VimpelCom says it saved an Opex (operating expense) of $280 million in the first three quarters of 2016.
VimpelCom followed a three-pronged strategy — agile operating model, cost efficient procurement and improved supply chain.
Opex savings from new business model
Agile operating model
# 14 percent net reduction in headcount
# 30 percent reduction in line managers
# 8 percent of office space eliminated
Procurement
# Globally managed contract value doubled to 40 percent
# Fixed rates and invoicing in local currency reduces FOREX exposure
Supply chain
# 18 percent reduction in inventory levels
# 7 percent warehouse space reduction
VimpelCom posted 3 percent drop in Q3 2016 revenue to $2,372 million. The dip in revenue of VimpelCom is despite achieving 28 percent growth in mobile data revenue spanning the entire footprint.
VimpelCom Capex dips
Capex – including licenses — of VimpelCom fell 8 percent to $425 million in Q3 2016, primarily due to the performance transformation program, leading to a LTM Capex excluding licenses to revenue ratio of 16.7 percent.
VimpelCom’s Capex – excluding licenses – dipped 15 percent to $382 million in Q3 2016.
The telecom company will maintain its strategy of investing in high-speed data networks to capture mobile data growth, including the roll-out of 4G/LTE networks in Russia and Algeria and 3G networks in Algeria, Bangladesh, Pakistan and Ukraine.
“We continue to grow mobile data revenue across our footprint, by 28 percent. We remain on track to achieve our financial targets for the full year, although at the lower range for service revenue and underlying EBITDA margin, while the Capex to revenue ratio is trending towards 17 percent,” said Jean-Yves Charlier, chief executive officer of VimpelCom.
In Russia, Capex excluding licenses decreased 24 percent to RUB 9.4 billion, due to phasing, together with capital efficiency improvements, resulting from savings from centralizing procurement on a global basis. The LTM Capex to revenue ratio for Q3 2016 was 15.6 percent.
In Pakistan, Capex increased to PKR 7.6 billion in Q3 2016 with a LTM Capex to revenue ratio of 15.9 percent, driven by integration expenses.
In Algeria, Capex was DZD 4.3 billion, a 28 percent increase, while the LTM Capex to revenue ratio was 16.3 percent.
In Bangladesh, Capex decreased 54 percent to BDT 1.7 billion in Q3 2016, while the LTM Capex to revenue ratio was 18.3 percent.
Banglalink made investment in data networks and expanded network coverage. Banglalink’s 3G network covered 54 percent of the population at the end of Q3 2016.
In Ukraine, Capex was UAH 860 million with an LTM Capex to revenue ratio of 18.6 percent,
In Uzbekistan, Capex was UZS 112 billion and the LTM Capex to revenue ratio was 15.3 percent, resulting from a 17 percent growth in 3G sites.
Baburajan K
