Vimpelcom reported a small improvement in underlying results in the first quarter, with revenues up 4 percent and EBITDA growing 2 percent on an organic basis. However, negative currency effects and weak conditions in many of its markets, especially Russia and Kazakhstan, led to a 12 percent drop in reported revenue to USD 2.023 billion. Revenues in Russia fell 17 percent, the rest of Eurasia 21 percent and the other markets by 2 percent.
Adjusted EBITDA fell 15 percent to USD 799 million, hurt also by USD 40 million in restructuring charges, and the margin was down 1.4 percent points year-on-year to 39.5 percent. Vimpelcom classified its Italian unit Wind as a discontinued activity held for sale, leading to a net profit from continuing activities of USD 38 million versus a loss of USD 88 million a year ago. The bottom line was helped by lower depreciation and interest costs and fewer forex losses compared to a year ago.
Capital expenditure was reduced 26 percent in the quarter to USD 195 million, and operating cash flow was down 12 percent to USD 647 million. Vimpelcom's net debt was up 9 percent year-on-year and 17 percent higher than in Q4 at USD 6.407 billion due to the payment of USD 795 million in fines to settle the investigations in the US into its Uzbekistan activities.
CEO Jean-Yves Charlier said the group's strategy was "firmly on course, particularly in the areas of cost base transformation, streamlining our portfolio, and greater globalization of our internal operations". He reiterated the group's full-year targets, which include a modest improvement in organic revenue and the underlying EBITDA margin.
The company said service revenue was still up 3 percent on an organic basis in Q1, led by 27 percent growth in mobile data service revenue. It ended the period with 194 million mobile customers, down by 0.9 million from a year earlier due mainly to the stricter customer registration rules in Pakistan. Excluding this, the company would have added 4.7 million new customers in the past year.
