Vimpelcom said it expects to achieve only the lower end of its full-year targets, after a slowdown in service revenues in Q2. On an organic basis, service revenue fell 0.7 percent, compared to 3 percent growth in Q1. The 26 percent growth in mobile data was offset by lower voice revenue, the company said.
Its total revenue fell 16 percent year-on-year to USD 2.156 billion in the three months to June, and service revenue dropped 17 percent to USD 2.089 billion. In addition to negative currency effects, the company saw an organic revenue decline of 2 percent in its home market Russia and organic sales fell 15 percent in Algeria.
Group EBITDA fell 26 percent to USD 795 million, hurt by the weaker sales and USD 116 million in group restructuring costs, and the margin dropped to 36.9 percent from 41.6 a year ago.
Net profit improved to USD 138 million from 108 million, due to better results at Italian operator Wind, which was classed as held for sale. Vimpelcom said it expects to receive in early September approval from the European Commission for the planned merger of Wind with 3 Italia.
Vimpelcom's capital expenditure dropped 41 percent to USD 347 million in Q2, or 17.3 percent of revenue. The company said full-year capex should also be around 17 percent of revenue. Operating cash flow fell to USD 679 million from USD 801 million, hurt mainly by currency effects.
For 2016, Vimpelcom previously forecast service revenue flat to a low single-digit organic increase, while the underlying EBITDA margin should be flat to 1 percentage point higher. CEO Jean-Yves Charlier said Vimpelcom "remains on track to achieve its financial targets for the year, although at the lower range for service revenue and underlying EBITDA margin".
