VimpelCom CEO: Armenia, Georgia Capex in Line with Strategy"
NEW YORK, Nov 16 (Dow Jones) -- Capital expenditure plans for Georgia and Armenia will generally follow OAO Vimpel Communications' pattern of investment in second-tier countries, Chief Executive Officer Alexander Izosimov told Dow Jones Newswires on Wednesday.
That is to say $100 per subscriber, Izosimov said. He added that the company could reach one million subscribers - and $100 million in expenditures - in both countries in about 36 months.
Izosimov said he couldn't disclose more specific numbers or timeframes at the moment.
In the case of Armenia, the deal in that country has just won approval from the Armenian government and it is too early to talk about set numbers, Izosimov said.
"We are very happy to see the Armenian government give its blessings," he said. "We have yet to finalize a capex plan."
VimpelCom last week bought 90% of Armenian operator Armentel from Greece's Hellenic Telecommunications Organization SA or OTE, for EUR341.9 million in cash and EUR40 million in debt. The deal met official approval last week.
Izosimov was in New York to celebrate the company's 10th anniversary of listing in the New York Stock Exchange. VimpelCom, as it is more commonly known, is Russia's No. 2 mobile phone provider after OAO Mobile TeleSystems, or MTS.
"We already entered key markets" outside Russia, such as Ukraine, he said. "We're now going through the second-tier (countries)" and Armenia and Georgia are important for the company's strategy in the Caucasus region, Izosimov said.
In terms of measuring its growth, the company is now focusing on "real, quality subscribers" rather than raw subscriber numbers based on phone card sales.
Real subscribers are people who not only buy mobile phone cards but also use them in a chargeable transaction in three months' time, he said.
"Our aspiration is leadership," Izosimov said. "We are very close, we are a stone's throw from closing the gap."
Izosimov said relations between Russia and Georgia aren't interfering with company's business in Georgia.
Relations between the two countries have become strained, with Georgia recently vowing to reduce its dependence on Russian gas and in an apparent effort to counteract pressure from its neighbor.
"It has not affected at all. We enjoy great support from the (Georgian) government," he said.
In September, VimpelCom posted a 23% rise in second-quarter net profit, driven by price increases and tight cost controls. Net profit increased to $194.9 million from $158.8 million a year earlier, and revenue rose 46% to $1.12 billion from $769.8 million.
Shares of VimpelCom in New York were down 0.2% at $66.50 in early afternoon trade Wednesday, when most Russian American Depositary Receipts were seeing red.
End"
Posted to the site on 16th November 2006
