- 95% Year-to-Year Subscriber Growth
Moscow and New York (March 26, 1998) - Open Joint Stock Company Vimpel-Communications ("VimpelCom") (NYSE:VIP) today reported increased earnings and continued strong subscriber growth for the fourth quarter and the twelve months ended December 31, 1997.
For the fourth quarter ended December 31, 1997, VimpelCom reported total operating revenues of $89.9 million, a 34% increase over the $67.1 million in total operating revenues reported in the same period in 1996. For the fourth quarter of 1997, total net operating revenues (net of revenue-based taxes) were $86.5 million, a 35% increase over the $64.0 million in net operating revenues reported in the same period in 1996. Operating income for the fourth quarter of 1997 was $27.4 million, an increase of 47% compared to $18.7 million in operating income reported in the same period in 1996. Net income for the quarter ended December 31, 1997, was $14.2 million, or $0.74 per share ($0.55 per ADS), a 35% increase over the net income of $10.5 million, or $0.55 per share ($0.41 per ADS), earned in the same period in 1996. Each ADS represents 0.75 of one share of common stock.
For the year ended December 31, 1997, VimpelCom reported total operating revenues of $305.9 million compared with total operating revenues of $213.2 million for 1996, an increase of 43%. Net operating revenues (net of revenue-based taxes) for 1997 were $293.9 million, a 44% increase over the $204.2 million in net operating revenues reported in 1996. Service revenues for 1997 represented approximately 87% of total operating revenues as compared to approximately 72% reported in 1996. The Company reported operating income of $86.8 million in 1997, an increase of 23% over the $70.5 million in operating income reported in 1996. Net income for the year ended December 31, 1997, was $61.1 million or $3.17 per share ($2.38 per ADS), a 36% increase over the net income of $44.9 million, or $2.53 per share ($1.90 per ADS), earned in 1996.
As of December 31, 1997, VimpelCom had 110,140 subscribers in the Moscow License Area, representing a growth of 95% over the 56,584 subscribers at the end of 1996, and a market share which the Company estimates to be approximately 52%. Average revenue per subscriber per month for 1997 was approximately $277, 14% lower than in 1996 and in line with Company estimates. Churn for the year ended December 31, 1997 was 15.9% compared to 16.1% in 1996. In addition, good progress was made in the Company's 50% joint venture in Samara, as the number of subscribers grew 131% from 2,420 at the end of 1996 to 5,602 at the end of 1997.
Commenting on today's announcement, Dmitri Zimin, President and Chief Executive Officer of VimpelCom said: "We are very pleased with our fourth quarter results and particularly, with our strong subscriber growth. Overall, 1997 has seen record investment in our networks and the successful launch of Russia's first GSM-1800 (PCS) network. Despite increased investments and higher operating expenses in 1997, our EBITDA for the year was strong and grew by more than 30% and net income grew by 36% over 1996. In 1998, we will continue to concentrate on the further expansion of our networks in Moscow and introduction of new services, which will form the basis for long-term earnings growth, as we begin to develop the Russian wireless mass market."
EBITDA for the fourth quarter of 1997 was a record $35.7 million, 62% higher than the $22.1 million in the same period in 1996. EBITDA for the year ended December 31, 1997, was $112.0 million, a 30% increase over the EBITDA of $85.9 million reported in 1996. The EBITDA margin for the year ended December 31, 1997, was 38.1%, a decrease from the 42.1% EBITDA margin in 1996. This decrease in EBITDA margin is due primarily to higher selling, general and administrative expenses (including expenses related to the launch of the new GSM-1800 network) and a reduction in the contribution from connection fees and the sale of handsets when compared to 1996.
Selling, general and administrative expenses for the fourth quarter of 1997, increased 7% to $22.6 million compared to the $21.2 million reported in the same period in 1996. As a percentage of net revenue in the fourth quarter of 1997, selling, general and administrative expenses decreased from 33.0% to 26.1% compared to the same period in 1996 and from 27.1% in the third quarter of 1997. Selling, general and administrative expenses for the year ended December 31, 1997, were $80.2 million, 58% higher than the $50.7 million incurred in 1996. The absolute increase in selling, general and administrative expenses in 1997 was due primarily to the increase in the level of business activity compared with 1996 and expenses arising from the commercial launch of the new GSM-1800 network.
For the fourth quarter ended December 31, 1997, the Company reduced its provision for doubtful accounts receivable, which resulted in a gain of $0.6 million compared to a $2.4 million charge in the same period in 1996. For the year ended December 31, 1997, provision for doubtful accounts receivable was $10.2 million, compared to $7.3 million in 1996. This increase in provision for doubtful accounts receivable was due to the growth in business activities. As a percentage of net operating revenues, the provision for doubtful accounts receivable for 1997 was 3.5%, slightly lower than the 3.6% in 1996.
Overall capital additions in 1997 were approximately $194.1 million, 62% higher than the $120.0 million incurred in 1996, reflecting the Company's continued build out of its original D-AMPS network, investment in Bee-Net (the Company's proprietary fiber optic network) and the introduction of its new GSM-1800 network in June of 1997. As a result, depreciation and amortization expense increased 139% in 1997 to $25.2 million compared to $10.5 million in 1996.
VimpelCom is the largest provider of cellular telecommunications in Russia, marketing its services under the brand name "Bee Line". The VimpelCom Group operates the only Digital-AMPS cellular network and the first Russian PCS network, using GSM technology, in the Moscow License Area, which includes the City of Moscow and the Moscow Region. The VimpelCom Group holds cellular licenses in nine regions of European Russia which have a total population of approximately 28 million (19% of Russia's population). VimpelCom was the first Russian company listed on the New York Stock Exchange (November 1996), trading under the symbol "VIP".
This press release contains forward-looking statements related to the development of the Company's business. These statements are based on Management's best assessment of future market conditions and trends. The actual outcome may differ from these statements as a result of unforeseen developments from competition, governmental regulations of the wireless telecommunications industry, general political uncertainties in Russia and general economic developments in Russia. 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.
For more information, please contact:
Edelman Financial Worldwide
212 704 4423
Open Joint Stock Company Vimpel-Communications
Unaudited Consolidated Condensed Statements of Income
|Three months ended
|Twelve months ended
|(In thousands, except per share (ADS) amounts)|
|Service revenues and connection fees||US$57,530||US$79,636||US$173,188||US$271,352|
|Sales of handsets and accessories||9,350||9,532||35,316||31,934|
|Installation and equipment contracts||216||781||4,726||2,644|
|Total operating revenues||67,096||89,949||213,230||305,930|
|less revenue-based taxes||3,055||3,422||9,061||11,996|
|Net operating revenues||64,041||86,527||204,169||293,934|
|Cost of handsets and accessories sold||6,608||9,627||21,988||26,028|
|Cost of installation and equipment contracts||445||801||4,680||1,971|
|Selling, general and administrative expenses||21,159||22,609||50,667||80,188|
|Depreciation and amortization||3,397||8,374||10,549||25,238|
|Provision for doubtful accounts||2,375||(628)||7,310||10,212|
|Total Operating expenses||45,350||59,125||133,695||207,112|
|Other income and expenses:|
|Net foreign exchange (loss) gain||570||(443)||267||1,835|
|Total other income and expenses||(848)||(3,378)||(5,087)||851|
|Income before income taxes and minority interest||17,843||24,024||65,387||87,673|
|Provision for income taxes||7,336||9,750||20,477||26,827|
|Minority interest in net losses of subsidiaries||14||90||14||(230)|
|Net income per common share||$0.55||$0.74||$2.53||$3.17|
|Net income per ADS equivalent||$0.41||$0.55||$1.90||$2.38|
|Weighted average common shares outstanding (thousands)||19,246||19,280||17,739||19,280|
|EBITDA||US $22,088||US $35,776||US $85,923||US $112,060|
Open Joint Stock Company Vimpel-Communications
Condensed Consolidated Balance Sheet
|(In thousands US dollars)|
|Cash and cash equivalents||US$ 33,316||US$ 14,333|
|Other current assets||21,967||34,436|
|Total current assets||99,040||114,425|
|Property and equipment, net||179,808||347,653|
|Total Assets||US$ 298,889||US$ 483,098|
|Liabilities and shareholders' equity|
|Other accrued liabilities||10,507||23,225|
|Total current liabilities||63,931||98,251|
|Deferred incomes taxes||23,774||33,747|
|Equipment financing and other liabilities||61,818||136,962|
|Total liabilities and shareholders' equity||US$298,889||US$483,098|