- 119% Year-to-Year Subscriber Growth
Moscow and New York (June 6, 1997) - Open Joint Stock Company Vimpel-Communications ("VimpelCom") (NYSE: VIP) today reported increased earnings and continued strong subscriber growth for the first quarter ended March 31, 1997.
For the first quarter of 1997, VimpelCom reported total operating revenues of $66.7 million, a 65% increase over the $40.4 million in total operating revenues reported in the first quarter of 1996. For the first quarter of 1997, total net operating revenue (net of revenue based taxes) was $64.1 million, a 62% increase over the $39.6 million in net operating revenues reported in the first quarter of 1996. Operating income for the first quarter of 1997 rose to $20.3 million, up 36% compared with the $14.9 million in operating income reported in the same period a year ago.
Net income for the quarter ended March 31, 1997, was $16.8 million, or $0.87 per share ($0.65 per ADS), a 151% increase over the net income of $6.7 million, or $0.38 per share ($0.29 per ADS), earned in the first quarter of 1996. Each ADS represents 0.75 of one share of common stock. The growth in net income was greater than the EBITDA growth in the first quarter of 1997 due to a lower provision for income taxes, lower interest charges and a favorable foreign exchange gain.
EBITDA remained strong and reached $24.5 million in the first quarter of 1997, 12% higher than the $21.8 million in the first quarter of 1996. It should be noted that EBITDA in the first quarter of 1996 included a gain amounting to approximately $2.1 million. Without this one-time gain, the adjusted EBITDA in the first quarter of 1996 would have been $19.7 million and the difference in the growth between the first quarter of 1996 and 1997 would have been 24%. The EBITDA margin for the quarter ended March 31, 1997 was 38.2%, a decrease from the 49.8% as adjusted EBITDA margin for the corresponding period in 1996, but higher than the 34.5% EBITDA margin for the fourth quarter of 1996. The decrease in EBITDA margin year on year is due primarily to an increase in the provision for doubtful accounts and higher selling, general and administrative expenses related to increases in overall business activity and start-up expenses related to the new PCS network.
As of March 31, 1997, VimpelCom had over 64,500 subscribers in the Moscow License area, representing a growth of 119% compared to the approximately 29,400 subscribers reported at the end of the first quarter of 1996.
Commenting on today's announcement, Dmitri Zimin, President and Chief Executive Officer of VimpelCom, said: "We are pleased with our first quarter results, which were both in line with our expectations and reflect the seasonality of the Moscow market which has previously been stronger in the second half of the year. On May 28, 1997, we completed a secondary offering of VimpelCom stock on behalf of FGI Wireless which was very well received by the international markets and served to increase liquidity for all of our shareholders. As we complete the test phase of our new PCS network, we expect to introduce commercial service to the Moscow market in June. Positioned as a complement to our existing Bee Line network, we expect our PCS service will help us develop new market segments hand-in-hand with our D-AMPS service."
For the first quarter of 1997, selling, general and administrative expenses, excluding depreciation and amortization, increased 91% to $17.3 million from the $9.1 million reported in the same quarter in 1996. The increase in selling, general and administrative expenses over first quarter 1996 resulted primarily from the overall increase in the level of business activity in the D-AMPS cellular business compared with the first quarter of 1996, including increases in advertising, marketing and other operating expenses required to build out the Company's support infrastructure and other customer-related and administrative facilities. In addition, the first quarter of 1997 includes continued start-up costs for the new PCS network.
For the first quarter of 1997, the Company recorded a $3.5 million provision for doubtful accounts receivable compared with $1.0 million in the corresponding quarter of 1996. The increase in the provision for doubtful accounts is due principally to the increase in the level of business activity in the first quarter of 1997 as compared to the corresponding period in 1996. The Company continues to believe the provision is conservative and more than adequate for its experience at this time.
< Depreciation and amortization expense was $4.2 million for the first quarter of 1997, a 110% increase compared to $2.0 million in the corresponding period of 1996. The increase was due to the increased depreciable asset base resulting from the Company's continuing capital investments. To expand its D-AMPS service, VimpelCom signed an agreement with Ericsson at the end of April 1997 which will increase the network's capacity and provide wider coverage in the Moscow region and in VimpelCom's other service areas.
Having begun full-scale operations in 1994, VimpelCom is now the largest provider of cellular telecommunications in Russia, marketing its services under the brand name "Bee Line". The Group's primary operating area includes the City of Moscow and Moscow Region, which together cover a population of over 15 million people. The Group operates the only Digital Advanced Mobile Phone System ("D-AMPS") cellular system in the Moscow License Area and the first PCS network, using GSM technology, in the Moscow License Area and in Russia. VimpelCom completed an initial public offering of American Depository Shares (ADSs) in November 1996 and is the first and only Russian company listed on the New York Stock Exchange.
For more information, contact
John McInerney or Perry Hall
Dewe Rogerson Inc.
Open Joint Stock Company Vimpel-Communications
Unaudited Consolidated Condensed Statements of Income
|Three months ended March 30, (In thousand, except per share
|Service revenue and connection fees||US$ 58,434||32,196|
|Sales of handsets and accessories||8,000||8,213|
|Installation and equipment contracts||295||-|
|Total operating revenues||66,729||40,409|
|Revenue based taxes||(2,582)||(843)|
|Net operating revenues||64,147||39,566|
|Cost of handsets and accessories sold||5,232||5,305|
|Cost of installation and equipment contracts||265||-|
|Selling, general and administrative expenses||17,340||9,058|
|Depreciation and amortization||4,192||2,000|
|Provision for doubtful accounts||3,501||1,000|
|Total operating expenses||43,832||24,645|
|Other income and expenses:|
|Net foreign exchange (loss) gain||1,842||(225)|
|Total other income and expenses||1,623||(1,318)|
|Income before income taxes and minority interest||21,938||13,603|
|Provision for income taxes||5,077||6,906|
|Minority interest in net earnings of subsidiaries||52||-|
|Net Income||US$ 16,809||US$ 6,697|
|Net Income per common share||US$ 0.87||US$ 0.38|
|Weighted average common shares outstanding||19,280||17,596|
|Net Income per ADS equivalent||US$ 0.65||US$ 0.29|
Open Joint Stock Company Vimpel-Communications
Condensed Consolidated Balance Sheet
|Cash and cash equivalents||US$ 5,771||US$ 33,316|
|Other current assets||7,862||8,672|
|Total current assets||93,590||99,040|
|Property and equipment, net||215,536||179,808|
|Total Assets||US$ 330,522||US$ 298,889|
|Liabilities and shareholders' equity:|
|Accounts payable||US$ 6,007||US$ 11,903|
|Other accrued liabilities||14,322||10,507|
|Total current liabilities||62,708||63,931|
|Deferred income taxes||27,131||23,774|
|Equipment financing and other liabilities||74,456||61,818|
|Total liabilities and shareholders' equity||US$ 330,522||US$ 298,889|