Vimpelcom posts Q3 billion dollar losses as former CEO faces probe

Corruption charges and $900 million damages aside, the year hasn’t been all that bad, argued Vimpelcom CEO Jean-Yves Charlier as the latest quarterly figures were unveiled.

Russian telco Vimpelcom lost $1.005 bn in the third quarter, while this time last year it showed a $105m, according to its latest results. The reversal of fortune came from having to set aside $900 million for possible damages that may arise from a corruption investigation into its Uzbekistan activities. However, under ordinary circumstances, revenues would be 2% up, the company declared.

Former Vimpelcom chief executive Jo Lunder is facing an investigation into alleged corruption in the telco’s operatons in Uzbekistan.

Last week reported that Telenor chairman Svein Aaser had resigned his position after he led a Telenor attempt to bail out VimpelCom that led to a loss of confidence in his judgement.

The results also reflect negative currency effects and tough economic conditions in some of the Russian company’s markets. Revenue was down by 31% to $2.442 billion, and EBITDA plummeted by 96% to $58 million.

Currency fluctuations aside, Vimpelcom said revenues were up 2%, while EBITDA would be down just 1% if the extraordinary circumstances of damage payments had not skewed the quarterly outcomes. The company is sticking to its financial targets, said CEO Jean-Yves Charlier, and the transformation programme, which started earlier this year, is now making progress. More details on this strategy will be unveiled with the full-year results, he said.

Vimpelcom forecast that in 2015 service revenue would flatten to a single-digit decline, the underlying EBITDA margin flat to minus 1% and capital expenditure excluding licence fees would stabilise at 18-20% of revenue. In the first nine months of the year, service revenue was flat, the underlying EBITDA margin fell 1.2% to 41.3% and capital expenditure nearly halved to $1.137 billion or 15.5% of revenue. Operating cash flow in the nine months was down 23% year-on-year to $1.887 billion. Vimpelcom said it will pay a dividend of $0.035 per share in December.

Vimpelcom ended September with a total of 195.3 million mobile customers, down 1% from last year.


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