VimpelCom owns up corruption, announces prospective settlement
17 Feb 2016
Wireless carrier VimpelCom Ltd, in which Norway's Telenor holds a minority stake, has announced a prospective settlement of corruption charges in the United States, by paying a fine for corruption rule violations.
In its fourth quarter results released today, VimpelCom announced that during the company's ongoing discussions with US and Dutch authorities, the company has acknowledge certain violations of corruption laws and indicated willingness to pay a fine within the previously disclosed provision for that purpose.
VimpelCom said it had reached a settlement with Dutch and US authorities over the probe these countries conducted regarding its business activities in Uzbekistan.
The company, however, said these prospective settlements are subject to the approval of the pertinent authorities.
''VimpelCom reiterates that there can be no assurance that they will become effective in accordance with the terms described above.''
Telenor, meanwhile, said, ''Corruption is unacceptable, and Telenor takes it very seriously that VimpelCom now seems to acknowledge certain violations of the US Foreign Corrupt Practices Act and relevant Dutch Laws.''
Telenor said it is unable to give any further comments to VimpelCom's prospective settlements until they are finally approved and publicly available.
VimpelCom Ltd, the emerging-markets wireless carrier controlled by Russian billionaire Mikhail Fridman and partners, boosted sales in local currencies and improved its profitability last quarter, predicting further improvements in 2016.
Fourth-quarter sales rose 1 per cent in local currencies to the equivalent of $2.3 billion. In dollar terms, sales fell 29 per cent, VimpelCom said in a statement.
Earnings before interest, taxes, depreciation and amortisation rose 3 per cent in local currencies to $793 million.
The company forecast flat or a "low single digit" increase in service revenue in 2016, and said it's targeting as much as a 1 percentage point increase in its organic Ebitda margin.
VimpelCom, co-owned by Norway's Telenor ASA, has come under pressure over alleged corruption in the ex-Soviet republic of Uzbekistan. Telenor has said it will divest its 33 per cent stake in the company, while VimpelCom chief executive Jean-Yves Charlier has begun a strategic revamp of the wireless carrier.
VimpelCom last year set aside $900 million for possible fines as it waits for the outcome of investigations into alleged Uzbek bribes. The company on Wednesday said it's reached settlements with the US Securities and Exchange Commission and Department of Justice as well as the Dutch Public Prosecution Service. But said they're still subject to the approval of the authorities.
In August, Charlier merged VimpelCom's Wind Italy unit with CK Hutchison Holdings Ltd's 3 Italia allowing the carrier to de-consolidate Italian operations from its balance sheet, offloading more than $12 billion in debt. The company also bought a rival in Pakistan and plans to sell wireless towers in emerging markets to cut debt.