VimpelCom Posts $1 Billion Loss After Uzbek Bribes Provisionby
Company will sell Russian towers, outsource billing systems
Company set aside $900 million to cover Uzbekistan probe
VimpelCom Ltd. swung to a quarterly loss and said it will sell assets after making a $900 million provision to cover potential U.S. and Dutch fines over bribery allegations in Uzbekistan.
The carrier reported a net loss of $1 billion in the third quarter, compared with a $105-million profit a year earlier, Amsterdam-based VimpelCom said in a statement Friday. The figures exclude its Italian operations, which are being merged with Hong-Kong billionaire Li Ka-shing’s assets in the country. Excluding the provision for Uzbekistan and goodwill write-offs in Italy, net profit was $191 million.
VimpelCom, controlled by billionaire Mikhail Fridman and Norway’s Telenor ASA, has come under pressure over alleged corruption in the ex-Soviet republic of Uzbekistan. Telenor has said it will divest its 33 percent stake in the company, and Telenor Chairman Svein Aaser was ousted last week over the scandal. Jo Lunder, VimpelCom’s former chief executive officer, was detained by Norwegian police on Wednesday.
Sales last quarter fell 31 percent to $2.44 billion, mainly due to depreciation of local currencies against the U.S. dollar, the company said. Excluding the impact of exchange rates, acquisitions and divestments, revenue grew 2 percent.
Adjusted earnings before interest, taxes, depreciation and amortization fell 33 percent to $1.02 billion, beating analyst estimates of $977 million. The margin on earnings narrowed to 41.7 percent of sales.
The company also said it will pay a dividend of 3.5 cents per share.
Jean-Yves Charlier, who succeeded Lunder earlier this year, began a strategic revamp of the wireless carrier, announcing a plan in August to boost cash flow by $750 million within three years as revenue and earnings wane.
Russia, the company’s biggest market, will sell off wireless towers and is in talks with local and international bidders for the assets, Alexander Popovskiy, vice president of the unit, told reporters on a conference call today. The company is also planning to outsource its billing systems, he said.
Revenue in Russia, where VimpelCom is the third-biggest wireless carrier, fell 1 percent in the third quarter to 72.4 billion rubles ($1.14 billion) amid a recession.