In a statement Vimplecom announced it will cut its annual dividend for 2014 to 3.5 cents a share from its prior guidance of 80 cents a share. The decrease will help offset the $20 billion in debt the company now has due to its expansions into Africa, Asia and continental Europe.
CEO Jo Lunder defended the telecom in a statement saying "Vimpelcom continues to have an attractive combination of mature, strong cash-generating businesses and solid emerging market growth opportunities."
For 2013 Vimplecom announced an interim dividend of 45 cents a share. The company said it would not pay a final dividend for 2013.
The Russian telecom will continue its new dividend policy until it has a net debt to EBITDA ratio of under 2 times. The company hopes to have a debt to EBITDA ratio of 2 .3 times by the end of 2014.
TheStreet Ratings team rates VIMPELCOM LTD as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate VIMPELCOM LTD (VIP) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow."