VimpelCom Ltd (ADR) (NASDAQ:VIP) has finally reached a settlement in its investigation against violation of certain anti-corruption laws in Uzbekistan. The company’s Central Asian operations had been under close scrutiny by several regulatory bodies. As part of the settlement, the company would plead guilty to certain violations and is expected to pay $900 million in fines.
As a result of the prolonged investigation and the outcome, some of the major stakeholders in the company, like Telenor, are expected to sell their stake. A statement from Telenor had stated that the company is planning to sell its 33% stake in VIP. Added to this, the company had been bearing losses in the past few months. VimpelCom had stated that this was due to Uzbek provisions and currency depreciation in several of VIP’s international markets. However, a closer analysis of the company’s filings showed that VimpelCom’s service revenue had dropped by 0.2%.
A recent statement from the company had revealed that it expects to once again become profitable by 2017. The company management had stated that it is targeting single digit organic growth in its 2016 revenues. VIP’s CFO, Andrew Davies, voiced his confidence in the management’s plans by stating that VimpelCom would “absolutely” make a profit in 2017. The CEO of the company, Jean-Yves, had stated that the recent merger with Italy’s Hutchison would be vital in the company’s future plans.
It is important to note here that the deal is currently under review and is yet to be approved by EU regulators. Additionally, since the deal would reduce the number of telecom service providers in Italy from 4 to 3, means that the regulators are likely to reject the merger. This is mainly due to the fact that reduced competition would mean higher prices for the public.
VimpelCom Ltd (ADR) (NASDAQ:VIP) experienced a trade volume of 3.53 million shares during the February 17 session, to reach a close at $3.79, after gaining 12.46% in terms of share value.