UPDATE 2-Vimpelcom Q1 beats forecast on forex, stock up

* Net profit $392 mln ex-Kyivstar vs Reuters poll $372 mln

* Including Kyivstar, net profit was $412 mln

* Shares up 5.9 pct, outperforming rival MTS

(Writes through, adds more CEO comments, analyst, share price)

MOSCOW, May 26 (BestGrowthStock) – Vimpelcom Ltd (VIP.N: ), Russia’s
No.3 mobile operator, said on Wednesday it expects to return to
growth once the macroeconomic situation improves, after
reporting forecast-beating first-quarter earnings.
Vimpelcom Ltd was created in April through a merger of
Russia’s Vimpelcom and Ukraine’s Kyivstar, which ended one of
Russia’s longest corporate wars between the shareholders of
Alfa-Group and Norway’s Telenor (TEL.OL: ). [ID:nL5637811]

The company, which operates under the Beeline brand, said
net profit was $392 million, excluding Kyivstar, against a $297
million net loss a year ago and an average forecast of $372
million in a Reuters poll. [ID:nLDE64O0K1]

Its New-York listed stock rose 5.9 percent by 1641 GMT,
outperforming its main peer MTS (MBT.N: ), which grew 3.8 percent.

“Our quarterly results give us confidence that the
development of our business is on track. Looking ahead, we will
focus on completing the integration and organizational structure
of our new company in order to deal with the changing industry
landscape,” Chief Executive Alexander Izosimov said.

As Russian mobile phone penetration already tops 100
percent, mobile phone operators has shifted their focus towards
data services seen as the main driver for future revenue growth.


Vimpelcom’s earnings were supported by the appreciation in
the rouble and other operating currencies against the dollar as
it recorded a $105 million foreign exchange gain in the first
quarter against a forex loss of $746 million a year ago, and saw
revenues improve due mainly to currency translation effect.

Total sales rose 13 percent year-on-year to $2.23 billion,
partly helped by the consolidation of a business in Kyrgyzstan,
while revenue on its key Russian market was up a moderate 1.9
percent in rouble terms amid a slow recovery in demand.

“Until the local markets stabilise and begin to rebound we
will remain focused on efficiency and shareholder returns. Once
the macroeconomic situation in the region improves, we expect
the growth to return,” Izosimov said.

Operating income before depreciation and amortisation
(OIBDA) increased 10.9 pct to $1.05 billion and the OIBDA margin
slid to 47.2 percent from 48.1 percent a year ago.

Vimpelcom in April for the first time ceded its No.2
position on the Russian mobile market to MegaFon, which had
launched an aggressive marketing campaign to attract clients.

“Yes we have been losing some market share towards the end
of 2009 but I think that… the situation has stabilised. But we
do not intend to engage in a heavy battle for subscriber marker
share,” Izosimov said on a conference call with analysts.


Net profit for the merged company totalled $412 million,
Vimpelcom said but did not provide year-ago pro-forma numbers.
It also said it generated operating cash flow of around $960
million in the January through March period.

“Strong operating cash flows and healthy margins underpin
our favourable outlook on Vimpelcom Ltd’s stock,” Uralsib
analysts wrote in a note.
“The company has secure cash flows from its mobile business
in Russia and Ukraine and is exposed to growth opportunities in
the Russian broadband market.”

Stock Basics

(Reporting by Maria Kiselyova and Anastasia Teterevleva;
Editing by Mike Nesbit)

UPDATE 2-Vimpelcom Q1 beats forecast on forex, stock up