VimpelCom reported an “improving” set of quarterly results, which it said “put the company on track to meet the 2015 targets”, although it is still seeing revenue pressure across its units.
The company also noted a strategy to “generate sustainable annualised cashflow improvements of $750 million by year three”, although its announcement was somewhat lacking in detail (the company had not held its results call at the time of publishing). A further update will come at the company’s annual Analyst and Investor conference in October 2015.
Net income attributable to shareholders was $108 million, up 8 per cent, on revenue of $3.76 billion, down 26 per cent. It said that in organic terms, service revenue declined 2 per cent to $3.61 billion, a figure it said was “in line with management expectations”.
The company’s top line was impacted by continued market weakness in Italy and aggressive price competition in Algeria, partially offset by good service revenue growth in Bangladesh and Ukraine. Its profit benefitted from lower income tax expense.
EBITDA of €1.51 billion was down 27 per cent, or 3 per cent in organic terms, impacted by the decline in revenue.
VimpelCom’s total mobile customer base declined by 1.8 million year-on-year to 213.4 million, mainly due to a requirement to block unverified SIMs in Pakistan.
In its core market of Russia, service revenue declined by 35 per cent to $1.26 billion, with the decrease a more modest 2 per cent in organic terms. It said that mobile service revenue was up slightly YoY, driven by growth in mobile data and interconnect revenue, partially offset by lower voice and roaming revenue driven by a lower ARPU as customers migrated to new price plans.
The results were published before Vimplecom and Hutchison announced plans to merge their Italian operations. With regard to that country, the company said that in Q2 it “continued to outperform in a challenging mobile market”. Service revenue of $1.1 billion was down 23 per cent, equating to a 4 per cent drop in organic terms.
VimpelCom said that it expects the Italian market will “continue to stabilise during the second half of the year”.
For the full year, the company is forecasting a EBITDA margin that is flat to minus on percentage point in organic terms, with service revenue from flat to a low single-digit decline.