Vimpelcom, owner of Telecel releases results with declined revenues, expects tough 2015

Nigel Gambanga Avatar

TelecelThe latest financial results (Fourth Quarter 2014) for Vimpelcom, the company with a 60% stake in Telecel Zimbabwe, have just been published. The global mobile operator registered a 21% dip in revenues and net losses of $935 million.

A reduction in earnings had been anticipated with an outlook for a single digit decline in sales and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), something that was met with an 8% Year on Year decline. Operating cash flow declined by 5% to $4.063 billion.

Telecel Zimbabwe, the only investment in Sub-Saharan Africa that Vimplecom has left (after selling its Burundi operations to Econet) falls under Vimpelcom’s Africa and Asia unit which also comprises of Algeria, Pakistan, and Bangladesh. Revenue for the unit declined to $788 million. Interestingly every market in the unit registered an increase in mobile data revenue.

Overall, EBITDA for Africa and Asia fell by 19% to $326 million, with a strong performance from Bangladesh and improvement from Vimpelcom’s Pakistan unit being weighed down by pricing and market challenges in Algeria that affected the Vimplecom subsidiary there.

While Vimpelcom registered an increase in subscribers, Telecel Zimbabwe experienced a loss of 400,000 subscribers in the recorded financial year. With a recorded subscriber total of 2,2 million, the figure falls in the same range reported in the last telecoms regulators’ report for the third quarter of 2014.

A tough year ahead for Vimpelcom

Vimpelcom has made a gloomy forecast for 2015, with revenues expected to fall due to declining service revenues and maintained capital expenditures. The contribution made by Telecel Zimbabwe wasn’t a focal point for the overall impression of Vimpelcom in this past financial year, something that it too is a subsidiary that is ready for disposal in this year.

All the noise around the ownership of Telecel Zimbabwe certainly contributes to that impression, and with a tough season ahead, offsetting one unit that isn’t a heavy hitter, just to boost numbers makes a lot of sense.

This is compounded by the fact that Telecel Zimbabwe isn’t operating in the best of markets, has a host of complications surrounding its operational position and is also not delivering aggressively when stacked up against its competition.