Transcript VimpelCom - Rustocks.com

VimpelCom
Presentation of 3Q2003
Financial and Operating Results
November 20, 2003
Disclaimer
This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate,
in part, to the Company’s development plans, such as national expansion. These statements also relate
to the consummation of the merger between VimpelCom and VimpelCom-Region which is subject to
regulatory and certain other approvals, as well as certain other conditions precedent, including the
transfer of all of VimpelCom-Region's licenses and permissions to VimpelCom. If any of the approvals
are not obtained or any condition precedent is not met, the merger will not be consummated. The
forward-looking statements are based on management's best assessment of the Company's strategic and
financial position, future market conditions and trends and its ability to consummate the merger. These
discussions involve risks and uncertainties. The actual outcome may differ materially from these
statements as a result of unforeseen developments from regulatory authorities, competition,
governmental regulations of the wireless telecommunications industry, general political and social
uncertainties in Russia, general economic developments in Russia, the Company’s ability to continue to
grow its overall subscriber base, continued volatility in the world economy and other factors. There can
be no assurance that such risks and uncertainties will not have material adverse effects on the
Company’s development plans. Certain factors that could cause actual results to differ materially from
those discussed in any forward-looking statements include the risks described in the Company's Annual
Report on Form 20-F for the year ended December 31, 2002 and other public filings made by the
Company with the United States Securities and Exchange Commission, which risk factors are
incorporated herein by reference. VimpelCom disclaims any obligation to update developments of these
risk factors or to announce publicly any revision to any of the forward-looking statements contained in
this presentation, or to make corrections to reflect future events or developments.
2
VimpelCom 3Q2003 Financial Highlights
Net Revenues, $ Million
71.4%
Net Income, $ Million
78.3%
379.0
40.5
221.1
3Q2002
72.2
3Q2003
3Q2002
3Q2003
OIBDA Margin
OIBDA, $ Million
74.0%
178.5
46.4%
102.6
3Q2002
3
Source: VimpelCom
3Q2003
3Q2002
47.1%
3Q2003
VimpelCom-R 3Q2003 Financial Highlights
Net Revenues, $ Million
Net Income, $ Million
40.2%
102.9%
128.7
91.8
17.6
8.6
2Q2003
3Q2003
2Q2003
3Q2003
OIBDA Margin
OIBDA, $ Million
49.8%
49.8
33.2
2Q2003
4
Source: VimpelCom
36.2%
3Q2003
2Q2003
38.7%
3Q2003
Operating Highlights
‣ 10.4 million subscribers in Russia as of November
20, 2003
‣ Leader in net additions in Russia
‣ Fastest growing operator in Moscow and in
Central, Volga, South and Siberia super-regions
‣ 260,000 subscribers in St. Petersburg as of
November 20, 2003
‣ Largest call center in Russia opened in Moscow
serving more than 7 million subscribers in the
Moscow license area and Central super-region
5
National GSM Network Rollout
Area
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
6
Moscow
Voronezh
Tver
Kaluga
Vladimir
Ryazan
Lipetsk
Tula
Yaroslavl
Smolensk
Belgorod
N. Novgorod
Saratov
Rostov
Barnaul
Kemerovo
Novosibirsk
Bryansk
Kostroma
Ivanovo
Orenburg
Kursk
Orel
Omsk
Kazan
Tomsk
Krasnodar
Maykop
Volgograd
Ufa
Cheboksary
Nalchick
Gorno-Altaysk
Krasnoyarsk
Samara
Astrakhan
Ulyanovsk
Kaliningrad
Norilsk
Makhachkala
Stavropol
Cherkessk
St. Petersburg
Tura
Tambov
Leningrad Region
Total
Super
Region
Central
Central
Central
Central
Central
Central
Central
Central
Central
Central
Central
Volga
Volga
South
Siberia
Siberia
Siberia
Central
Central
Central
Volga
Central
Central
Siberia
Volga
Siberia
South
South
South
Volga
Volga
South
Siberia
Siberia
Volga
South
Volga
North W
Siberia
South
South
South
North W
Siberia
Central
North W
Area
Popul.
(‘000)
16,985
2,379
1,473
1,041
1,525
1,228
1,213
1,676
1,368
1,050
1,512
3,524
2,669
4,407
2,607
2,900
2,692
1,379
737
1,149
2,177
1,236
861
2,079
3,780
1,046
5,571
2,702
4,103
1,314
900
203
2,966
3,240
1,007
1,382
955
135
2,584
2,730
440
4,669
18
1,180
1,671
102,463
Network
Launch/
Acquisition
Jul 1999
May 2000
Sep 2001
Sep 2001
Sep 2001
Sep 2001
Oct 2001
Oct 2001
Oct 2001
Nov 2001
Nov 2001
Jan 2002
Jan 2002
Jan 2002
Jan 2002
Jan 2002
Jan 2002
May 2002
May 2002
Jun 2002
Jul 2002
Aug 2002
Aug 2002
Aug 2002
Aug 2002
Sep 2002
Sep 2002
Sep 2002
Oct 2002
Oct 2002
Oct 2002
Oct 2002
Oct 2002
Oct 2002
Nov 2002
Nov 2002
Dec 2002
Dec 2002
Dec 2002
Jan 2003
Feb 2003
Feb 2003
April 2003
Aug 2003
Oct 2003
Oct 2003
Moscow
Population: 17.0 mln.
Northwest
Population: 14.0 mln.
Far East
Population:
11.4 mln.
Urals
Population: 18.3 mln.
Central
Population: 21.0 mln.
38
43
46
3
10
9
18 4
23 8 1 5 20 19
22
6 12
11 7
45
2
31
27 14
28
42 41
32
29
39
37 25
35
13
21
36
44
30
26
24
40
Volga
Population: 25.2 mln.
South
Population: 22.9 mln.
17
34
16
15
33
Siberia
Population: 15.3 mln.
In commercial operation
Launch in Q4 2003E
Other licensed regions
Unlicensed territories
Strong Subscriber Growth
VimpelCom Subscriber Base, mln
VimpelCom Market Share
60%
9.26
7.43
6.19
5.15
4.03
3.31
3.71
3.95
50%
49%
49%
29%
30%
31%
40%
2.24
27%
4.43
52%
4.18
3.00
1.44
0.72
53%
28%
5.08
20%
17%
19%
21%
13%
7%
0%
3Q02
4Q02
1Q03
Moscow
7
2Q03
Regions
Source: VimpelCom, independent sources
3Q03
3Q02
4Q02
Moscow
1Q03
Russia
2Q03
3Q03
Regions
Strong Growth In The Regions
VimpelCom Regional Subscriber Base, ('000)
4,183
316
824
3,005
188
2,242
1,440
723
1
142
16
246
317
3Q02
Central
8
110
285
106
119
422
744
594
545
1,073
416
775
579
416
523
4Q02
Volga
706
1Q03
South
1,226
903
2Q03
3Q03
Siberia
Northwest
Structure Of The Customer Base
Prepaid vs. Postpaid
23%
77%
3Q02
21%
79%
4Q02
22%
78%
1Q03
Prepaid
9
19%
81%
2Q03
Postpaid
Moscow vs. Regions
16%
84%
3Q03
18%
82%
3Q02
28%
72%
4Q02
36%
40%
64%
60%
1Q03
Moscow
2Q03
Regions
45%
55%
3Q03
Network Rollout As Of 9/30/03
Moscow
Regions
Total
3Q2003 2Q2003
3Q2003 2Q2003
3Q2003 2Q2003
№ of BTSs
2,556
2,388
3,525
2,794
6,081
5,182
№ of BSCs
114
108
89
74
203
182
10
45
38
55
48
№ of MSCs
Note:
BTS – base transceiver station
BSC – base station controller
MSC – mobile switching center
10
Source: VimpelCom
10
Key Subscriber Statistics
(‘000)
30 Sept 03
30 Sept 02
YtY
Moscow
5,076
3,305
54%
4,429
15%
Contract
Prepaid
799
4,277
715
2,590
12%
65%
763
3,666
5%
17%
Regions
4,183
723
479%
3,005
39%
Total
9,259
4,028
130%
7,434
25%
1,470
7,789
964
3,065
53%
154%
1,415
6,018
4%
29%
Churn(quarterly) 9.6%
8.5%
-
10.5%
-
Contract
Prepaid
11
30 Jun 03
QtQ
Key Financial Figures
($ mln)
3Q03
3Q02
YtY
Net Revenues*
Moscow*
Regions*
379.0
259.7
119.3
221.1
199.6
21.5
71.4%
30.1%
454.9%
304.4
216.7
87.7
24.5%
19.8%
36.0%
Gross Margin
OIBDA
OIBDA Margin
81.8%
178.5
47.1%
80.2%
102.6
46.4%
-74.0%
--
81.8%
139.9
46.0%
-27.5%
--
Net Income*
Net Income Margin
Moscow
Regions
72.2
19.1%
61.6
17.9
40.5
18.3%
43.5
(2.4)
78.3%
-41.8%
833.5%
52.6
17.3%
47.1
9.0
37.1%
-30.9%
98.3%
SG&A
% of Net Revenues
126.9
33.5%
68.4
30.9%
85.6%
--
106.7
35.1%
18.9%
--
Bad Debt
% of Net Revenues
4.9
1.3%
6.3
2.8%
-22.6%
--
2.4
0.8%
104.9%
--
165.3
136.2
21.4%
174.2
-5.1%
Capex
12
* Net operating revenues and net income excluding inter-company transactions
2Q03
QtQ
Operational Indicators
ARPU, Blended ($)
ARPU Moscow
Contract (Moscow)
Prepaid (Moscow)
ARPU Regions
MOU, Blended (min)
MOU Moscow
Contract (Moscow)
Prepaid (Moscow)
MOU Regions
SAC, Blended ($)
Moscow
Regions
13
3Q03
3Q02
YtY
2Q03
QtQ
14.4
17.5
53.6
10.4
11.5
19.8
21.0
56.5
10.4
13.3
-27.3%
-16.7%
-5.1%
0.0%
-13.5%
14.3
16.9
51.0
9.5
11.2
0.7%
3.6%
5.1%
9.5%
2.7%
92.7
92.5
284.2
54.7
93.0
97.2
99.1
233.4
58.9
85.3
-4.6%
-6.7%
21.8%
-7.1%
9.0%
93.8
95.1
273.7
56.0
91.6
-1.2%
-2.7%
3.8%
-2.3%
1.5%
18.8
27.0
12.3
24.6
29.0
12.4
-23.6%
-6.9%
-0.8%
21.1
29.7
12.3
-10.9%
-9.1%
0.0%
Strong Balance Sheet
Assets and Liabilities, $'000
($’000)
2,165
1,693
Cash and Cash Equivalents
Total Assets
Total Debt
- Short-term
- Long-term
Shareholder’s Equity
9/30/03 12/31/02 12/31/01
272,950
263,657
2,164,597 1,692,744
750,913
650,580
265,886
176,265
485,027
474,315
843,763
662,663
LTM OIBDA*
- LTM Depreciation and amortization
- LTM Operating income
926
700
223
2000
751
651
278
2001
2002
9M2003
Total Debt Total Assets
LTM Interest
Debt/Equity
Debt/OIBDA * *
OIBDA/Interest
Debt/Assets
144,172
925,806
277,673
90,350
187,323
508,121
510,952
322,209
148,456
163,622
347,330
97,417
224,792
61,306
87,150
46,586
26,865
1.0
2.0
6.9
0.4
0.5
1.9
5.5
0.3
66,035
0.9
1.5
7.7
0.3
* LTM OIBDA constitutes the sum of the lines: LTM Operating income and LTM Depreciation and amortization
LTM stands for “last twelve months” to reporting date
* * In cases when OIBDA is part of financial ratios it is deemed to be calculated in accordance with the
reconciliation tables herein
14
Source: VimpelCom
Net Operating Cash Flow vs CAPEX
Net Operating Cash Flow/Capex, $ mln
509.1
476.4
364.2
238.3
221.7
101.1
2001
2002
Net Operating Cash Flow
15
Source: VimpelCom
9M2003
Capex
Summary
‣ Ongoing rapid subscriber growth resulted in more
than 10 million subscribers
‣ Strong financial results with net income growth
over 70%
‣ Leader in the key Moscow market; overall market
share in Russia has increased to 31%
‣ Merger with VimpelCom-Region approved by
shareholders will simplify VimpelCom’s corporate
structure and strengthen the balance sheet
‣ Issues to address: high churn rate and falling ARPU
on a year-on-year basis
16
Reconciliation of OIBDA and OIBDA margin
(Three months ended)
($ ‘000)
Sept. 30, 2003
June 30, 2003
Sept.30, 2002
Reconciliation of VimpelCom OIBDA to operating income
OIBDA
178,472
139,929
102,567
Less: Depreciation
(42,894)
(33,914)
(23,182)
Less: Amortization
(8,871)
(8,738)
(3,249)
126,707
97,277
76,136
Operating Income
Reconciliation of VimpelCom OIBDA margin to operating income
as percentage of net operating revenues
OIBDA margin
47.1%
46.0%
46.4%
Less: Depreciation as %
of net operating revenues
(11.3%)
(11.1%)
(10.5%)
Less: Amortization as %
of net operating revenues
(2.4%)
(2.9%)
(1.5%)
33.4%
32.0%
34.4%
Operating income as %
of net operating revenues
17
Reconciliation of OIBDA and OIBDA margin
(Three months ended)
($ ‘000)
Sept. 30, 2003
June 30, 2003
Sept.30, 2002
Reconciliation of VimpelCom-Region OIBDA to operating income
OIBDA
49,788
33,243
2,124
Depreciation
(12,893)
(8,524)
(2,564)
Amortization
(5,788)
(5,637)
(546)
31,107
19,082
Operating Income
(986)
Reconciliation of VimpelCom-Region OIBDA margin to operating income
as percentage of net operating revenues
OIBDA margin
38.7%
36.2%
9.0%
Depreciation as %
of net operating revenues
(10.0%)
(9.3%)
(10.9%)
Amortization as %
of net operating revenues
(4.5%)
(6.1%)
(2.3%)
24.2%
20.8%
4.2%
Operating income as %
of net operating revenues
18