March 2011 | Company News Alert
VimpelCom , Russia's third largest operator, has reported rising group revenues and continued revenue diversification by geography and business segment during Q410. BMI looks at the opportunities and risks for the future, finding promising conditions for continued growth, but also risks stemming from inside and outside the company.
VimpelCom has operations in Russia, Ukraine, CIS (Kazakhstan, Uzbekistan, Armenia, Tajikistan, Georgia and Kyrgyzstan) and South East Asia (Cambodia, Vietnam and Laos). Revenues were up 22% y-o-y in Q410 to US$2,816mn across the group, with FY10 revenues up 20.8% to US$10,513mn. Revenue growth has been largely driven by attracting new mobile subscriptions, with group subscription growth from Q409 to Q410 of 43.5%, reaching 92.7mn. The group is heavily dependent on the Russian market from which it gets 74.6% of its revenue and 56.1% of its subscriber base.
In 2010 VimpelCom's acquisition of Kyivstar was approved and finalised, resulting in large increases in subscriptions and revenues in the Ukraine. During Q410 Ukraine accounted for 14.3% of group revenues, up from 2.08% in Q409. Meanwhile, over the same period Ukrainian operations share of group subscriptions increased from 3.1% to 26.3%. The acquisition diluted the group's reliance on the Russian market slightly. However, BMI would welcome continued geographic diversification of VimpelCom's operations beyond Russia, CIS and Ukraine.
We forecast slow growth in the Ukrainian mobile market, with net additions of just under 1mn subscribers 2011-15. VimpelCom's revenue growth has up to this point largely been the result of attracting additional subscribers, ...
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