VimpelCom Boosts Profit on Subscriber Growth in Asia, Africa

VimpelCom Ltd. (VIP), the wireless carrier owned by Russian billionaire Mikhail Fridman and Norway’s Telenor ASA (TEL), reported rising fourth-quarter earnings after cutting costs and adding customers in Africa and Asia.

Earnings before interest, taxes, depreciation and amortization rose 10 percent to $2.45 billion in the period ending Dec. 31, VimpelCom said today in a statement. That matched the average of analysts’ projections compiled by Bloomberg. Sales added 1 percent to $5.95 billion.

VimpelCom increased data revenue in Russia, cut operating costs in Bangladesh, and gained users in Uzbekistan after rival OAO Mobile TeleSystems quit the market. Ebitda margin expanded to 41.1 percent of sales from 37.8 percent a year earlier.

Net income was $801 million compared with a loss of $381 million a year earlier, helped by a gain from VimpelCom’s stake in handset retailer Euroset Holding NV. Subscribers increased 5 percent from a year earlier to 214 million, led by an 8 percent gain for the Africa and Asia division to more than 85 million customers.

Amsterdam-based VimpelCom, which operates in 18 countries, is seeking to boost operating efficiency and cut its $27 billion debt which stems from a purchase of telecommunications assets from Egyptian billionaire Naguib Sawiris in 2011. The company targets a net-debt-to-Ebitda ratio of below 2 by 2015, from 2.2 as of Dec. 31.

“We are very focused on organic growth, cash flows and are committed to deleveraging,” Chief Executive Officer Jo Lunder said in a phone interview today.

Acquisition Interest

Still, VimpelCom may be interested in acquisitions if the right opportunity presents itself, Lunder said. Tele2 AB (TEL2B)’s Russian business emerged as a potential takeover target after the company failed to win licenses to offer faster wireless service in the country last year.

“Market consolidation would be of interest if on the right terms,” Lunder said, when asked if VimpelCom is interested in Tele2’s Russia assets. “Still, there no M&As on the table.”

Shares of VimpelCom advanced 2.6 percent to $12.12 in New York trading yesterday. The stock has advanced 3.6 percent over the past year, valuing the company at $19.7 billion.

VimpelCom increased net cash from operating activities by 24 percent to $2.3 billion in the fourth quarter. The company’s target is to reduce capital spending to below 15 percent of sales by 2015 from 18 percent last year.

The company plans to announce a final dividend for 2012 and a payout policy next quarter. The company is set to receive $1.4 billion from Fridman’s Altimo as a result of a stock conversion in April and may pay extraordinary dividends from the proceeds, according to today’s statement.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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