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Veon Ltd.

November 17, 2005

VimpelCom announces third quarter and nine months 2005 financial and operating results

-- 51% year-on-year increase in total operating revenues -
-- 52% year-on-year increase in OIBDA --
-- 93% year-on-year increase in net income --
-- approximately 42.4 million subscribers as of today including 1.8 million in Kazakhstan and 0.2 million in Ukraine--

 

Moscow and New York (November 17, 2005) - Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP), a leading provider of wireless telecommunications services in Russia and Kazakhstan, with newly acquired operations in Ukraine, today announced its financial and operating results for the quarter and nine months ended September 30, 2005. In the third quarter of 2005, VimpelCom showed continued improvement in total operating revenues, OIBDA and net income supported by strong subscriber growth. VimpelCom's condensed consolidated financial statements are attached.

Commenting on today's announcement, Alexander Izosimov, Chief Executive Officer of VimpelCom, said, "As expected, our third quarter results were very strong. We showed good progress in our financial indicators with revenue, OIBDA and net income reaching new highs. We added approximately 4.9 million new subscribers which was the best quarterly result for the Company since the fourth quarter of 2004. At the same time, strong subscriber growth did not dilute our average revenue per user (ARPU) which stayed unchanged as compared with the previous quarter. Going forward, we will continue to focus on the Company's financial performance, and, in terms of expansion, on the remaining unlicensed territories in the Russian Far East and the countries of the CIS."

The principal results of operations with comments are presented in the following tables. All definitions are presented in Attachment A. The condensed consolidated financial statements of VimpelCom are presented in Attachment B. Reconciliation of each of OIBDA, OIBDA margin, ARPU and SAC to the most directly comparable U.S. GAAP financial measures appear in Attachment C.

As discussed in the Company's 2004 Annual Report on Form 20-F and our subsequent quarterly earnings releases, the Company restated its historical financial statements for periods ending on and prior to September 30, 2004 to reflect guidance from the United States Securities and Exchange Commission contained in a letter to the accounting industry in February 2005 with respect to accounting for depreciation of leasehold improvements. In addition, starting with the first quarter of 2005 our earnings releases reflect changes made by the Company to the estimated useful life of its GSM Russian telecommunications licenses as well as a reclassification of revenues generated by the Company's value added services. In its subscriber reporting, starting with the second quarter of 2005, the Company decided to combine its advance payment subscribers with its prepaid subscribers (see "Definitions"). The earlier reported financial statement information and subscriber information that is incorporated in this press release, including for the third quarter of 2004 and the nine months ending September 30, 2004, were recalculated accordingly.

 

Key Subscriber Statistics

 

As of
Sept. 30, 2005

As of
Sept. 30, 2004

Change,
Y-on-Y
(%)

As of
June 30, 2005

Change
Q-on-Q
(%)

Russia

38,401,100

19,869,100

93.3%

33,700,400

13.9%

% of prepaida)

96.6%

94.6%

--

96.4%

--

Moscow license area

8,875,800

6,645,700

33.6%

8,501,200

4.4%

% of prepaida)

88.7%

87.1%

--

88.9%

--

Russian regions

29,525,300

13,223,400

123.3%

25,199,200

17.2%

% of prepaida)

99.0%

98.4%

--

99.0%

--

Kazakhstan

1,652,000

676,300

144.3%

1,401,600

17.9%

% of prepaida)

98.3%

95.6%

--

98.0%

--

Total

40,053,100

20,545,400

94.9%

35,102,000

14.1%

% of prepaida)

96.7%

94.6%

--

96.5%

--

% of active subscribersb)

84.4%

n/a

--

87.2%

--

 

Churn (quarterly)

8.8%

7.2%

--

6.7%

--

 

a.  Including advance payment subscribers. Numbers for September 30, 2004 were recalculated in accordance with the Company's practice as discussed above.

b.  Active subscribers are defined as those who in the last three months made a chargeable transaction.

 

The Company reported another quarter of strong subscriber growth adding more than 4.9 million in the third quarter of 2005. It came primarily due to the continued rapid subscriber growth in the regions of Russia, which was supported by growth in Moscow and Kazakhstan.

Based on independent research, VimpelCom estimates its market share in Russia at 34.4% at the end of the third quarter of 2005, compared to an estimated 33.7% at the end of the third quarter of 2004. Based on the same research, VimpelCom's subsidiary KaR-Tel estimates its market share in Kazakhstan at 35.6% at the end of the third quarter of 2005 as compared with 29.2% estimated at the end of the third quarter of 2004.

The Company's quarterly churn rate in the third quarter of 2005 was approximately 8.8%, compared to the Company's churn rate of 7.2% reported for the same period in 2004. The increase in churn in the third quarter of 2005 was expected as a reflection of the last New Year promotional campaign. These promotions usually deliver strong subscriber/SIM card additions with a higher than normal level of churners. The Company continues its efforts to control churn with particular attention on the high-end user segments. Churn management remains one of the Company's priority tasks as the market approaches a more mature phase.

 

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 attachments)

 

Three months ended

Nine months ended

Sep. 30,
2005

Sep. 30,
2004*)

Change
Y-on-Y
(%)

Sep. 30,
2005

Sep. 30,
2004*)

Change
Y-on-Y
(%)

Total operating revenues (US$,000)

890,291

591,472

50.5%

2,300,697

1,488,095

54.6%

OIBDA (US$,000)

449,957

295,663

52.2%

1,151,618

742,382

55.1%

OIBDA margin

50.5%

50.0%

--

50.1%

49.9%

--

Gross margin (US$,000)

737,935

491,328

50.2%

1,911,257

1,239,686

54.2%

Gross margin percentage

82.9%

83.1%

--

83.1%

83.3%

--

Net income (US$,000)

194,875

101,016

92.9%

463,383

266,654

73.8%

Net income per share (US$)

3.82

2.51

52.2%

9.07

6.64

36.6%

Net income per ADS (US$)

0.96

0.63**)

 

2.27

1.66**)

 

ARPU (US$)

7.8

10.6

-26.4%

7.6

10.8

-29.6%

MOU (min)

109.3

99.4

10.0%

99.5

96.3

3.3%

SAC (US$)

11.4

14.2

-19.7%

12.8

14.8

-13.5%

 

*) These numbers were restated in accordance with the Company's newly adopted accounting practice as specified in VimpelCom's 2004 Annual Form 20-F Report. These numbers also reflect changes made by the Company to the estimated useful life of its GSM Russian telecommunications licenses as well as revenues generated by the Company's value added services.

**) On November 22, 2004, we changed the ratio of our ADSs traded on The New York Stock Exchange from four ADSs for three common shares to four ADSs for one common share. VimpelCom ADS holders as of record date at the close of business on November 19, 2004 received two additional ADSs for every ADS held. There were no changes to VimpelCom's underlying common shares. All ADS information presented herein reflects the change in the ratio.

 

Significant improvements in VimpelCom's financial and operating results in the third quarter of 2005, as compared with the third quarter of 2004, were achieved largely as a result of continued rapid subscriber growth combined with the effects of economies of scale, efficient cost control and lower acquisition costs per subscriber. All key financial indicators - total operating revenues, OIBDA and net income - showed robust growth. The third quarter OIBDA margin of 50.5% was strong, indicating continued healthy business development. A slight decline as compared with the 51.4% OIBDA margin reported for the second quarter of 2005 repeats a seasonal pattern connected with the rise in roaming costs in the third quarter, which included the height of the summer vacation period.

Although a comparison of SAC for a particular quarter with prior quarters does not necessarily represent a trend, the Company is pleased to report a low third quarter SAC of $11.4, decreasing from $13.3 in the second quarter of 2005.

Selling, general and administrative expenses ("SG&A"), as a percentage of total operating revenues, was 31.9% in the third quarter of 2005 which is less than 32.5% reported for the third quarter of 2004. SG&A increased as compared with the second quarter of 2005 primarily due to a substantial increase in the volumes of sales in the third quarter despite the decrease in SAC. In addition to this, revenue growth and business expansion in the third quarter of 2005 caused an increase in certain general and administrative expenses as compared with the second quarter of 2005. Specifically, there was an increase in the universal service fund (USF) expense in line with revenue growth and an increase in network maintenance costs connected with further network development. Accruals connected with stock based compensation programs as a result of substantial growth of the ADR price in the third quarter of 2005 also contributed to the increase in our general and administrative expenses.

VimpelCom's total capital investments for the third quarter of 2005 were approximately $316.9 million, with $261.7 million spent for the purchase of long-lived assets and $55.2 million spent for the acquisition of a company in Sakhalin. Capital investments in the third quarter were lower than in the second quarter of 2005. However, we expect that our total capital investments for 2005 will be in line or slightly higher than our 2005 capital investment plan.

The Company's MOU in the third quarter of 2005 was 109.3 minutes, an increase of approximately 10.0% compared to 99.4 minutes recorded in the third quarter of 2004. As compared with 99.2 minutes recorded for the second quarter of 2005, MOU increased by 10.2%. This sequential quarter increase was primarily due to summer-time seasonal effects and was enhanced by marketing activity aimed at increasing off-peak traffic.

ARPU for the third quarter of 2005 was approximately $7.8 which represents no change as compared with the second quarter of 2005 and is in line with normal seasonal trends. On a year-on-year basis, ARPU declined by 26.4% from the $10.6 reported for the third quarter of 2004. The downward year-on-year trend in ARPU is caused primarily by rapid regional expansion, which increases the proportion of lower ARPU subscribers in the Company's customer base.

The Company's management will discuss its third quarter 2005 results during a conference call and slide presentation on November 17, 2005 at 6:30 pm Moscow time (10:30 am ET in New York). The call and slide presentation may be accessed via webcast at the following URL address https://www.vimpelcom.com. The conference call replay and the slide presentation webcast will be available through November 24, 2005 and December 16, 2005, respectively. The slide presentation will also be available for download on VimpelCom's website https://www.vimpelcom.com.

VimpelCom is a leading international provider of mobile telecommunications services in Russia and Kazakhstan, with newly acquired operations in Ukraine. The VimpelCom Group's license portfolio covers approximately 200 million people. Geographically it covers 78 regions in Russia (with 136.5 million people, representing 94% of Russia's population) as well as the entire territory of Kazakhstan and Ukraine. 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 trends in the Company's financial and operational performance, as well as the Company's strategic and development plans, capital investment plans and developments in the telecommunications market. 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 the CIS and general economic developments in Russia and the CIS, the Company's ability to continue to grow its overall subscriber base, the availability of attractive expansion opportunities in Russia and the CIS, continued volatility in the world economy, the availability of opportunities for capital investment 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, Kazakh and Ukrainian telecommunications industries 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, 2004 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
investor_relations@vimpelcom.com

Ian Bailey/Michael Polyviou
Financial Dynamics
Tel: 1(212) 850 5600
mpolyviou@fd-us.com

 

 

- Definitions and Tables attached-

Attachment A: Definitions

Subscriberis an authorized user of cellular services, using one SIM card (GSM) with one or several selective numbers or one handset (DAMPS) with one selective number. The number of subscribers includes employees using cellular services and excludes guest roamers and users of test SIM cards (GSM) or handsets (DAMPS).

Prepaid subscribersare those subscribers who pay for their services in advance1).

Churn rateis defined as the total number of subscribers disconnected from our network within a given period of time expressed as a percentage of the midpoint of subscribers in our network at the beginning and end of that period. Contract subscribers are disconnected if they have not paid their bills for 2 months and prepaid subscribers are disconnected 6 months after their services have been blocked. We typically block a prepaid subscriber's service in two cases: (1) their balance drops to $0 or below, and (2) an account shows no chargeable activity within 6 months. The Company retains the right to change its disconnect policy to reflect changes in business or regulatory environment.

OIBDAis 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 impairment loss. 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 impairment loss (relating to our 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 marginis 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 marginis defined as total operating revenues less service costs and cost of handsets and accessories sold.

Gross margin percentageis gross margin expressed as a percentage of total operating revenues.

Each ADSrepresents 0.25 of one share of common stock. This ratio was established effective November 22, 2004. Previously each ADS represented 0.75 of one share of common stock.

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.

1)       This definition is broader than the one historically used by the Company as it includes advance payment subscribers previously presented in our operating statistics under the line "contract subscribers".

2)        

 

Attachment B: VimpelCom unaudited condensed consolidated financial statements

Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Statements of Income

 

Three months ended
Sept. 30,

Nine months ended
Sept. 30,

2005

2004

2005

2004

(In thousands of US dollars, except per share (ADS) amounts)

Operating revenues:

 

 

Service revenues and connection fees

US$881,841

US$581,296

US$2,274,305

US$1,458,000

Sales of handsets and accessories

6,948

9,396

22,971

27,709

Other revenues

1,502

780

3,421

2,386

Total operating revenues

890,291

591,472

2,300,697

1,488,095

 

Operating expenses:

 

 

Service costs

145,757

93,783

368,360

227,120

Cost of handsets and accessories sold

6,599

6,361

21,080

21,289

Selling, general and administrative expenses

283,856

192,513

750,141

489,063

Depreciation

118,000

74,455

307,727

199,158

Amortization

34,518

14,962

103,086

33,618

Impairment of long-lived assets

-

-

-

7,354

Provision for doubtful accounts

4,122

3,152

9,498

8,241

Total operating expenses

592,852

385,226

1,559,892

985,843

 

Operating income

297,439

206,246

740,805

502,252

 

Other income and expenses:

 

 

Interest income

1,515

2,225

4,506

4,088

Other income

5,576

737

12,399

1,625

Interest expense

(35,815)

(24,946)

(107,413)

(51,706)

Net foreign exchange gain (loss)

6

1,979

(170)

4,511

Other expenses

(6,529)

(1,307)

(18,375)

(2,608)

Total other income and expenses

(35,247)

(21,312)

(109,053)

(44,090)

 

Income before income taxes and minority interest

262,192

184,934

631,752

458,162

 

Income taxes expense

66,738

53,498

167,577

133,128

Minority interest in net earnings of subsidiaries

579

30,420

792

58,380

 

Net income

US$194,875

US$101,016

US$463,383

US$266,654

Net income per common share

US$3.82

US$2.51

US$9.07

US$6.64

Net income per ADS equivalent

US$0.96

US$0.63

US$2.27

US$1.66

Weighted average common shares outstanding (thousands)

51,010

40,179

51,080

40,176

 

 

 

 

Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Balance Sheets

 

September 30,
2005

December 31,
2004

(In thousands of US dollars)

Assets

 

Current assets:

 

Cash and cash equivalents

US$674,649

US$305,857

Trade accounts receivable

143,163

119,566

Other current assets

389,713

371,999

Total current assets

1,207,525

797,422

 

Non-current assets

 

Property and equipment, net

2,831,464

2,314,405

Telecommunication licenses and allocation of frequencies, net

709,941

757,506

Other intangible assets, net

580,935

580,799

Other assets

456,924

330,109

Total non-current assets

4,579,264

3,982,819

 

Total assets

US$5,786,789

US$4,780,241

 

Liabilities and shareholders' equity

Current liabilities:

 

Accounts payable

354,797

345,187

Due to related parties

3,783

7,290

Customer advances and deposits

256,565

278,170

Deferred revenue

1,445

1,893

Ruble denominated bonds payable, current portion

105,267

-

Bank loans, current portion

219,831

115,111

Capital lease obligations, current portion

3,454

2,851

Equipment financing obligations, current portion

31,557

71,577

Accrued liabilities

144,777

103,246

Total current liabilities

1,121,476

925,325

 

Deferred income taxes

303,884

296,967

 

 

Bank loans, less current portion

1,543,731

1,240,199

 

 

Capital lease obligations, less current portion

1,854

5,004

 

 

Ruble denominated bonds payable, less current portion

-

108,113

 

 

Accrued liabilities

9,318

6,837

 

 

Equipment financing obligations, less current portion

31,591

38,283

 

 

 

 

 

Minority Interest

183,663

2,380

 

 

 

 

 

Shareholders' equity

2,591,272

2,157,133

 

 

 

 

 

Total liabilities and shareholders' equity

US$5,786,789

US$4,780,241

 

 

 

 

 

Open Joint Stock Company "Vimpel-Communications"
Unaudited Condensed Consolidated Statements of Cash Flows

 

 

 

 

 

 

Nine months ended
Sept. 30,

 

 

2005

2004

 

 

(In thousands of US dollars)

 

 

 

 

 

Net cash provided by operating activities

US$927,648

US$551,496

 

 

 

 

 

Proceeds from bank and other loans

775,488

716,534

 

 

Proceeds from bonds issue

-

90,470

 

 

Payments of fees in respect of debt issue

(17,590)

(10,791)

 

 

Repayment of bank and other loans

(350,692)

(27,148)

 

 

Repayment of rouble denominated bonds

-

(94,214)

 

 

Repayment of equipment financing obligations

(68,155)

(55,234)

 

 

Purchase of treasury stock

(18,374)

-

 

 

Repayment of capital lease obligations

-

(401)

 

 

Net cash provided by financing activities

320,677

619,216

 

 

 

 

 

Purchase of property and equipment

(775,647)

(622,286)

 

 

Purchase of SakhalinTelecomMobile, net of cash acquired US$6,835

(48,382)

 

 

 

Purchase of Beeline-Samara stock

-

(12,884)

 

 

Purchase of KaR-Tel stock, net of cash acquired of US$6,543

-

(345,427)

 

 

Purchase of DTI stock, net of cash acquired of US$382

-

(73,689)

 

 

Purchase of minority interest in consolidated subsidiary

(8,380)

-

 

 

Purchase of SakhalinTelecom Ltd.

(5,040)

-

 

 

Sale of SakhalinTelecom Ltd.

4,968

-

 

 

Sale of KaR-Tel stock

175,000

-

 

 

Purchase of intangible assets

(13,465)

(6,541)

 

 

Purchase of other assets

(205,281)

(77,741)

 

 

Net cash used in investing activities

(876,227)

(1,138,568)

 

 

 

 

 

Effect of exchange rate changes on cash

(3,306)

(711)

 

 

 

 

 

Net increase in cash

368,792

31,433

 

 

Cash and cash equivalents at beginning of period

305,857

157,611

 

 

Cash and cash equivalents at end of period

US$674,649

US$189,044

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

Non-cash activities:

 

 

 

Equipment acquired under financing and capital lease agreements

US$12,628

US$4,517

 

 

Accounts payable for equipment and other long-lived assets

150,542

82,186

 

 

Accrued debt and equity offering costs

1,927

-

 

 

Offset of the capital lease liability with accounts receivable

2,547

1,619

 

 

Operating activities financed by sale of treasury stock

4,164

1,546

 

 

Acquisitions:

 

 

 

Fair value of assets acquired

42,461

484,287

 

 

Difference between the amount paid and the fair value of net assets acquired

21,586

174,771

 

 

Cash paid for the capital stock

(55,217)

(426,041)

 

 

  Liabilities assumed

US$8,830

US$233,017

 

 

 

Attachment C. Reconciliation tables

Reconciliation of VimpelCom OIBDA to operating income (Unaudited)
(In thousands of US dollars)

 

Three months ended

September 30, 2005

September 30, 2004

June 30, 2005

OIBDA

449,957

295,663

395,554

Depreciation

(118,000)

(74,455)

(103,393)

Amortization

(34,518)

(14,962)

(34,939)

Operating income

297,439

206,246

257,222

 

Reconciliation of VimpelCom OIBDA margin to operating income as percentage of total operating revenues
(Unaudited)

 

Three months ended

September 30, 2005

September 30, 2004

June 30, 2005

OIBDA margin

50.5%

50.0%

51.4%

Less: Depreciation as a percentage of total operating revenues

(13.3%)

(12.6%)

(13.4%)

Less: Amortization as a percentage of total operating revenues

(3.9%)

(2.5%)

(4.5%)

Operating income as a percentage of total operating revenues

33.3%

34.9%

33.5%

 

Reconciliation of SAC to selling, general and administrative expenses (Unaudited)
(In thousands of US dollars, except for SAC and subscriber amounts)

 

Three months ended

September 30, 2005

September 30, 2004

June 30, 2005

Selling, general and administrative expenses

283,856

192,513

242,762

Less: General and administrative expenses

(190,745)

(122,913)

(155,613)

Sales and marketing expenses, including

93,111

69,600

87,149

advertising & marketing expenses

30,886

16,780

36,103

dealers' commission expense

62,225

52,820

51,046

New gross subscribers,'000

8,159

4,894

6,572

Subscriber Acquisition Cost (SAC) (US$)

11.4

14.2

13.3

 

Reconciliation of ARPU to service revenue and connection fees (Unaudited)
(In thousands of US dollars, except for ARPU and subscriber amounts)

 

Three months ended

September 30, 2005

September 30, 2004

June 30, 2005

Service revenue and connection fees

881,841

581,296

760,723

Less: Connection fees

(325)

(191)

(132)

Less: Revenue from rent of fiber-optic channels

(520)

(408)

(269)

Service revenue used to calculate ARPU

880,996

580,697

760,322

Average number of subscribers,'000

37,709

18,184

32,652

Average revenue per subscriber per month (US$)

7.8

10.6

7.8

 

Reconciliation of VimpelCom OIBDA to operating income (Unaudited)
(In thousands of US dollars)

 

Nine months ended

September 30, 2005

September 30, 2004

OIBDA

1,151,618

742,382

Impairment loss

0

(7,354)

Depreciation

(307,727)

(199,158)

Amortization

(103,086)

(33,618)

Operating income

740,805

502,252

 

Reconciliation of VimpelCom OIBDA margin to operating income as percentage of total operating revenues
(Unaudited)

 

Nine months ended

September 30, 2005

September 30, 2004

OIBDA margin

50.1%

49.9%

Less: Impairment loss

(0.0%)

(0.5%)

Less: Depreciation as a percentage of total operating revenues

(13.4%)

(13.4%)

Less: Amortization as a percentage of total operating revenues

(4.5%)

(2.3%)

Operating income as a percentage of total operating revenues

32.2%

33.7%

 

Reconciliation of SAC to selling, general and administrative expenses (Unaudited)
(In thousands of US dollars, except for SAC and subscriber amounts)

 

Nine months ended

September 30, 2005

September 30, 2004

Selling, general and administrative expenses

750,141

489,063

Less: General and administrative expenses

(486,030)

(313,025)

Sales and marketing expenses, including

264,111

176,038

advertising & marketing expenses

87,206

46,493

dealers' commission expense

176,905

129,545

New gross subscribers,'000

20,587

11,861

Subscriber Acquisition Cost (SAC) (US$)

12.8

14.8

 

Reconciliation of ARPU to service revenue and connection fees (Unaudited)
(In thousands of US dollars, except for ARPU and subscriber amounts)

 

Nine months ended

September 30, 2005

September 30, 2004

Service revenue and connection fees

2,274,305

1,458,000

Less: Connection fees

(617)

(527)

Less: Revenue from rent of fiber-optic channels

(1,061)

(1,261)

Service revenue used to calculate ARPU

2,272,627

1,456,212

Average number of subscribers,'000

33,048

15,042

Average revenue per subscriber per month (US$)

7.6

10.8

 

 

 

 

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