VimpelCom fell to a loss of $1.01 billion in the third quarter, partly as a result of a $900 million provision in relation to the ongoing investigations of the company’s activities in Uzbekistan.
The $900 million provision, which was announced earlier this week, was the main component in exceptional costs of $1.2 billion which wiped out the chances of profitability in the quarter. The group made net income of $105 million in the year-ago period.
The Netherlands-based group is under investigation by the US Securities and Exchange Commission, US Department of Justice (DoJ) and the Dutch Public Prosecution Service for its behaviour in Uzbekistan.
Separately, former VimpelCom CEO Jo Lunder is being held by the Norwegian police as part of the same probe, it was confirmed. The Norwegian authorities have opened their own investigation into the company’s activities in Uzbekistan, as well as assisting the Dutch with their investigation.
More bad news for VimpelCom came with quarterly revenue which fell drastically by 31 per cent to $2.44 billion. The company pinned the blame on unkind currency movements. Without such fluctuations, the company would have reported a two per cent increase in quarterly revenue.
In the company’s largest market of Russia, revenue fell by 43 per cent to $1.15 billion. Even discounting currency movements, the Russian business would still have reported a one per cent decline in revenue. A small increase in mobile service revenue was offset by a decline in its fixed business. Mobile service revenue was pushed up by mobile data and interconnect revenue.
Total mobile customers across the group decreased by 1.3 million on a year-on-year basis to 196 million by the end of 3Q15, mainly because of regulation of the mobile industry in Pakistan, which required operators to block unverified SIMs during the second quarter. Excluding this effect the group customer base would have grown by 4.3 million customers year-on-year.