VimpelCom Swings at Record on Strategy Outlook: Russia Overnight

VimpelCom Ltd. is posting the biggest price swings on record versus peers as Russia’s third-largest mobile provider prepares to disclose investment strategy for the first time since resolving a shareholder conflict.

American depositary receipts of VimpelCom rallied 1.3 percent yesterday in New York, as the stock’s 60-day volatility reading jumped to a two-month high of 31.35, compared with an average of 7.67 for companies included in the MSCI Emerging Markets Telecommunication Services Index. The Bloomberg Russia-US Equity Index of the most-traded Russian companies rose for the first time this week, adding 0.2 percent.

VimpelCom has slipped 0.5 percent since Nov. 23, when Russia agreed to withdraw a case against Norway’s Telenor ASA for raising its stake, a move that frees the Amsterdam-based phone company to pay dividends suspended in May. VimpelCom, which saw its share of revenue from Russia drop to 39.89 percent in the third quarter, from 41.82 percent in the previous three months, said it will unveil its strategy for this year through 2015 at meetings in London on Jan. 16.

“Everyone expects the company will focus on its strategy now that the shareholder dispute is over,” Anna Lepetukhina, an analyst at Sberbank Investment Research who will start coverage on VimpelCom at the end of the month, said by phone from Moscow yesterday. “VimpelCom should regain its share of the Russian market, the main source of its revenue globally. Particularly, it should increase its share of the mobile Internet market.”

VimpelCom was formed in 2011 when its Moscow-based unit merged with Italy’s Wind Telecom SpA to create the world’s sixth-biggest mobile phone company by number of subscribers. The stock, which gained 11 percent in 2012, rose 1.3 percent to $10.71 in New York yesterday.

Dispute Settled

The Bloomberg Russia-US gauge increased to 100.30 yesterday, advancing for the first time in three days.

The Market Vectors Russia ETF, the biggest U.S.-traded exchange-traded fund that holds Russian shares, decreased 0.2 percent to $29.80, the lowest level since Dec. 28. The RTS Volatility Index, which measures expected swings in the index futures, dropped 2.3 percent to 20.86.

Russian stock futures expiring in March on Moscow’s RTS Index were little changed at 157,020 yesterday.

A Moscow court banned VimpelCom’s Russian unit from paying dividends last year because the anti-monopoly service, knows as FAS, opposed Oslo-based Telenor buying more shares. The dispute was settled when Altimo Cooperatief U.A.’s billionaire owner Mikhail Fridman increased his voting stake in VimpelCom to 47.85 percent in October.

Algeria Resolution

Bobby Leach, an Amsterdam-based spokesman for VimpelCom, said by e-mail yesterday that the company won’t release a preview of its strategy before its analyst and investor day.

Investors are also looking for signs from VimpelCom that it will resolve the situation with its Djezzy unit in Algeria and reduce its debt, Sberbank Investment’s Lepetukhina said yesterday.

The Algerian government’s purchase of a stake in Djezzy, a local unit of VimpelCom’s Orascom Telecom Algerie, is nearing completion and is pending selection of seven board members, Al-Fadjr independent newspaper reported last month, citing unidentified Finance Ministry officials.

VimpelCom’s debt-to-earnings before interest, taxes, depreciation and amortization is the third highest among telecommunication carriers, following The Hague-based Koninklijke KPN NV and Telecom Italia SpA of Milan. The company’s debt-to-ebitda ratio was at 2.52 yesterday, data compiled by Bloomberg show.

Norilsk Surges

OAO GMK Norilsk Nickel, the world’s largest nickel and palladium producer, jumped 4.2 percent to $19.85 yesterday in New York, the highest level since March 15. The company’s common stock in Moscow gained 2.3 percent to 5,875 rubles, or $193.65, the highest level since March 15. One ADR represents a 10th of the company’s Moscow-listed shares.

Goldman Sachs Group Inc. raised its recommendation on the stock to neutral from sell yesterday, after Chief Executive Officer Vladimir Potanin and United Co. Rusal, controlled by billionaire Oleg Deripaska, last month settled a struggle for control of the company that lasted more than four years.

“The stock is driven by relief after the battle and expectations for higher dividends,” Valentina Bogomolova, an analyst at UralSib Capital who has a hold rating on the shares, said by phone from Moscow yesterday. “People expect that the company may consider paying a special dividend for 2012.”

The ruble depreciated 0.2 percent against the basket to

34.5428 by 11:50 p.m. in Moscow yesterday. The ruble lost 0.5 percent to 30.36 per dollar and less than 0.1 percent to 39.66 per euro.

United Co. Rusal, the world’s largest aluminum producer, rose 1 percent to HK$5.05 in Hong Kong trading as of 10:42 a.m. local time. The MSCI Asia Pacific Index gained 0.9 percent.

Before it's here, it's on the Bloomberg Terminal.