Russian mobile phone group Vimpelcom forecast earnings and revenue would grow by around 5 per cent in the next two years, with its purchase of Wind Telecom last year providing a boost as it focuses now on tough conditions at home.
Vimpelcom, which has operations in Italy, Asia and North Africa, in addition to the CIS, as a result of the $6 billion Wind deal, said it would turn its attention to organic growth and particularly its Russian heartland, where its market share has slipped behind rivals MTS and MegaFon.
“Russia is a challenge ... We hope to see stronger signs (of progress) in the year ahead of us,” Chief Executive Jo Lunder told Reuters.
“Our size in Russia is now comfortable - we are not going to up our share of subscribers as a top priority. We must protect and maintain our position and then focus on profit.”
Earnings before interest, tax, depreciation and amortisation(EBITDA) fell 3 per cent in the fourth quarter to $2.2 billion. Revenue rose 5 per cent, excluding acquisitions, to $5.9 billion and mobile subscriber numbers were up 13 per cent to 205 million.
Norwegian group Telenor, Vimpelcom’s biggest shareholder with a voting stake of 36 per cent, had fought in vain for the group to drop the Wind deal in favour of a more Russia-focused strategy. Lunder said management was now thinking along the same lines as its biggest shareholders.
“I can only speak on behalf of management but I think all shareholders are very supportive of the strategy just now - an increased focus on operations and extracting synergies - there is general support in that direction,” he said.
The Wind acquisition also saddled Vimpelcom with a heavy debt load - $24.37 billion at the end of Q4 against $22.2 billion the previous quarter.
“We are comfortable with the debt level. It increased in Q4, but we see this as more of a quarterly movement than a long term trend,” Lunder said.
Vimpelcom said on Tuesday it made a net loss of $386 million in the fourth quarter of 2011, hit by non-cash items of $437 million relating to foreign exchange movements and one-off charges on operations in Vietnam and Cambodia as well as the Wind deal.