VimpelCom Quarterly Profits Nearly Triple to $538 Million
Russia's VimpelCom has announced that its third-quarter profits jumped to US$538 million, from US$189 million a year ago, although revenues fell by 6 percent to US$5.75 billion.
The profit growth was the result of higher profit before tax and a lower effective tax rate this year compared to 3Q 2011 when certain net operating losses incurred were not recognized for tax purposes.
The total mobile subscriber base increased 7% YoY to 212 million at the end of the third quarter.
The largest absolute contribution came from accelerated growth in subscribers in the Africa & Asia Business Unit and a large increase in subscribers in CIS resulting primarily from the temporary network closure of a competitor by the Uzbek authorities. In addition, the company also achieved strong growth in fixed and mobile broadband subscribers in Russia, Italy and Ukraine.
In Russia, the company continued the positive trend witnessed in the first half of the year, delivering organic revenue growth of 7% YoY. Mobile data revenues increased 38% YoY. Mobile broadband subscribers in Russia increased 5% YoY to 2.5 million, while the fixed broadband subscriber base reached 2.3 million, up 25% YoY
In the Africa & Asia Business Unit, the company exceeded the 86 million subscriber level through strong subscriber growth across all countries of operation, with Algeria, Pakistan and Bangladesh performing well in the period. However there was a slowdown in revenue growth in Pakistan and Algeria due to Ramadan. In addition, revenue growth in Pakistan was also negatively impacted by heavy rains in September and two government forced cellular network closures.
The Ukraine Business Unit continued to invest in solidifying its market position in the mobile segment through the ongoing transition to bundled tariff plans. The transition is showing good results with flat mobile service revenues YoY and an improvement QoQ. Mobile subscribers increased by 2% YoY to 25.2 million. Fixed-line service revenues increased by 11% YoY, mainly due to a 60% increase in fixed residential broadband revenues.
The CIS Business Unit delivered double digit organic revenue growth, partly supported by a temporary decrease in competition in Uzbekistan. Overall, CIS was able to maintain subscriber growth despite an increasingly competitive environment.
The company's Italian business continued to outperform the broader Italian telecom market in the third quarter. VimpelCom strengthened its market position in Italy in both the mobile and fixed-line segments. Fixed broadband revenues were up 7% YoY, while mobile internet revenues increased 40% YoY.