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VimpelCom to cut 2009 capex after weaker rouble dents Q3

26 ноября 2008

Russian telecoms operator OAO Vimpel Communications Tuesday posted a less-than-expected 41% fall in third-quarter net profit and said it will cut capital expenditure significantly next year.

"We understand that the company will not be able to avoid the future consequences of the financial crisis," said Izosimov, adding that the company has some suspended equipment orders and stopped taking on new staff.

"Above all our efforts and focus are on optimizing our free cash flow ... even if we don't get refinancing for the ($1.8 billion) debt that matures next year, we can pay it," Izosimov told reporters.

He declined to give an exact figure for the scale of the capital expenditure cuts before they are approved by the board, but said they would represent "tens of percent."

More than three quarters of VimpelCom's debt is denominated in dollars, making repayment more expensive for VimpelCom if the ruble weakens continues its recent fall.

Chief Financial officer Yelena Shmataova said the company has hedged its 2009 debt repayments against major ruble depreciation.

Net profit between July and September fell to $269 million from $458 million a year earlier, against analysts expectations of $210.4 million. This year's figure was reduced by a $341 million foreign exchange loss due to the revaluation of VimpelCom's debt.

Revenue grew 45% as the operator signed up four million new mobile users between July and September, while existing clients in its core domestic market spent 13% more on average a month than in 2007.

"Mobile businesses are fairly well protected from the economic slowdown," UralSib analyst Konstantin Chernyshev said in a note assessing the results, noting that VimpelCom's average revenue per user in Kazakhstan scarcely fell during the period, despite the particularly severe slowdown in that country.

VimpelCom was one of Russia's best performing stocks in 2007, but has shed almost two thirds of its value of in the last three months as American investors shun the risks of emerging market stocks and local telecom stocks suffer from the end of the ruble's strength against the dollar.

VimpelCom's New-York listed stock was trading down 1.3%, or 11 cents, at $8.59 at 1420 GMT, reversing earlier gains.

Источник: Total Telecom

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