“VympelCom” invested in the mobile network in 2016, less competition

“VympelCom” in 2016, has invested in the development of our mobile networks less than competitors, estimated by analysts at VTB Capital. In the beginning of 2010, the reduction of investments in infrastructure has cost the company market share — then the operator has lost the second place “the Megaphone” and still didn’t get it back

In 2016, the capital expenses (CAPEX) VimpelCom (provides Telecom services under the brand “Beeline”) was 17% in relation to annual revenue, the report said VTB Capital (RBC). According to published on Monday, February 27, the annual accounts of VimpelCom, which owns 100% of operator capex in Russia, the operator spent last year to 41.4 billion roubles Main competitors are VimpelCom, MTS and MegaFon, has not yet published the results of its operations for the year 2016, but according to the valuation VTB Capital, their CAPEX could reach 22-23% of revenues.

Thus in 2017, “VimpelCom” re planning a relatively low level of investment in network development in relation to the revenues projected in the report of VTB Capital. “Even in the face of a General decline in the level of capitalului in Russia and the penetration of smartphones supporting LTE, at the level of 25-30%, we would not want to see that VimpelCom is lagging behind in investment,” say analysts at the Bank.

In 2009 “VympelCom” the first of the “big three” reduced investment in the construction of the networks, due to the economic crisis and the high debt resulting from purchases of fixed line operator Golden Telecom. In the end, “VimpelCom” later than the competition started a large-scale launch of 3G networks in Russia and in 2010 the operator conceded “to the Megaphone” the second position in the market by number of subscribers and revenue from mobile communications. To restore the company’s position has failed so far.

According to the representative of “VimpelCom” Anna Aybasheva, operator investment was less due to the fact that the company “dramatically saved” and received a “reasonable price” on the tender to select equipment suppliers. In addition, VimpelCom is actively developing joint programs with competitors to build networks, and to optimize the cost of rent for communication sites.

The representative of MTS declined to disclose the level of CAPEX by the end of 2016. Also received the representative of “MegaFon”.

In the area of mobile risks

VTB Capital analysts are also concerned that six months after leaving from a post of General Director of “VimpelCom” Mikhail Slobodin he has not found a permanent replacement. On his post temporarily appointed the former former head of Telenor Russia and senior Manager of VimpelCom Sella Morten jonsen. “We would prefer to see a final decision as soon as possible to be sure that there would be a smooth transition,” reads the report.

While at VTB Capital note that the mobile communications market in Russia has normalized, although mobile retail is still a number of problems. “We are confident that the leadership of “VimpelCom” is ready to divide “Euroset”, especially considering that the company has a more modest investment than the second co-owner of the retailer, “MegaFon”, the report says. Formerly a top-managers “the Megaphone” have confirmed the intention to separate the retail network in two parts this year.

Improves financial indicators of VimpelCom and the protracted 2015 selling towers, on which the operator places the equipment for cellular communications analysts. According to their analysts, the operator is difficult to agree on the evaluation of towers.

Finally, analysts at VTB Capital, commented on the VimpelCom plans to hold a second listing on Euronext in Amsterdam (there raspolozena the headquarter of the holding). February 27, VimpelCom announced that it intends to change the name to VEON and to place the shares on another trading platform, in addition to amerikansoy NASDAQ. The placement will take place under the Ticker VEON, which the company plans to move to the American stock exchange. “We do not consider this simple solution as it may reduce liquidity. And we don’t see that now there are problems for European investors to invest in stocks traded in the US companies. The result could be the inclusion of securities in VimpelCom are any indexes”, — the report says. Analysts remind that now the paper holding not included in MSCI Russia index, which takes into account the MTS and “MegaFon”, or the NASDAQ-100.

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