VimpelCom Declines Most Since 2012 after Omitting Dividend
VimpelCom Ltd. (VIP), the wireless carrier controlled by Russian billionaire Mikhail Fridman, fell the most since 2012 after omitting a final dividend for 2013 and saying future payouts will be lower.
Shares of VimpelCom dropped 13 percent to $10.14, the biggest slide since May 2012. The company, which operates in 15 countries, posted declines in third-quarter revenue and earnings as sales fell in Russia, Africa and Asia. The Amsterdam-based company’s stock surged 23 percent last year.
VimpelCom trails OAO Mobile TeleSystems and OAO MegaFon in Russia, its largest market, where competition weighs on calling prices and carriers vie for data users to maintain growth. The company, partly owned by Norway’s Telenor ASA (TEL), is struggling to reduce spending and boost profitability to help cut $27.6 billion of gross debt stemming from the acquisition of telecommunications assets, including in Italy and Algeria, from Egyptian billionaireNaguib Sawiris in 2011.
“In the medium-term, VimpelCom is doing the right thing by cutting their debt, since U.S. tapering will inevitably lead to the rates’ increase, and it’ll be hard for the company to service its debt,” Yulia Bushueva, who helps manage about $500 million at Arbat Capital in Moscow, said by e-mail. “But investors want to see the money here and now, that’s why for the stock market it’s definitely negative news.”
Starting with its 2014 dividend, VimpelCom aims to pay 3.5 U.S. cents a share a year to investors, according to a statement today. VimpelCom plans to keep the payout at that level until it has reduced net debt to less than two times annual earnings before interest, taxes, depreciation and amortization.
VimpelCom had aimed to pay at least 80 U.S. cents per share a year. Sales and Ebitda this year will be “stable,” VimpelCom predicted. Net debt will be about 2.3 times Ebitda at the end of the year, it forecast.
29 January 2014, Bloomberg
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