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VimpelCom earnings miss estimates on weaker Russia, Kazakhstan

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MOSCOW. May 12 (Bloomberg) VimpelCom Ltd., the wireless carrier partly owned by billionaire Mikhail Fridman, reported first-quarter earnings that missed analysts’ estimates as costs grew faster than revenue in key markets including Russia.

Earnings before interest, taxes, depreciation and amortization fell 19 percent to $758 million, Amsterdam-based VimpelCom said Thursday in a statement. Eight analysts surveyed Interfax had predicted $815 million on average. The underlying Ebitda margin narrowed to 39.5 percent of sales from 40.9 percent a year earlier.

Russia, VimpelCom’s largest market, and Kazakhstan led the decline in profitability as costs surged due to intensified competition and weakening in local currencies. Ebitda measured in local currencies fell 8 percent in Russia and 26 percent in Kazakhstan.

VimpelCom’s shares have lost 15 percent since the end of March, pressured by concern that the European Commission may veto a merger of the company’s assets in Italy with Hong Kong billionaire Li Ka-shing’s 3 Italia. Also, Telenor ASA, the Nordic region’s largest phone company, has hired JPMorgan Chase & Co. to explore the sale of its 33 percent stake in VimpelCom, according to people with knowledge of the matter.

VimpelCom’s first-quarter sales fell 12 percent to $2.02 billion and rose 4 percent in local currencies, adjusted for disposals and acquisitions.

“There are signs of an easing in pressures, with the exception of Russia," Chief Executive Officer Jean-Yves Charlier said in the statement. The company confirmed its 2016 forecast for flat or low single-digit revenue growth in local currencies.

 

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