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Vimpel Posts Loss; Stock Jumps

Sung Moss

Vimpel Communications(VIP Quote), the second-largest cell phone company in Russia, announced another net loss this morning. Though the loss was smaller than many analysts expected, the company wants the world to know that it was exchange rates that did it in...again.

And it looks like investors were willing to give them the benefit of the doubt in afternoon trading. The stock was up nearly 6%, to $13.10, a 71 cent bump since yesterday's close.

In an eye-raising move, Vimpel switched its reporting currency this quarter, dumping dollars for rubles. The company said in the release that the move was made "in order to align the reporting currency with the predominant functional currency of the company and simplify comparative performance analysis."

Too bad the switch didn't mask the reality of the company's 8.5 billion ruble net loss, down from a 14.6 billion ruble profit at the same time last year. In fact, the company said it was exchange rates that made life miserable this quarter, pointing to a 23.6 billion ruble foreign exchange loss as the reason for the dismal showing. Per ADS net loss came to 8.41 rubles, down from earnings per ADS of 14.36 rubles in the year over. Vimpel specifically cited currency devaluations in Russia, Kazakhstan and Armenia -- all centers of operations for the Russian-based telecom -- as increasing costs for the company's long-term, foreign debt.

But investors heard this tune before. Just two weeks ago, the company also blamed exchange rate problems for its dismal fourth-quarter showing.

Despite the loss, Vimpel tried to highlight the good, pointing to some relatively good numbers. Operating income before depreciation and amortization jumped nearly 18% to 32.17 billion rubles in the year over and OIBDA margin leaped more than 48%. Revenues were up 30.7% based on a year over comparison, coming to 66.8 billion rubles. But that's still down 4.1% since the last quarter.

Vimpel said total mobile subscribers jumped 2.8% since the last quarter to 62.7 million. Broadband subscribers exploded in the year over period as well, increasing 184%.

"During the first quarter of 2009, the economies of Russia and the CIS countries went through a period of intense macroeconomic turmoil with a significant decline in overall business confidence, rapid currency devaluations, a drop in industrial production and rising unemployment," CEO Boris Nemsic said in an obvious, though realistic, statement today. "Looking forward, we think that the most recent macroeconomic developments, if maintained, give us reason for cautious optimism."