VimpelCom Ltd second quarter net profit up 42% to $312 mln

VimpelCom Ltd., which includes one of Russia’s top three mobile operators VimpelCom, saw its second quarter net profit increase 43 percent year-on-year to $312 million, the company said on Wednesday.

The net profit increase is due to favorable currency movements partly offset by increased depreciation and tax expenses, the company said in a statement.

In March 2011, VimpelCom approved a $6-billion cash-and-shares deal to buy Wind Telecom owned by Egyptian billionaire Naguib Sawiris. The merger is expected to create the world’s fifth largest telecom operator.

“This quarter in which our transformational merger with Wind Telecom closed shows solid performance across all of our business units,” VimpelCom’s Chief Executive Officer Jo Lunder was quoted in the statement as saying.

“Our diligent efforts resulted in an improvement in our market position in Russia, relative outperformance of the market in Italy, and continued profitable growth across our operations in emerging markets. Moreover, we are leveraging our scale advantage, which is reflected by our ability to deliver synergies from the merger with Kyivstar ahead of expectations,” he added, referring to Ukraine operator Kyivstar, which VimpelCom merged with in 2010.

VimpelCom’s total mobile subscriber base increased in the second quarter by 11 percent to 193 million people mainly due to an accelerated growth of subscribers in Russia.

Revenues rose nine percent to $6 billion driven by a three percent organic growth and favorable foreign exchange environment.

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) remained stable at $240 billion, impacted by one off expenses related to the Wind Telecom and Vietnam’s GTEL transactions.

Capital expenditure increased 41 percent to $1 billion within a planned 21 percent capex to revenue ratio for the year.

Actual net cash from operating activities rose 23 percent year-on-year to $1.2 billion.

“Looking ahead, we will maintain our focus on integrating our businesses and driving sustainable, profitable growth and increased cash flows by capturing opportunities in our emerging markets and by increasing focus on both fixed and mobile broadband in our more mature markets,” Lunder said.

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