News
Russian-owned telco reaches settlements with U.S., Dutch authorities that acknowledge violations of corruption practices; Telenor ‘takes it very seriously’.
Vimpelcom on Wednesday admitted to having violated anti-corruption laws with regard to its business in Uzbekistan and said it will pay fines totalling an as-yet undisclosed sum.
The U.S. Department of Justice, the Securities and Exchange Commission and the Dutch Public Prosecution Service, or Openbaar Ministerie, have been conducting investigations into the telco’s Uzbekistan operations and its dealings with an entity known as Takilant for the past two years.
"These discussions have resulted in prospective settlements with the SEC, DOJ and OM," Vimpelcom revealed in its full-year results announcement.
However, the settlements still require the approval of various authorities and will not become final until such approvals have been gained, the company added. It will not divulge the details of the settlements until that time.
"Based on the terms of the prospective settlements with the SEC, DOJ and OM, the company and certain subsidiaries would, among other things, acknowledge certain violations of the U.S. Foreign Corrupt Practices Act and relevant Dutch laws and pay fines and disgorgements to the SEC, DOJ and OM, with those financial penalties within the previously disclosed provision for that purpose," Vimpelcom said.
In November it made a provision of US$900 million for the outcome of the Uzbekistan investigations.
Shareholder Telenor made its feelings clear about Vimpelcom’s statement.
"Corruption is unacceptable, and Telenor takes it very seriously that Vimpelcom now seems to acknowledge certain violations of the U.S. Foreign Corrupt Practices Act and relevant Dutch Laws," it said in a statement on Wednesday.
However, it declined to comment further until the final outcome of the case is clear and the details are publicly available.
Telenor holds a 33% stake in Vimpelcom, but in October last year
announced that it would look to sell out in order to focus on its core operations. It values the stake at 20 billion kroner (€2.1 billion).
In its results announcement, Vimpelcom said Telenor has been a highly supportive shareholder over the years and that it will work with the company to "to ensure a successful divestiture of its stake."
Vimpelcom, which reports in U.S. dollars, posted a 23% decline in revenues in the fourth quarter of last year and a 29% fall for the full year to US$2.3 billion and $9.63 billion respectively. However, organically – stripping out currency effects and other factors – both figures grew by 1%.
Underlying EBITDA fell by 22% to $898 million in Q4, but rose by 5% organically, while the full-year figure fell by 30% to $3.93 billion, but dropped just 1% organically. Underlying EBITDA excludes the provisions Vimpelcom made for the Uzbekistan investigation.
"Vimpelcom has delivered on its 2015 targets despite a difficult backdrop of currency devaluations and economic challenges in most emerging markets across the world. We have reported stable organic revenue and EBITDA margin, with continued improvements in most operations," said company CEO Jean-Yves Charlier.
"In 2016, we remain firmly committed to executing on our strategy and building on the good momentum of 2015, which will see the company targeting flat to low single digit organic growth in service revenue, underlying EBITDA margins and operating cash flow," he said.
