VimpelCom Continues To Deliver On Strategy With Profitable Organic Growth In 3Q12 PR Newswire AMSTERDAM, Nov. 14, 2012 AMSTERDAM, Nov.14, 2012 /PRNewswire/ -- KEY RESULTS AND DEVELOPMENTS IN 3Q12 oRevenues of USD 5.7 billion; organic^1 growth of 3% YoY oEBITDA of USD 2.5 billion, up 8% organically YoY; double digit growth in Russia and CIS oResults negatively impacted by USD appreciation against operating currencies oTotal mobile subscriber base increased to 212 million oPositive operational development continues in Business Unit Russia oNet income increased 185% YoY to USD 538 million "VimpelCom Ltd" ("VimpelCom", "Company" or "Group") (NYSE: VIP), a leading global provider of telecommunications services, today announces operating and financial results for the quarter ended September 30, 2012. JO LUNDER, CHIEF EXECUTIVE OFFICER, COMMENTS: "We have made further good progress in the execution of our strategy, with strong organic growth in Group revenue and EBITDA. The EBITDA margin of 44% is the highest reported since completion of the Wind Telecom acquisition in April 2011. In our emerging markets (excluding Italy) we delivered 7% organic revenue growth and a 14% increase in EBITDA. In Russia, the positive trend seen in the first half continued, with year-on-year revenue growth of 7%, in part driven by strong mobile data revenue growth of 38%. EBITDA in Russia increased 16% year-on-year, with an improvement in the EBITDA margin to 43.2%. Our business in Italy has continued to outperform competition also showing strong mobile data revenue growth and CIS, Asia & Africa and Ukraine each delivered a solid set of figures in their respective markets. "We are delivering on our objectives and our focus will remain on delivering profitable growth leading to increased cash flows." CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS USD mln Actual Reported Organic 3Q12 3Q11 YoY YoY Total operating revenues 5,747 6,096 -6% 3% EBITDA 2,530 2,572 -2% 8% EBITDA margin 44.0% 42.2% - - EBIT 1,255 1,076 17% - Net income 538 189 185% - EPS, basic (USD) 0.33 0.12 175% - Capital expenditures 829 1,193 -31% - Net cash from operating activities 1,998 1,914 4% - Net debt / LTM EBITDA 2.4 - - - Total mobile subscribers (million)^2 212 199 7% - ^1) Organic revenue and EBITDA growth are non-GAAP financial measures that exclude the effect of foreign currency movements and certain items like liquidations and disposals. A reconciliation of organic to reported Revenue and EBITDA growth can be found in Attachment C. For more information please see the definition of Organic growth Revenue and EBITDA in Attachment E. ^2) Following the sale of Vietnam the subscriber numbers for 3Q12 exclude Vietnam subscribers while 3Q11 included 2 million subs in Vietnam. For all definitions please see Attachment E. CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS USD mln Pro forma Actual 9M12 9M11 Reported Organic 9M12 9M11 Reported YoY YoY YoY Total operating 17,111 17,588 -3% 5% 17,111 14,373 19% revenues EBITDA 7,322 7,298 0% 7% 7,322 6,029 21% EBITDA margin 42.8% 41.5% - - 42.8% 41.9% - EBIT 3,462 2,961 17% - 3,462 2,640 31% Net income 1,344 906 48% - 1,344 924 45% EPS, basic (USD) 0.83 0.56 48% - 0.83 0.62 34% Capital expenditures 2,489 2,949 -16% - 2,489 2,615 -5% Net cash from operating 4,956 - - - 4,956 4,248 17% activities Net debt / LTM EBITDA 2.4 - - - 2.4 - - Total mobile subscribers 212 199 7% - 212 199 7% (millions)^2 PRESENTATION OF FINANCIAL RESULTS The pro forma information presented in this earnings release reflects what the Company's results of operations would have looked like had the Company's transaction with Wind Telecom occurred on January 1, 2011. For further details about the adjustments and assumptions of the pro forma results, please refer to VimpelCom's press releases issued on August 18, 2011 and May 14, 2012 both of which are available on the Company's website. VimpelCom results presented in this earnings release are based on IFRS. Certain amounts and percentages that appear in this earnings release have been subject to rounding adjustments. As a result, certain numerical figures shown as totals, including in tables, may not be exact arithmetic aggregations of the figures that precede or follow them. The actual financial results in this earnings release have not been audited. On January 16^th, 2013 VimpelCom will be hosting its Analyst & Investor Day. Updates will follow on VimpelCom.com STRATEGIC UPDATE AND MAIN EVENTS oAGM to be held on December 21, 2012 subject to removal of injunction relating to the FAS claim OTH raising its voting stake in Canada to 65% oAim to launch LTE in Moscow and 6 other Russian regions in 2013 oAnalyst & Investor Day on January 16, 2013 In 3Q12 VimpelCom continued to deliver on its strategic priorities as defined by the Company's Value Agenda for 2012-2014, with profitable organic growth in almost all business units. Without the reduction of MTRs in Italy, Revenue growth would have been close to 5% organically YoY and EBITDA organic growth would have been approximately 9% YoY. In Russia, the Company continued to deliver on its turnaround strategy. As previously announced, in April and May, a Russian court issued injunctions in relation to the claims by the Russian Federal Anti-Monopoly Service ("FAS") against Telenor East Holding II AS ("Telenor") and Weather Investments II S.a.r.l. ("Weather II"). The injunctions prohibited, among other things, the payment of dividends by VimpelCom's wholly owned Russian subsidiary OJSC "Vimpel-Communications". In May, VimpelCom announced that in light of these injunctions the Supervisory Board of the Company considered it prudent and in the best interests of VimpelCom to postpone the payment and cancel the June 1, 2012 record date of the previously announced final dividend relating to the Company's 2011 results. The Supervisory Board of the Company will make a decision whether to pay the final 2011 dividend at a later date and will set a new record date as appropriate. The Company has announced that its Supervisory Board has set the date for the Company's 2012 Annual General Meeting of Shareholders (the "Shareholders Meeting") for December 21, 2012. The record date for the Shareholders Meeting has been set for November 20, 2012. In light of the injunctions issued by the Moscow Arbitration Court in relation to the claims by the Russian Federal Anti-Monopoly Service ("FAS") against Telenor and Weather II, the Supervisory Board has determined that if the injunctions are not lifted prior to November 27, 2012 it would be prudent to postpone the Shareholders Meeting. In case the Shareholders Meeting is postponed, an announcement in that respect will be issued on or around November 27, 2012. Further details on the agenda, the slate of nominees to the Supervisory Board and procedural matters related to the Shareholders Meeting will be made available through an official notice to be distributed by VimpelCom to its shareholders prior to the Shareholders Meeting. The Company has also taken several important steps with respect to Orascom Telecom Holding (OTH). VimpelCom and OTH, of which VimpelCom is 51.9% shareholder, have entered into mutual service level agreements to create synergies and operational efficiencies. Additionally, in light of an agreement between VimpelCom and Weather II that required the cessation of the use of the "Orascom" name and brand by OTH and its subsidiaries by the end of 2012, Orascom Telecom Holding S.A.E. will be renamed to Global Telecom Holding S.A.E. Furthermore, following the change in Canada's foreign ownership laws earlier this year OTH will convert its non-voting shares into voting shares of Globalive Investment Holding Corp. (GIHC), the parent company of Wind Mobile Canada and Globalive Canada. As a result, the indirect voting stake of OTH in GIHC will increase from 32.02% to 65.08%. The required approval for the conversion from the Canadian investment authorities is expected by early 2013. Finally, OTH's shareholder loans to GIHC group will be restructured. In July, VimpelCom was awarded an LTE license in Russia, allowing the Company to provide services using radio-electronic devices in the territory of the Russian Federation via networks that use the LTE standard and its further modifications within the frequency band of 791-862 MHz. VimpelCom aims to launch its LTE services in Moscow and in 6 other Russian regions in 2013. The roll-out of the LTE network will need to occur with a phased approach based on a predefined schedule and must be fully completed by the end of 2019. A further condition of the license award is that VimpelCom will invest at least RUB 15 billion annually until its federal LTE network is built. VimpelCom announces today that it will hold its second Analyst & Investor Day on January 16, 2013 in London. An update of the Group strategy, the Value Agenda, will be presented both for the Group and for Business Units. VIMPELCOM GROUP – FINANCIAL AND OPERATING RESULTS 3Q12 oRevenues of USD 5.7 billion with organic growth of 3% YoY, mainly impacted by MTR cut in Italy oStrong mobile data growth oEBITDA of USD 2.5 billion, up 8% organically YoY; double digit organic growth in Russia and CIS oTotal mobile subscriber base increased 7% YoY to 212 million; incidental strong growth in Uzbekistan oNet cash from operating activities USD 2.0 billion, impacted by interest swap receipt of USD 190 million oCapex of USD 0.8 billion; LTM Capex / Revenues of 19% oNet debt / LTM EBITDA at 2.4x, stable QoQ OPERATING PERFORMANCE OVERVIEW The 3Q12 reported results in USD were significantly impacted by the appreciation of the USD against the local currencies in almost all of VimpelCom's operating businesses. The organic development is highlighted below. The total mobile subscriber base increased 7% YoY to 212million 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. 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. 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 high quality subscriber growth despite an increasingly competitive environment. OPERATING FINANCIALS PER BUSINESS UNIT USD mln 3Q12 3Q11 Reported Organic YoY YoY Total operating revenues 5,747 6,096 -6% 3% of which: BU Russia 2,326 2,397 -3% 7% BU Europe & North America 1,662 1,970 -16% -5% BU Africa & Asia 904 957 -6% 5% BU Ukraine 452 437 3% 4% BU CIS 478 430 11% 17% Other (75) (95) - - EBITDA 2,530 2,572 -2% 8% of which: BU Russia 1,005 961 5% 16% BU Europe & North America 672 798 -16% -5% BU Africa & Asia 424 434 -2% 6% BU Ukraine 231 235 -2% -1% BU CIS 234 198 18% 28% Other (36) (54) - - EBITDA margin 44.0% 42.2% - - Capital expenditures 829 1,193 -31% - * See definitions in Attachment E. FINANCIAL PERFORMANCE OVERVIEW Total operating revenues in the third quarter 2012 decreased by 6% YoY impacted by unfavorable currency movements. Overall organic revenue growth was 3%, with a strong performance across most business units. EBITDA decreased 2% YoY, impacted by unfavorable currency movements. Excluding these forex effects, EBITDA increased 8% compared to the same period last year. Double digit organic EBITDA growth YoY was seen in the Russia and CIS business units, up 16%, and 28%, respectively. EBITDA in CIS was supported by one-off adjustments totaling USD 12.5 million in Kazakhstan. Italy showed a YoY organic EBITDA decline of 5% in Italy mainly due to the MTR cut in July 2012 and Ukraine a 1% decline due to the ongoing transition to bundled tariff plans. EBIT grew by 17% YoY positively affected, as reported previously, by the declining amortization pattern applied to intangible assets associated with customer relationships as part of the Wind Telecom acquisition where amortization of later periods is lower than amortization in the year of acquisition. Profit before tax increased by 136% YoY due to higher EBIT, foreign exchange gains and a higher result from the investment in Euroset. The net foreign exchange gain was USD 36 million in 3Q12, while in 3Q11 there was a loss of USD 137 million. Net income nearly tripled as a 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. Capex was USD 829 million with investments in the further roll out of the mobile networks in Russia, Bangladesh and the CIS. In Italy, Wind continued to invest in the roll-out of HSDPA and in backbone capacity to support the growth in data. The Company expects FY12 Capex to be approximately 19% of revenue. Reported Organic USD mln 3Q12 3Q11 YoY YoY Total operating revenues 5,747 6,096 -6% 3% EBITDA 2,530 2,572 -2% 8% EBITDA margin 44.0% 42.2% EBIT 1,255 1,076 17% Financial income and expenses (472) (449) 5% Net foreign exchange (loss)/gain and others 19 (287) n.m. Profit before tax 802 340 136% Income tax expense (225) (188) 20% Profit for the period 577 152 280% Net income 538 189 185% Capital expenditures 829 1,193 -31% STATEMENT OF FINANCIAL POSITION & CASH FLOW (ACTUAL) USD mln 3Q12 2Q12 QoQ Total assets 53,490 52,543 2% Shareholders' equity 14,779 13,942 6% Gross debt 26,637 26,559 0% Net debt 22,681 23,067 -2% Net cash from operating activities 1,998 1,914 4% Net cash used (in)/from investing activities (1,137) (1,278) -11% Net cash used (in)/provided from financing activities (481) (187) 157% Total assets increased by 2% in the quarter to USD 53.5 billion, primarily as a result of cash generation, investment in fixed assets and positive impact of currency translation in the third quarter. Gross debt was stable in the quarter at USD26.6billion, mainly due to foreign exchange movements and repayments of Ruble loans and Euro loans, including the repayment of the final part of the bridge loan in Italy. Net debt decreased to USD 22.7 billion, leading to a net debt to LTM EBITDA of 2.4x at the end of the third quarter. Net cash from operating activities of USD 2.0 billion at the Group level was positively impacted by the receipt of USD 190 million related to the monetization of an interest swap and working capital movement, partially offset by higher interest and tax payments compared to the same period last year. The decrease in net cash used in investing activities compared to 2Q12 was mainly impacted by lower investments in property, equipment and intangible assets in 2012. The increase in net cash used in financing activities in 3Q12 compared to 2Q12 was mainly the result of the net repayment of debt. Net cash from operating activities in the first 9 months of 2012 is USD 5.0 billion, or 17% higher than in 9M11. BUSINESS UNITS PERFORMANCE IN 3Q12 oRussia oEurope & North America oAfrica & Asia oUkraine oCIS BUSINESS UNIT RUSSIA – FINANCIAL AND OPERATING RESULTS oPositive operational development continued in 3Q12 oSolid revenue increase of 7% YoY; continuing strong growth in mobile data of 38% YoY oStrong EBITDA increase of 16% YoY and EBITDA margin growth of 3.2 p.p. to 43.2% oLTE launch planned in Moscow and 6 other regions in 2013 In 3Q12 the Russian Business Unit continued to demonstrate positive developments in operations and delivered on the Company´s strategy of profitable growth. Revenue for the quarter showed a solid growth of 7% YoY and EBITDA grew strongly by 16% YoY, continuing the trend in the first half of this year. EBITDA margin in 3Q12 reached 43.2%, an increase of 3.2 p.p. YoY, including the negative effect of forex changes in 3Q12 which impacted EBITDA margin by 0.4 p.p. during the quarter. Mobile revenues grew by 6% YoY, supported by continued uplift in mobile data usage during the quarter. Mobile data revenues increased by 38% YoY and VAS revenues were up by 29% YoY. VimpelCom´s initiatives aimed at stimulating data usage for small and medium screen users by promoting bundles has resulted in a strong increase in bundle subscribers since the start of the year. Mobile ARPU increased by 5% YoY following the growth of mobile data. Fixed line revenue grew by 10% YoY on the back of strong growth in wholesale voice and FTTB revenues. As part of the operational excellence program, the efficiency of the FTTB business has increased resulting in improved EBITDA margin. VimpelCom launched new initiatives during the third quarter as part of its ongoing operational excellence program. These initiatives are focused on process re-engineering to increase operational productivity and both the efficiency and effectiveness of all functions within the Russian headquarters. In addition, the Company continued its focus on network outsourcing by signing contracts for the Volga and Far East regions in the third quarter. VimpelCom expects to outsource network maintenance in more regions in the future. Churn was 15% in 3Q12, down from 16% in 3Q11, however stable QoQ. VimpelCom continues its activities focused on reducing churn rates. The transition to a revenue sharing model with the Company's distribution channels has helped reduce churn and the Company is taking further measures, such as offering competitive tariffs and improving the network quality. VimpelCom is on track to deliver continued improvement in network quality to support the growth of mobile data customers. In addition, the Company finalized its plans for the rollout of LTE. VimpelCom aims to launch its LTE services in Moscow and in 6 other regions in 2013. KEY DEVELOPMENTS 3Q12 oTotal revenue in Russia grew by 7% YoY to RUB74.5billion driven by the increase in fixed and mobile revenues. oMobile revenues increased 6% YoY mainly as a result of growth in data revenue by 38% YoY and VAS by 29% YoY, as well as in equipment revenues. Mobile ARPU increased by 5% YoY to RUB 350. oMobile data traffic grew by 78% YoY in 3Q12. oFixed line revenue increased 10% YoY due to continuing growth in fixed broadband revenues, up 33% YoY, and wholesale voice, up 13% YoY. oEBITDA increased by 16% YoY as a result of the increase in revenues and cost control initiatives. oEBITDA margin was 43.2%, an increase of 3.2 p.p. compared to 3Q11, mainly driven by the Operational Excellence projects mentioned above. oMobile subscriber base decreased by 1% YoY to 56.2 million; mobile broadband subscribers increased 5% YoY to 2.5 million. The fixed broadband subscriber base exceeded 2.3 million, up 25% YoY. oCapex/Revenues was 14% in 3Q12, in line with the network construction schedule. Capex/Revenues LTM stood at 18%. In 4Q12 we expect to complete the annual rollout and we expect Capex/Revenues FY12 to be below 20%. The Company will continue to invest in its 3G network development in order to match its main competitors in terms of population coverage by the end of 2013. RUSSIA KEY INDICATORS RUB mln 3Q12 3Q11 YoY Total operating revenues 74,458 69,553 7% Total operating expenditures 42,278 41,701 1% EBITDA 32,180 27,852 16% EBITDA margin 43.2% 40.0% Capex 10,288 13,643 -25% Capex / Revenues 14% 20% Mobile Mobile total operating revenues 61,842 58,094 6% - of which mobile data 6,210 4,486 38% Mobile subscribers ('000) 56,181 56,824 -1% - of which mobile broadband ('000) 2,507 2,387 5% Mobile ARPU (RUB) 352 334 5% MOU 282 251 12% Fixed Fixed-line total operating revenues 12,617 11,459 10% Fixed Broadband revenues 2,891 2,169 33% Fixed Broadband subscribers ('000) 2,294 1,833 25% Fixed Broadband ARPU (RUB) 421 410 3% BUSINESS UNIT EUROPE & NA - FINANCIAL AND OPERATING RESULTS ITALY oRelative outperformance continues, despite regulatory headwinds, macro slow down and intense competition oRevenues decline 5% YoY, revenues excl. MTR impact stable YoY oData revenue growth momentum remains strong: Mobile Internet up 40%, fixed LLU broadband up 8% oEBITDA declines 5% YoY, mainly impacted by the July 2012 MTR cut oSolid subscriber growth: mobile up 3% with highest ever gross adds in July and fixed LLU BB up 9% In Italy the third quarter was characterized by significant regulatory and competitive headwinds, further impacted by the ongoing week economic environment. Despite this challenging context WIND was able to outperform the market further growing its market share in mobile and fixed line. Operating free cash flow generation also remained strong and was stable over 3Q11. Total revenues declined by 5% mainly driven by the reduction in service revenues, as a result of the 53% cut in mobile termination rates which came into effect on July 1, partially offset by other revenues and by a solid increase in handset sales. Excluding the impact from MTRs total revenues were flat YoY. Mobile service revenues declined 8% over the previous year but, excluding the MTR impact, were flat over 3Q11 driven by a strong performance in mobile data revenues. In fixed line the strategic shift towards higher margin LLU led to an expected slower total subscriber growth and a 4% decline in service revenues, but yielded a significant improvement in margin. In the core LLU segment the voice customer base grew a solid 6% while the LLU broadband customer base grew 9%. From a commercial perspective the third quarter was impressive with WIND achieving its highest ever number of gross additions in mobile in July and recording a strong performance in August and September. In the quarter WIND secured over 63% of MNO net additions driven by a solid inflow of MNP customers; market churn in the period however remained high at levels in excess of 30% driven by intense promotional activity on MNP. WIND's customers continued to increase their voice usage. Mobile broadband revenue grew 40% over the previous year, traditional messaging revenues were up 9% and fixed broadband revenues were up 3%. On October 10, 2012 WIND signed an agreement with the trade unions and employees of the company to adopt an innovative cost efficiency plan aimed at reducing network maintenance opex by approximately EUR 40-45 million per year from January 1, 2013 onwards through increased productivity of network maintenance personnel and a general reduction of HR costs. The project is expected to deliver the same savings as the previously announced managed services outsourcing plan, without outsourcing approximately 1,700 employees. KEY DEVELOPMENTS 3Q12 oTotal revenues declined 5% YoY to EUR 1,329 million with a flat underlying trend (excl. MTR cut). oEBITDA in 3Q12 declined 5% to EUR 537 million, delivering a stable overall margin of 40.4%. oCapex in 3Q12, excluding LTE spectrum, was EUR 197 million mainly invested in expanding coverage and capacity on the HSDPA mobile network and increasing the backhauling capacity to support the strong growth in data. oMobile subscriber growth remained solid in 3Q12 driven by the success of WIND's "minuto vero" campaign which led to a 3% increase in subscribers to over 21.5 million. Mobile broadband also delivered a strong performance in the period with consumer subscribers increasing by more than 14% YoY. oMobile data ARPU grew by 11% YoY to EUR 4.0 reaching 29% of the total ARPU of EUR 14.0. Mobile voice ARPU in 3Q12 declined materially YoY as a result of the sharp MTR cut and competitive intensity coupled with the above mentioned ongoing success of WIND's data only SIM card offerings for tablets, PCs and dongles which do not generate voice revenues. oIn fixed-line WIND's focus on the direct market was clearly evident with the 1% growth in voice subscribers being entirely driven by the increase in direct voice subscribers, up 5.5% to 2.48 million. In fixed broadband the momentum remained strong, despite a seasonally weak quarter, with subscribers growing by 7% to 2.22 million, driven by a 9% increase in LLU Broadband customers, in line with the Company's strategy. Dual-play subscribers grew by over 9% YoY to 1.85 million. oFixed-line ARPU decreased by 6% to EUR 30.7 in 3Q12 driven by the decline of pay per use traffic and prices coupled with promotional activity resulting from competitive pressure. Broadband ARPU declined marginally to EUR 18.7. ITALY KEY INDICATORS Euro mln 3Q12 3Q11 YoY Total operating revenues 1,329 1,397 -5% Total operating expenditures 792 832 -5% EBITDA 537 565 -5% EBITDA margin 40.4% 40.5% Capex 222 226 -2% Capex / revenues 17% 16% Mobile Total revenues 959 1,026 -6% Subscribers ('000) 21,455 20,802 3% - of which mobile broadband ('000) ^(1) 4,734 4,141 14% ARPU (€) 14.0 15.7 -11% MOU 202 196 3% Fixed Total revenues 370 371 0% Total voice subscribers ('000) 3,138 3,094 1% Total fixed-line ARPU (€) 30.7 32.6 -6% Broadband subscribers ('000) 2,216 2,073 7% Broadband ARPU (€) 18.7 19.5 -4% Dual-play subscribers ('000) 1,854 1,696 9% (1) Mobile broadband includes consumer customers that have performed at least one mobile Internet event in the previous month on 2.5G/3G/3.5G CANADA In 3Q12 Wind Mobile continued executing on its "Value Plus" strategy, adding primarily postpaid subscribers while carefully managing prepaid economics for both voice and mobile broadband customers. Wind Mobile crossed the 500,000 customer milestone in September 2012 becoming the fastest growing new entrant wireless operator in the Canadian market. The Company added over 53.6 thousand subscribers during the quarter increasing its active subscriber base to 510 thousand, with over 90% of the net additions during the quarter being postpaid subscribers. On the commercial side, Wind Mobile enjoyed a strong back to school season supported by a new, vibrant media campaign and the launch of promotional offers. The Company continued to grow its distribution footprint and branded points of sale increased to 265 at the end of the quarter. Wind Mobile also continued to expand its network and launched in Barrie and Woodstock in 3Q12, increasing population coverage to over 13.6 million. The Company continues to focus on improving network quality and increased sites on air to 1,270 sites. CANADA KEY INDICATORS 3Q12 3Q11 YoY Subscribers ('000) 510 358 43% ARPU (CAD) 27.9 27.1 3% BUSINESS UNIT AFRICA & ASIA – FINANCIAL AND OPERATING RESULTS oRevenues of USD 904 million with organic growth of 5% YoY oEBITDA of USD 424 million with organic growth of 6% YoY oEBITDA margin of 46.9%, supported by good organic growth and operational excellence initiatives and despite the negative impact from Ramadan oSubscriber base increased by 13% to more than 86 million Revenues in the Africa & Asia business unit recorded an organic growth of 5%, but its actual results were adversely affected by the local currency devaluation against the US dollar in Algeria and Pakistan. Organic growth in revenues was driven by strong subscribers growth and an increase in data and Value-Added Services (VAS). EBITDA amounted to USD 424 million, an organic growth of 6%, mainly driven by strong EBITDA growth and healthy margins in Pakistan, as well as the ongoing operational excellence initiatives, a pillar to the Value Agenda. ALGERIA ("DJEZZY") Djezzy grew its subscriber base by 9% YoY to reach 17.7 million customers by the end of 3Q12. Revenues increased by 2% YoY in local currency terms and was affected by the shift in Ramadan seasonality impacting the peak summer period of July. EBITDA increased 1% YoY in local currency terms. Despite the extremely challenging conditions with the on-going restrictions imposed on Orascom Telecom Algeria, Djezzy maintained its leadership position with a 56% market share. PAKISTAN ("MOBILINK") During 3Q12, Mobilink maintained its focus on voice, data, VAS and customer acquisition offers along with brand building activities, all of which led to an 8% increase in subscribers YoY. Total subscribers were 36.1 million as at the end of 3Q12. Revenues for the quarter increased by 4% YoY in local currency terms. Revenue growth is attributable to the focus on customer acquisition, as well as increased data and VAS uptake. This quarter all cellular networks were closed in major cities on Government instructions on August 20^th (Feast day) and September 21^st, resulting in revenue loss for all cellular operators. Furthermore, revenues were impacted by monsoon and floods in the southern and central regions. Mobilink's EBITDA grew by 10% YoY in local currency terms, mostly on account of growing revenue and ongoing cost control measures, including lower customer acquisition and retention costs. BANGLADESH ("BANGLALINK") banglalink's subscriber base increased 21% YoY in 3Q12, reaching 26.8 million customers. Revenues achieved a significant growth of 23% YoY in local currency terms, driven by a larger subscriber base, in addition to a higher level of VAS and data adoption, and targeted start-up and reactivation promotions. EBITDA increased 9% YoY in local currency terms. EBITDA growth in local currency was slowed by higher subscriber acquisition costs YoY, as well as a market dynamic of increased activations in September, in anticipation of lower future sales due to regulatory requirements on registration of sim cards prior to activation, which was implemented in mid-October. SUB SAHARAN AFRICA ("TELECEL GLOBE") Telecel Globe subscribers increased nearly 50% in 3Q12 compared to the previous year, with strong additions for the quarter in Zimbabwe. Revenues, for Burundi and CAR combined, increased 23% YoY, as a result of a strong increase in subscribers alongside an increase in data revenues in Burundi. EBITDA showed significant improvement YoY, increasing 54%. In Zimbabwe, which is not consolidated, service revenues increased by 50% YoY while EBITDA increased by 80% YoY, mainly due to the 92% YoY increase in subscriber base. SOUTH EAST ASIA Subscribers in the South East Asia cluster increased 4% YoY after the exclusion of Vietnam subscribers from comparative figures for 2011. In Laos, new promotional guidelines for new sales and a customer registration decree had a negative impact on subscriber acquisition, which was mitigated by successful data uptake and a growing contribution to revenues. In Cambodia, the hosting of the ASEAN summit boosted roaming revenues for 3Q12. AFRICA & ASIA* KEY INDICATORS Reported Organic USD mln 3Q12 3Q11 YoY YoY Total operating revenues 904 957 -6% 5% Total operating expenditures 480 523 -8% EBITDA 424 434 -2% 6% EBITDA margin 46.9% 45.4% Capex 57 156 -64% Capex / revenues 6% 16% Mobile Subscribers ('000) 86,132 75,970 13% *Africa & Asia operations include operations in Algeria, Pakistan, Bangladesh, Sub-Saharan Africaand South East Asia. For details per country unit please see Attachment B AFRICA & ASIA BUSINESS UNIT: COUNTRY DETAIL ALGERIA DZD bln 3Q12 3Q11 YoY Total operating revenues 36 35 2% EBITDA 21 21 1% EBITDA margin 58.6% 59.1% PAKISTAN PKR bln 3Q12 3Q11 YoY Total operating revenues 26 24 4% EBITDA 11 10 10% EBITDA margin 43.0% 41.0% BANGLADESH BDT bln 3Q12 3Q11 YoY Total operating revenues 12 10 23% EBITDA 3 3 9% EBITDA margin 29.3% 33.1% BUSINESS UNIT UKRAINE – FINANCIAL AND OPERATING RESULTS oRevenues increased 4% YoY to UAH 3.6 billion, supported by fixed line revenue growth of 11% YoY oImproved migration to mobile bundled offerings oEBITDA decreased by 1% YoY to UAH 1.8 billion; EBITDA margin at 51.2%, increasing QoQ oMobile subs up 2% YoY to 25.2 million; Fixed BB subs up 70% YoY to 551 thousand During the third quarter, VimpelCom continued to invest in solidifying its market position in the mobile segment. The Company showed a QoQ improvement in revenues and EBITDA, driven by an ongoing migration of its customers to bundled offerings and strong dynamics in fixed line revenues. VimpelCom recorded an EBITDA margin of 51.2% in 3Q12. oTotal revenues were up 4% to UAH 3.6 billion, due to a gradual recovery in the mobile segment, 11% growth in fixed line revenues and strong sales of handsets. oMobile service revenues were stable in 3Q12 versus the previous year and up 9% QoQ driven by the ongoing transition to bundle offerings. ARPU was down to UAH 42.3 from UAH 43.1 in 2Q11, due to the transition to bundles. The Company continues to see a temporary negative impact on ARPU and margins as a result of this transition, which will continue for the remainder of 2012. oFixed line revenues were up 11% on the back of strong FTTB revenues and wholesale transit in 3Q12. Fixed residential broadband revenue increased by 60% driven by an increase in fixed broadband subscriber base of 70% YoY to 551 thousand. oChurn has increased to 8.4% as a result of higher sales and re-pricing activities. Although the churn level is still the lowest in the market, VimpelCom has launched a comprehensive churn reduction program. oEBITDA decreased 1% YoY in 3Q12 to UAH 1.8 billion, due to higher service costs, higher subscriber acquisition costs reflecting increased sales and an increased network and IT costs. EBITDA margin for the quarter decreased 2.5 p.p. YoY to 51.2% due to the reasons mentioned above, but improved by 1 p.p. QoQ compared to 2Q12 as result of cost control measures and improving dynamics in the migration to bundles. oLTM Capex/Revenues was 15% and showed a declining trend as a result of reduced investments in the FTTB network due to completion of the rollout, and in line with the infrastructure optimization initiatives within the Company's Value Agenda. oVimpelCom is taking actions to improve sales and margins in the coming quarters. The Company has launched a dedicated sales excellence program with regional differentiation in dealer commissions and tariffs. The Company is also continuing its pricing initiatives designed to improve service mobile revenue trends from 4Q12 onwards. These initiatives are focused on up-selling low and medium ARPU customers after they have transitioned to bundles. In addition to these measures, VimpelCom continues to focus on optimizing its cost base in order to maintain efficiency. With the aforementioned measures, the Company expects to further solidify its market position in 2013. UKRAINE KEY INDICATORS UAH mln 3Q12 3Q11 YoY Total operating revenues 3,613 3,485 4% Total operating expenditures 1,765 1,615 9% EBITDA 1,849 1,870 -1% EBITDA margin 51.2% 53.7% Capex 428 644 -34% Capex / revenues 12% 18% Mobile Mobile total operating revenues 3,329 3,227 3% Mobile subscribers ('000) 25,221 24,747 2% Mobile ARPU (UAH) 42.3 43.1 -2% MOU 497 467 6% Fixed-line Fixed-line total operating revenues 284 257 11% Fixed-line broadband revenues 69 43 60% Fixed-line broadband subscribers ('000) 551 324 70% Fixed-line broadband ARPU (UAH) 43.8 46.6 -6% BUSINESS UNIT CIS – FINANCIAL AND OPERATING RESULTS oStrong organic growth of revenues of 17% YoY; incidental strong positive impact from Uzbekistan oEBITDA of USD 234million, with organic growth of 28% YoY, supported by one-off adjustments in Kazakhstan and by incidental strong revenue growth in Uzbekistan oEBITDA margin of 49.0%, supported by one-off adjustments of USD 12.5 million in Kazakhstan oMobile subscribers up 23% YoY to 23 million; incidental strong positive impact from Uzbekistan oMobile BB subs up 35% YoY to 11.2 million; Fixed BB subs up 67% to 277 thousand The CIS markets delivered double digit organic growth in revenue and EBITDA in 3Q12. Results were substantially impacted by the situation in Uzbekistan after the temporary network closure of a competitor by the Uzbek authorities. VimpelCom has been able to increase its mobile subscriber base by 23%, mainly driven by 62% growth in subscribers in Uzbekistan. The Company continues to face strong competition in its markets, especially in Kazakhstan, but also in other markets like Armenia and Tajikistan. Churn is showing an increasing trend in Kazakhstan, Tajikistan, Georgia and Kyrgyzstan, and VimpelCom launched a comprehensive churn reduction program in all of its CIS markets. oIn 3Q12, total revenues grew organically 17% YoY and 11% on a reported basis, with the main contributions coming from Uzbekistan, Kyrgyzstan and Georgia. Reported revenues grew 11% to USD 478 million, impacted in part by disadvantageous forex movements. If Uzbekistan were adjusted to the growth level of 1H12, the underlying revenue growth in local currency would have had a similar YoY growth trend as that seen in 2Q12. oTotal mobile revenue increased organically by 20% YoY in 3Q12 supported by strong subscriber growth in Uzbekistan and 60% YoY data growth, resulting from increasing data services consumption. oFixed line revenues declined organically by 6% YoY, impacted mainly by voice and wholesale revenue decline in Armenia and Tajikistan. oEBITDA grew organically by 28% and on an actual basis by 18% mainly on the back of incidental strong mobile revenue growth in Uzbekistan and one-off adjustments in Kazakhstan totaling USD 12.5 million, primarily related to the release of a provision. oEBITDA margin of 49.0% in 3Q12 was 3 p.p. higher than 3Q11, impacted in part by the one-off adjustments in Kazakhstan and the contribution from Uzbekistan. oLTM Capex/Revenues was 29% and showed a declining trend, in line with investment plans. The Company's main investment projects, focused on data development, are on schedule and network expansion continues to support both traffic and revenue growth. KAZAKHSTAN Kazakhstan, the largest market in the CIS, reported a revenue decline of 0.3% YoY organically in 3Q12. The results were affected by the competitive environment and a limitation on tariffs introduced by the regulator last year, which led to an APPM decline. VimpelCom protected its market position by focusing on the quality of subscribers and on mobile broadband subscriber growth. Consequently, data revenue increased by 22% and mobile subscribers increased by 4% YoY. EBITDA grew 6% YoY and EBITDA margin was 51.6%, supported by the USD 12.5 million one-off adjustments described above. UZBEKISTAN In Uzbekistan VimpelCom substantially strengthened its market position in 3Q12 after the forced closure of a competitor´s network. Revenue was up 88% organically YoY in 3Q12, supported by a 62% YoY increase in the subscriber base as well as 26% ARPU growth. If this were adjusted to the growth level of 1H12, the underlying revenue growth would have been approximately 35% YoY. EBITDA grew 123% and EBITDA margin was 56.2%, a sharp increase from 47.3% in 3Q11, supported by interconnect cost reduction and control of structural OPEX. If the EBITDA growth were adjusted to the growth level of 1H12, the underlying growth would have been 45% YoY. The main focus of management in Uzbekistan is to sustain network quality and further improve network capacity to service subscribers. ARMENIA Revenues in Armenia declined organically by 11% YoY in 3Q12, mainly as a result of declining fixed voice and wholesale revenues. Mobile data revenues grew by 24% YoY. EBITDA declined 4% YoY. EBITDA margin increased 3.1 p.p. to 43.5% on the back of strict cost control. KYRGYZSTAN Kyrgyzstan continued to show positive dynamics in revenue and EBITDA growth. In local currency, revenue grew 20%, supported by subscriber base growth of 6%, and EBITDA grew organically by 21% YoY, resulting in an increased EBITDA margin in local currency of 55.7%. ARPU grew 10% YoY in 3Q12. Mobile broadband subscriber growth of 27% YoY coupled with the increase in mobile data usage resulted in significant mobile data revenue growth, up 104% YoY. GEORGIA Georgia delivered strong results in 3Q12, with subscriber base growth of 25%, revenue growth of 25% and a 32% increase in EBITDA YoY in local currency. EBITDA margin increased 1.4 p.p. YoY to 29.8% due to structural OPEX control. The Company was able to strengthen its market position further in 3Q12. TAJIKISTAN In Tajikistan, revenues increased organically by 6% YoY for 3Q12, while EBITDA increased by 17% YoY supported by increased high margin international traffic, leading to a 4.8 p.p. increase in EBITDA margin to 52.2%. Competition is strong with aggressive tariffs for calls to Russia, but VimpelCom is showing positive dynamics and strengthening its market position. Data revenue grew strongly by 118% supported by an increase in mobile broadband subscribers of 14% and an increase in average revenue per data user, in line with increasing usage of data services. CIS* KEY INDICATORS Reported Organic USD mln 3Q12 3Q11 YoY YoY Total operating revenues 478 430 11% 17% Total operating expenditures 244 232 5% EBITDA 234 198 18% 28% EBITDA margin 49.0% 46.0% Capex 90 180 -50% Capex / revenues 19% 42% Mobile Mobile subscribers ('000) 22,985 18,712 23% - of which mobile broadband ('000) 11,173 8,303 35% Fixed Fixed-line broadband subscribers ('000) 277 166 67% Fixed-line broadband revenues 11 8 39% * CIS operations include operations in Kazakhstan, Uzbekistan, Armenia, Kyrgyzstan, Tajikistan, and Georgia. For details per country unit please see Attachment B CIS BUSINESS UNIT: COUNTRY DETAIL KAZAKHSTAN KZT mln 3Q12 3Q11 YoY Total operating revenues 32,626 32,727 0% EBITDA 16,828 15,931 6% EBITDA margin 51.6% 48.7% UZBEKISTAN USD mln 3Q12 3Q11 YoY Total operating revenues 137 73 88% EBITDA 77 35 123% EBITDA margin 56.2% 47.3% CONFERENCE CALL INFORMATION On November 14, 2012, the Company will host an analyst & investor conference call on its third quarter 2012 results. The call and slide presentation may be accessed at http://www.vimpelcom.com 2:00 pm CET investor and analyst conference call US call-in number: +1 (877) 616-4476 International call-in number: +1 (402) 875-4763 The conference calls replay and the slide presentation webcasts will be available until November 21, 2012. The slide presentations will also be available for download on the Company's website. Investor and analyst call replay US Replay number: +1 (855) 859-2056 Confirmation code : 44474823 International replay: + 1 (404) 537-3406 Confirmation code : 44474823 DISCLAIMER This press release contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the Company's plans to hold its annual shareholder meeting, as well as the Company's network development and churn plans in Russia and planned capital expenditures in 2012. The forward-looking statements included in this release 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 continued volatility in the economies in our markets, unforeseen developments from competition, governmental regulation of the telecommunications industries, general political uncertainties in our markets and/or litigation with third parties. There can be no assurance that such risks and uncertainties will not have a material adverse effect on the Company. Certain factors that could cause actual results to differ materially from those discussed in any forward-looking statements include the risk factors described in the Company's Annual Report on Form 20-F for the year ended December 31, 2011 filed with the U.S. Securities and Exchange Commission (the "SEC") and other public filings made by the Company with the SEC, which risk factors are incorporated herein by reference. The Company 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. ABOUT VIMPELCOM LTD VimpelCom is one of the world's largest integrated telecommunications services operators providing voice and data services through a range of traditional and broadband mobile and fixed technologies in Russia, Italy, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Cambodia, Laos, Algeria, Bangladesh, Pakistan, Burundi, Zimbabwe, Central African Republic and Canada. VimpelCom's operations around the globe cover territory with a total population of approximately 780 million people. VimpelCom provides services under the "Beeline", "Kyivstar", "djuice", "Wind", "Infostrada" "Mobilink", "Leo", "banglalink", "Telecel", and "Djezzy" brands. As of September 30, 2012 VimpelCom had 212 million mobile subscribers on a combined basis. VimpelCom is traded on the New York Stock Exchange under the symbol (VIP). For more information visit: http://www.vimpelcom.com CONTENT OF THE ATTACHMENT TABLES Attachment A VimpelCom Ltd Interim Financial Statements 19 Attachment B Country units key indicators CIS and Africa & 22 Asia Attachment C Reconciliation Tables 25 Average Rates of Functional Currencies to USD Attachment D WIND Telecomunicazioni group condensed 27 financial statement of income Attachment E Definitions 28 For more information on financial and operating data for specific countries, please refer to the supplementary file Factbook3Q2012.xls on our website at http://vimpelcom.com/ir/financials/results.wbp ATTACHMENT A: VIMPELCOM LTD INTERIM FINANCIAL STATEMENTS VIMPELCOM LTD UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF INCOME (ACTUAL) (In millions of USD, except per share amounts) 3Q12 3Q11 9M12 9M11 Service revenues 5,547 5,912 16,517 13,985 Sale of equipment and accessories 167 126 443 326 Other revenues 33 58 151 62 Total operating revenues 5,747 6,096 17,111 14,373 Operating expenses Service costs 1,259 1,518 3,677 3,522 Cost of equipment and accessories 172 181 452 409 Selling, general and administrative expenses 1,786 1,825 5,660 4,413 Depreciation 721 796 2,168 1,936 Amortization 507 667 1,561 1,395 Impairment loss - - - - Loss on disposals of non-current assets 47 33 131 58 Total operating expenses 4,492 5,020 13,649 11,733 Operating profit 1,255 1,076 3,462 2,640 Finance costs 507 500 1,507 1,086 Finance income (35) (51) (116) (86) Other non-operating losses 29 124 31 156 Shares of (profit) /loss of associates and joint (12) 26 16 - ventures accounted for using the equity method Net foreign exchange (gain)/loss (36) 137 (100) 71 Profit before tax 802 340 2,124 1,413 Income tax expense 225 188 711 484 Profit for the period 577 152 1,413 929 Attributable to: The owners of the parent 538 189 1,344 924 Non-controlling interest 39 (37) 69 5 577 152 1,413 929 Earnings per share Basic, profit for the period attributable to 0.33 0.12 0.83 0.62 ordinary equity holders of the parent Diluted, profit for the period attributable to 0.33 0.12 0.83 0.62 ordinary equity holders of the parent ATTACHMENT A: VIMPELCOM LTD INTERIM FINANCIAL STATEMENTS VIMPELCOM LTD UNAUDITED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION (ACTUAL) (In millions of USD) 30 September 2012, 31 December 2011, unaudited audited Assets Non-current assets Property and equipment 14,963 15,165 Intangible assets 10,618 11,825 Goodwill 16,754 16,776 Investments in associates and joint 487 388 ventures Deferred tax asset 391 386 Financial assets 1,635 1,536 Other non-financial assets 19 92 Total non-current assets 44,867 46,168 Current assets Inventories 160 227 Other non-financial assets 1,243 1,320 Trade and other receivables 2,732 2,711 Current income tax asset 300 293 Other financial assets 861 345 Cash and cash equivalents 3,241 2,325 Total current assets 8,537 7,221 Assets classified as held for sale 86 650 Total assets 53,490 54,039 Equity and liabilities Equity Equity attributable to equity owners of 14,779 14,037 the parent Non-controlling interests 710 865 Total equity 15,489 14,902 Non-current liabilities Financial liabilities 25,731 25,724 Provisions 462 402 Other non-financial liabilities 398 442 Deferred tax liability 1,542 1,624 Total non-current liabilities 28,133 28,192 Current liabilities Trade and other payables 3,678 4,566 Dividend payables 554 - Other non-financial liabilities 2,275 2,030 Other financial liabilities 2,878 3,118 Current income tax payable 298 399 Provisions 145 182 Total current liabilities 9,828 10,295 Liabilities associated with assets held 40 650 for sale Total equity and liabilities 53,490 54,039 ATTACHMENT A: VIMPELCOM LTD INTERIM FINANCIAL STATEMENTS VIMPELCOM LTD UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (ACTUAL) (In millions of USD) 3Q12 9M12 9M11 Operating activities Profit after tax 577 1,413 929 Tax expense 225 711 484 Profit before tax 802 2,124 1,413 Non-cash adjustment to reconcile profit before tax to net cash flows: Depreciation 721 2,168 1,936 Amortization 507 1,561 1,395 Loss on disposals of non-current assets 47 131 58 Finance income (35) (116) (86) Finance costs 507 1,507 1,086 Other non-operating losses 29 31 156 Net foreign exchange gain (loss) (36) (100) 71 Share of loss / (profit) of associate (12) 16 - Movements in provisions and pensions 1 14 - Cash from operations 2,531 7,336 6,029 Working capital adjustments: Change in trade and other receivables and prepayments 145 35 (124) Change in inventories 8 19 (50) Change in trade and other payables (81) (213) (78) Interest paid (594) (1,653) (1,057) Interest received 232 339 86 Income tax paid (243) (907) (558) Net cash flows from operating activities 1,998 4,956 4,248 Investing activities Proceeds from sale of property, plant and equipment 5 20 74 and intangible assets Purchase of property, plant and equipment and (967) (2,747) (2,695) intangible assets Payments of loans granted (77) (155) (72) Receipts/(payments) from deposits (106) (539) 134 Receipts from/(investments in) associates - 3 29 Proceeds from sales of share in subsidiaries, net of 5 (77) - cash Acquisition of subsidiaries, net of cash acquired 3 2 (1,052) Net cash flows used in investing activities (1,137) (3,493) (3,582) Financing activities Acquisition of non-controlling interest - (9) - Proceeds from borrowings net of fees paid 432 2,627 8,436 Repayment of borrowings (913) (3,083) (6,040) Purchase of treasury shares - - (4) Proceeds from sale of treasury stock - 3 - Dividends paid to equity holders of the parent - - (500) Net cash flows used in financing activities (481) (462) 1,892 Net increase in cash and cash equivalents 380 1,001 2,558 Net foreign exchange difference (22) (85) (1) Cash and cash equivalents at beginning of period 2,883 2,325 885 Cash and cash equivalents at end of period 3,241 3,241 3,442 ATTACHMENT B: COUNTRY UNITS KEY INDICATORS AFRICA & ASIA BUSINESS UNIT: COUNTRY DETAIL ALGERIA DZD bln 3Q12 3Q11 YoY Total operating revenues 36 35 2% EBITDA 21 21 1% EBITDA margin 58.6% 59.1% Capex (USD) 6 5 19% Capex / revenues (USD) 1% 1% Mobile Subscribers ('000) 17,694 16,289 9% ARPU 668.3 714.9 -7% MOU 257.9 286.0 -10% PAKISTAN PKR bln 3Q12 3Q11 YoY Total operating revenues 26 24 4% EBITDA 11 10 10% EBITDA margin 43.0% 41.0% Capex (USD) 29 55 -48% Capex / revenues (USD) 11% 19% Mobile Subscribers ('000) 36,074 33,416 8% ARPU 230.6 235.6 -2% MOU 211.8 197.0 8% BANGLADESH BDT bln 3Q12 3Q11 YoY Total operating revenues 12 10 23% EBITDA 3 3 9% EBITDA margin 29.3% 33.1% Capex (USD) 20 64 -69% Capex / revenues (USD) 14% 50% Mobile Subscribers ('000) 26,776 22,140 21% ARPU 149.2 147.1 1% MOU 224.6 214.3 5% SUB SAHARAN AFRICA (TELECEL GLOBE) USD mln 3Q12 3Q11 YoY Total operating revenues 26 21 23% EBITDA 11 7 54% EBITDA margin 41.2% 32.9% Mobile Subscribers ('000) 4,231 2,825 50% SEA (CONSOLIDATED) USD mln 3Q12 3Q11 YoY Total operating revenues 12 17 -32% EBITDA (1) (15) -92% EBITDA margin -10.1% -87.4% Mobile Subscribers ('000) 1,357 1,300 4% CIS BUSINESS UNIT: COUNTRY DETAIL KAZAKHSTAN KZT mln 3Q12 3Q11 YoY Total operating revenues 32,626 32,727 0% EBITDA 16,828 15,931 6% EBITDA margin 51.6% 48.7% Capex (USD) 52 85 -40% Capex / revenues (USD) 24% 38% Mobile Subscribers ('000) 8,596 8,252 4% ARPU (KZT) 1,187 1,262 -6% MOU 222 162 37% ARMENIA AMD mln 3Q12 3Q11 YoY Total operating revenues 16,611 18,664 -11% EBITDA 7,225 7,538 -4% EBITDA margin 43.5% 40.4% Capex (USD) 4 9 -52% Capex / revenues (USD) 10% 17% Mobile Subscribers ('000) 803 761 6% ARPU (AMD) 2,994 3,281 -9% MOU 271 264 3% UZBEKISTAN USD mln 3Q12 3Q11 YoY Total operating revenues 137 73 88% EBITDA 77 35 123% EBITDA margin 56.2% 47.3% Capex (USD) 20 68 -70% Capex / revenues (USD) 15% 93% Mobile Subscribers ('000) 9,229 5,688 62% ARPU (USD) 5 4 26% MOU 543 431 26% TAJIKISTAN USD mln 3Q12 3Q11 YoY Total operating revenues 31 29 6% EBITDA 16 14 17% EBITDA margin 52.2% 47.4% Capex (USD) 5 4 5% Capex / revenues (USD) 15% 15% Mobile Subscribers ('000) 947 937 1% ARPU (USD) 10 10 3% MOU 242 246 -2% GEORGIA GEL mln 3Q12 3Q11 YoY Total operating revenues 38 30 25% EBITDA 11 9 32% EBITDA margin 29.8% 28.4% Capex (USD) 2 10 -76% Capex / revenues (USD) 10% 53% Mobile Subscribers ('000) 991 793 25% ARPU (GEL) 12 12 1% MOU 251 227 11% KYRGYZSTAN KGS mln 3Q12 3Q11 YoY Total operating revenues 2,076 1,730 20% EBITDA 1,156 958 21% EBITDA margin 55.7% 55.4% Capex (USD) 7 4 64% Capex / revenues (USD) 16% 11% Mobile Subscribers ('000) 2,419 2,281 6% ARPU (KGS) 285 260 10% MOU 273 308 -11% ATTACHMENT C: RECONCILIATION TABLES RECONCILIATION OF CONSOLIDATED EBITDA OF VIMPELCOM* (PRO FORMA) USD mln 3Q12 3Q11 9M12 9M11 Unaudited pro forma EBITDA 2,530 2,572 7,322 7,298 Depreciation (721) (796) (2,168) (2,304) Amortization (507) (667) (1,561) (1,999) Impairment loss reserve - - - 23 Loss on disposals of non-current assets (47) (33) (131) (57) EBIT 1,255 1,076 3,462 2,961 Financial Income and Expenses (472) (449) (1,391) (1,383) - including finance income 35 51 116 126 - including finance costs (507) (500) (1,507) (1,509) Net foreign exchange gain/(loss) and others 19 (287) 53 (180) - including Other non-operating (losses)/gains (29) (124) (31) (171) - including Shares of (loss)/profit of associates and joint ventures accounted for using the equity 12 (26) (16) (34) method - including Net foreign exchange gain / (loss) 36 (137) 100 25 Profit before tax 802 340 2,124 1,398 Income tax expense (225) (188) (711) (549) Profit for the period 577 152 1,413 849 Profit for the period attributable to (39) 37 (69) 57 non-controlling interest Net income 538 189 1,344 906 * See also the supplementary file Factbook3Q2012.xls on our website at http://vimpelcom.com/ir/financials/results.wbp ATTACHMENT C: RECONCILIATION TABLES RECONCILIATION OF CONSOLIDATED EBITDA OF VIMPELCOM* (ACTUAL) USD mln 3Q12 3Q11 9M12 9M11 Unaudited EBITDA 2,530 2,572 7,322 6,029 Depreciation (721) (796) (2,168) (1,936) Amortization (507) (667) (1,561) (1,395) Impairment loss reverse - - - - Loss on disposals of non-current assets (47) (33) (131) (58) EBIT 1,255 1,076 3,462 2,640 Financial Income and Expenses (472) (449) (1,391) (1,000) - including finance income 35 51 116 86 - including finance costs (507) (500) (1,507) (1,086) Net foreign exchange gain/(loss) and others 19 (287) 53 (227) - including Other non-operating (losses)/gains (29) (124) (31) (156) - including Shares of (loss)/profit of associates and joint ventures accounted for using the equity 12 (26) (16) - method - including Net foreign exchange gain/(loss) 36 (137) 100 (71) Profit before tax 802 340 2,124 1,413 Income tax expense (225) (188) (711) (484) Profit for the period 577 152 1,413 929 Profit for the period attributable to (39) 37 (69) (5) non-controlling interest Net income 538 189 1,344 924 * See also the supplementary file Factbook3Q2012.xls on our website at http://vimpelcom.com/ir/financials/results.wbp ORGANIC GROWTH REVENUE AND EBITDA 3Q12 versus 3Q11 Revenue EBITDA Business Units Organic FX and Reported Organic FX and Reported others others Russia 7% -10% -3% 16% -11% 5% Europe & NA -5% -11% -16% -5% -11% -16% Africa & Asia 5% -11% -6% 6% -8% -2% Ukraine 4% -1% 3% -1% -1% -2% CIS 17% -6% 11% 28% -10% 18% Total 3% -9% -6% 8% -10% -2% ATTACHMENT C: RECONCILIATION TABLES RECONCILIATION OF VIMPELCOM CONSOLIDATED NET DEBT (ACTUAL) USD mln 3Q12 2Q12 Net debt 22,681 23,067 Cash and cash equivalents 3,241 2,883 Long - term and short-term deposits 715 609 Gross debt 26,637 26,559 Interest accrued related to financial liabilities 451 558 Fair value adjustment 28 228 Unamortised fair value adjustment under acquisition method of 817 841 accounting Other unamortised adjustments to financial liabilities (fees, 69 (147) discount etc.) Derivatives not designated as hedges 429 415 Derivatives designated as hedges 178 157 Total other financial liabilities 28,609 28,611 AVERAGE RATES OF FUNCTIONAL CURRENCIES TO USD* Average rates Closing rates YTD12 YTD11 YoY YTD12 FY2011 Delta Russian Ruble 31.17 28.77 -7.7% 30.92 32.20 4.1% Euro 0.78 0.71 -9.1% 0.78 0.77 -1.0% Algerian Dinar 77.31 74.52 -3.6% 79.42 75.33 -5.2% Pakistan Rupee 92.43 85.18 -7.8% 94.83 89.95 -5.1% Bangladeshi Taka 82.09 69.75 -15.0% 81.64 81.83 0.2% Ukrainian Hryvnia 7.99 7.94 -0.6% 7.99 7.99 0.0% Kazakh Tenge 148.73 147.30 -1.0% 149.86 148.40 -1.0% Armenian Dram 400.18 378.06 -5.5% 406.25 385.77 -5.0% Kyrgyz Som 46.95 45.72 -2.6% 47.15 46.48 -1.4% * Functional currencies in Tajikistan, Uzbekistan and Cambodia are USD. ATTACHMENT D: WIND TELECOMUNICAZIONI GROUP CONDENSED STATEMENTS OF INCOME EUR mln 9M 12 9M 11 Change Total operating revenues 4,058 4,146 -2.1% EBITDA 1,549 1,588 -2.4% D&A (838) (782) 7.1% EBIT 712 805 -11.6% Financial Income and expenses (673) (669) 0.6% EBT 39 137 -71.5% Income Tax (127) (134) -4.8% Profit/(Loss) from discontinued operations - 6 -100.0% Net income (88) 9 n.m. ATTACHMENT E: DEFINITIONS EBITDA and EBITDA Margin are non-GAAP financial measures. VimpelCom calculates EBITDA as profit for the period before depreciation, amortization, impairment loss, finance costs, income tax expense and the other line items reflected in the reconciliation table above. Our Russia Business Unit excludes certain expenses from their EBITDA. EBITDA margin is calculated as EBITDA divided by total operating revenues. EBITDA and EBITDA margin should not be considered in isolation or as a substitute for analyses of the results as reported under IFRS. Our management uses EBITDA and EBITDA margin as supplemental performance measures and believes that EBITDA and EBITDA margin provide useful information to investors because they are indicators of the strength and performance of the company's business operations, including its ability to fund discretionary spending, such as capital expenditures, acquisitions and other investments, as well as indicating its ability to incur and service debt. In addition, the components of EBITDA and EBITDA margin include the key revenue and expense items for which the company's operating managers are responsible and upon which their performance is evaluated. EBITDA and EBITDA margin also assist management and investors by increasing the comparability of the company's performance against the performance of other telecommunications companies that provide EBITDA (earnings before interest, taxes, depreciation and amortization) or OIBDA (operating income before depreciation and amortization) information. This increased comparability is achieved by excluding the potentially inconsistent effects between periods or companies of depreciation, amortization and impairment losses, which items may significantly affect operating profit between periods. However, our EBITDA results may not be directly comparable to other companies' reported EBITDA or OIBDA results due to variances and adjustments in the components of EBITDA (including our calculation of EBITDA) or calculation measures. Additionally, a limitation of EBITDA's or EBITDA's use as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues or the need to replace capital equipment over time. Reconciliation of EBITDA to profit for the period, the most directly comparable IFRS financial measure, is presented in Attachment C. EBIT is a non-GAAP measure and is calculated as EBITDA plus depreciation, amortization, impairment loss and loss on disposals of non-current assets. Our management uses EBIT as a supplemental performance measure and believes that it provides useful information of earnings of the Company before making accruals for financial income and costs and Net foreign exchange (loss)/gain and others. Reconciliation of EBIT to profit for the period, the most directly comparable IFRS financial measure, is presented in Attachment C. EBIT equals operating profit. Net foreign exchange (loss)/gain and others represents the sum of Net foreign exchange loss, Shares of loss/(profit) of associates and joint ventures accounted for using the equity method, and Other non-operating losses/(gains). Our management uses Net foreign exchange (loss)/gain and others as a supplemental performance measure and believes that it provides useful information about the impact of our debt denominated in foreign currencies on our results of operations due to fluctuations in exchange rates, the performance of our equity investees and other losses and gains the Company needs to manage to run the business. Net income equals profit for the period attributable to the owners of the parent. ARPU (Monthly Average Revenue per User) is calculated by dividing service revenue during the relevant period, including revenue from voice-, roaming-, interconnect-, and value added services (including mobile data, SMS, MMS), but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of subscribers during the period and dividing by the number of months in that period. For business unit Africa & Asia (except SEA) visitors roaming revenue is excluded from service revenues. APPM (Average Price Per Minute) is a measure used by management to assess the average price our mobile subscribers pay for using our mobile services. MTR (Mobile Termination Rate) is a rate a mobile operator receives from other operators for terminating calls on its mobile network. MNP (Mobile Number Portability) is an option for mobile subscribers to retain their mobile phone number when switching from one mobile operator to another. Broadband subscribers are the customer contracts that served as a basis for revenue generating activity in the three months prior to the measurement date, as a result of activities including monthly internet access using FTTB and xDSL technologies as well as mobile internet access via WiFi and USB modems using 3G/HSDPA technologies (in Italy also includes EDGE). Italian subsidiary measures broadband subscribers based on the number of active contracts signed. Russian business unit includes IPTV activities. Capital expenditures (Capex), purchases of new equipment, new construction, upgrades, software, other long lived assets and related reasonable costs incurred prior to intended use of the non-current asset, accounted at the earliest event of advance payment or delivery. Long-lived assets acquired in business combinations are not included in capital expenditures. Households passed are households located within buildings, in which indoor installation of all the FTTB equipment necessary to install terminal residential equipment has been completed. Mobile subscribers are SIM-cards registered in the system as of a measurement date, users of which generated revenue at any time during the three months prior to the measurement date. This includes revenue coming from any incoming and outgoing calls, subscription fee accruals, debits related to service, outgoing SMS, Multimedia Messaging Service (referred to as MMS), data transmission and receipt sessions, but does not include incoming SMS and MMS sent by VimpelCom or abandoned calls. VimpelCom's total number of mobile subscribers also includes SIM-cards for use of mobile Internet service via USB modems and subscribers for WiFi. The number for Italy is based on SIM-cards, users of which generated revenue at any time during the twelve months prior to the measurement date. For the purpose of this earnings release, we include all subscribers of Zimbabwe, which is accounted for as investment at cost, into business unit Africa & Asia and subscribers of all our Canada equity investee into business unit Europe and North America, both of which are included into total subscribers of VimpelCom. MOU (Monthly Average Minutes of Use per User) is calculated by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile subscribers during the period and dividing by the number of months in that period. Net debt is a non GAAP financial measure and is calculated as gross debt represented by principal amounts of interest bearing loans, bonds, equipment financing and loans from others minus cash and cash equivalents, as well as long-term and short-term deposits. The Company believes that net debt provides useful information to investors because it shows the amount of debt outstanding to be paid after using available cash and cash equivalent and long-term and short-term deposits. Net debt should not be considered in isolation or as an alternative to other financial liabilities, or any other measure of the company financial position. Reconciliation of net debt to other financial liabilities, the most directly comparable GAAP financial measure, is presented in Attachment C. Reportable segments, the Company identified Russia, Europe and North America, Africa & Asia, CIS and Ukraine based on the business activities in different geographical areas. Although Georgia is no longer a member of the CIS, consistent with VimpelCom's historic reporting practice VimpelCom continues to include Georgia in its CIS reporting segment. Intersegment revenues are eliminated in consolidation. Organic growth Revenue and EBITDA are non-GAAP financial measures that reflect changes in Revenue and EBITDA excluding foreign currency movements and other factors, such as business under liquidation, disposals, mergers and acquisitions. We believe investors should consider these measures as they are more indicative of our ongoing performance and management uses these measures to evaluate the Company's operational results and trends. Reconciliation of organic growth of revenue and EBITDA to reported growth of revenue and EBITDA is presented in Attachment C. SOURCE VimpelCom Ltd Website: http://VimpelCom.com Contact: INVESTOR RELATIONS - Gerbrand Nijman, Investor_Relations@vimpelcom.com, Tel: +31 20 79 77 200 (Amsterdam), or Remco Vergeer, Investor_Relations@vimpelcom.com, Tel: +31 20 79 77 200 (Amsterdam), or Stefano Songini, email@example.com, Tel +39 06 83111 (Rome), or Mamdouh Abd Elwahab, firstname.lastname@example.org, Tel: +202 2461 5050 / 51 (Cairo), or MEDIA AND PUBLIC RELATIONS - Bobby Leach, email@example.com, Tel: +31 20 79 77 200 (Amsterdam)
VimpelCom Continues To Deliver On Strategy With Profitable Organic Growth In 3Q12
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