while at the same time increased our subscriber numbers by 5 percent. Finally, our CIS business continued to deliver double digit revenue and EBITDA growth. The Group EBITDA margin in 4Q12 rose to 41.1 percent. Our 2012 results, with clear operational improvements, demonstrate our ability to deliver on our strategy and objectives. In 2013 we expect to deliver results in line with our enhanced Value Agenda objectives for 2013- 2015."
4Q12 results were strong on an organic basis, but in USD terms the results were significantly impacted by the YoY appreciation of the USD against the local currencies in most of VimpelComs operating businesses.
The total mobile subscriber base increased 5 percent YoY to 214 million by the end of the fourth quarter. The largest absolute contribution came from accelerated growth in subscribers in the Africa & Asia Business Unit and a large increase in subscribers in the CIS Business Unit from growth in Uzbekistan. The Company also achieved solid growth in fixed and mobile broadband subscribers in Russia, Italy and Ukraine.
In Russia, the Company continued the positive trend of the first nine months of the year, delivering organic revenue growth of 4 percent YoY. Mobile broadband subscribers in Russia increased 5 percent YoY to 2.7 million and fixed broadband subscribers grew 15 percent YoY to 2.4 million.
In Italy, the Company continued to outperform the broader Italian, highly competitive telecom market in the fourth quarter, in a highly competitive environment. VimpelCom strengthened its market position in Italy in both mobile and fixed-line, increasing its market share in both segments. The fixed broadband subscriber base increased 4 percent YoY to more than 2.2 million. Mobile broadband consumer subscribers grew 24 percent YoY.
In the Africa & Asia Business Unit, the Company exceeded the 85 million subscribers mark, an increase of 8 percent YoY, through strong subscriber growth in most of its operations. Solid performance across the main operations, Algeria, Pakistan and Bangladesh, led to organic revenue growth of 11 percent YoY.
The Ukraine Business Unit continued to solidify its market position in the mobile segment through the ongoing transition to bundled tariff plans. The transition is showing good results with mobile total operating revenues returning to growth. Mobile subscribers increased by 5 percent YoY to 26.0 million.
The CIS Business Unit delivered double digit organic revenue growth, mainly resulting from a temporary decrease in competition in Uzbekistan. The Company continues to face particularly strong competition in Kazakhstan, but also in Armenia and Tajikistan.
Total operating revenues in the fourth quarter of 2012 increased by 1 percent YoY impacted by unfavorable currency movements. Organic revenue growth was 3 percent, with solid performance across most Business Units.
EBITDA increased 10 percent YoY, also impacted by unfavorable currency movements. Excluding these forex effects, EBITDA increased 13 percent compared to 4Q11. In addition to the focus on operational excellence throughout the businesses, EBITDA in 4Q11 included certain one-off charges, including provisions for HR costs in Russia, Africa & Asia and Ukraine and inventory write-offs in Russia. In addition, 4Q11 included a provision in Africa & Asia for a corporate contingent liability and costs associated with the demerger of OTMT. These combined effects resulted in a more favorable comparison for 4Q12.
Strong EBITDA organic growth YoY was seen in the Russia, Africa & Asia, Ukraine and CIS Business Units, up 15 percent, 36 percent, 9 percent and 45 percent, respectively. The strong increase in Africa & Asia is also driven by the doubling of the EBITDA in Bangladesh as a result of significantly lower commercial opex in 4Q12, while in 4Q11 banglalink recorded very high customer acquisition costs. Italy showed an EBITDA decline of 4 percent YoY in local currency, mainly due to the MTR cut in July 2012. Net of the MTR cut, EBITDA would have increased by 2 percent YoY, supported by cost efficiency measures.
EBIT in 4Q12 grew by 231 percent compared to 4Q11. The 4Q11 results were negatively impacted by impairments for a total of USD 527 million and the impact of the Purchase-Price Allocation related to the acquisition of Wind Telecom in addition to the one-offs mentioned above. EBIT in 4Q12 was positively affected by the declining amortization schedule applied to intangible assets as part of the Wind Telecom acquisition. EBIT in 4Q12 was also impacted by negative forex and an impairment of OTH's shareholder loan to WIND Mobile Canada of USD 328 million, following a detailed business plan review.
Excluding these combined effects for 4Q11 and 4Q12, EBIT would have grown by 24 percent.
Profit before tax increased to USD 764 million, compared to a loss of USD 559 million in the same period a year ago. This increase was primarily the result of a substantially higher EBIT and a Euroset fair value adjustment of USD 606 million, due to IFRS requirements, as a result of the acquisition of the additional 0.1 percent. Net foreign exchange loss was USD 30 million in 4Q12, while in 4Q11 there was a loss of USD 119 million.
Net income increased to USD 801 million compared to a net loss in 4Q11 of USD 381 million. The increase is mainly the result of the aforementioned increase in Profit before tax.
CAPEX was USD 1,631 million with investments in the further roll out of the mobile networks in Russia, Bangladesh and the CIS. In Italy, Wind continued to invest in the roll-out of HSPA+ and in backbone capacity to support the growth in data.
Total assets in the quarter increased by 3 percent to USD 55.4 billion, primarily as a result of cash generation, investments in fixed assets and the positive impact of currency translation YoY. Gross debt increased marginally in the quarter to USD 27.0 billion, mainly due to foreign exchange movements. Net debt decreased to USD 22.0 billion, leading to a net debt to LTM EBITDA of 2.2x at the end of the fourth quarter.
Net cash from operating activities increased 24 percent YoY to USD 2.3 billion positively impacted by the increase in EBITDA and improvement in working capital, partially offset by higher tax payments compared to the same period last year. The decrease in net cash used in investing activities compared to 3Q12 was mainly impacted by lower cash out for investments in property, equipment and intangible assets in 2012. The decrease in net cash used in financing activities in 4Q12 compared to 4Q11 was mainly the result of the net repayment of debt. Net cash from operating activities in FY12 is USD 7.3 billion, or 19 percent higher than in FY11.
VimpelCom is an integrated telecommunications services operator focusing on providing voice and data services through a range of traditional and broadband mobile and fixed technologies in Russia, Italy, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Cambodia, Laos, Algeria, Bangladesh, Pakistan, Burundi, Zimbabwe, Central African Republic and Canada.
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