- Annual Subscriber Growth Exceeds 150%
Moscow and New York (April 21, 1997) - Open Joint Stock Company Vimpel-Communications ("VimpelCom") (NYSE: VIP) today reported increased earnings and continued strong subscriber growth on its Moscow D-AMPS cellular network for the fourth quarter of 1996 and for the twelve months ended December 31, 1996. The company also reported that the development of its PCS (GSM-1800) business is on schedule and commercial service is expected to begin in the second quarter of 1997.
For the fourth quarter of 1996, VimpelCom reported total operating revenues of $67.1 million, a 70% increase over the $39.5 million in total operating revenues reported in the last quarter of 1995. For the fourth quarter of 1996, total net operating revenues (net of revenue-based taxes) were $64.0 million, a 68% increase over the $38.0 million in net operating revenues reported in the same quarter of 1995. Operating income for the fourth quarter of 1996 rose to $18.7 million, up 96% compared with the $9.5 million in operating income reported in the same period of 1995. Net income for the quarter ended December 31, 1996, was $10.5 million, or $0.58 per share ($0.44 per ADS), a 94% increase over the net income of $5.4 million, or $0.33 per share ($0.25 per ADS), earned in the fourth quarter of 1995. Each ADS represents 0.75 of one share of common stock.
For the year ended December 31, 1996, VimpelCom reported total operating revenues of $213.2 million compared with total operating revenues of $100.9 million for 1995, an increase of 111 %. Net operating revenues (net of revenue-based taxes) for 1996 were $204.2 million, a 110% increase over the $97.1 million in net operating revenues reported in 1995. Service revenue for 1996 increased to approximately 73% of net operating revenues compared with approximately 55% of net operating revenues in 1995. The Company reported operating income of $70.5 million in 1996, which includes the effect of a nonrecurring, one-time compensation charge of $4.9 million incurred in the first quarter of 1996, and represents a 55% increase over the $45.4 million in operating income reported in 1995. Without this one-time charge, operating income in 1996 would have increased by 66% compared with 1995. Net income for the year ended December 31, 1996, was $44.9 million, or $2.59 per share ($1.94 per ADS), a 63% increase over the net income of $27.6 million, of $1.58 per share ($1.19 per ADS), earned in 1995. Without the one-time $4.9 million compensation charge, net income in 1996 would have increased by 80%.
As of December 31, 1996, VimpelCom had over 56,500 subscribers in the Moscow License Area, representing a growth of 26% over the approximately 45,000 subscribers at the end of the third quarter of 1996, and a growth of over 150% compared with the approximately 22,500 subscribers reported at the end of 1995. Commenting on today's announcement, Dmitri Zimin, President and Chief Executive Officer of VimpelCom, said: "We are very gratified by these results, because they reflect a historic year for VimpelCom. We completed the first listing by a Russian company on the New York Stock Exchange, and also maintained our dominant market position in the expanding wireless market in Moscow. In 1997, we will continue to concentrate on further expanding our D-AMPS service in Moscow and the surrounding regions, and introduce our new GSM-1800 service, which will significantly increase the variety of services offered to our customers and,over the long term, develop the wireless mass market."
For the fourth quarter of 1996, EBITDA remained strong, reaching $22.1 million, 111% higher than the $10.5 million in the fourth quarter of 1995. EBITDA for the year ended December 31, 1996, was $85.9 million, a 77% increase over the EBITDA of $48.5 million reported in 1995. EBITDA for the year ended 1996 excludes the $4.9 million non-recurring compensation charge incurred in the first quarter of 1996. The EBITDA margin for the year ended December 31, 1996, was 42%, a decrease from the 50% margin in 1995. This decrease for the year was due mainly to higher operating expenses.
Selling, general and administrative expenses substantially increased to $50.7 million for the year ended December 31, 1996, from the $15.0 million in 1995. For the fourth quarter of 1996, selling, general and administrative expenses increased to $21.2 million from the $8.4 million reported in the same quarter a year ago. These increases resulted primarily from the overall increase in the level of business activity in 1996 compared with 1995 and the build out of support infrastructure and other customer-related and administrative facilities.
Overall capital expenditure in 1996 was approximately $120 million as the Company continued to build out its D-AMPS network and started the development of its GSM-1800 network. As a result, depreciation and amortization charges in 1996 increased to $10.5 million compared with $3.1 million in 1995. The Company plans to increase capital expenditure in 1997 in order to increase the capacity and extend the geographic coverage in the license areas of its AMPS network. In addition, in 1997 VimpelCom plans to add capacity to its new GSM-l800 network and extend the coverage in Moscow and the surrounding regions. The Company expects that overall capital expenditure for 1997 will be approximately $148 million.
Having begun full-scale operations in 1994, VimpelCom is now the largest provider of cellular telecommunications in Russia, marketing its services under the brand name "Bee Line". The Group's primary operating area includes the City of Moscow and Mosdow Region, which together cover a population of over 15 million people. The Group operates the only Digital Advanced Mobile Phone system ("D-AMPS") cellular system in the Moscow License Area, and has also been granted a license to provide Personal Communications Services ("PCS") in the Moscow License Area. VimpelCom completed an initial public offering of ADSs in November 1996 and is the first and only Russian company listed on the New York Stock Exchange.
For more information, contact
John McInerney or Perry Hall
Dewe Rogerson Inc.
Unaudited Consolidated Condensed Statements of Income
|Three months ended December 31 ,||Twelve months ended December 31 ,|
|(In thousands, except per share and per ADS amounts)|
|Service revenues and connection fees||US$ 57,530||US$ 28,642||US$ 173,188||US$ 73,164|
|Sales of handsets and accessories||9,350||10,865||35,316||27,753|
|Installation and equipment contracts||216||0||4,726||0|
|Total operating revenues||67,096||39,507||213,230||100,917|
|Less revenue-based taxes||3,055||1,486||9,061||3,794|
|Net operating revenues||64,041||38,021||204,169||97,123|
|Cost of handsets and accessories sold||6,608||7,720||21,988||17,492|
|Cost of installation and equipment contracts||445||0||4,680||0|
|Selling, general and administrative expenses||21,159||8,418||50,667||14,980|
|Provision for doubtful accounts||2,375||4,500||7,310||4,500|
|Depreciation and amortization||3,397||929||10,549||3,104|
|Total operating expenses||45,350||28,489||133,695||51,747|
|Other income and expenses:|
|Net foreign exchange gain (loss)||570||(1,361)||267||(391)|
|Total other income and expense||(848)||(2,917)||(5,087)||(4,210)|
|Income before income taxes and minority interest||17,843||6,615||65,387||41,166|
|Provision for income taxes||7,336||1,204||20,477||13,545|
|Minority interest in net earnings of subsidiaries||14||0||14||0|
|Net income||US$ 10,493||US$ 5,411||US$ 44,896||US$ 27,621|
|Net income per common share||US$ 0.58||US$ 0.33||US$ 2.59||US$ 1.58|
|Net income per ADS equivalent||US$ 0.44||US$ 0.25||US$ 1.94||US$ 1.19|
|Weighted average common shares outstanding (thousands)||17,981||16,397||17,333||17,481|
Open Joint Stock Company Vimpel-Communications
Consolidated Balance Sheets
|Cash and cash equivalents||US$ 33,316||US$ 8,844|
|Accounts receivable - trade, net of allowance for doubtful accounts of US$ 2,692 in 1995 and US$ 4,106 in 1996||28,119||10,219|
|Total current assets||99,040||43,038|
|Property and equipment, net||179,808||70,233|
|Due from related parties||2,682||3,199|
|Total assets||US$ 298,889||US$ 122,598|
|Liabilities and shareholders' equity|
|Accounts payable||US$ 11,903||US$ 3,586|
|Deferred income taxes||1,565||315|
|Equipment financing, current portion||6,139||7,847|
|Total current liabilities||63,931||48,422|
|Deferred income taxes||23,774||9,668|
|Equipment financing, less current portion||61,818||20,509|
|Other long term liabilities||-||602|
|Commitments and contingencies||-||-|
Convertible voting preferred stock (5 rubles nominal value per share), 10,000,000 shares authorized; 6,426,600 shares issued and outstanding in 1996
|Common stock (5 rubles nominal value per share), 90,000,000 shares authorized; 19,280,000 shares issued and outstanding in 1996; 12,660,000 shares issued and outstanding in 1995 including 346,000 treasury shares||86||80|
|Additional paid-in capital||64,340||6,064|
|Total shareholders' equity||146,575||43,397|
|Total liabilities and shareholders' equity||US$ 298,889||US$ 122,598|