VimpelCom Acquires KaR-Tel

VimpelCom acquires KaR-Tel, second largest cellular operator in Kazakhstan, for $350M plus $75M in debt; reports 73% increase in net income for Q2

August 26, 2004

5 Min Read

MOSCOW -- Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE:VIP) today announced it has won a tender against international bidders and has signed an agreement to purchase "KaR-Tel", the second largest cellular operator in Kazakhstan, for a purchase price of US$350 million plus assumption of approximately $75 million in debt. KaR-Tel holds a national GSM-900 license and currently serves approximately 600,000 subscribers, representing, according to Company estimates, a 31% market share in Kazakhstan.

Recognizing the benefits of local expertise when entering a new country, VimpelCom is also in discussions with a Kazakh partner to sell for cash (at the same pricing terms as paid by VimpelCom) a minority interest of up to 50% minus one share in KaR-Tel. VimpelCom intends to retain control of KaR-Tel, with no less than 50% plus one share ownership. The closing of both the purchase of KaR-Tel by VimpelCom and the sale of a stake in KaR-Tel to a partner are expected to occur in the second half of 2004.

Commenting on today's announcement, Alexander Izosimov, Chief Executive Officer of VimpelCom, said, "We are very pleased to announce this acquisition in Kazakhstan as VimpelCom's first expansion outside of Russia. This move opens a new chapter in our development, reflecting our vision of VimpelCom as an international company with a strong presence in developing markets, particularly within the CIS. Kazakhstan, with the highest GDP per capita in the CIS after Russia and a cellular penetration rate of only 13%, offers tremendous opportunities."

Mr. Izosimov continued, "Building upon our achievements and experience operating across 11 time zones in Russia, we intend to expand decisively into Kazakhstan with the introduction of our Bee Line brand and the implementation of our unified business solutions for IT, marketing, distribution, customer service, billing and network operations."

In a separate release:

MOSCOW and NEW YORK -- Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP - News), a leading provider of wireless telecommunications services in Russia, today announced its financial and operating results for the quarter and six months ended June 30, 2004. During the second quarter, the Company reported rapid subscriber growth in the regions and increases in net operating revenues, OIBDA and net income.

Commenting on today's announcement, Alexander Izosimov, Chief Executive Officer of VimpelCom, said, "We are pleased with the Company's performance in the second quarter. We added approximately 3 million new subscribers, our largest quarterly increase in new subscribers in the Company's history. We launched five new networks in the regions and gained access to operations in three regions in the Far East through an acquisition. In addition, our financial results continue to strengthen, with our OIBDA margin reaching a new high of 49.8%." Mr. Izosimov continued: "We are pleased to see progress with the supply of numbering capacity and we look forward to continued strong growth, particularly in the Russian regions."

Table 1: Key Financial and Operating Indicators

Three months ended June 30, 2004

Three months ended June 30, 2003

Change Y-on-Y (%)

Six months ended June 30, 2004

Six months ended June 30, 2003

Change Y-on-Y (%)

Net operating revenues (US$000)

490,901

304,440

61.2%

908,598

548,877

65.5%

OIBDA (US$000)(1)

244,694

139,929

74.9%

446,719

247,865

80.2%

OIBDA margin(2)

49.8%

46.0%

--

49.2%

45.2%

--

Gross margin (US$000)(3)

406,217

249,022

63.1%

748,358

445,592

67.9%

Gross margin percentage(4)

82.7%

81.8%

--

82.4%

81.2%

--

Net income (US$000)

90,955

52,647

72.8%

167,086

94,034

77.7%

Net income per share (US$)

2.26

1.38

63.8%

4.16

2.47

68.4%

Net income per ADS (US$)(5)

1.70

1.04

63.5%

3.12

1.85

68.6%

ARPU (US$)(6)

10.8

14.3

-24.7%

10.8

13.9

-22.6%

MOU, revised definition (min)(7)

96.3

100.2

-3.9%

94.1

94.4

-0.4%

SAC (US$)(8)

14.1

21.1

-33.0%

15.3

21.0

-27.2%





JSC Vimpel-Communications (VimpelCom)

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like