|
VimpelCom announces second quarter and six month
2004
financial and operating results
-- 61% year-on-year increase in net operating revenues --
-- 73% year-on-year increase in net income --
-- 75% year-on-year increase in OIBDA --
-- approximately 18.3 million subscribers --
-- commercial operations in 70 regions of Russia --
Moscow and New York (August 26, 2004) - Open Joint Stock Company "Vimpel-Communications"
("VimpelCom" or the "Company") (NYSE: VIP), a leading provider of
wireless telecommunications services in Russia, today announced its
financial and operating results for the quarter and six months ended June
30, 2004. During the second quarter, the Company reported rapid subscriber
growth in the regions and increases in net operating revenues, OIBDA and
net income. Consolidated financial statements of VimpelCom and
consolidated financial statements of VimpelCom-Region, VimpelCom's
subsidiary for regional development, are attached.
Commenting on today's announcement, Alexander Izosimov,
Chief Executive Officer of VimpelCom, said, "We are pleased with the
Company's performance in the second quarter. We added approximately 3
million new subscribers, our largest quarterly increase in new subscribers
in the Company's history. We launched five new networks in the regions and
gained access to operations in three regions in the Far East through an
acquisition. In addition, our financial results continue to strengthen,
with our OIBDA margin reaching a new high of 49.8%." Mr. Izosimov
continued: "We are pleased to see progress with the supply of numbering
capacity and we look forward to continued strong growth, particularly in
the Russian regions."
Key Financial and Operating Indicators
(Definitions as well as reconciliation of each of OIBDA,
OIBDA margin, ARPU and SAC to its most directly comparable U.S. GAAP
financial measures are presented below in the attachment)
|
Three months ended |
Six months ended |
June
30, 2004 |
June
30, 2003 |
Change
Y-on-Y
(%) |
June
30, 2004 |
June
30, 2003 |
Change
Y-on-Y
(%) |
Net operating revenues (US$,000) |
490,901 |
304,440 |
61.2% |
908,598 |
548,877 |
65.5% |
OIBDA (US$,000) (1) |
244,694 |
139,929 |
74.9% |
446,719 |
247,865 |
80.2% |
OIBDA margin (2) |
49.8% |
46.0% |
- |
49.2% |
45.2% |
- |
Gross margin (US$,000) (3) |
406,217 |
249,022 |
63.1% |
748,358 |
445,592 |
67.9% |
Gross margin percentage (4) |
82.7% |
81.8% |
- |
82.4% |
81.2% |
- |
Net income (US$,000) |
90,955 |
52,647 |
72.8% |
167,086 |
94,034 |
77.7% |
Net income per share (US$) |
2.26 |
1.38 |
63.8% |
4.16 |
2.47 |
68.4% |
Net income per ADS (US$) (5) |
1.70 |
1.04 |
63.5% |
3.12 |
1.85 |
68.6% |
ARPU (US$) (6) |
10.8 |
14.3 |
-24.7% |
10.8 |
13.9 |
-22.6% |
MOU, revised definition (min)
(7) |
96.3 |
100.2 |
-3.9% |
94.1 |
94.4 |
-0.4% |
SAC (US$) (8) |
14.1 |
21.1 |
-33.0% |
15.3 |
21.0 |
-27.2% |
Significant improvements in VimpelCom's financial and
operating results in the second quarter of 2004, as compared with the
second quarter of 2003, were achieved largely as a result of rapid
subscriber growth combined with the effects of economies of scale,
efficient cost control and lower acquisition costs per subscriber in the
regions outside of Moscow.
The Company's financial results include the activities
in the Moscow license area and in the regions. Net operating revenues,
excluding inter-company transactions, for Moscow stand-alone and the
regions in the second quarter of 2004 were $289.1 million and $201.8
million, respectively. Net income for Moscow stand-alone and in the
regions in the second quarter of 2004 was $68.9 million and $43.0 million,
respectively.
Selling, general and administrative ("SG&A") expenses,
as a percentage of net operating revenues, improved to 32.3% reported in
the second quarter of 2004 as compared with 35.1% in the second quarter of
2003. In part, it was caused by a temporary decrease in subscriber
acquisition costs in Moscow in the second quarter of 2004 due to the
transition from payments of a one-time dealer commission to payments of
dealer commissions over six months.
VimpelCom's total capital expenditures for the second
quarter of 2004 were approximately $272.4 million, spent for the purchase
of long-lived assets. On June 30, 2004, VimpelCom acquired approximately
93.5% of the outstanding shares of Dal Telecom International for a total
purchase price of approximately US$74.1 million. Dal Telecom
International, which operates in three regions in the Russian Far East,
has short-term debt of approximately US$8.0 million.
As previously disclosed, in January 2004, VimpelCom
adopted a new depreciation policy. Based on periodic internal studies of
the useful economic lives of the Company's property and equipment, the
Company changed the estimated useful life of GSM telecommunications
equipment from 9.5 to 7 years. This new policy was largely responsible for
the increase to $62.7 million in depreciation reported for the second
quarter of 2004 as compared to the $33.9 million reported for the same
period in 2003. Depreciation expense did not increase significantly in the
second quarter of 2004 as compared to the $57.3 million reported for the
first quarter of 2004.
The Company's MOU in the second quarter of 2004 was
96.3 minutes, a decrease of approximately 3.9% compared to 100.2 minutes
recorded in the second quarter of 2003. As compared with 91.4 minutes
recorded for the first quarter of 2004, MOU increased by 5.3%, primarily
due to seasonal effects. ARPU for the second quarter of 2004 was
approximately $10.8, a 24.7% decrease from the $14.3 reported for the
second quarter of 2003. The downward trend in ARPU is caused primarily by
rapid regional expansion, which increases the proportion of lower ARPU
regional subscribers in the network. A very competitive environment in
some regions amplifies this trend by putting additional pressure on
tariffs. As compared with the first quarter of 2004, these effects were
offset primarily by the seasonal increase in MOU.
Key Subscriber Statistics
|
As of
June 30, 2004 |
As of
June 30, 2003 |
Change,
Y-on-Y
(%) |
As of
March 31, 2004 |
Change
Q-on-Q
(%) |
Moscow license area |
6,183,400 |
4,428,800 |
39.6% |
6,042,300 |
2.3% |
Contract |
843,900 |
763,200 |
10.6% |
826,800 |
2.1% |
Prepaid |
5,339,500 |
3,665,600 |
45.7% |
5,215,500 |
2.4% |
Regions (predominantly prepaid
subscribers) |
10,120,500 |
3,004,800 |
236.8% |
7,329,200 |
38.1% |
Total Number of Subscribers |
16,303,900 |
7,433,600 |
119.3% |
13,371,500 |
21.9% |
|
Churn (quarterly) |
9.4% |
10.5% |
- |
8.6% |
- |
The Company reported a record subscriber growth in the
second quarter of 2004 due to the acceleration in subscriber growth in the
regions, the launch of new networks in five regions and the acquisition of
Dal Telecom International, a cellular operator in three regions of the
Russian Far East. The acquisition was closed on June 30, 2004, as a result
of which VimpelCom obtained approximately 322,000 additional subscribers
as of the date of acquisition. VimpelCom's subscriber growth in the second
quarter of 2004 was negatively affected by the shortage of numbering
capacity, particularly in Moscow. As previously disclosed, VimpelCom was
granted additional numbering capacity in August both for Moscow and the
regions.
Using independent sources to estimate the number of
subscribers of the Company's competitors, VimpelCom estimates its market
share in Russia at 32.9% at the end of the second quarter of 2004,
compared to 30.0% estimated at the end of the second quarter of 2003.
VimpelCom's market share in the Moscow license area was 46.0% at the end
of the second quarter of 2004, compared to the Company's estimated market
share of 48.8% reported at the end of the second quarter of 2003.
The Company's quarterly churn rate in the second
quarter of 2004 was 9.4%, compared to the Company's churn rate of 10.5%
reported for the same period in 2003. An increase in churn rate as
compared with the 8.6% churn rate reported for the first quarter of 2004
was primarily due to the shortage of numbering capacity which forced the
Company to temporarily reduce the termination period for inactive
subscribers. This resulted in approximately 200,000 additional
disconnects, which increased the second quarter churn rate by
approximately 1.4%.
The Company's management will discuss its second
quarter 2004 results during a conference call and slide presentation on
August 26, 2004 at 6:30 pm Moscow time (10:30 am EDT in New York). The
call and slide presentation may be accessed via webcast at the following
URL address
http://www.vimpelcom.com. The conference call replay and the slide
presentation webcast will be available through September 2, 2004 and
September 27, 2004, respectively. The slide presentation will also be
available for download on VimpelCom's website
http://www.vimpelcom.com.
VimpelCom is a leading provider of telecommunications
services in Russia, operating under the "Bee Line GSM" brand. The
VimpelCom Group's license portfolio covers approximately 94% of Russia's
population (136 million people), including the City of Moscow, the Moscow
Region and the City of St. Petersburg. VimpelCom was the first Russian
company to list its shares on the New York Stock Exchange ("NYSE").
VimpelCom's ADSs are listed on the NYSE under the symbol "VIP".
This press release contains "forward-looking
statements", as the phrase is defined in Section 27A of the Securities Act
and Section 21E of the Exchange Act. These statements relate to the
Company's development plans. These and other forward-looking statements
are based on management's best assessment of the Company's strategic and
financial position and of future market conditions and trends. These
discussions involve risks and uncertainties. The actual outcome may differ
materially from these statements as a result of unforeseen developments
from competition, governmental regulation of the wireless
telecommunications industry, general political uncertainties in Russia and
general economic developments in Russia, the Company's ability to continue
to grow its overall subscriber base, continued volatility in the world
economy and other factors. As a result of such risks and uncertainties,
there can be no assurance that the effects of competition or current or
future changes in the political, economic and social environment or
current or future regulation of the Russian telecommunications industry
will not have a material adverse effect on the VimpelCom Group. Certain
factors that could cause actual results to differ materially from those
discussed in any forward-looking statements include the risks described in
the Company's Annual Report on Form 20-F for the year ended December 31,
2003 and other public filings made by the Company with the United States
Securities and Exchange Commission, which risk factors are incorporated
herein by reference. VimpelCom disclaims any obligation to update
developments of these risk factors or to announce publicly any revision to
any of the forward-looking statements contained in this release, or to
make corrections to reflect future events or developments.
For more information, please contact:
Valery Goldin
VimpelCom (Moscow)
Tel: 7(095) 974-5888
vgoldin@vimpelcom.com
|
Christopher Mittendorf
Edelman Financial Worldwide
Tel: 1(212) 704-8134
christopher.mittendorf@edelman.com
|
- Definitions and Tables attached-
Definitions
- OIBDA is a non-U.S. GAAP financial measure. OIBDA, previously
referred to as EBITDA by the Company, is defined as operating income
before depreciation, amortization and one-time write-down of AMPS/D-AMPS
related assets in the Samara region of $7,354 thousand in the second
quarter of 2004. The Company believes that OIBDA provides useful
information to investors because it is an indicator of the strength and
performance of our business operations, including our ability to finance
capital expenditures, acquisitions and other investments and our ability
to incur and service debt. While depreciation, amortization and one-time
write-down of AMPS/D-AMPS related assets in the Samara region of $7,354
thousand in the second quarter of 2004, are considered operating costs
under U.S. GAAP, these expenses primarily represent the non-cash current
period allocation of costs associated with long-lived assets acquired or
constructed in prior periods. Our OIBDA calculations are commonly used
as bases for some investors, analysts and credit rating agencies to
evaluate and compare the periodic and future operating performance and
value of companies within the wireless telecommunications industry.
OIBDA should not be considered in isolation as an alternative to net
income, operating income or any other measure of performance under U.S.
GAAP. OIBDA does not include our need to replace our capital equipment
over time. Reconciliation of OIBDA to operating income, the most
directly comparable U.S. GAAP financial measure, is presented below in
the tables section.
- OIBDA margin is OIBDA expressed as a percentage of total operating
revenues. Reconciliation of OIBDA margin to operating income as a
percentage of total operating revenues, the most directly comparable
U.S. GAAP financial measure, is presented below in the tables section.
- Gross margin is defined as total operating revenues less service
costs and cost of handsets and accessories sold.
- Gross margin percentage is gross margin expressed as a percentage of
total operating revenues.
- Each ADS represents 0.75 of one share of common stock.
- Monthly ARPU (Monthly Average Revenue per User), a non-U.S. GAAP
financial measure, is calculated for each month in the relevant period
by dividing the Company's service revenue during that month, including
roaming revenue, but excluding revenue from connection fees, sales of
handsets and accessories and other non-service revenue, by the average
number of the Company's subscribers during the month. Reconciliation of
ARPU to service revenues and connection fees, the most directly
comparable U.S. GAAP financial measure, is presented below in the tables
section. The Company believes that ARPU provides useful information to
investors because it is an indicator of the performance of the Company's
business operations and assists management in budgeting. The Company
also believes that ARPU provides management with useful information
concerning usage and acceptance of the Company's services. ARPU should
not be viewed in isolation or an alternative to other figures reported
under U.S. GAAP.
- MOU (Monthly Average Minutes of Use per User) is calculated for each
month of the relevant period by dividing the total number of minutes of
usage for incoming and outgoing calls during that month (excluding guest
roamers) by the average number of subscribers during the month.
- SAC (Average Acquisition Cost Per User), a non-U.S. GAAP financial
measure, is calculated as dealers' commissions, advertising expenses and
handset subsidies for the relevant period divided by the number of new
subscribers added during the relevant period. Reconciliation of SAC to
selling, general and administrative expenses, the most directly
comparable U.S. GAAP financial measure, is presented below in the tables
section. The Company believes that SAC provides useful information to
investors because it is an indicator of the performance of the Company's
business operations and assists management in budgeting. The Company
also believes that SAC assists management in quantifying the incremental
costs to acquire a new subscriber. SAC should not be viewed in isolation
or as an alternative to other figures reported under U.S. GAAP.
Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Statements of Income
|
Three months
ended
June 30, |
Six months
ended
June 30, |
2004 |
2003 |
2004 |
2003 |
(In thousands of US
dollars , except per share (ADS) amounts) |
Operating revenues: |
|
|
Service revenues and connection fees |
US$472,808 |
US$290,426 |
US$873,711 |
US$520,525 |
Sales of handsets and accessories |
17,507 |
12,956 |
33,281 |
26,382 |
Other revenues |
586 |
1,058 |
1,606 |
1,970 |
Total operating
revenues |
490,901 |
304,440 |
908,598 |
548,877 |
|
Operating expenses: |
|
|
Service costs |
69,327 |
42,774 |
131,692 |
79,934 |
Cost of handsets and accessories sold |
15,357 |
12,644 |
28,548 |
23,351 |
Selling, general and administrative
expenses |
158,537 |
106,721 |
296,550 |
192,031 |
Depreciation |
62,743 |
33,914 |
120,080 |
65,592 |
Amortization |
9,513 |
8,738 |
18,656 |
16,110 |
Impairment of long-lived assets |
7,354 |
0 |
7,354 |
0 |
Provision for doubtful accounts |
2,986 |
2,372 |
5,089 |
5,696 |
Total operating
expenses |
325,817 |
207,163 |
607,969 |
382,714 |
|
Operating income |
165,084 |
97,277 |
300,629 |
166,163 |
|
Other income and
expenses: |
|
|
Other income |
534 |
90 |
888 |
664 |
Other expenses |
(898) |
(950) |
(1,301) |
(1,382) |
Interest income |
362 |
2,278 |
1,863 |
4,276 |
Interest expense |
(12,904) |
(17,961) |
(26,760) |
(33,997) |
Net foreign exchange gain (loss) |
861 |
(1,286) |
2,532 |
41 |
Total other income
and expenses |
(12,045) |
(17,829) |
(22,778) |
(30,398) |
|
Income before income
taxes and minority interest |
153,039 |
79,448 |
277,851 |
135,765 |
|
Income taxes expense |
44,040 |
23,129 |
80,739 |
38,041 |
Minority interest in
net earnings of subsidiaries |
18,044 |
3,672 |
30,026 |
3,690 |
|
Net income |
US$90,955 |
US$52,647 |
US$167,086 |
US$94,034 |
|
Net income per
common share |
US$2.26 |
US$1.38 |
US$4.16 |
US$2.47 |
Net income per ADS
equivalent |
US$1.70 |
US$1.04 |
US$3.12 |
US$1.85 |
Weighted average
common shares outstanding (thousands) |
40,178 |
38,079 |
40,175 |
38,076 |
|
Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Balance Sheets
|
|
|
June 30,
2004 |
December 31,
2003 |
(In thousands of US
dollars) |
Assets |
|
Current assets: |
|
Cash and cash equivalents |
US$243,553 |
US$157,611 |
Trade accounts receivable |
108,375 |
113,092 |
Other current assets |
290,580 |
255,540 |
Total current assets |
642,508 |
526,243 |
|
Non-current assets: |
|
Property and equipment, net |
1,720,740 |
1,460,542 |
Telecommunication licenses and
allocation of frequencies, net |
130,963 |
103,817 |
Other intangible assets, net |
106,614 |
59,369 |
Other assets |
213,151 |
152,261 |
Total non-current assets |
2,171,468 |
1,775,989 |
|
Total assets |
US$ 2,813,976 |
US$ 2,302,232 |
|
Liabilities and
shareholders' equity |
Current liabilities: |
|
Accounts payable |
200,128 |
158,467 |
Due to related parties |
6,330 |
8,603 |
Customer advances and deposits |
209,749 |
181,475 |
Deferred revenue |
2,626 |
2,701 |
Ruble denominated bonds payable, current
portion |
34,450 |
101,852 |
Bank loans, current portion |
288,211 |
35,343 |
Capital lease obligation, current
portion |
6,879 |
6,587 |
Equipment financing obligations, current
portion |
53,697 |
70,935 |
Accrued liabilities |
68,738 |
127,689 |
Total current liabilities |
870,808 |
693,652 |
|
Deferred income taxes |
71,810 |
34,380 |
Bank loans, less current
portion |
442,084 |
330,112 |
Capital lease obligation,
less current portion |
6,974 |
9,154 |
Ruble denominated bonds
payable, less current portion |
14,382 |
- |
Accrued liabilities, less
current portion |
5,214 |
4,046 |
Equipment financing
obligations, less current portion |
23,949 |
53,008 |
|
Minority Interest |
211,395 |
179,664 |
|
Shareholders' equity |
1,167,360 |
998,216 |
|
Total liabilities
and shareholders' equity |
US$2,813,976 |
US$2,302,232 |
|
Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Statements of Cash Flows
|
|
|
Six months ended
June 30, |
2004 |
2003 |
(In thousands of US
dollars) |
Net cash provided by
operating activities |
US$ 298,657 |
US$ 196,614 |
|
Proceeds from bank and other
loans |
382,325 |
121,732 |
Proceeds from issuance of
ruble denominated bonds |
5,200 |
97,119 |
Payments of fees in respect
of bank loans |
(7,216) |
- |
Payments of fees in respect
of debt issue |
(2,500) |
(1,815) |
Repayment of rouble
denominated bonds |
(59,764) |
- |
Repayment of bank and other
loans |
(25,668) |
(57,545) |
Repayment of equipment
financing obligations |
(43,126) |
(149,384) |
Repayment of lease
obligations |
(260) |
(661) |
Net cash provided by
financing activities |
248,991 |
9,446 |
|
Purchase of property and
equipment |
(334,895) |
(221,754) |
Purchase of StavTeleSot
stock, net of cash acquired of US$658 |
- |
(38,143) |
Purchase of DalTelecom
stock, net of cash acquired of US$382 |
(73,689) |
- |
Purchase of intangible
assets |
(15,219) |
(12,387) |
Purchase of other assets |
(38,890) |
(14,420) |
Net cash used in
investing activities |
(462,693) |
(286,704) |
|
Effect of exchange
rate changes on cash |
987 |
5,477 |
|
Net increase
(decrease) in cash |
85,942 |
(75,167) |
Cash and cash
equivalents at beginning of period |
157,611 |
263,657 |
Cash and cash
equivalents at end of period |
US$243,553 |
US$188,490 |
|
Supplemental cash
flow information |
|
Non-cash activities: |
|
Equipment acquired under financing and
capital lease agreements |
US$1,659 |
US$68,053 |
Accounts payable for equipment and other
long-lived assets |
77,004 |
25,587 |
Accrued debt and equity offering costs |
1,230 |
249 |
Operating activities financed by sale of
treasury stock |
1,268 |
1,777 |
Acquisitions: |
|
Fair value of assets acquired |
86,655 |
66,634 |
Difference between the amount paid and
the fair value of net assets acquired |
17,401 |
(4,699) |
Cash paid for the capital stock |
(74,071) |
(38,801) |
Liabilities assumed |
US$29,985 |
US$23,134 |
Reconciliation of VimpelCom OIBDA to operating
income (Unaudited)
(In thousands of US dollars)
|
Three months ended |
June 30, 2004 |
March 31, 2004 |
June 30, 2003 |
OIBDA |
244,694 |
202,025 |
139,929 |
Impairment loss |
(7,354) |
- |
- |
Depreciation |
(62,743) |
(57,337) |
(33,914) |
Amortization |
(9,513) |
(9,143) |
(8,738) |
Operating income |
165,084 |
135,545 |
97,277 |
Reconciliation of VimpelCom OIBDA margin to
operating income as percentage of net operating revenues
(Unaudited)
|
Three months ended |
June 30, 2004 |
March 31, 2004 |
June 30, 2003 |
OIBDA margin |
49.8% |
48.4% |
46.0% |
Less: Impairment loss |
(1.5%) |
0% |
0% |
Less: Depreciation as percentage of net
operating revenues |
(12.8%) |
(13.7%) |
(11.1%) |
Less: Amortization as percentage of net
operating revenues |
(1.9%) |
(2.2%) |
(2.9%) |
Operating income as percentage of net
operating revenues |
33.6% |
32.5% |
32.0% |
Reconciliation of SAC to selling, general and
administrative expenses(Unaudited)
(In thousands of US dollars, except for SAC and subscriber amounts)
|
Three months ended |
June 30, 2004 |
March 31, 2004 |
June 30, 2003 |
Selling, general and administrative
expenses |
158,537 |
138,013 |
106,721 |
Less: General and administrative
expenses |
102,247 |
87,865 |
65,474 |
Sales and marketing expenses,
including |
56,290 |
50,148 |
41,247 |
advertising & marketing expenses |
16,468 |
13,245 |
13,518 |
dealers' commission expense |
39,822 |
36,903 |
27,729 |
New gross subscribers,'000 |
3,987 |
2,979 |
1,959 |
Subscriber Acquisition Cost (SAC) (US$) |
14.1 |
16.8 |
21.1 |
Reconciliation of ARPU to service revenue and
connection fees (Unaudited)
(In thousands of US dollars, except for ARPU and subscriber amounts)
|
Three months ended |
June 30, 2004 |
March 31, 2004 |
June 30, 2003 |
Service revenue and connection fees |
US$472,808 |
US$400,903 |
US$290,426 |
Less: Connection fees |
151 |
185 |
379 |
Less: Revenue from rent of fiber-optic
channels |
304 |
549 |
278 |
Service revenue used to calculate ARPU |
472,353 |
400,169 |
289,769 |
Average number of subscribers,'000 |
14,625 |
12,318 |
6,754 |
Average revenue per subscriber per month
(US$) |
10.8 |
10.8 |
14.3 |
Reconciliation of VimpelCom OIBDA to operating
income (Unaudited)
(In thousands of US dollars)
|
Six months ended |
June 30, 2004 |
June 30, 2003 |
OIBDA |
446,719 |
247,865 |
Impairment loss |
(7,354) |
- |
Depreciation |
(120,080) |
(65,592) |
Amortization |
(18,656) |
(16,110) |
Operating income |
300,629 |
166,163 |
Reconciliation of VimpelCom OIBDA margin to
operating income as percentage of net operating revenues
(Unaudited)
|
Six months ended |
June 30, 2004 |
June 30, 2003 |
OIBDA margin |
49.2% |
45.2% |
Less: Impairment loss |
(0.8%) |
0% |
Less: Depreciation as percentage of net
operating revenues |
(13.2%) |
(12.0%) |
Less: Amortization as percentage of net
operating revenues |
(2.1%) |
(2.9%) |
Operating income as percentage of net
operating revenues |
33.1% |
30.3% |
Reconciliation of SAC to selling, general and
administrative expenses (Unaudited)
(In thousands of US dollars, except for SAC and subscriber amounts)
|
Six months ended |
June 30, 2004 |
June 30, 2003 |
Selling, general and administrative
expenses |
296,550 |
192,031 |
Less: General and administrative
expenses |
190,112 |
122,117 |
Sales and marketing expenses,
including |
106,438 |
69,914 |
advertising & marketing expenses |
29,713 |
22,963 |
dealers' commission expense |
76,725 |
46,951 |
New gross subscribers,'000 |
6,967 |
3,333 |
Subscriber Acquisition Cost (SAC) (US$) |
15.3 |
21.0 |
Reconciliation of ARPU to service revenue and connection
fees (Unaudited)
(In thousands of US dollars, except for ARPU and subscriber amounts)
|
Six months ended |
June 30, 2004 |
June 30, 2003 |
Service revenue and connection fees |
US$873,711 |
US$520,525 |
Less: Connection fees |
336 |
716 |
Less: Revenue from rent of fiber-optic
channels |
853 |
649 |
Service revenue used to calculate ARPU |
872,522 |
519,160 |
Average number of subscribers,'000 |
13,471 |
6,207 |
Average revenue per subscriber per month
(US$) |
10.8 |
13.9 |
Open Joint Stock Company "VimpelCom-Region"
Unaudited Condensed Consolidated Statements of Income
|
Three months
ended
June 30, |
2004 |
2003 |
(In thousands of US
dollars, except per share (ADS) amounts) |
Operating revenues: |
|
|
Service revenues and connection fees |
209,344 |
83,212 |
Sales of handsets and accessories |
8,643 |
7,700 |
Other revenues |
574 |
892 |
Total operating
revenues |
218,561 |
91,804 |
|
Operating expenses |
|
|
Service costs |
38,915 |
17,665 |
Cost of handsets and accessories sold |
8,199 |
6,929 |
Equipment lease |
2,763 |
2,233 |
Selling, general and administrative
expenses |
69,458 |
28,884 |
Network maintenance |
4,518 |
2,296 |
Depreciation and amortization |
26,222 |
14,161 |
Provision for doubtful accounts |
1,845 |
554 |
Total operating
expenses |
151,920 |
72,722 |
|
Operating income |
66,641 |
19,082 |
|
Other income and
expenses: |
|
|
Other income |
(414) |
(24) |
Other expenses |
128 |
281 |
Interest income |
(219) |
(239) |
Interest expense |
5,414 |
5,925 |
Net foreign exchange gain |
(568) |
(369) |
Total other income
and expenses |
4,341 |
5,574 |
|
Income before income
taxes and minority interest |
62,300 |
13,508 |
|
Income taxes expense |
16,764 |
4,573 |
Minority interest in
net earnings of subsidiaries |
59 |
286 |
|
Net income |
45,477 |
8,649 |
|
*) Net income of VimpelCom-Region as a legal entity
differs from the $42,960 million net income reported above in this press
release for the regional segment for the second quarter of 2004. The
difference is caused by the fact that the financial statements of
BeeLine-Samara are included in the regions for segment reporting purposes,
but are not included in the consolidated financial statements of
VimpelCom-Region. BeeLine-Samara operates in the Samara region but, for
historical reasons, is owned directly by VimpelCom. The following table
provides reconciliation between these figures (all numbers are in
thousands of US$):
|
Three months ended
June 30, 2004 |
Net income of VimpelCom-Region |
45,477 |
Net income of BeeLine-Samara |
(5,033) |
Net effect of transactions between
VimpelCom-Region and BeeLine-Samara |
2,516 |
Net income of VimpelCom's regional
segment |
42,960 |
Operating revenue of VimpelCom-Region as a legal entity
differs from the $201,760 million operating revenues for the regional
segment excluding inter-company transactions, reported above in this press
release for the second quarter of 2004. The following table provides
reconciliation between these figures (all numbers are in thousands of
US$):
|
Three months ended
June 30, 2004 |
Operating revenue of VimpelCom-Region |
218,561 |
Operating revenue of BeeLine-Samara |
8,114 |
Net effect of transactions between
VimpelCom-Region and BeeLine-Samara |
(4,321) |
Operating revenue of VimpelCom's
regional segment |
222,354 |
Inter-company operating revenue of
VimpelCom-Region and BeeLine-Samara |
(20,594) |
Regional segment operating revenue
excluding inter-company transactions |
201,760 |
Open Joint Stock Company "VimpelCom-Region"
Unaudited Condensed Consolidated Balance Sheets
|
|
|
June 30,
2004 |
December 31,
2003 |
(In thousands of US
dollars) |
Assets |
|
Current assets: |
|
Cash and cash equivalents |
US$32,801 |
US$42,729 |
Trade accounts receivable |
13,513 |
22,726 |
Other current assets |
176,729 |
137,529 |
Total current assets |
223,043 |
202,984 |
|
Non-current assets: |
|
Property and equipment, net |
827,930 |
624,306 |
Telecommunication licenses and
allocation of frequencies, net |
77,427 |
87,175 |
Other intangible assets, net |
30,759 |
20,383 |
Other assets |
108,653 |
62,995 |
Total non-current assets |
1,044,769 |
794,859 |
|
Total assets |
US$1,267,812 |
US$997,843 |
|
Liabilities and
shareholders' equity |
Current liabilities: |
|
Accounts payable |
US$108,400 |
US$73,345 |
Due to related parties |
122,054 |
71,420 |
Customer advances and deposits |
72,282 |
41,916 |
Deferred revenue |
1,125 |
713 |
Rouble denominated bonds payable,
current portion |
34,450 |
101,852 |
Bank loans, current portion |
16,111 |
4,710 |
Capital lease obligation, current
portion |
- |
- |
Equipment financing obligations, current
portion |
10,164 |
17,078 |
Accrued liabilities |
15,951 |
16,076 |
Total current liabilities |
380,537 |
327,110 |
|
Deferred income taxes |
21,019 |
24,713 |
Bank loans, less current
portion |
88,401 |
66,500 |
Long-term loans due to
VimpelCom |
295,435 |
176,231 |
Equipment financing
obligations, less current portion |
6,594 |
16,097 |
Rouble denominated bonds
payable, less current portion |
14,382 |
- |
Accrued liabilities |
3,263 |
2,718 |
|
Minority Interest |
481 |
350 |
|
Shareholders' equity |
457,700 |
384,124 |
|
Total liabilities
and shareholders' equity |
US$1,267,812 |
US$997,843 |
|
Open Joint Stock Company "VimpelCom-Region"
Unaudited Condensed Consolidated Statements of Cash Flows
|
|
|
Six months ended
June 30, |
2004 |
2003 |
(In thousands of US
dollars) |
|
Net cash provided by
operating activities |
US$ 173,076 |
US$ 32,836 |
|
Proceeds from bank and other
loans |
34,081 |
99,144 |
Proceeds from loans from
VimpelCom |
119,144 |
54,243 |
Proceeds from issuance of
rouble denominated bonds |
5,200 |
97,119 |
Repayment of issuance of
rouble denominated bonds |
(59,764) |
- |
Payment of fees in respect
of bank loans |
(6,956) |
- |
Repayment of bank and other
loans |
(887) |
(34,488) |
Repayment of equipment
financing obligations |
(15,522) |
(120,259) |
Repayment of capital lease
obligations |
- |
(119) |
Net cash provided by
financing activities |
75,296 |
95,640 |
|
Purchase of property and
equipment |
(215,348) |
(103,951) |
Purchase of StavTeleSot
stock, net of cash acquired of US$658 |
- |
(38,143) |
Purchase of intangible
assets |
(12,805) |
(8,944) |
Purchase of other assets |
(30,714) |
(3,058) |
Net cash used in
investing activities |
(258,867) |
(154,096) |
|
Effect of exchange
rate changes on cash |
567 |
1,557 |
|
Net decrease in cash |
(9,928) |
(24,063) |
Cash and cash
equivalents at beginning of year |
42,729 |
52,703 |
|
Cash and cash
equivalents at end of year |
US$32,801 |
US$28,640 |
Reconciliation of VimpelCom-Region OIBDA to operating
income (Unaudited)
(In thousands of US dollars)
|
Three months ended |
June 30, 2004 |
March 31, 2004 |
June 30, 2003 |
OIBDA |
92,863 |
69,923 |
33,243 |
Depreciation |
(19,616) |
(18,194) |
(8,524) |
Amortization |
(6,606) |
(6,166) |
(5,637) |
Operating income |
66,641 |
45,563 |
19,082 |
Reconciliation of VimpelCom-Region OIBDA margin to
operating income as percentage of net operating revenues (Unaudited)
|
Three months ended |
June 30, 2004 |
March 31, 2004 |
June 30, 2003 |
OIBDA margin |
42.5% |
40.1% |
36.2% |
Less: Depreciation as percentage of net
operating revenues |
(9.0%) |
(10.4%) |
(9.3%) |
Less: Amortization as percentage of net
operating revenues |
(3.0%) |
(3.5%) |
(6.1%) |
Operating income as percentage of net
operating revenues |
30.5% |
26.2% |
20.8% |
Reconciliation of VimpelCom-Region OIBDA to operating
income
(Unaudited)
(In thousands of US dollars)
|
Six months ended |
June 30, 2004 |
June 30, 2003 |
OIBDA |
162,786 |
48,633 |
Depreciation |
(37,810) |
(15,284) |
Amortization |
(12,772) |
(10,187) |
Operating income |
112,204 |
23,162 |
Reconciliation of VimpelCom-Region OIBDA margin to
operating income as percentage of net operating revenues (Unaudited)
|
Six months ended |
June 30, 2004 |
June 30, 2003 |
OIBDA margin |
41.4% |
31.0% |
Less: Depreciation as percentage of net
operating revenues |
(9.6%) |
(9.7%) |
Less: Amortization as percentage of net
operating revenues |
(3.3%) |
(6.5%) |
Operating income as percentage of net
operating revenues |
28.5% |
14.8% |
|