VimpelCom, one of Russia’s "Big Three" telecommunication operators, reported its first quarter 2015 IFRS results on May 13, posting a revenues drop of 30% y/y, while EBITDA fell by 33% y/y, impacted by currency headwinds.

Excluding the effect of foreign currency movements, revenues and EBITDA decreased by 2% y/y and 6% y/y respectively. Net income reached $184mn, while UralSib analysts forecasted a net loss of $64mn. "The difference was not important as it reflected lower D&A and forex losses than we expected, as well as a gain from the sales of towers in Italy," the analysts said in a note.

The company's sales dropped by 30% y/y to $3.5bn. Service revenues were flat y/y in Russia and contracted by 5% in Italy, 11% in Algeria and 4% in Pakistan. The results, however, were offset by 10% revenue growth in Bangladesh and 5% growth in Ukraine. Mobile data revenues in Russia rose by 18% y/y.

Net debt decreased by 12% q/q to $17.6bn due to the ruble and euro weakening against the dollar and the proceeds from asset sales in Algeria sales and the sale of towers in Italy. Net debt/EBITDA ratio contracted to 2.4 from 2.5 at the end of 2014. Management confirmed its targets for the year, expecting revenues and EBITDA margin to remain flat.

"The results were largely in line with expectations and at least they did not contain any negative surprises," UralSib noted. "We reiterate our Hold recommendation on VimpelCom, and prefer MTS among Russian telecom names, as it has strong operating momentum and a lower debt load, and it offers an attractive dividend play."