Vimpel: Ring up Russia

07/11/2003 12:00 am EST

Focus:

Jim Collins

Chairman and CEO, Insight Capital Research & Management, Inc.

The latest buy from Listed Insight is Vimpel-Communications, a play on wireless services in Russia. The stock pick comes with a number of caveats. Editor Jim Collins notes, "This stock is exposed to country-specific political, economic, legal, and regulatory risks given that it is domiciled and operates within Russia." Here’s his review.

"In 1996, Vimpel-Communications (VIP NYSE) was the first Russian company to list its shares on the New York Stock Exchange. The company provides GSM-based wireless telecommunications services in Russia, operating under the ‘Bee Line’ family of brand names. This is one of the most recognized brands in Russia’s telecom industry. The company provides wireless services to its subscribers by offering voice services, data transmission, and access to both national and international roaming services. It also offers location based, mobile, and wireless Internet access. Its services are marketed to high-end user, with monthly fees. The company also markets to more price-sensitive, mass-market subscribers by offering prepaid cards through banks, restaurants, supermarkets, and gas stations.

"Vimpel’s license portfolio covers 92% of Russia’s population (134 million), including Moscow and St. Petersburg. As of the end of 2002, the firm’s total subscriber base was approximately 5.2 million. On May 29, 2003, Vimpel released year-to-date subscriber growth data; total subscribers rose to 6.9%. The firm reported very strong growth from their new service in St. Petersburg, which was activated in April. For the quarter ended march 31, 2003 Vimpel Communications reported earnings of $0.82 per American Depositary Share. This was $0.26 better than earnings reported in the prior year. Revenues increased 68% to $244 million. The shares have been strong performers since hitting a bottom in July 2002. VIP recently hit a two-year high."

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