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VimpelCom Profits Plunge by 90 Percent

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Russia based VimpelCom has reported a near collapse in its first quarter profits as revenues also declined by a tenth.

The company posted revenues down by 10 percent at a shade over USD5 billion, while net profit collapsed, down by 90% to just USD39 million.

The decrease in net profit was primarily the result of the decline in operational performance, as well as foreign exchange losses of US$ 92 million. A higher rate of tax in some countries also impacted on the net profit figure.

The revenue decline was mainly due to operational performance in Russia, the intense price competition in Italy particularly through the summer of 2013, regulatory and governmental actions in the Africa & Asia Business Unit, together with unstable macro-economic situations in Pakistan and Ukraine.

EBITDA decreased organically 6% YoY to US$ 2.1 billion, reflecting the decline in revenue and higher infrastructure and distribution costs in Russia.

The company's CEO, Jo Lunder noted "We previously indicated our expectation that 2014 would be a challenging year and the Q1 results reflect the more difficult trading environment. Group organic revenues declined by 5%, however due to our continuing focus on cost control the Group's EBITDA margin remains strong at 41.6%."

CAPEX increased 24% to US$ 736 million in 1Q14, reflecting the continued investments in high-speed data network, including the roll out of LTE networks in Russia, 3G networks in Algeria and Bangladesh and continued investments in Italy in HSPA+ and LTE.

The Group's total customer base grew by 3 percent to end the period at 218 million subscribers.

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Tags: vimpelcom  Russia