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VimpelCom's CEO Discusses Q2 2012 Results - Earnings Call Transcript

We also achieved strong subscriber growth in the second quarter with an increase of 8% reaching 208 million mobile subscribers. The largest contribution came from Africa and Asia, but the Company also achieved strong growth in fixed and mobile broadband subscribers in Russia, in Italy and Ukraine.

The company was able to deliver a solid performance in the second quarter despite a considerable negative impact from currency movements. Net income reached $488 million, almost a doubling of the last year and we delivered a solid cash flow with net cash from operating activities of $1.35 billion. In relation to the claim by FAS, the Russian Antimonopoly Service against Telenor and Weather II, we have no material updates today.

As you know as a result of the injection by the Russian court in relation to the FAS claim, VimpelCom decided to postpone the final 2011 dividend payments decision. We will of course update you if there are any material developments on this topic.

Moving on to the performance of the five business units, starting with Russia. In Russia the Company continued to maintain the positive operating trends seen in the first quarter. The business saw organic revenue growth of 8% while EBITDA increased 12% leading to an EBITDA margin of 43.1%. The highest margin we’ve recorded in the last five quarters. The 8% growth in total revenues were supported by a 35% increase in mobile data revenues as we continue to promote mobile data services.

On the operational excellence program, we’re also making significant progress. In order to improve the effectiveness and efficiency of our distribution, we’re implementing a full revenue sharing model with our dealers. This enables us to reduce subscriber acquisition costs and it also supports our efforts to reduce churn. Our churn rate decreased from 17% in the first quarter to 15% in the second quarter, but more work is required.

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