VimpelCom records 90% slump in Q1 profit

VimpelCom has reported a near collapse in its first quarter profits as revenues also declined by a tenth.

The company posted revenues down by 10 per cent at a shade over US$5 billion, while net profit collapsed, down by 90 per cent to just US$39 million.

The decrease in net profit was primarily the result of the decline in operational performance, as well as foreign exchange losses of US$92 million. A higher rate of tax in some countries also impacted on the net profit figure.

The revenue decline was mainly due to operational performance in Russia, the intense price competition in Italy particularly through the summer of 2013, regulatory and governmental actions in the Africa and Asia, together with unstable macro-economic situations in Pakistan and Ukraine.

EBITDA decreased organically six per cent year-on-year to US$2.1 billion, reflecting the decline in revenue and higher infrastructure and distribution costs in Russia.

Capex increased 24 per cent to US$736 million in Q114, reflecting the continued investments in high-speed data networks, including the roll out of LTE networks in Russia, 3G networks in Algeria and Bangladesh, and continued investments in Italy in HSPA+ and LTE.

The Group’s total customer base grew by three per cent to the end of the period at 218 million subscribers.