VimpelCom blamed regulatory and competitive pressures, plus a “market slowdown”, for its third quarter squeeze on sales and earnings.
VimpelCom, the third-largest mobile operator in Russia – but headquartered in Amsterdam – saw year-on-year sales for the period dip by 1 per cent, to US$5.7 billion.
EBITDA dropped 2 per cent, to $2.5 billion, giving an EBITDA margin of 43.5 per cent (down from 44 per cent during Q3 2012).
Net profits slumped by 53 per cent, to $255 million, mainly due to higher taxes.
Jo Lunder, Vimpelcom’s CEO, maintained that the “underlying performance was stable” and that operational improvements in Russia were “on track”.
Sales in Russia, VimpelCom’s biggest single market – accounting for around 40 per cent of group turnover – increased by a modest 1 per cent, to RUB75.4 billion ($2.3 billion). Expressed in US dollars, however, revenue slipped 1 per cent.
“It’s disappointing that VimpelCom grows in Russia at a slower pace than its competitors,” Ivan Kim, an analyst at VTB Capital in Moscow, told Bloomberg.
More encouragingly, mobile data revenue grew 30 per cent, year-on-year, but it still wasn’t a strong enough performance to stop monthly ARPU falling slightly, to RUB349 (Q3 2012: RUB352).
Mobile forms the bulk of sales in Russia with fixed-line making up only 17 per cent.
In Italy, VimpelCom’s second-largest market (around 30 per cent of group turnover), sales dropped 6 per cent, to €1.25 billion ($1.66 billion). Mobile revenue fell 3 per cent, to €926 million. VimpelCom blamed MTR cuts and stiff competition for the poorer performance.
The Ukraine business unit had a poor Q3 as well. Revenues fell 7 per cent, to UAH 3.4 billion ($420 million), while EBITDA slumped 10 per cent, to UAH 1.7 billion. The EBITDA margin, at 49.6 per cent, is nonetheless respectable.
VimpelCom blamed strong price competition and existing customers switching to lower-priced bundled tariff plans for the downturn in Ukraine.
Revenue fell too at the Africa & Asia business unit (down 4 per cent, to $869 million), but the CIS business unit managed a 7 per cent sales increase, to $513 million, on the back of strong subscriber growth in Uzbekistan and Kazakhstan.