* Company says delivered on all its 2016 financial targets
* Hikes dividend; sets higher '17-'18 cash flow targets
* Announces raft of partnerships; corporate name change to
* Plans second share listing in Amsterdam as Telenor sells
(Adds CEO comments, context)
By Eric Auchard
BARCELONA, Feb 27 Russian and emerging markets
communications network operator VimpelCom Ltd on Monday
reported a return to growth in the final quarter of last year
and posted solid progress in its 18-month-old turnaround
strategy, including a six-fold dividend increase.
For 2017, the company lifted its growth target for revenue,
excluding acquisitions and disposals, to the low single digits
as a percentage, compared with its prior outlook for flat to a
low single digit. It also boosted its cash flow goal.
Marking its determination to overhaul its telecoms business,
VimpelCom said it plans to rebrand as VEON, the moniker it has
adopted for the messaging app at the centre of its strategy to
become a major online player.
In a measure of progress in reinventing itself as an
Internet player, VimpelCom said it had struck its first three
distribution partnerships with Vivendi SA's Studio+,
music streaming service Deezer SA and MasterCard Inc
VEON is a new-model messaging app designed to compete with
the likes of Facebook Inc's WhatsApp and Rakuten Inc's
Viber by offering free services to customers over its
network without users incurring data charges as other apps do.
VimpelCom aims to offer basic communication for free, while
taking a cut of proceeds from partnerships with popular internet
services it offers through its app, using data insights it can
glean as a network operator.
"We want to take this company from a telecom company to a
tech company," VimpelCom Chief Executive Jean-Yves Charlier told
Reuters in an interview ahead of the earnings results. "The
group is in a very solid position as it moves into 2017," he
The VEON messaging app was introduced in November in Italy
and has been downloaded by nearly 1 million users since,
Charlier said. It ranked among the top five social media apps in
Italy in February, according to data by market research firm
The Amsterdam-based company is among the world's 10 largest
communications network operators with more than 200 million
VimpelCom, which operates in a dozen markets including
Russia, Italy, Algeria, Pakistan and Bangladesh, aims to make a
clean break from a corruption scandal in which it was accused of
using shell companies and phoney contracts to funnel funds to a
close relative of the president of Uzbekistan. A year ago, it
paid $795 million to settle a U.S. and Dutch investigation into
Charlier, the former chief executive of SFR, Vivendi's
French telecom business before it was sold to Altice NV
, joined in 2015 to undertake a house-cleaning, setting
a strategy to first stabilise existing VimpelCom businesses
before seeking to fuel faster growth with the internet.
"The first stage for all of this is to regain credibility
with investors and financial markets," he said.
VimpelCom's makeover is among the more radical
reincarnations being considered by the world's telecom industry,
which is stuck in a rut of falling prices and tight regulation
EXPANDING SHAREHOLDER BASE
VimpelCom said it aims to expand its free float to 45
percent of shares to draw more European investors in coming
months. On Monday, it set out plans for a second listing on the
Euronext exchange in Amsterdam besides its current Nasdaq
The larger float is the result of the decision by Norwegian
emerging markets telecoms operator Telenor ASA to
completely sell its one-time $2.5 billion investment in
VimpelCom, following sharp disagreement over strategy (reut.rs/2kYH742).
Russian billionaire Mikhail Fridman holds 48 percent of
VimpelCom and is said to be fed up with the commodity-like
trends of the telecoms business.
VEON is developing partnerships with consumer and business
brands to offer services integrated with its messaging app to
mobile customers in frontier markets ranging from transport to
retail to financial services.
Studio+ produces original video programming series for
mobile users, with episodes typically running 10 minutes.
Deezer has expanded to offer music services in more than 180
countries with funding from Access Industries Inc, the family
office of Ukrainian-born U.S. billionaire Len Blavatnik.
For the fourth quarter, VimpelCom posted core earnings of
$783 million while service revenue rose 3 percent across its
dozen country markets, with strength in Pakistan and Ukraine
offset by ongoing weakness in Algeria.
VimpelCom generated $588 million of underlying equity-free
cash flow in 2016 and raised its 2017 target to a range of $700
million to $800 million and to more than $1 billion for 2018,
reflecting a return to stable growth and cost-cutting as it
works to become a faster-moving data-driven company.
Introducing a new dividend policy, VimpelCom said it would
pay out 23 cents a share, including a 3.5 cent interim dividend
paid in December and a final dividend of 19.5 cents to be paid
in April. Three years earlier, it slashed its expected dividend
to a token 3.5 cents from 80 cents. (reut.rs/2leuT2c)
The VEON name change is subject to a shareholder vote at an
extraordinary general meeting to be held on March 30.
(Reporting by Eric Auchard; Additional reporting by Anthony
Deutsch; Editing by Christopher Cushing)