VimpelCom Ltd. (VIP), the wireless carrier controlled by Russian billionaire Mikhail Fridman, reported a 2.2 percent drop in third-quarter earnings as intensifying competition weighed on calling prices.
Earnings before interest, taxes, depreciation and amortization fell to $2.47 billion from $2.53 billion a year earlier, the company said today. Analysts projected $2.49 billion, the average of five estimates compiled by Bloomberg. Sales fell 1 percent to $5.69 billion, also missing estimates.
VimpelCom trails OAO Mobile TeleSystems (MBT) and OAO MegaFon (MFON) in Russia, its largest market, where competition weighs on calling prices and carriers vie for data users to maintain growth. Sales in Russia dropped 1 percent, also hurt by a weaker ruble.
“It’s disappointing that VimpelCom grows in Russia at a slower pace than its competitors,” Ivan Kim, an analyst at VTB Capital in Moscow, said by phone.
Amsterdam-based VimpelCom, which operates in 15 countries, also posted revenue declines for Africa, Asia and Ukraine. Sales in Italy were little changed.
Shares of VimpelCom fell 1.4 percent to $14.33 yesterday in New York, valuing the company at $25.2 billion. The stock has gained 37 percent this year.
The company, partly owned by Norway’s Telenor ASA (TEL), is struggling to reduce spending and boost profitability to help cut $27.6 billion of gross debt stemming from the acquisition of telecommunications assets, including in Italy and Algeria, from Egyptian billionaire Naguib Sawiris in 2011.
VimpelCom plans to pay an interim dividend of 45 cents a share in December, at a cost of $791 million. The dividend was expected by investors, VTB Capital’s Kim said. VimpelCom’s target is to pay at least 80 cents a year in dividends.
Ebitda as a percentage of sales narrowed to 43.5 percent from 44 percent. Net income declined 53 percent to $255 million, hurt by higher taxes.
Mobile subscribers rose 5 percent from a year earlier to 219 million users. The company said it was awarded a license to offer faster, so-called third-generation wireless service in Bangladesh, and a provisional 3G license in Algeria.
To contact the reporter on this story: Ilya Khrennikov in Moscow at email@example.com