VimpelCom has reported strong gains in first-quarter profits thanks to cost-cutting measures and a steady top-line performance.
Owned by Mikhail Fridman – the Russian billionaire – and Norwegian telecoms incumbent Telenor, the operator saw net income rise by 28%, to $408 million, compared with the same period last year, with revenues flat at $5.6 billion.
“These results demonstrate further progress on our Value Agenda and we remain on track to achieve our longer-term objectives,” said Jo Lunder, the chief executive of VimpelCom (Amsterdam, Netherlands).
Lunder claimed that revenues grew by 1% organically and would have risen by 4% without the impact of mobile termination rate cuts in Italy.
The company is under some pressure to reduce debts it amassed when acquiring telecoms assets from Egyptian billionaire Naguib Sawiris two years ago, but said the ratio for net debt to earnings before interest, tax, depreciation and amortization fell to 2.3 in the previous quarter, from 2.6 a year earlier.
Recently boosted by the sale of Sotelco, its Cambodian subsidiary, to its local partner, VimpelCom has also benefited from strong revenue growth in Uzbekistan following the closure of a rival’s network by Uzbek authorities.
It also reported growth in mobile broadband customer numbers in Russia and claimed that its Italian business outperformed the broader market, with fixed broadband revenues up by 9% in local currency terms.
In Pakistan, however, it was hit by a number of government-forced cellular network closures and saw revenues in Bangladesh fall as a result of strikes and the disconnection of customers using VoIP services due to regulatory restrictions.
VimpelCom attributed an improvement in its EBITDA margin – which has risen from 41.1% to 42% over the past 12 months – largely to cost-cutting efforts in Russia, where it has shifted to a revenue share model with its distributors and slashed employee headcount.