VimpelCom's Q2 Profit Up 31%

VimpelCom reported on Thursday a 31 percent increase in second-quarter profit on added subscribers and said it agreed to start selling Apple's iPhone 3G in Russia this year.

Net income climbed to $470.2 million from $359.3 million a year earlier, the company said in a statement. Sales rose to $2.61 billion from $1.72 billion under U.S. generally accepted accounting principles.

VimpelCom, the country's second-largest mobile phone company, acquired Russian phone and Internet provider Golden Telecom for $4.3 billion on Feb. 29, boosting revenue. VimpelCom and domestic competitors Mobile TeleSystems and MegaFon are profiting from the 10th straight year of economic growth in Russia, increasing demand for phone services.

"The increase in revenue was driven by fast organic growth in both our mobile and fixed-line operations as well as by the first full quarter consolidation of Golden Telecom," CEO Alexander Izosimov said in the statement.

VimpelCom said it had signed an agreement with Apple to bring the iPhone 3G to Russia later this year.

MTS and MegaFon also signed sales deals with Apple this month, Interfax reported, citing market sources. The sales are to begin in October at a retail price of about $1,000 each, Interfax said.

VimpelCom rose 60 cents, or 2.7 percent, to $23.12 in New York trading on Wednesday. Before Thursday, the stock declined 44 percent this year.

VimpelCom had 53.7 million subscribers in the former Soviet countries at the end of June, an addition of 6 million from a year earlier. Besides Russia, the company is active in Ukraine, Kazakhstan, Tajikistan, Uzbekistan, Georgia and Armenia.

The company bought Golden Telecom to create the country's first integrated fixed- and mobile phone operator and branch out in the fast-growing broadband Internet market. Last year, VimpelCom also bought Armentel, a fixed-line and mobile phone operator in Armenia.

MTS, Russia's largest mobile phone company, said on Aug. 12 its second-quarter profit rose 30 percent to $659 million, with sales jumping 34 percent to $2.64 billion. Revenue from mobile operations was $2.18 billion and fixed-line revenue reached $477 million.

Net income in Russia rose 26 percent to $448 million on sales of $2.24 billion, an increase of 53 percent. Average monthly revenue per mobile phone subscriber in Russia increased to $14.7 from $12.3 a year earlier, topping the $14.4 median analyst estimate in the survey. Average monthly usage rose to 220.3 minutes from 192.6 minutes a year earlier.

Combined operations in other countries had a profit of $22.3 million, up sixfold from a year earlier, as sales gained 49 percent to $388.1 million.

Operating income before depreciation and amortization for the company as a whole rose 36 percent to $1.22 billion, compared with the $1.23 billion analysts had anticipated. Profit on that basis as a percentage of sales fell to 46.8 percent from 52.2 percent a year earlier. In Russia, Oibda rose 36 percent to $1.06 billion with a margin of 47.3 percent.

(Bloomberg, MT)