Phone operator Vimplecom on June 4 released its official 1Q 2008 financial results audited to US GAAP. For the first time, the consolidated statement included the financial results of the recently bought Golden Telecom business (see daily of December 21). Hence, disproportionate changes in some indicators in relation to actual business growth.
Revenue rose by an impressive 42% y-o-y, with fixed-line business accounting for a hefty chunk of the overall proceeds. Revenue on mobile phone services rose by a more modest 34%, falling short of the respective revenue growth of 37% posted by MTS.
The OIBDA margin increased by a surprising 1.9%, taking into account the less profitable fixed-line business. Comparisons with MTS would not be in favor of the latter. AFK Sistema's subsidiary saw its margins fall by 2.5% y-o-y in the surveyed period. Vimpelcom's OIBDA margin on cellular business expanded to a hefty 55.1%, which is a record in the industry (admittedly, Megafon is yet to publish its 1Q 2008 financials).
We, however, fear that the strong growth in margins was probably linked with a slow increase in the operator's subscriber base. The number of its cellular phone users in Russia (the cellular market is the main one for Russia's three largest phone operators) increased by just 9% over the year, compared to 16% growth MTS. However, Vimpelcom has been recently posting only a rise in the number of its active cellular users, which gives us grounds to believe that the actual growth in the company's overall subscriber base was probably higher.
Vimpelcom: 1Q 2008 financial results, mn USD
| | 1Q 2007 | 1Q 2008 | 1Q2008/1Q2007 | 1Q2008/1Q2007 МТС |
|---|
| Revenue | 1 488 | 2 108 | 42% | 37% |
| Revenue on cellular business | 1 454 | 1 944 | 34% | 37% |
| OIBDA | 766 | 1 126 | 47% | 30% |
| OIBDA margin | 51.5% | 53.4% | 1.9 п.п. | -2.5 п.п. |
| OIBDA margin on cellular business | 51.6% | 55.1% | 3.5 п.п. | -2.5 п.п. |
| Net profit | 277 | 601 | 117% | 36% |
| Net margin | 18.6% | 28.5% | 9.9 п.п. | -0.2 п.п. |
| ARPU in Russia | 10.9 | 13.2 | 21% | 22% |
| Number of clients in Russia (active clients) | 38 631 | 42 079 | 9% | 16% |
Source: company data, Finam estimates
On the whole, the company reported sound financial results, but the statement indicates that MTS will likely remain the leader in the wireless telecoms segment next year. So far, MTS still generates the highest revenue in the sector. That said, the chief rival's robust margins on cellular business could send a serious challenge to Mikhail Shamolin, the new head of MTS (see materials on his appointment in daily of May 30).
At present, we do not have an official recommendation on Vimpelcom
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