VIMPELCOM LTD (ADR) 
By AMSTERDAM, March 6, 2013 /PRNewswire/ --
KEY RESULTS AND DEVELOPMENTS IN 2012(*)
Q4
-- Revenues of USD 6.0 billion; organic(1) )growth of 3% YoY
-- EBITDA of USD 2.4 billion, up 13% YoY organically
-- EBITDA margin increased 3.3 p.p. YoY to 41.1%
-- Total mobile subscriber base grew 5% YoY to 214 million
-- Net income increased to USD 801 million
-- Net Cash from Operating Activities up 24% YoY to USD 2.3 billion
FY
-- Revenues of USD 23.1 billion; organic growth of 4% YoY
-- EBITDA of USD 9.8 billion, up 8% YoY organically
-- EBITDA margin increased 1.8 p.p. YoY to 42.4%
-- Net income increased to USD 2.1 billion
-- Net Cash from Operating Activities up 19% YoY to USD 7.3 billion
"VimpelCom Ltd" ("VimpelCom", "Company" or "Group") (NYSE: VIP), a leading global provider of telecommunications services, today announced operating and financial results for the quarter and full year ended December 31, 2012.
JO LUNDER, CHIEF EXECUTIVE OFFICER 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% increase in revenue year-on-year with mobile ARPU up 5%, stimulated by usage and Value Added Services growth with mobile data revenues up 37%. EBITDA in Russia increased 15% 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% year-on-year, with mobile internet revenues growing 37%. In Africa & Asia, we experienced strong increases in subscribers leading to organic revenue growth of 11%. 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%. Finally, our CIS business continued to deliver double digit revenue and EBITDA growth. The Group EBITDA margin in 4Q12 rose to 41.1%. 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."
CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS (FY11 IS PRO FORMA)*
USD mln 4Q12 4Q11 Reported Organic FY12 FY11 Reported Organic
YoY YoY YoY YoY
--- --- --- ---
Net operating revenues 5,950 5,889 1% +3% 23,061 23,477 -2% +4%
EBITDA 2,446 2,227 10% +13% 9,768 9,525 3% +8%
EBITDA margin 41.1% 37.8% - 42.4% 40.6% -
EBIT 709 214 241% 4,171 3,175 31%
Net income 801 (381) n.m. 2,145 525 309%
Capital expenditures** 1,631 3,734 -56% 4,120 6,683 -38%
Net cash from operating activities 2,301 1,858 24% 7,257 - -
Net debt / LTM EBITDA 2.2 2.6 - 2.2 2.6 -
Total mobile subscribers (millions)*** 214 204 5% 214 204 5%
------------------------------------- --- --- --- --- --- ---
* Comparative FY11 figures are Pro forma - for pro forma definition see next page. (
)** Including licenses of USD 1.8 billion in 4Q11 & FY11 and USD 0.1 billion in FY12
*** Following the sale of Vietnam the subscriber numbers for 4Q12 exclude the Vietnam subscriber numbers while 4Q11 included 2 million subs in Vietnam
For all other definitions see Attachment E.
1) Organic revenue and EBITDA growth are non-GAAP financial measures that exclude the effect of foreign currency movements and certain items like liquidations and disposals. A reconciliation of organic to reported Revenue and EBITDA growth can be found on page 2. For more information please see the definition of Organic growth Revenue and EBITDA in Attachment E.
CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS (ACTUAL REPORTED)
USD mln FY12 FY11 Reported
YoY
---
Net operating revenues 23,061 20,262 14%
EBITDA 9,768 8,256 18%
EBITDA margin 42.4% 40.7% -
EBIT 4,171 2,854 46%
Net income attributable to VimpelCom Ltd. 2,145 543 295%
Capital expenditures 4,120 6,349 -35%
Net cash from operating activities 7,257 6,106 19%
Net debt / LTM EBITDA 2.2 2.6 -
Total mobile subscribers (millions) 214 204 5%
---------------------------------- --- --- ---
ORGANIC GROWTH REVENUE AND EBITDA (FY11 IS PRO FORMA)
4Q12 versus 4Q11 FY12 versus FY11
USD mln Revenue EBITDA Revenue EBITDA
------- ------ ------- ------
Business Units Organic FX and Reported Organic FX and Reported Organic FX and Reported Organic FX and Reported
others others others Others
------ ------ ------ ------
Russia 4% 0% 4% 15% 1% 16% 7% -6% 1% 13% -6% 7%
Europe & NA -4% -4% -8% -4% -2% -6% -3% -7% -10% -3% -7% -10%
Africa & Asia 11% -9% 2% 36% -3% 33% 9% -9% 0% 15% -4% 11%
Ukraine 4% 0% 4% 9% 0% 9% 2% 0% 2% -1% -1% -2%
CIS 21% -5% 16% 45% -8% 37% 15% -5% 10% 22% -6% 16%
Total 3% -2% 1% 13% -3% 10% 4% -6% -2% 8% -5% 3%
----- --- --- --- --- --- --- --- --- --- --- --- ---
PRESENTATION OF FINANCIAL RESULTS
Actual twelve months 2011 results reflect
the consolidation of Wind Telecom as of
April 15, 2011. The Company believes pro
forma of FY11 results versus FY12 actual
reported results provide the most
meaningful comparison of financial
performance. For further details about
the presentation of the adjustments and
assumptions of our pro forma results,
please refer to VimpelCom's press
release issued on August 18, 2011 and
May 14, 2012 both which are available on
the Company's website.
The pro forma full year 2011 information
presented in this press release reflects
what the Company's results of operations
would have looked like had the Company's
transactions with Wind Telecom occurred
on January 1, 2011.
VimpelCom Ltd. consolidated results
presented in this earnings release are
based on IFRS and have not been audited.
The full year 2012 audited financial
results under IFRS will be published
when the Company files its annual report
on Form 20-F for the year ended December
31, 2012.
Certain amounts and percentages that
appear in this earnings release have
been subject to rounding adjustments. As
a result, certain numerical figures
shown as totals, including in tables,
may not be exact arithmetic aggregations
of the figures that precede or follow
them.
STRATEGIC UPDATE
-- Enhanced Value Agenda for 2013-2015 announced highlighting medium-term
objectives
-- Successful issuance of USD 2.0 billion Eurobonds for debt refinancing
-- AGM elected new Supervisory Board
-- Acquisition of 0.1% in Euroset, increasing total stake to 50.0%
-- Paid final dividend 2011 and interim dividend 2012 of in total USD 1.3
billion
In January, VimpelCom hosted its second annual Analyst & Investor Day in London, where the Company presented its enhanced business strategy, the Value Agenda 2013-2015. This Value Agenda, which is focused on increasing Net Cash from Operating Activities, has four main pillars: Profitable Growth, Customer Excellence, Operational Excellence and Capital Efficiency.
VimpelCom's objectives* for the period 2013 - 2015 are:
-- Revenue and EBITDA CAGR of around mid-single digit;
-- Net Debt/EBITDA below 2x in 2015; and
-- CAPEX/Revenues, excl. licenses, below 15% in 2015.
As a result of the execution of the Value Agenda the Company indicated its intention to have annual cash flow improvements of USD 2 billion from operations and of between USD 0.6 billion and USD 0.9 billion from finance optimization by the end of 2015.
In December 2012, Altimo delivered a notice to VimpelCom that it intends to convert 128,532,000 Convertible Preferred Shares into Common Shares at a ratio of one Convertible Preferred Share for one Common Share. Altimo set the conversion date for April 16, 2013 and the conversion premium to be paid by Altimo to the Company upon conversion is USD 10.835 per Convertible Preferred Share. Based on this conversion premium, the Company will receive approximately USD 1.4 billion from Altimo for the conversion. Altimo's voting percentage will remain 47.9%, while its economic interest in the Company will increase from 52.7% to 56.2%.
VimpelCom held its Annual General Meeting of Shareholders (AGM) in Amsterdam in December 2012. The AGM approved that the Supervisory Board will continue to consist of nine directors, four nominated by Altimo, three nominated by Telenor and two independent directors. In addition, the Supervisory Board unanimously elected Alexey Reznikovich as its Chairman. As announced yesterday, the Company will have its AGM 2013 on April 24, 2013.
In December 2012, VimpelCom increased its stake in Russian mobile retailer Euroset to 50.0% by acquiring 0.1% of the shares of Euroset. As a result, VimpelCom and Lefbord, a company owned by Megafon and Garsdale Services Investment, have equal economic and governance rights in Euroset. VimpelCom will continue to account for Euroset using the equity method.
Also in December 2012, VimpelCom signed a USD 500 million bilateral credit facility with China Development Bank for financing equipment and services from Huawei. The Facility has a tenor of 8 years and is to date undrawn. In February 2013, VimpelCom completed approximately USD 2 billion in debt refinancing, by issuing 6-year USD 600 million 5.20% guaranteed notes, 10-year USD 1.0 billion 5.95% guaranteed notes and 5-year RUB 12.0 billion 9.0% guaranteed notes. The proceeds will be used for the repayment of maturing debt in VimpelCom and general corporate purposes. The coupon on the USD notes was the lowest coupon in VimpelCom's history. Additionally, the RUB denominated Eurobonds represent the first such issuance by a non-financial services or non-state-owned company. Following the recent debt refinancing, VimpelCom has secured its refinancing requirements into 2014.
The Company announced a final dividend 2011 of USD 0.35 per common share and an interim dividend 2012 of USD 0.45 per common share in December 2012, which has been paid in January 2013 for a total amount of USD 1.3 billion. The dividend guideline of USD 0.80 per common share, assuming 1,628 million common shares are issued and outstanding, is currently under review following the aforementioned intended conversion of Convertible Preferred Shares by Altimo. The Company expects a decision on the dividend policy by the Supervisory Board in 2Q13. The Company also expects to announce the final dividend 2012 and a possible extra-ordinary dividend related to proceeds of a conversion in 2Q13.
The Company recently announced the appointment of Ziad Shatara to the position of CEO of banglalink in Bangladesh and of Taras Parkhomenko as CEO of VimpelCom's operating company in Kazakhstan.
VimpelCom's 51.9%-owned subsidiary Orascom Telecom Holding ("OTH") took steps to increase its stake in WIND Mobile in Canada to 100%, subject to Canadian regulatory approvals.
Finally, negotiations with the Algerian Government are still progressing and the Company aims to reach a mutually beneficial resolution.
* The above objectives assume constant
currency exchange rates, no major
regulatory changes, current asset
portfolio mix and a stable
macroeconomic environment.
VIMPELCOM GROUP - FINANCIAL AND OPERATING RESULTS 4Q12
-- Organic revenue growth of 3% YoY; revenues of USD 6.0 billion
-- EBITDA growth of 13% YoY on an organic basis, reaching USD 2.4 billion
-- Total mobile subscriber base grew by 5% YoY to 214 million
-- Net cash from operating activities increased 24% YoY to USD 2.3 billion
-- CAPEX of USD 1.6 billion
-- Net debt / LTM EBITDA was 2.2 at end 4Q12
OPERATING PERFORMANCE OVERVIEW 4Q12
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 VimpelCom´s operating businesses. The organic development is highlighted below.
The total mobile subscriber base increased 5% 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% YoY. Mobile broadband subscribers in Russia increased 5% YoY to 2.7 million and fixed broadband subscribers grew 15% 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% YoY to more than 2.2 million. Mobile broadband consumer subscribers grew 24% YoY.
In the Africa & Asia Business Unit, the Company exceeded the 85 million subscribers mark, an increase of 8% 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% 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% 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.
OPERATING FINANCIALS PER BUSINESS UNIT (FY11 IS PRO FORMA)
USD mln 4Q12 4Q11 Reported Organic FY12 FY11 Reported Organic
YoY YoY
YoY YoY
Net operating revenues 5,950 5,889 1% 3% 23,061 23,477 -2% 4%
of which:
BU Russia 2,371 2,274 4% 4% 9,190 9,064 1% 7%
BU Europe & North
America 1,778 1,924 -8% -4% 6,982 7,771 -10% -3%
BU Africa & Asia 937 922 2% 11% 3,721 3,719 0% 9%
BU Ukraine 432 417 4% 4% 1,676 1,641 2% 2%
BU CIS 488 419 16% 21% 1,755 1,589 10% 15%
Other (56) (67) - - (263) (307) - -
EBITDA 2,446 2,227 10% 13% 9,768 9,525 3% 8%
of which:
BU Russia 978 844 16% 15% 3,878 3,641 7% 13%
BU Europe & North
America 674 718 -6% -4% 2,658 2,952 -10% -3%
BU Africa & Asia 426 321 33% 36% 1,741 1,566 11% 15%
BU Ukraine 227 209 9% 9% 859 873 -2% -1%
BU CIS 235 171 37% 45% 813 703 16% 22%
Other (94) (36) - - (181) (210) - -
EBITDA margin 41.1% 37.8% - - 42.4% 40.6% - -
CAPEX 1,631 3,734 -56% - 4,120 6,683 -38% -
----- ----- ----- --- --- ----- ----- --- ---
FINANCIAL PERFORMANCE OVERVIEW 4Q12
Total operating revenues in the fourth quarter of 2012 increased by 1% YoY impacted by unfavorable currency movements. Organic revenue growth was 3%, with solid performance across most Business Units.
EBITDA increased 10% YoY, also impacted by unfavorable currency movements. Excluding these forex effects, EBITDA increased 13% 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%, 36%, 9% and 45%, 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% YoY in local currency, mainly due to the MTR cut in July 2012. Net of the MTR cut, EBITDA would have increased by 2% YoY, supported by cost efficiency measures.
EBIT in 4Q12 grew by 231% 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%.
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%. 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.
Actual
------
USD mln 4Q12 4Q11 YoY
Total operating revenues 5,950 5,889 1%
EBITDA 2,446 2,227 10%
EBITDA margin 41.1% 37.8% -
EBIT 709 214 231%
Financial income and expenses (484) (467) 4%
Net foreign exchange (loss)/gain and others 539 (306) n.m
Profit before tax 764 (559) n.m
Income tax expense (195) (101) 93%
Profit for the period 569 (660) n.m
Net income 801 (381) n.m
Capital expenditures 1,631 3,734 -56%
-------------------- ----- ----- ---
STATEMENT OF FINANCIAL POSITION & CASH FLOW (ACTUAL)
USD mln 4Q12 3Q12 QoQ FY12 FY11 YoY
Total assets 55,360 53,490 3% 55,360 54,039 2%
Shareholders' equity 14,869 14,779 1% 14,869 14,037 6%
Gross debt 26,987 26,637 1% 26,987 26,733 1%
Net debt 21,971 22,681 -3% 21,971 24,230 -9%
-------- ------ ------ --- ------ ------ ---
4Q12 4Q11 YoY FY12 FY11 YoY
Net cash from operating activities 2,301 1,858 24% 7,257 6,106 19%
Net cash used (in)/from investing activities (515) (3,363) -85% (4,008) (6,945) -42%
Net cash used (in)/provided financing activities (125) 691 n.m. (587) 2,583 n.m.
------------------------------------------------ ---- --- ---- ---- ----- ----
Total assets in the quarter increased by 3% 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% 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% higher than in FY11.
NON-CASH ITEMS IN 4Q12 AND FY12 IMPAIRMENTS
On a regular basis the Company performs an impairment test per cash generating unit. Following a detailed business plan review of Wind Mobile in Canada, the Company has recorded an impairment of USD 328 million.
REVALUATIONS
As a result of the acquisition of the additional 0.1% in Euroset, the Company had to adjust the fair value of the previously held interest in Euroset by USD 606 million due to IFRS requirements.
VIMPELCOM GROUP - FINANCIAL RESULTS FULL YEAR 2012
-- Revenues reached USD 23.1 billion; organic growth of 4% YoY
-- EBITDA of USD 9.8 billion, up 8% YoY organically
-- EBITDA margin increased 1.8 p.p. YoY to 42.4%
-- Net Income increased to USD 2.1 billion
-- CAPEX excl. licenses of USD 4.0 billion leading to CAPEX/LTM Revenues of
17%
-- Net cash from operating activities increased by 19% to USD 7.3 billion
FULL YEAR 2012
On a pro forma basis, total operating revenues in 2012 decreased by 2% YoY. Overall organic revenue growth was 4%, with strong performance across all Business Units. In Russia, revenues increased by 1% in USD terms and 7% in local currency. In Italy, revenues in USD decreased by 10% and decreased in local currency by 3%, as a result of the sharp MTR cuts. Excluding MTR effect, net operating revenues improved by 5%. The Africa & Asia Business Unit reported organic revenue growth of 9% and had stable revenues in USD terms, while the Ukraine Business Unit delivered growth of 2% in both USD and in local currency. Lastly, the CIS Business Unit continued to achieve strong performance with a revenue increase of 15% organically, primarily as a result of the network closure of a competitor by the Uzbek authorities.
On a pro forma basis, EBITDA increased by 3% YoY. Strong organic EBITDA growth of 13% was seen in the Russia Business Unit, while EBITDA growth in the Africa & Asia and CIS Business Units were up 15% and 22%, respectively. In the Europe & North America Business Unit, EBITDA decreased 10% in USD terms and declined by 3% in local currency, mainly due to the impact of the MTR cuts. The Ukraine Business Unit EBITDA decreased by 1% in local currency and by 2% in USD terms.
CAPEX excluding licenses stood at USD 4.0 billion, with investments in the further roll out of the mobile networks in Russia, Bangladesh, Pakistan and the CIS. The CAPEX/LTM Revenues excluding licenses for FY12 is 17%.
The Company expects FY13 CAPEX, excluding licenses, to be approximately 21% of revenue.
Pro-forma Actual
USD mln FY12 FY11 YoY FY12 FY11 YoY
Total operating revenues 23,061 23,477 -2% 23,061 20,262 14%
EBITDA 9,768 9,525 3% 9,768 8,256 18%
EBITDA margin 42.4% 40.6% - 42.4% 40.7% -
EBIT 4,171 3,175 31% 4,171 2,854 46%
Financial income and expenses (1,875) (1,850) 1% (1,875) (1,467) 28%
Net foreign exchange (loss)/gain and others 592 (486) n.m. 592 (533) n.m
Profit before tax 2,888 839 244% 2,888 854 238%
Income tax expense (906) (650) 39% (906) (585) 55%
Profit for the period 1,982 189 949% 1,982 269 637%
Net income 2,145 525 309% 2,145 543 295%
Capital expenditures* 4,120 6,683 -38% 4,120 6,349 -35%
-------------------- ----- ----- --- ----- ----- ---
* Including licenses of USD 1.8 billion in 4Q11 & FY11 and USD 0.1 billion in FY12
ORGANIC REVENUE AND EBITDA GROWTH FY12 VERSUS FY11 (FY 11 IS PRO FORMA)
USD mln Revenue EBITDA
-------
Business Units Organic FX and Reported Organic FX and Reported
others others
Russia 7% -6% 1% 13% -6% 7%
Europe & NA -3% -7% -10% -3% -7% -10%
Africa & Asia 9% -9% 0% 15% -4% 11%
Ukraine 2% 0% 2% -1% -1% -2%
CIS 15% -5% 10% 22% -6% 16%
Total 4% -6% -2% 8% -5% 3%
----- --- --- --- --- --- ---
BUSINESS UNITS PERFORMANCE IN 4Q12
-- Russia
-- Europe & North America
-- Africa & Asia
-- Ukraine
-- CIS
BUSINESS UNIT RUSSIA - FINANCIAL AND OPERATING RESULTS
-- Positive operational trend of previous quarters continued in 4Q12
-- Revenue growth of 4% YoY, supported by 37% increase YoY in mobile data
revenues
-- EBITDA increase of 15% YoY leading to EBITDA margin growth of 4.2 p.p.
YoY to 41.3%
-- Operational Excellence program delivered more than double of targeted
RUB 5 billion annualized savings
The Russian Business Unit continued the positive trend of the previous quarters, delivering profitable growth with a revenue increase of 4% YoY and EBITDA growing double digit YoY in 4Q12. The strong EBITDA YoY performance was partly the result of a relatively low comparable EBITDA in 4Q11, which was impacted by relatively high commercial and technical costs and one-offs of RUB 800 million in total, including a provision for HR costs and an inventory write-down. During 4Q12, VimpelCom continued its strong execution of its operational excellence program and realized more than double its initial target of RUB 5 billion in annualized savings in 2012.
The mobile subscriber base in Russia declined by 2% YoY to 56.1 million, but the impact on revenue was offset by an increase in ARPU of 5% YoY due to strong increase of mobile data revenues.
Mobile revenues grew by 4% YoY, driven by an increase in ARPU and strong equipment sales. Mobile data revenues increased by 37% YoY with revenues for small screens up by 52%.
Fixed-line revenue growth slowed to 0.4% YoY, mainly due to a decline in wholesale fixed-line voice revenues, while FTTB revenue recorded a strong growth of 24% YoY.
EBITDA margin in 4Q12 was 41.3%, an increase of 4.2 p.p. YoY. This includes the negative effect of forex changes in 4Q12, which impacted EBITDA margin by 0.2 p.p. Savings in commercial costs were among the biggest contributors to the EBITDA margin improvement, primarily driven by the shift to a revenue share model with distributors as part of the Operational Excellence program.
VimpelCom remains on track to deliver continued improvement in network quality to support the growth of mobile data. In 2012, VimpelCom significantly increased IP-zation to 48% from 11% at the start of the year and grew the number of node-Bs by 22%. Improving network quality continues to be the Company's focus with the aim to be on par with its peers in the key regions at the end of 2013. As a result of these efforts, the Company expects CAPEX/Revenues to increase to 22% in 2013.
KEY DEVELOPMENTS 4Q12
-- Total revenue in Russia grew by 4% YoY to RUB 73.6 billion driven by the
increase in mobile revenues.
-- Mobile revenues increased 4% YoY mainly as a result of growth in data
revenue by 37% YoY, as well as in equipment revenues. Mobile ARPU
increased by 5% YoY to RUB 343.
-- Fixed-line revenue increased 0.4% YoY with continuing growth in fixed
broadband revenues, up 23% YoY, offset by a 9% decline YoY in wholesale
voice revenues.
-- EBITDA increased by 15% YoY and EBITDA margin was 41.3%, an increase of
4.2 p.p. compared to 4Q11, mainly driven by the strong execution of the
Operational Excellence program.
-- Mobile subscriber base decreased by 2% YoY to 56.1 million; mobile
broadband subscribers increased 5% YoY to 2.7 million. The fixed
broadband subscriber base grew 15% YoY to 2.4 million.
-- CAPEX/Revenues was 34% in 4Q12, in line with the network construction
schedule. CAPEX/Revenues for FY12 stood at 18%.
RUSSIA KEY INDICATORS
RUB mln 4Q12 4Q11 YoY FY12 FY11 YoY
---- ---- --- ---- ---- ---
Total operating revenues 73,637 71,022 4% 285,375 266,087 7%
Total operating expenditures 43,259 44,664 -3% 164,897 159,407 3%
EBITDA 30,378 26,358 15% 120,478 106,681 13%
EBITDA margin 41.3% 37.1% 42.2% 40.1%
CAPEX 25,076 25,318 -1% 50,699 59,795 -15%
CAPEX / Revenues 34% 36% 18% 22%
Mobile
Mobile total operating revenues 61,579 59,012 4% 236,922 221,534 7%
- of which mobile data 7,036 5,118 37% 24,330 17,604 38%
Mobile subscribers ('000) 56,110 57,224 -2%
- of which mobile broadband ('000) 2,654 2,538 5%
Mobile ARPU (RUB) 343 327 5%
MOU (min) 290 259 12%
Fixed
Fixed-line total operating revenues 12,058 12,009 0% 48,453 44,554 9%
Fixed Broadband revenues 3,148 2,564 23% 11,719 8,676 35%
Fixed Broadband subscribers ('000) 2,378 2,073 15%
Fixed Broadband ARPU (RUB) 445 432 3%
------------------------- --- --- ---
BUSINESS UNIT EUROPE & NA - FINANCIAL AND OPERATING RESULTS ITALY
-- Continued relative outperformance of the market
-- Total Revenues, excluding MTR impact, increasing 2% YoY
-- EBITDA margin increased 0.1 p.p. YoY to 37.5%; MTR cut partially offset
by cost efficiency
-- EBITDA-CAPEX increased YoY in 4Q12 and FY12
-- Strong Data revenue growth: Mobile Internet up 37%, messaging up 6%,
fixed broadband up 5%
-- 55% share of mobile net additions driven by positive MNP inflow balance
WIND posted a solid performance in 4Q12 with the strong commercial success of WIND's offerings offsetting the regulatory and macroeconomic challenges in the market. Despite the challenging context and the intense competitive environment, WIND was able to further strengthen its competitive position in the market.
Total revenues in 4Q12 declined 4% YoY mainly as a result of the 6% reduction in service revenues arising from the 53% cut in the mobile termination rate (MTR), which occurred in July, partially offset by a strong increase in handset sales driven by the success of WIND's "All Inclusive" mobile offerings and certain settlements with third parties. Excluding the impact from the MTR cut, total revenues grew 2% YoY with total service revenues up 1% YoY.
Mobile service revenues declined by 7% YoY due to the aforementioned MTR cut, net of which growth would have been 2% YoY. WIND's mobile subscriber base increased by 3% YoY due to strong net additions in the quarter, securing over 55% share of mobile network operator (MNO) net additions. The quarter was, however, characterized by a high churn rate due to an acceleration of MNP, but WIND managed to maintain a positive inflow balance.
In fixed-line, the results of the new strategy based on LLU focus and profitability, resulted in a slight decline in total subscribers. The decline in the overall customer base, coupled with a lower pay per use price and traffic driven by competitive pressure and economic slowdown, resulted in a 3% decline in fixed line service revenues, while the new strategy delivered a solid improvement in marginality.
In 4Q12, WIND continued to deliver strong performance in Data with Mobile Internet revenues growing 37%, messaging revenues up 6%, and fixed BB revenues increasing by 5%. The success of WIND's offerings in both fixed and mobile, under the "All Inclusive" umbrella proposition, was clearly demonstrated by the solid increase in mobile broadband subscribers, up 24% YoY, driven by the 23% increase in consumer small screen users which account for 66% of total consumer mobile internet revenues in 2012. Fixed broadband customers grow by 4%, mainly driven by the 6% increase in the more profitable LLU BB subscriber base.
EBITDA in 4Q12 declined by approximately 4% driven by the reduction in top-line, due to the MTR cut, partially offset by structural cost saving initiatives implemented in the period. The EBITDA margin increased by 0.1 percentage point YoY. Excluding the impact from MTRs, underlying EBITDA grew 2% YoY. MTR reductions will also impact 2013 with a first cut having taken place in January 2013 and a final cut scheduled for July 2013. As part of the overall Cost Efficiency Project WIND launched its Network Transformation Project aimed at achieving OPEX savings of approximately EUR 40-45mln per annum starting in 2013.
KEY DEVELOPMENTS 4Q12
-- Total revenues declined 4% YoY to EUR 1,369 million with an underlying
increase, excluding MTR impact, of 2%.
-- EBITDA in 4Q12 declined 4% to EUR 514 million, with a margin increase of
0.1 percentage points to 37.5%.
-- CAPEX in 4Q12, excluding LTE spectrum, was EUR 326 million bringing FY
2012 total CAPEX to EUR 905 million.
-- Mobile subscriber base increased 3% to over 21.6 million. Mobile
broadband consumer subscribers grew 24% YoY.
-- Mobile data ARPU increased by 8% to EUR 4.1 accounting for 30% of the
total ARPU of EUR 13.7 declining 10% vs. 4Q11; the voice ARPU decline
was due to the July MTR cut and competitive intensity, coupled with the
ongoing success of WIND's data only SIM card offerings for tablets, PCs
and dongles, which do not generate voice revenues.
-- In fixed-line, WIND continued to focus on the direct market, achieving a
4% growth in voice LLU subscribers which reached 2.45 million. LLU
customers now account for 79% of the overall fixed voice customer base
of 3.11 million. In fixed broadband, the momentum remained strong, with
subscribers growing by 4% to 2.21 million, driven by a 6% increase in
LLU Broadband customers. Dual-play subscribers grew by 6% YoY reaching
1.85 million.
-- Fixed-line ARPU decreased by 8% to EUR 30.7 in 4Q12 driven by the
reduction of pay per use traffic and price decline resulting from
competitive pressure. Broadband ARPU was stable YoY at EUR 19.1.
ITALY KEY INDICATORS
Euro mln 4Q12 4Q11 YoY FY12 FY11 YoY
Total operating revenues 1,369 1,424 -3.9% 5,427 5,570 -3%
Total operating expenditures 856 892 -4% 3,365 3,451 -2%
EBITDA 514 533 -4% 2,062 2,120 -3%
EBITDA margin 37.5% 37.4% 38.0% 38.1%
CAPEX 342 1,533 -78% 1,000 2,139 -53%
CAPEX / Revenues 25% 108% 18% 38%
Mobile
Total revenues 1,001 1,037 -4% 3,958 4,073 -3%
Subscribers ('000) 21,650 21,014 3% 21,650 21,014 3%
- of which mobile broadband ('000) (1) 5,541 4,479 24% 5,541 4,479 24%
ARPU (EUR) 13.7 15.2 -10% 14.4 15.6 -8%
MOU (min) 212 205 3% 207 197 5%
Fixed
Total revenues 369 387 -5% 1,469 1,497 -2%
Total voice subscribers ('000) 3,110 3,142 -1% 3,110 3,142 -1%
Total fixed-line ARPU (EUR) 30.7 33.2 -8% 31.2 33.2 -6%
Broadband subscribers ('000) 2,210 2,135 4% 2,210 2,135 4%
Broadband ARPU (EUR) 19.1 19.1 0% 18.8 19.3 -2%
Dual-play subscribers ('000) 1,848 1,743 6% 1,848 1,743 6%
--------------------------- ----- ----- --- ----- ----- ---
(1) Mobile broadband includes consumer customers that have performed at least one mobile Internet event in the previous month on 2.5G/3G/3.5G
CANADA
In 4Q12 Wind Mobile continued to strongly deliver on its "Value Plus" strategy, adding primarily postpaid subscribers, while carefully managing prepaid economics for both voice and mobile broadband customers. Wind Mobile became the fastest growing new entrant wireless operator in the Canadian market. The Company added over 80 thousand subscribers during the quarter, increasing its active subscriber base to 590 thousand, with over 70% of the net additions during the quarter being postpaid subscribers. On the commercial side, Wind Mobile enjoyed a strong holiday season supported by a new media campaign and the launch of promotional offers. The Company continued to grow its distribution footprint and branded points of sale increased to 335 at the end of 2012. Wind Mobile also continued to expand its network and launched in Peterborough and Windsor in 4Q12, increasing its population coverage to over 14 million. The Company continues to focus on improving network quality and increased sites on air to 1,300 sites.
CANADA KEY INDICATORS
Mobile 4Q12 4Q11 YoY FY12 FY11 YoY
---- ---- --- ---- ---- ---
Subscribers ('000) 590 403 47% 590 403 47%
ARPU (CAD) 28.1 26.4 6% 27.8 27.0 3%
--------- ---- ---- --- ---- ---- ---
BUSINESS UNIT AFRICA & ASIA - FINANCIAL AND OPERATING RESULTS
-- Revenues reached USD 937 million, with organic growth of 11% YoY
-- EBITDA increased to USD 426 million, with organic growth of 36% YoY
-- EBITDA margin of 45.5%, supported by operational excellence and cost
saving initiatives
-- Subscriber base increased by 8% to more than 85 million
Revenues in the Africa & Asia Business Unit reached USD 937 million, with organic growth of 11% YoY. However, actual results in US dollar terms were adversely affected by local currency devaluation against the US dollar, mainly in Algeria and Pakistan. Revenue growth was driven by strong subscriber growth, an increase in APPM in Pakistan and Bangladesh, and further supported by growth in mobile data and Value-Added Services (VAS). EBITDA increased to USD 426 million, achieving an organic growth of 36% YoY, partially as a result of the ongoing operational excellence initiatives. 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 (SIM tax subsidy) in 4Q12, while in 4Q11 banglalink recorded very high customer acquisition costs. In addition, EBITDA for 4Q11 was adversely affected by provisions for corporate contingent liabilities and costs associated with the demerger of OTMT.
ALGERIA ("DJEZZY")
During 4Q12, Djezzy was able to maintain its leadership position with a market share of 55%, growing its subscriber base by 8% YoY to 17.8 million customers. Revenues increased by 9% YoY in local currency terms, mainly due to the growth in the number of subscribers. Mobile data revenues grew by 12% YoY. EBITDA increased by 8% YoY in local currency terms. During the quarter, Djezzy celebrated its 10(th) anniversary.
PAKISTAN ("MOBILINK")
In 4Q12, Mobilink focused on voice, data and VAS offerings, as well as churn management, leading to a 6% increase YoY in the subscriber base to 36.1 million customers. New regulatory restrictions on retail channel sales led to a decline in gross additions for the quarter. Revenues increased by 9% YoY in local currency terms, driven by the increase in data and VAS uptake. Mobile data revenues achieved a growth of 44% YoY. During the quarter, all cellular networks in major cities were shut down upon government request for security reasons on several occasions, resulting in revenue loss for all cellular operators. Despite these issues, EBITDA increased by 13% YoY in local currency terms, mostly on the back of strong measures of the operational excellence initiative. On November 29(th) 2012, Mobile Financial Services (MFS) were launched in collaboration with Waseela Microfinance Bank Limited. Initial services offered include domestic money remittance and bill payment.
BANGLADESH ("BANGLALINK")
banglalink increased its subscriber base by 9% YoY, reaching 25.9 million customers at the end of 4Q12. Revenues grew 13% YoY in local currency terms, driven by a higher level of VAS and data adoption, which led to mobile data revenues increasing by 130% YoY, and targeted start-up and reactivation promotions. The new self-regulations set by the local regulator, BTRC, regarding VoIP usage forced banglalink to disconnect suspected VoIP users with high ARPU. This negatively affected revenues and is expected to have significant negative impact during 2013. EBITDA in 4Q12 doubled YoY in local currency terms due to savings on commercial opex resulting from lower gross additions. EBITDA in 4Q11 was adversely affected by the aggressive acquisition strategy that followed the reduction in SIM tax in June 2011, which led to an adjustment in SIM tax subsidy allocation.
SUB SAHARAN AFRICA ("TELECEL GLOBE")
Telecel Globe subscribers increased by 42% YoY to approximately 4.5 million, with the number of subscribers in Zimbabwe increasing by 70% YoY. Despite the political situation and armed rebellion that erupted in CAR during December 2012, the network continues to function normally. Nevertheless, revenues decreased by 6% YoY in local currency terms due to lower revenues achieved during December compared to the same period last year, as a result of the security situation in the country. In Burundi, revenues grew by 21% YoY in local currency terms, mainly driven by 21% growth in subscribers to 1.4 million customers. During the quarter, Mobile Financial Services ("Leo Manoti") were launched in Burundi. Telecel Globe EBITDA showed a significant improvement YoY due to cost optimization initiatives, reversing the loss seen in 4Q11.
SOUTH EAST ASIA
Revenues for South East Asia decreased by 45% YoY, mainly due to the sale of Vietnam. EBITDA recovered due to the sale of Vietnam and savings on dealer commissions and lower interconnect costs. In Laos, Beeline continued to offer SMS, voice, and data bundles, which were launched in November, and introduced VAS for the first time.
AFRICA & ASIA KEY INDICATORS
USD mln 4Q12 4Q11 YoY FY12 FY11 YoY
Revenues 937 922 2% 3,721 3,719 0%
Total operating expenditures 511 601 -15% 1,981 2,153 -8%
EBITDA 426 321 33% 1,741 1,566 11%
EBITDA margin 45.5% 34.8% 46.8% 42.1%
CAPEX 193 646 -70% 400 976 -59%
CAPEX / revenues 21% 70% 11% 26%
---------------- --- --- --- ---
For details per country unit please see Attachment B
AFRICA & ASIA BUSINESS UNIT: COUNTRY DETAIL
ALGERIA
DZD bln
4Q12 4Q11 YoY FY12 FY11 YoY
Total operating revenues 37 34 9% 143 136 6%
EBITDA 22 20 8% 85 80 6%
EBITDA margin 58.9% 59.5% 59.4% 59.3%
------------- ---- ---- ---- ----
PAKISTAN
PKR bln
4Q12 4Q11 YoY FY12 FY11 YoY
Total operating revenues 27.2 25.0 9% 105.8 97.9 8%
EBITDA 11.7 10.4 12% 45.6 40.0 14%
EBITDA margin 43.0% 41.7% 43.1% 40.9%
------------- ---- ---- ---- ----
BANGLADESH
BDT bln
4Q12 4Q11 YoY FY12 FY11 YoY
Total operating revenues 11.2 9.9 13% 45.4 37.9 20%
EBITDA 4.2 2.1 104% 15.7 12.5 26%
EBITDA margin 37.4% 20.8% 34.7% 33.0%
------------- ---- ---- ---- ----
BUSINESS UNIT UKRAINE - FINANCIAL AND OPERATING RESULTS
-- Revenues increased 4% YoY to UAH 3.5 billion
-- Successful transition to mobile bundled tariff plans, leading to
recovery in mobile revenues growth
-- EBITDA increased by 9% YoY to UAH 1.8 billion; EBITDA margin up 2.2 p.p.
to 52.5%
-- Mobile subscriber base grew 5% YoY to 26.0 million; Fixed BB subscribers
up 54% YoY to 613 thousand
During the fourth quarter, VimpelCom continued to solidify its market position in the mobile segment. The Company showed a solid YoY improvement in revenues and EBITDA, driven by a successful migration of its customers to bundled tariff plans and by strong dynamics in fixed broadband revenues. VimpelCom recorded an EBITDA margin of 52.5% in 4Q12 driven by growth of mobile revenues and cost measures as part of the operational excellence program.
-- Total revenues grew 4% to UAH 3.5 billion. The mobile service revenues
trend was inverted and returned to a growth of 3% in 4Q12 versus 4Q11,
driven by successful transition to bundled tariff plans and a 5% YoY
growth of the mobile subscriber base to 26.0 million. The Company
transitioned 75% of subscribers to bundled tariffs as of YE 2012 and the
transition is expected to be finalized in 2013. Strong YoY growth of
handset sales added to the YoY revenue growth of 4%. Fixed-line revenues
were up 3% YoY as a result of strong FTTB revenue growth. Fixed
residential broadband revenue continued to outgrow the market,
increasing by 77% YoY, driven by a growth in the fixed broadband (FBB)
subscriber base of 54% YoY to 613 thousand and an 8% YoY growth of fixed
broadband ARPU to UAH 47.2.
-- EBITDA increased 9% YoY to UAH 1.8 billion and EBITDA margin was up 2.2
p.p. YoY to 52.5% in 4Q12, mainly due to the growth in mobile service
revenue and residential broadband margin, but the YoY comparison was
also positively impacted by a one-off provision for HR costs in 4Q11.
EBITDA margin was also positively affected by the improved revenue mix
in fixed-line with less wholesale voice and a larger share of
interconnect revenues.
-- CAPEX was UAH 602 million in 4Q12 resulting in a CAPEX/Revenues of 14%
for FY12. CAPEX FY12 was 18% below FY11 as a result of reduced
investments in the FTTB network following the completion of the rollout.
UKRAINE KEY INDICATORS
UAH mln 4Q12 4Q11 YoY FY12 FY11 YoY
Net operating revenues 3,453 3,326 4% 13,392 13,078 2%
Total operating expenditures 1,639 1,654 -1% 6,525 6,125 7%
EBITDA 1,814 1,672 9% 6,867 6,953 -1%
EBITDA margin 52.5% 50.3% 51.3% 53.2%
CAPEX 602 788 -24% 1,848 2,264 -18%
CAPEX / revenues 17% 24% 14% 17%
Mobile
Mobile net operating revenues 3,190 3,070 4% 12,326 12,106 2%
Mobile subscribers ('000) 25,960 24,776 5%
Mobile ARPU (UAH) 40.7 41.1 -1%
MOU (min) 497.7 482.8 3%
Fixed-line
Fixed-line net operating revenues 264 256 3% 1,066 972 10%
Fixed-line broadband revenues 82 47 77% 275 158 74%
Fixed-line broadband subscribers ('000) 613 397 54%
Fixed-line broadband ARPU (UAH) 47.2 43.7 8%
------------------------------ ---- ---- ---
BUSINESS UNIT CIS(*) - FINANCIAL AND OPERATING RESULTS
-- Organic growth of revenues of 21% YoY, with strong positive impact from
Uzbekistan
-- EBITDA of USD 235 million, with organic growth of 45% YoY
-- EBITDA margin of 48.1%
-- Mobile subscribers up 23% YoY to 24 million
-- Mobile broadband subscribers up 29% YoY to 12 million; Fixed BB
subscriber base up 54% to 326 thousand
The CIS Business Unit continued to perform strongly, delivering profitable double digit growth in 4Q12. However, since 3Q12 the results were substantially positively impacted by the situation in Uzbekistan, following the network closure of a competitor by the Uzbek authorities.
VimpelCom increased its mobile subscriber base in the CIS by 23% YoY, mainly driven by a 60% YoY growth in subscribers in Uzbekistan. The Company continued to face particularly strong competition in Kazakhstan, but also in Armenia and Tajikistan.
-- In 4Q12, total revenues grew organically by 21% YoY, with the main
contribution coming from Uzbekistan. Reported revenues grew 16% to USD
488 million, impacted by negative forex movements. If Uzbekistan would
have been adjusted to the growth level of 1H12, the revenue organic
growth in 4Q12 would have been 9% YoY.
-- Total mobile revenues increased organically by 23% YoY in 4Q12 supported
by 71% YoY mobile data revenue growth, primarily resulting from small
screen subscribers, which more than offset the slowdown in voice growth
and decline in revenue from sales of devices.
-- Fixed-line revenues increased organically by 3% YoY, due to strong
growth in Kazakhstan, partially offset by voice and wholesale revenue
decline in Armenia and Tajikistan.
-- EBITDA grew organically 45%, or 37% on a reported basis, mainly due to
strong mobile revenue growth in Uzbekistan. If Uzbekistan would have
been adjusted to the growth level of 1H12, EBITDA organic growth would
have been 17% YoY.
-- EBITDA margin reached 48.1% in 4Q12 up 7.3 p.p. over 4Q11, due to strong
performance in Uzbekistan and cost measures undertaken as part of the
ongoing Operational Excellence programs in all CIS countries.
-- In 4Q12 CAPEX was USD 128 million, bringing FY 2012 CAPEX/Revenues to
22%. The Company's main investment projects, focused on data
development, are on schedule and network expansion continues to support
both traffic and revenue growth.
* CIS operations include operations in Kazakhstan, Uzbekistan, Armenia, Kyrgyzstan, Tajikistan, and Georgia.
KAZAKHSTAN
The market in Kazakhstan remained highly competitive and VimpelCom is transitioning its subscriber base to bundled tariff plans, causing a temporary negative impact on revenues. This negative impact is expected to continue in the coming quarters, but improvements in revenue dynamics are expected to be visible after the transition is completed, as a result of upselling of the subscriber base. Revenues in Kazakhstan increased by 2% YoY organically in 4Q12, driven by a 2% YoY growth of mobile service revenues and a 54% YoY increase in fixed-line revenues. Mobile data revenues showed strong growth of 40% YoY in 4Q12, as a result of the Company´s focus on increasing data usage for small screens, causing data revenue growth for smartphones to grow by 50% YoY. EBITDA grew 8% YoY and EBITDA margin improved 2.6 p.p. to 46.2%, supported by cost control measures as part of the Operational Excellence program.
UZBEKISTAN
In Uzbekistan, VimpelCom continued to strengthen its market position substantially in 4Q12 after the closure of a competitor´s network. Revenue was up 99% YoY in local currency, supported by a 60% YoY increase of the subscriber base as well as 26% YoY ARPU increase as a result of the growth of high value subscribers and increasing mobile data revenues. EBITDA grew 192% YoY and EBITDA margin was 60.3%, a sharp increase from 41.0% in 4Q11. These results were supported by exceptional revenue growth, positively driven by the competitor's network closure, and control of structural OPEX. The main focus of management in Uzbekistan is to sustain quality of service and further improve network capacity.
ARMENIA
Revenues in Armenia declined organically by 10% YoY in 4Q12, primarily due to stagnating fixed voice as a result of fixed to mobile convergence and a lower level of terminated traffic revenues in the fixed-line segment.
The mobile segment faces strong competition and revenues were impacted by a slowdown in mobile interconnect, while at the same time mobile data revenues showed an increase of 29% YoY. EBITDA declined 13% YoY and EBITDA margin declined 1.1 p.p. to 39.5%.
KYRGYZSTAN
Kyrgyzstan continued to show positive dynamics in revenue and EBITDA growth. In local currency, revenues grew 15% YoY, supported by subscriber base growth of 5% YoY and ARPU growth of 10% YoY. EBITDA grew organically by 23% YoY due to structural OPEX decline, resulting in an increased EBITDA margin in local currency of 58.3%. Mobile broadband subscriber growth of 16% YoY coupled with the increase in mobile data usage resulted in significant mobile data revenue growth, up 63% YoY.
TAJIKISTAN
In Tajikistan, revenues increased organically by 14% YoY in 4Q12, while EBITDA increased by 19% YoY, leading to a 1.8 p.p. increase in EBITDA margin to 45.9%. VimpelCom maintained its market position by growing its subscriber base by 17% YoY in 4Q12. Data revenue grew strongly by 63% supported by an 11% increase in mobile broadband subscribers, in line with increasing usage of mobile data services.
GEORGIA
Georgia continued to deliver strong results in 4Q12, with subscriber base growth of 16%, revenue growth of 19% and a 52% increase in EBITDA YoY in local currency. EBITDA margin increased 6.3 p.p. YoY to 28.9% due to structural OPEX control measures and focus on efficiency improvement. The Company was able to further strengthen its market position in 4Q12.
CIS(*) KEY INDICATORS
USD mln 4Q12 4Q11 YoY FY12 FY11 YoY
Total operating revenues 488 419 16% 1,755 1,589 10%
Total operating expenditures 253 248 2% 943 886 6%
EBITDA 235 171 37% 813 703 16%
EBITDA margin 48.1% 40.8% 46.3% 44.3%
CAPEX 128 241 -47% 384 626 -39%
CAPEX / revenues 26% 58% 22% 39%
Mobile
Mobile subscribers ('000) 24,167 19,703 23%
- of which mobile broadband ('000) 11,967 9,287 29%
Fixed-line
Fixed-line broadband subscribers ('000) 326 212 54%
Fixed-line broadband revenues 13 9 46% 34 30 15%
----------------------------- --- --- --- --- --- ---
* CIS operations include operations in Kazakhstan, Uzbekistan, Armenia, Kyrgyzstan, Tajikistan, and Georgia.
For details per country unit please see Attachment B
CIS BUSINESS UNIT: COUNTRY DETAIL
KAZAKHSTAN
KZT mln
4Q12 4Q11 YoY FY12 FY11 YoY
Total operating revenues 32,055 31,566 2% 123,665 120,672 2%
EBITDA 14,822 13,749 8% 58,811 57,708 2%
EBITDA margin 46.2% 43.6% 47.6% 47.8%
------------- ---- ---- ---- ----
UZBEKISTAN
USD mln
4Q12 4Q11 YoY FY12 FY11 YoY
Total operating revenues 158 80 99% 463 277 67%
EBITDA 95 33 193% 253 122 107%
EBITDA margin 60.3% 41.0% 54.6% 44.1%
------------- ---- ---- ---- ----
CONFERENCE CALL INFORMATION
On March 6, 2013, the Company will host an analyst & investor conference call on its fourth quarter 2012 results. The call and slide presentation may be accessed at http://www.vimpelcom.com
2:30 pm CET investor and analyst conference call
US call-in number: + 1 877 616-4476
International call-in number: + 1 402 875-4763
The conference call replay and the slide presentations webcast will be available until March 13, 2013. The slide presentation will also be available for download on the Company's website.
Investor and analyst call replay
US Replay number: +1 855 859-2056
Confirmation code : 11312009
International replay: +1 404 537-3406
Confirmation code : 11312009
DISCLAIMER
This press release contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements include those relating to the Company's strategy, development plans and anticipated performance, including the Company's Value Agenda objectives, CAPEX projections, cost optimization plans, expected cash flow improvements, intentions regarding its interest in WIND Mobile in Canada, expectations regarding negotiations with the Algerian Government and anticipated dividends. These and other forward-looking statements are based on management's best assessment of the Company's strategic and financial position and of future market conditions and trends. These discussions involve risks and uncertainties. The actual outcome may differ materially from these statements as a result of continued volatility in the economies in our markets, unforeseen developments from competition, governmental regulation of the telecommunications industries, general political uncertainties in our markets and/or litigation with third parties. Future dividend payments are subject to Supervisory Board approval and there can be no assurance as to the timing and amount of such payments. There can be no assurance that such risks and uncertainties will not have a material adverse effect on the Company. Certain factors that could cause actual results to differ materially from those discussed in any forward-looking statements include the risk factors described in the Company's Annual Report on Form 20-F for the year ended December 31, 2011 and other public filings made by the Company with the SEC, which risk factors are incorporated herein by reference. The Company 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.
ABOUT VIMPELCOM LTD
VimpelCom is one of the world's largest integrated telecommunications services operators 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. VimpelCom's operations around the globe cover territory with a total population of approximately 780 million people. VimpelCom provides services under the "Beeline", "Kyivstar", "djuice", "Wind", "Infostrada" "Mobilink", "Leo", "banglalink", "Telecel", and "Djezzy" brands. As of December 31, 2012 VimpelCom had 214 million mobile subscribers on a combined basis. VimpelCom is traded on the New York Stock Exchange under the symbol (VIP). For more information visit: http://www.vimpelcom.com
CONTENT OF THE ATTACHMENT TABLES
Attachment A VimpelCom Ltd Financial Statements 21
Attachment B Country units key indicators CIS and Africa & Asia 26
Attachment C Reconciliation Tables 28
Average Rates of Functional Currencies to USD
Attachment D Wind Telecomunicazioni group condensed financial statement of income 31
Attachment E Definitions 31
For more information on financial and operating data for specific countries, please refer to the supplementary file Factbook4Q2012.xls on our website at http://vimpelcom.com/ir/
financials/results.wbp
ATTACHMENT A: VIMPELCOM LTD FINANCIAL STATEMENTS
VIMPELCOM LTD UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (ACTUAL)
USD (millions) Actual Actual
Three months ended Full Year
December 31
2012 2011 2012 2011
---- ---- ---- ----
Operating revenues
Service revenues 5,605 5,594 22,122 19,579
Sales of equipment and accessories 234 190 677 516
Other revenues 111 105 262 167
-------------- --- --- --- ---
Total operating revenues 5,950 5,889 23,061 20,262
------------------------ ----- ----- ------ ------
Operating expenses
Service costs 1,762 1,440 5,439 4,962
Cost of equipment and accessories 241 254 693 663
Selling, general and administrative expenses 1,501 1,968 7,161 6,381
Depreciation 758 790 2,926 2,726
Amortization 519 664 2,080 2,059
Impairment of GWMC* 328 - 328 -
Impairment loss 58 527 58 527
Loss on disposals of non-current assets 74 32 205 90
--------------------------------------- --- --- --- ---
Total operating expenses 5,241 5,675 18,890 17,408
------------------------ ----- ----- ------ ------
Operating profit 709 214 4,171 2,854
---------------- --- --- ----- -----
Finance costs 522 501 2,029 1,587
Finance income (38) (34) (154) (120)
Revaluation of previously held interest in Euroset (606) - (606) -
Other non-operating losses 44 152 75 308
Shares of loss/(profit) of associates and joint ventures accounted for using the equity
method (7) 35 9 35
Net foreign exchange loss/(gain) 30 119 (70) 190
Profit/(loss) before tax 764 (559) 2,888 854
------------------------ --- ---- ----- ---
Income tax expense 195 101 906 585
Profit/(loss) for the year from continuing operations 569 (660) 1,982 269
------------------------------------------------------ --- ---- ----- ---
Profit/(loss) for the period 569 (660) 1,982 269
----------------------------- --- ---- ----- ---
Attributable to:
The owners of the parent 801 (381) 2,145 543
Non-controlling interest (232) (279) (163) (274)
------------------------ ---- ---- ---- ----
569 (660) 1,982 269
--- ---- ----- ---
Earnings/loss per share
Basic, profit for the year attributable to ordinary equity holders of the parent $0.49 -$0.24 $1.33 $0.36
Diluted, profit for the year attributable to ordinary equity holders of the parent $0.49 -$0.24 $1.32 $0.36
---------------------------------------------------------------------------------- ----- ------ ----- -----
*Globalive Wireless Management
Company
ATTACHMENT A: VIMPELCOM LTD FINANCIAL STATEMENTS
VIMPELCOM LTD UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (PRO-FORMA)
USD (millions) Pro-forma Pro-forma
Three months ended Full Year
December 31
2012 2011 2012 2011
---- ---- ---- ----
Operating revenues
Service revenues 5,605 5,594 22,122 22,794
Sales of equipment and accessories 234 190 677 516
Other revenues 111 105 262 167
-------------- --- --- --- ---
Total operating revenues 5,950 5,889 23,061 23,477
------------------------ ----- ----- ------ ------
Operating expenses
Service costs 1,762 1,440 5,439 5,693
Cost of equipment and accessories 241 254 693 771
Selling, general and administrative expenses 1,501 1,968 7,161 7,488
Depreciation 758 790 2,926 3,094
Amortization 519 664 2,080 2,663
Impairment of GWMC* 328 - 328 -
Impairment loss 58 527 58 504
Loss on disposals of non-current assets 74 32 205 89
--------------------------------------- --- --- --- ---
Total operating expenses 5,241 5,675 18,890 20,302
------------------------ ----- ----- ------ ------
Operating profit 709 214 4,171 3,175
---------------- --- --- ----- -----
Finance costs 522 501 2,029 2,010
Finance income (38) (34) (154) (160)
Revaluation of previously held interest in Euroset (606) - (606) -
Other non-operating losses 44 152 75 323
Shares of loss/(profit) of associates and joint ventures accounted for using the equity
method (7) 35 9 69
Net foreign exchange loss/(gain) 30 119 (70) 94
Profit/(loss) before tax 764 (559) 2,888 839
------------------------ --- ---- ----- ---
Income tax expense 195 101 906 650
Profit/(loss) for the year from continuing operations 569 (660) 1,982 189
----------------------------------------------------- --- ---- ----- ---
Profit/(loss) for the period 569 (660) 1,982 189
---------------------------- --- ---- ----- ---
Attributable to:
The owners of the parent 801 (381) 2,145 525
Non-controlling interest (232) (279) (163) (336)
------------------------ ---- ---- ---- ----
569 (660) 1,982 189
--- ---- ----- ---
Earnings/loss per share
Basic, profit for the year attributable to ordinary equity holders of the parent $0.49 -$0.24 $1.33 $0.32
Diluted, profit for the year attributable to ordinary equity holders of the parent $0.49 -$0.24 $1.32 $0.32
---------------------------------------------------------------------------------- ----- ------ ----- -----
*Globalive Wireless Management
Company
ATTACHMENT A: VIMPELCOM LTD INTERIM FINANCIAL STATEMENTS
VIMPELCOM LTD UNAUDITED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
USD (millions) 31 December 2012, 31 December 2011,
audited audited
Assets
Non-current assets
Property and equipment 15,666 15,165
Intangible assets 10,601 11,825
Goodwill 16,964 16,776
Investments in associates and joint ventures 1,168 388
Deferred tax asset 312 386
Financial assets 1,091 1,536
Other non-financial assets 18 92
Total non-current assets 45,820 46,168
------------------------ ------ ------
Current assets
Inventories 167 227
Trade and other receivables 2,495 2,711
Other non-financial assets 1,290 1,320
Current income tax asset 292 293
Other financial assets 270 345
Cash and cash equivalents 4,949 2,325
Total current assets 9,463 7,221
-------------------- ----- -----
Assets classified as held for sale 77 650
Total assets 55,360 54,039
============ ====== ======
Equity and liabilities
Equity
Equity attributable to equity owners of the parent 14,869 14,037
Non-controlling interests 503 865
Total equity 15,372 14,902
------------ ------ ------
Non-current liabilities
Financial liabilities 25,955 25,724
Provisions 548 402
Other non-financial liabilities 410 442
Deferred tax liability 1,416 1,624
Total non-current liabilities 28,329 28,192
----------------------------- ------ ------
Current liabilities
Trade and other payables 4,585 4,566
Dividend payables 1,274 -
Other non-financial liabilities 2,243 2,030
Other financial liabilities 3,126 3,118
Current income tax payable 202 399
Provisions 192 182
Total current liabilities 11,622 10,295
------------------------- ------ ------
Liabilities associated with assets held for sale 37 650
------------------------------------------------ --- ---
Total equity and liabilities 55,360 54,039
---------------------------- ------ ------
ATTACHMENT A: VIMPELCOM LTD FINANCIAL STATEMENTS
VIMPELCOM LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
USD (millions) 2012 2011
------------- ---- ----
Operating activities
Profit after tax 2,093 269
Tax expense 866 585
----------- --- ---
Profit before tax 2,959 854
----------------- ----- ---
Non-cash adjustment to reconcile profit
before tax to net cash flows:
Depreciation 2,926 2,726
Amortization 2,080 2,059
Impairment of GWMC 328 -
Impairment loss 37 527
Loss on disposals of non-current assets 205 90
Finance income (154) (120)
Finance costs 2,029 1,587
Revaluation of previously held interest in
Euroset (658) -
Other non-operating losses/(gains) 77 308
Net foreign exchange (gain)/ loss (70) 190
Shares of loss/(profit) of associates and
joint ventures accounted for using the
equity method 9 35
Movements in provisions and pensions 36 (25)
---------------------------------- --- ---
Cash from operations 9,804 8,231
Working capital adjustments:
Change in trade and other receivables and
prepayments 10 (176)
Change in inventories 14 (69)
Change in trade and other payables 421 332
Interest paid (2,144) (1,528)
Interest received 383 106
Income tax paid (1,231) (790)
--------------- ----
Net cash flows from operating activities 7,257 6,106
---------------------------------- ----- -----
Investing activities
Proceeds from sale of property, plant and
equipment and intangible assets 42 34
Purchase of property, plant and equipment
and intangible assets (3,886) (6,260)
Payments of loans granted (189) (118)
Receipts/(payments) from deposits 107 212
Receipts from/(investments in) associates (2) 25
Divested cash net of proceeds from sale of
shares in subsidiaries (75) -
Receipt of dividends 8 -
Acquisition of subsidiaries, net of cash
acquired (13) (838)
----
Net cash flows used in investing activities (4,008) (6,945)
---------------------------------- ------ ------
Financing activities
Net proceeds from exercise of share options - 5
Acquisition of non-controlling interest (9) -
Proceeds from borrowings net of fees paid 3,094 10,389
Repayment of borrowings (3,650) (6,581)
Purchase of treasury shares - (1)
Proceeds from sale of treasury stock 3 -
Dividends paid to equity holders of the
parent - (1,216)
Dividends paid to non-controlling interests (25) (13)
---------------------------------- ---
Net cash flows used in financing activities (587) 2,583
---------------------------------- ---- -----
Net increase in cash and cash equivalents 2,662 1,744
Net foreign exchange difference (38) (304)
Cash and cash equivalents at beginning of
period 2,325 885
---
Cash and cash equivalents at end of period 4,949 2,325
================================== ===== =====
ATTACHMENT B: COUNTRY UNITS KEY INDICATORS
AFRICA & ASIA BUSINESS UNIT: COUNTRY DETAIL
ALGERIA
DZD bln
4Q12 4Q11 YoY FY12 FY11 YoY
Revenues 37.0 33.9 9% 143.3 135.6 6%
EBITDA 21.8 20.1 8% 85.2 80.4 6%
EBITDA margin 58.9% 59.5% 59.4% 59.3%
CAPEX (USD mln) 30 21 45% 47 40 18%
CAPEX / revenues (USD) 5% 5% 2% 2%
Mobile
Subscribers ('000) 17,846 16,595 8%
ARPU (DZD) 674 673 0%
MOU (min) 254 278 -9%
-------- --- --- ---
PAKISTAN
PKR bln 4Q12 4Q11 YoY FY12 FY11 YoY
Revenues 27.2 25.0 9% 105.8 97.9 8%
EBITDA 11.7 10.4 13% 45.6 40.0 14%
EBITDA margin 43.0% 41.7% 43.1% 40.9%
CAPEX (USD mln) 89.2 109.7 -19% 172.7 261.2 -34%
CAPEX / revenues (USD) 32% 38% 15% 23%
Mobile
Subscribers ('000) 36,141 34,214 6%
ARPU (PKR) 243 235 3%
MOU (min) 215 209 3%
-------- --- --- ---
BANGLADESH
BDT bln 4Q12 4Q11 YoY FY12 FY11 YoY
Revenues 11.2 9.9 13% 45.4 37.9 20%
EBITDA 4.2 2.1 104% 15.7 12.5 26%
EBITDA margin 37.4% 20.8% 34.7% 33.0%
CAPEX (USD mln) 43.2 336.8 -87% 116.4 428.2 -73%
CAPEX / revenues (USD) 31% 261% 21% 84%
Mobile
Subscribers ('000) 25,883 23,754 9%
ARPU (BDT) 138 140 -1%
MOU (min) 191 207 -8%
-------- --- --- ---
SUB SAHARAN AFRICA (TELECEL GLOBE)
USD mln
4Q12 4Q11 YoY FY12 FY11 YoY
Revenues 23 24 -3% 91 94 -3%
EBITDA 7.0 (5.1) n.m. 33.3 7.9 322%
EBITDA margin 27% n.a 34% 8%
Mobile
Subscribers ('000) 4,464 3,140 42%
----------------- ----- ----- ---
SEA (CONSOLIDATED)
USD mln
4Q12 4Q11 YoY FY12 FY11 YoY
Revenues 13 23.5 -45% 60.8 68.7 -12%
EBITDA 0 (19.7) n.m. (9.7) (75.5) n.m.
EBITDA margin 2% n.a. n.a. n.a.
Mobile
Subscribers ('000) 915 1,418 -35%
----------------- --- ----- ---
CIS BUSINESS UNIT: COUNTRY DETAIL
KAZAKHSTAN
KZT mln
4Q12 4Q11 YoY YTD12 YTD11 YoY
Net operating revenues 32,055 31,566 2% 123,665 120,672 2%
EBITDA 14,822 13,749 8% 58,814 57,708 2%
EBITDA margin 46.2% 43.6% 47.6% 47.8%
CAPEX (USD mln) 57 99 -42% 166 264 -37%
CAPEX / revenues (USD) 27% 47% 20% 32%
Mobile
Subscribers ('000) 8,589 8,409 2%
ARPU (KZT) 1,156 1,161 -0.4%
MOU (min) 237 165 44%
-------- --- --- ---
ARMENIA
AMD mln
4Q12 4Q11 YoY YTD12 YTD11 YoY
Net operating revenues 15,706 17,498 -10% 63,441 70,541 -10%
EBITDA 6,202 7,108 -13% 25,257 27,038 -7%
EBITDA margin 39.5% 40.6% 39.8% 38.3%
CAPEX (USD mln) 3 7 -50% 15 30 -50%
CAPEX / revenues (USD) 9% 14% 10% 16%
Mobile
Subscribers ('000) 800 765 5%
ARPU (AMD) 2,678 2,887 -7%
MOU (min) 273 261 5%
-------- --- --- ---
UZBEKISTAN
USD mln
4Q12 4Q11 YoY YTD12 YTD11 YoY
Net operating revenues 158 80 99% 463 277 67%
EBITDA 95 33 193% 253 122 107%
EBITDA margin 60.3% 41.0% 54.6% 44.1%
CAPEX (USD mln) 43 85 -50% 137 219 -37%
CAPEX / revenues (USD) 27% 107% 30% 79%
Mobile
Subscribers ('000) 10,194 6,361 60%
ARPU (USD) 5.3 4 26%
MOU (min) 516 458 13%
-------- --- --- ---
TAJIKISTAN
USD mln
4Q12 4Q11 YoY YTD12 YTD11 YoY
Net operating revenues 29 25 14% 107 101 6%
EBITDA 13 11 19% 51 48 8%
EBITDA margin 45.9% 44.1% 47.9% 47.2%
CAPEX (USD mln) 6 14 -58% 20 29 -29%
CAPEX / revenues (USD) 20% 54% 19% 29%
Mobile
Subscribers ('000) 1,132 965 17%
ARPU (USD) 8.9 8 7%
MOU (min) 256 229 12%
-------- --- --- ---
GEORGIA
GEL mln
4Q12 4Q11 YoY YTD12 YTD11 YoY
Net operating revenues 35 29 19% 129 106 22%
EBITDA 10 7 52% 35 25 42%
EBITDA margin 28.9% 22.6% 27.3% 23.4%
CAPEX (USD mln) 3 14 -76% 13 39 -68%
CAPEX / revenues (USD) 16% 80% 16% 63%
Mobile
Subscribers ('000) 969 833 16%
ARPU (GEL) 10.9 11 -1%
MOU (min) 244 217 12%
-------- --- --- ---
KYRGYZSTAN
KGS mln
4Q12 4Q11 YoY YTD12 YTD11 YoY
Net operating revenues 2,009 1,753 15% 7,582 6,531 16%
EBITDA 1,171 954 23% 4,266 3,567 20%
EBITDA margin 58.3% 54.4% 56.3% 54.6%
CAPEX (USD mln) 15 21 -29% 31 44 -29%
CAPEX / revenues (USD) 35% 55% 19% 31%
Mobile
Subscribers ('000) 2,482 2,371 5%
ARPU (KGS) 269.9 245 10%
MOU (min) 253 292 -14%
-------- --- --- ---
ATTACHMENT C: RECONCILIATION TABLES
RECONCILIATION OF CONSOLIDATED EBITDA OF VIMPELCOM* (PRO FORMA)
USD mln 4Q12 4Q11 YTD12 YTD11
(unaudited) (unaudited) (audited) (unaudited)
EBITDA 2,446 2,227 9,768 9,525
Depreciation (758) (790) (2,926) (3,094)
Amortization (519) (664) (2,080) (2,663)
Impairment of GWMC** (328) - (328) -
Impairment loss (37) (527) (58) (504)
Loss on disposals of non-current assets (74) (32) (205) (89)
EBIT 709 214 4,171 3,175
Financial Income and Expenses (484) (467) (1,875) (1,850)
- including finance income 38 34 154 160
- including finance costs (522) (501) (2,029) (2,010)
Net foreign exchange (loss)/gain and others 589 (306) 592 (486)
- including revaluation of previously held interest 606 - 606 -
in Euroset
- including Other non-operating (losses)/gains (44) (152) (75) (323)
- including Shares of (loss)/profit of associates and joint 7 (35) (9) (69)
ventures accounted for using the equity method
- including Net foreign exchange (loss)/gain (30) (119) 70 (94)
Profit before tax 764 (559) 2,888 839
Income tax expense (195) (101) (906) (650)
Profit for the period 569 (660) 1,982 189
Profit for the period attributable to non-controlling interest (232) (279) (163) (336)
Net income 801 (381) 2,145 525
* See also the supplementary file FactbookQ42012.xls on our website at http://vimpelcom.com/ir/financials/results.wbp
**Globalive Wireless Management Company
ATTACHMENT C: RECONCILIATION TABLES
RECONCILIATION OF CONSOLIDATED EBITDA OF VIMPELCOM* (ACTUAL)
USD mln 4Q12 4Q11 YTD12 YTD11
(unaudited) (unaudited) (audited) (audited)
EBITDA 2,446 2,227 9,768 8,256
Depreciation (758) (790) (2,926) (2,726)
Amortization (519) (664) (2,080) (2,059)
Impairment of GWMC** (328) - (328) -
Impairment loss (37) (527) (58) (527)
Loss on disposals of non-current assets (74) (32) (205) (90)
EBIT 709 214 4,171 2,854
Financial Income and Expenses (484) (467) (1,875) (1,467)
- including finance income 38 34 154 120
- including finance costs (522) (501) (2,029) (1,587)
Net foreign exchange (loss)/gain and others 539 (306) 592 (533)
- including revaluation of previously held interest in Euroset 606 - 606 -
- including Other non-operating (losses)/gains (44) (152) (75) (308)
- including Shares of (loss)/profit of associates and joint ventures 7 (35) (9) (35)
accounted for using the equity method
- including Net foreign exchange (loss)/gain (30) (119) 70 (190)
EBT 764 (559) 2,888 854
Income tax expense (195) (101) (906) (585)
Profit/(loss) for the year 569 (660) 1,982 269
(Profit)/loss for the year attributable to non-controlling interest (232) (279) (163) 274
Profit for the year attributable to the owners of the parent 801 (381) 2,145 543
------------------------------------------------------------ --- ---- ----- ---
* See also the supplementary file FactbookQ42012.xls on our website at http://vimpelcom.com/ir/financials/results.wbp
**Globalive Wireless Management Company
ATTACHMENT C: RECONCILIATION TABLES
RECONCILIATION OF VIMPELCOM CONSOLIDATED NET DEBT (ACTUAL)
USD mln 1Q12 2Q12 3Q12 4Q12
Net debt 24,339 23,067 22,681 21,971
Cash and cash equivalents 4,033 2,883 3,241 4,949
Long - term and short-term deposits 219 609 715 67
Gross debt 28,591 26,559 26,637 26,987
Interest accrued related to financial liabilities 450 558 451 536
Fair value adjustment 148 228 28 -
Unamortised fair value adjustment under acquisition method of accounting 909 841 817 794
Other unamortised adjustments to financial liabilities (fees, discounts etc.) (103) (147) 69 73
Derivatives not designated as hedges 403 415 429 453
Derivatives designated as hedges 173 157 178 237
Total other financial liabilities 30,570 28,611 28,609 29,080
--------------------------------- ------ ------ ------ ------
AVERAGE AND CLOSING RATES OF FUNCTIONAL CURRENCIES TO USD(*)
Average rates Closing rates
------------- -------------
FY12 FY11 YoY FY12 FY11 Delta
Russian
Ruble 31.09 29.39 -5.5% 30.37 32.20 6.0%
Euro 0.78 0.72 -7.5% 0.76 0.77 1.6%
Algerian
Dinar 77.84 72.93 -6.3% 78.94 75.33 -4.6%
Pakistan
Rupee 93.40 86.33 -7.6% 97.14 89.95 -7.4%
Bangladeshi
Taka 81.84 74.07 -9.5% 79.78 81.83 2.6%
Ukrainian
Hryvnia 7.99 7.97 -0.3% 7.99 7.99 0.0%
Kazakh
Tenge 149.11 146.62 -1.7% 150.74 148.40 -1.6%
Armenian
Dram 401.76 372.44 -7.3% 403.58 385.77 -4.4%
Kyrgyz Som 47.01 46.14 -1.9% 47.40 46.48 -1.9%
---------- ----- ----- ---- ----- ----- ----
* Functional currencies in Tajikistan, Uzbekistan and Cambodia are US dollars.
ATTACHMENT D: WIND TELECOMUNICAZIONI GROUP CONDENSED STATEMENTS OF INCOME
EUR mln FY 12 FY 11
Revenues 5,262 5,431
Other revenues 165 139
Total Revenues 5,427 5,570
EBITDA 2,063 2,120
D&A (1,147) (1,068)
EBIT 916 1,052
Financial Income and expenses (875) (934)
EBT 40 118
Income Tax (164) (278)
Profit/(Loss) from discontinued operations - 6
Net income (124) (154)
---------- ---- ----
ATTACHMENT E: DEFINITIONS
ARPU (Monthly Average Revenue per User) is calculated by dividing service revenue during the relevant period, including revenue from voice-, roaming-, interconnect-, and value added services (including mobile data, SMS, MMS), but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of subscribers during the period and dividing by the number of months in that period. For Business Unit Africa & Asia (except SEA) visitors roaming revenue is excluded from service revenues.
Broadband subscribers are the customer contracts that served as a basis for revenue generating activity in the three months prior to the measurement date, as a result of activities including monthly internet access using FTTB and xDSL technologies as well as mobile internet access via WiFi and USB modems using 3G/HSDPA technologies. Italian subsidiary measures broadband subscribers based on the number of active contracts signed. Russian Business Unit includes IPTV activities.
Capital expenditures (CAPEX), purchases of new equipment, new construction, upgrades, software, other long lived assets and related reasonable costs incurred prior to intended use of the non current asset, accounted at the earliest event of advance payment or delivery. Long-lived assets acquired in business combinations are not included in capital expenditures.
EBIT is a non-U.S. GAAP measure and is calculated as EBITDA plus depreciation, amortization and impairment loss. Our management uses EBIT as a supplemental performance measure and believes that it provides useful information of earnings of the Company before making accruals for financial income and expenses and Net foreign exchange (loss)/gain and others. Reconciliation of EBIT to net income attributable to VimpelCom Ltd., the most directly comparable U.S. GAAP financial measure, is presented above.
EBITDA is a non-U.S. GAAP financial measure. EBITDA is defined as earnings before interest, tax, depreciation and amortization. VimpelCom calculates EBITDA as operating income before depreciation, amortization and impairment loss and includes certain non-operating losses and gains mainly represented by litigation provisions for all of its Business Units except for its Russia Business Unit. The Russia Business Unit's EBITDA is calculated as operating income before depreciation and amortization. EBITDA should not be considered in isolation or as a substitute for analyses of the results as reported under U.S. GAAP. Historically our management used OIBDA (defined as operating income before depreciation, amortization and impairment losses) instead of EBITDA. Following the acquisition of Wind Telecom, our management concluded that EBITDA is a more appropriate measure because it is more widely used amongst European-based analysts and investors to assess the performance of an entity and compare it with other market players. Our management uses EBITDA and EBITDA margin as supplemental performance measures and believes that EBITDA and EBITDA margin provide useful information to investors because they are indicators of the strength and performance of the Company's business operations, including its ability to fund discretionary spending, such as capital expenditures, acquisitions and other investments, as well as indicating its ability to incur and service debt. In addition, the components of EBITDA include the key revenue and expense items for which the Company's operating managers are responsible and upon which their performance is evaluated. EBITDA also assists management and investors by increasing the comparability of the Company's performance against the performance of other telecommunications companies that provide EBITDA information. This increased comparability is achieved by excluding the potentially inconsistent effects between periods or companies of depreciation, amortization and impairment losses, which items may significantly affect operating income between periods. However, our EBITDA results may not be directly comparable to other companies' reported EBITDA results due to variances and adjustments in the components of EBITDA (including our calculation of EBITDA) or calculation measures. Additionally, a limitation of EBITDA's use as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues or the need to replace capital equipment over time. Reconciliation of EBITDA to net income attributable to VimpelCom Ltd., the most directly comparable U.S. GAAP financial measure, is presented above.
EBITDA margin is calculated as EBITDA divided by net operating revenues, expressed as a percentage.
Households passed are households located within buildings, in which indoor installation of all the FTTB equipment necessary to install terminal residential equipment has been completed.
LLU (local loop unbundling), in Italy, this is the regulatory process of allowing multiple telecommunications operators to use connections from Telecom Italia's local exchanges to the customer's premises.
MNP (Mobile number portability) is a facility provided by telecommunications operators which enables customers to keep their telephone numbers when they change operators.
Mobile subscribers are SIM-cards registered in the system as of a measurement date, users of which generated revenue at any time during the three months prior to the measurement date. This includes revenue coming from any incoming and outgoing calls, subscription fee accruals, debits related to service, outgoing SMS, Multimedia Messaging Service (referred to as MMS), data transmission and receipt sessions, but does not include incoming SMS and MMS sent by VimpelCom or abandoned calls. VimpelCom's total number of mobile subscribers also includes SIM-cards for use of mobile Internet service via USB modems and subscribers for WiFi. The number for Italy is based on SIM-cards, users of which generated revenue at any time during the twelve months prior to the measurement date. For the purpose of this earnings release, we include all subscribers of Zimbabwe, which is accounted for as investment at cost, into Business Unit Africa & Asia and subscribers of all our Canada equity investee into Business Unit Europe and North America, both of which are included into total subscribers of VimpelCom.
MOU (Monthly Average Minutes of Use per User) is calculated by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile subscribers during the period and dividing by the number of months in that period.
Net debt is a non-U.S. GAAP financial measure and is calculated as the sum of interest bearing long-term debt and short-term debt minus cash and cash equivalents, long-term and short-term deposits and fair value hedge. The Company believes that net debt provides useful information to investors because it shows the amount of debt outstanding to be paid after using available cash and cash equivalent and long-term and short-term deposits. Net debt should not be considered in isolation as an alternative to long-term debt and short-term debt, or any other measure of the company financial position. Reconciliation of net debt to long-term debt and short-term debt, the most directly comparable U.S. GAAP financial measures, is presented below in the reconciliation tables section.
Net foreign exchange (loss)/gain and others represents the sum of Net foreign exchange (loss)/gain, Equity in net (loss)/gain of associates and Other (expense)/income, net (primarily losses from derivative instruments), and is adjusted for certain non-operating losses and gains mainly represented by litigation provisions. Our management uses Net foreign exchange (loss)/gain and others as a supplemental performance measure and believes that it provides useful information about the impact of our debt denominated in foreign currencies on our results of operations due to fluctuations in exchange rates, the performance of our equity investees and other losses and gains the Company needs to manage to run the business.
Organic growth Revenue and EBITDA are non-U.S. GAAP financial measures that reflect changes in Revenue and EBITDA excluding foreign currency movements and other factors, such as business under liquidation, disposals, mergers and acquisitions. We believe investors should consider these measures as they are more indicative of our ongoing performance and management uses these measures to evaluate the Company's operational results and trends.
Reportable segments, the Company identified Russia, Europe and North America, Africa & Asia, CIS and Ukraine based on the business activities in different geographical areas. Although Georgia is no longer a member of the CIS, consistent with VimpelCom's historic reporting practice VimpelCom continues to include Georgia in its CIS reporting segment. Intersegment revenues are eliminated in consolidation.
SOURCE VimpelCom Ltd.