Amsterdam-based Vimpelcom reported an 83% drop in profits for its second quarter. The group’s recent debt refinancing of its Wind unit in Italy is partly to blame, but CEO Jo Lunder remained optimistic about Vimpelcom’s operations in the country, saying that it continued “to outperform competitors in a weak market.”
Vimpelcom’s revenue declined organically by 6% to $5.1 billion. Net income fell to $100 million from $573 million the previous year. Vimpelcom is a multi-national wireless company: it is controlled by Russian billionaire Mikhail Fridman, partly owned by Telenor of Norway, and operates in Italy, Russia and the Ukraine as well as parts of Africa and Asia.
Lunder expected that 2014 would be a “challenging year” for the group and the second quarter results were impacted by a weaker performance in some markets and the overall economic situation in Russia and the Ukraine. The CEO was also optimistic about the refinancing of Wind, expected to create $400 million in savings.
VimpelCom sought a buyer for its troubled Italian unit in March, and in June, Hutchison Whampoa reportedly resumed potential merger talks with Wind, which currently ranks No. 3 behind Telecom Italia and Vodafone in Italy’s telecom market. So far, no deal has emerged.
Italy has proved a tough market as well for Telecom Italia, which reported a 7.6% drop in its first half earnings on August 6. Italy’s largest phone company reported earnings before interest, taxes, depreciation and amortization of $5.8 billion down $476 million from the same period the previous year.
Telecom Italia claimed that the first half continued to be affected by Italy’s weak economic recovery as well as a slowdown in its Latin American operations.
More telecom news from Europe:
No bids for Bouygues. France’s third-largest telecom operator has made it clear that no party has offered to buy its operations. Bouygues comments come as rival Iliad, once a potential buyer, has turned its sights to the U.S., making a surprise $15 billion bid for a stake in T-Mobile US last week.
Vodafone and Belgacom renew partnership. The U.K. and Belgium-based carriers announced that they will continue to work together under their “partner market” agreement in both Belgium and Luxembourg for another three years. The agreement covers a range of products and services including allowing the customers of each company to roam on the other’s mobile networks.
EE offers mobile payments on London buses. The carrier has introduced its contactless payment service. “Cash on Tap” can now be used on London’s 8,600 buses. EE will extend the service to the London Underground, DLR and Overground starting September 16.
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