- 110% Year-to-Year Subscriber Growth
Moscow and New York (August 27, 1997) Open Joint Stock Company Vimpel-Communications ("VimpelCom") (NYSE: VIP) today reported increased earnings and continued strong subscriber growth for the second quarter and six months ended June 30, 1997.
For the second quarter of 1997, VimpelCom reported total operating revenues of $71.3 million, a 57% increase over the $45.5 million reported in the same quarter of 1996. Net operating revenues (net of revenue based taxes) in the second quarter of 1997 were $68.3 million, a 58% increase over the $43.2 million reported in the second quarter of 1996. Operating income for the second quarter of 1997 rose to $19.7 million, up 39% compared with the $14.2 million reported in the same period a year ago.
Net income for the quarter ended June 30, 1997, was $15.8 million, or $0.82 per share ($0.61 per ADS), a 41% increase over the net income of $11.2 million, or $0.67 per share ($0.50 per ADS), earned in the same period a year ago. Each ADS represents 0.75 of one share of common stock.
For the six months ended June 30, 1997, VimpelCom reported operating revenues of $138.0 million compared to total operating revenues of $ 85.9 million in the same period in 1996, an increase of 61%. Net operating revenues (net of revenue based taxes) for the six months ended June 30, 1997 were $132.4 million, a 60% increase over the $82.8 million in net operating revenues reported for the same period in 1996. Operating income for the six months ended June 30, 1997, rose to $40.0 million, up 38% compared with the $29.1 million reported in the same period in 1996. Net income for the first six months of 1997 was $32.6 million, or $1.69 per share ($1.27 per ADS), an 82% increase over the net income of $17.9 million, or US $1.03 per share ($0.77 per ADS), earned in the same period in 1996.
As of June 30, 1997, VimpelCom had approximately 73,600 subscribers in the Moscow License Area, representing a growth of 110% over the approximately 35,100 subscribers reported at the end of the second quarter of 1996.
Commenting on today's announcement, Dmitri Zimin, President and Chief Executive Officer of VimpelCom said: "We are quite pleased with our results this quarter. They met our expectations and reflect the seasonality of the Moscow market which traditionally tends to be stronger in the second half of the year than the first. On June 10, we launched Russia's first GSM-1800 network in Moscow, and also reduced our start-up prices. As a result, we saw a marked increase in subscriber uptake at the end of the quarter, a trend that has continued throughout the summer with July being a record month for subscriber growth.
EBITDA for the second quarter of 1997 remained strong, reaching $25.2 million, 52% higher than the $16.5 million in the same quarter of 1996. EBITDA for the six months ended June 30, 1997, was $49.7 million, a 30% increase over the EBITDA of $38.4 million reported for the same period in 1996. The EBITDA margin in the second quarter of 1997 was 36.9%, slightly less than the 38.3% in the same period of 1996, primarily resulting from increased selling, general and administrative expenses related to increased business activity and from start-up expenses related to the launch of the new GSM-1800 service.
Selling, general and administrative expenses, excluding depreciation and amortization, for the second quarter of 1997, increased 70% to $19.9 million from the $11.7 million reported in the same period in 1996. The increase in selling, general and administrative expenses over the second quarter of 1996 resulted primarily from the increase in the level of business activity in the D-AMPS cellular business compared with the same period 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 second quarter of 1997 includes start-up costs related to the commercial launch of the new GSM-1800 network.
The Company recorded a $3.2 million provision for doubtful accounts receivable compared with $2.1 million in the corresponding quarter of 1996. The increase in the provision for doubtful accounts is due primarily to the increase in the level of business activity in the second quarter of 1997 as compared with the corresponding period of 1996.
Depreciation and amortization expense was $5.5 million for the second quarter of 1997, a 130% increase compared to the $2.4 million in the corresponding period of 1996. The increase was due to increased depreciable asset base resulting from the Company's continuing capital investments in both its D-AMPS and GSM-1800 networks in order to expand capacity and coverage throughout its licensed areas.
Having begun full-scale operations in 1994, VimpelCom is now the largest provider of cellular telecommunications in Russia, marketing its services under the brand name "Bee Line". The Group's primary operating area includes the City of Moscow and Moscow Region, which together cover a population of over 15 million people. The Group operates the only Digital Advanced Mobile Phone System ("D-AMPS") cellular system and the first Russian PCS network, using GSM technology, in the Moscow License Area. VimpelCom completed an initial public offering of American Depository Shares (ADSs) in November 1996 and is the first and only Russian company listed on the New York Stock Exchange.
For more information, contact
John McInerney or Perry Hall
Dewe Rogerson Inc.
Open Joint Stock Company Vimpel-Communications
Unaudited Consolidated Condensed Statements of Income
|Three months ended June 30,||Six months ended June 30,|
|(In thousands of US dollars , except per share (ADS) amounts)|
|Service revenues and connection fees||US$ 63,477||36,525||121,911||68,721|
|Sales of handsets and accessories||6,361||8,957||14,361||17,170|
|Installation and equipment contracts||1,420||0||1,715||0|
|Total operating revenues||71,258||45,482||137,987||85,891|
|Less revenue-based taxes||2,979||2,254||5,561||3,097|
|Net operating revenues||68,279||43,228||132,426||82,794|
|Cost of handsets and accessories sold||4,332||4,011||9,564||9,316|
|Cost of installation and equipment contracts||810||0||1,075||0|
|Selling, general and administrative expenses||19,882||11,694||37,222||20,752|
|Depreciation and amortization||5,487||2,388||9,679||4,388|
|Provision for doubtful accounts||3,210||2,050||6,711||3,050|
|Total operating expenses||48,567||29,073||92,399||53,718|
|Other income and expenses:|
|Net foreign exchange (loss) gain||568||(588)||2,410||(813)|
|Total other income and expenses||2,752||(2,709)||4,375||(4,027)|
|Income before income taxes and minority interest||22,464||11,446||44,402||25,049|
|Provision for income taxes||6,747||239||11,824||7,145|
|Minority interest in net losses of subsidiaries||91||0||39||0|
|Net Income||US$ 15,808||US$ 11,207||US$ 32,617||US$ 17,904|
|Net Income per common share||US$ 0.82||US$ 0.67||US$ 1.69||US$ 1.03|
|Net Income per ADS equivalent||US$ 0.61||US$ 0.50||US$ 1.27||US$ 0.77|
|Weighted average common shares outstanding||19,280||16,848||19,280||17,395|
|EBITDA||US$ 25,199||16,543||US$ 49,706||38,364|
Open Joint Stock Company Vimpel-Communications
Condensed Consolidated Balance Sheet
|(In thousands of US dollars)|
|Cash and cash equivalents||US$ 8,078||US$ 33,316|
|Other current assets||25,936||21,967|
|Total current assets||118,064||99,040|
|Property and equipment, net||245,786||179,808|
|Total Assets||US$ 382,956||US$ 298,889|
|Liabilities and shareholders' equity:|
|Accounts payable||US$ 9,588||US$ 11,903|
|Other accrued liabilities||18,975||10,507|
|Total current liabilities||86,059||63,931|
|Deferred income taxes||28,466||23,774|
|Equipment financing and other liabilities||86,487||61,818|
|Total liabilities and shareholders' equity||US$ 382,956||US$ 298,889|