VimpelCom Ltd. (VIP:US), the wireless operator controlled by Russian billionaire Mikhail Fridman, posted a 83 percent fall in second-quarter profit partly due to non-cash charges related to refinancing of its Wind unit in Italy.
Net income declined to $100 million from $573 million a year earlier, the Amsterdam-based carrier said today in a statement. Sales slid 11 percent to $5.07 billion.
VimpelCom, co-owned by Norway’s Telenor ASA (TEL), is striving to reduce its debt pile of $29 billion which resulted from acquisitions of assets in Italy, Algeria and Asia from Egyptian billionaire Naguib Sawiris three years ago. The recent resolution of an ownership dispute in Algeria and the refinancing of Wind’s debt will improve annual profit by about $500 million, it said.
“The results for the second quarter were impacted by a weaker operational performance in some markets, but also by the macroeconomic situation in Russia and Ukraine, ” the company said in a statement.
VimpelCom, operating in more than a dozen countries, continued to lose share in its key Russian market to competitors OAO Mobile TeleSystems (MBT:US) and OAO MegaFon. (MFON) VimpelCom’s Russian sales dropped 7 percent, while mobile-data revenue rose 17 percent. That compared with an expansion of almost 40 percent in data reported by billionaire Alisher Usmanov’s MegaFon last week.
VimpelCom’s revenue in Ukraine fell by 5 percent in local currency amid a slowing economy and by 9 percent in Italy where it “outperformed a weak market”, according to the company. The group’s earnings before interest, income, depreciation and amortization fell 14 percent to $2.08 billion, missing analysts estimates for $2.11 billion.
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