Please ensure Javascript is enabled for purposes of website accessibility

Foolish Forecast: VimpelCom's Golden Years

By Dave Mock – Updated Apr 5, 2017 at 9:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Views you can use to get clues on tomorrow's news.

Russian wireless service provider Vimpel Communications (NYSE: VIP) will be reporting fourth-quarter and full-year 2007 earnings on Wednesday. Listen in for what's in store.

What analysts say:

  • Buy, sell, or waffle? Wall Street has 24 analysts giving opinions on VimpelCom. Twelve give the stock a buy, while eight say hold, and four say sell. In our Motley Fool CAPS investor database, 987 of our 86,000 users have rated the stock, giving it a five-star rating overall.
  • Revenue: The average revenue estimate for the company is $2 billion this quarter.
  • Earnings: Earnings, on average, are expected to fall around $0.40 per share.

What management says:
Changes are afoot at VimpelCom, with the company recently closing the purchase of fixed-line communication services provider Golden Telecom. Much like U.S. peers such as AT&T (NYSE: T) and Verizon Communications (NYSE: VZ), the combination is a golden opportunity to increase growth through the offer of packaged services that include fixed-line voice, broadband, and mobile communications.

CEO Alexander Izosimov noted that the purchase "truly transforms VimpelCom into a leading integrated telecom operator in Russia and the CIS with established positions in rapidly growing broadband, data and mobile markets." The combination should also go a long way toward fending off fierce competition from main Russian rival Mobile TeleSystems (NYSE: MBT).

What management does:
VimpelCom has seen erratic churn in many of its markets -- including Russia, which dominates its subscriber base -- as it adjusts policies for deactivating inactive accounts. In the future, the company will focus all metrics on its active subscriber base, which should give a clearer picture of operational performance.

Metric

06/06

09/06

12/06

3/07

6/07

9/07

Registered subscriber base (millions)

50.8

52.4

55.1

56.8

59.0

61.0

Average revenue per user (ARPU)*

$7.40

$8.60

$8.90

$8.90

$9.90

$11.00

Source: Company filings.
*ARPU calculated from registered subscriber base in Russian market only.

One Fool says:
While investors have seen just how bad a merger can be with Sprint Nextel (NYSE: S) recently, I don't expect many issues with VimpelCom's buy of Golden Telecom. While the two businesses will be integrated somewhat, the customer bases will be leveraged off one another, not combined as in the case of Sprint Nextel. Investors won't see any benefits from the merger until next quarter at the earliest, so for now continued momentum in key markets and metrics is the most important angle for investors to keep their eyes on.

More Foolishness:

The Motley Fool Inside Value service looks for value in beaten-down shares of companies like Sprint Nextel. To see what other companies the analyst team believes are priced below intrinsic value, take a free 30-day trial.

Fool contributor Dave Mock figures selling seashells by the seashore is a losing proposition. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy is designed to hold up well beyond 457 degrees Fahrenheit.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

VEON Ltd. Stock Quote
VEON Ltd.
VEON
$0.35 (-4.54%) $0.02
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$38.93 (-1.49%) $0.59
Sprint Corporation Stock Quote
Sprint Corporation
S
AT&T Inc. Stock Quote
AT&T Inc.
T
$15.67 (-2.12%) $0.34
Public Joint-Stock Company Mobile TeleSystems Stock Quote
Public Joint-Stock Company Mobile TeleSystems
MBT

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.