Vimpelcom (VIP), the Amsterdam, Netherlands, based mobile and fixed line network operator, has sought to take some of the risk out of it emerging markets portfolio with the sale of its Zimbabwean assets, in the form of a 51% stake in mobile network Telecel, to the state owned ZARNet in Zimbabwe on the 18th of November 2015. The operator had been facing some strong calls from government to align its shareholding structure with the 51% local ownership requirement contained in new legislation.
The sale will allow Vimpelcom to be able to shed itself of the loss making operation which had been stagnating amid growing regulatory uncertainly in Zimbabwe.
However, the emerging markets are proving to be a challenge as Vimpelcom revenues are coming under pressure with Q3 2015 service revenues inching just 1% higher according to organic growth and a massive -32% on reported year-on-year growth. The reasons cited for this lackluster performance has been the foreign exchange rates on the various currencies and in particular the fall of the Russian ruble. But no doubt the decline of other emerging market currencies also brought pressure to Vimpelcom revenues.
As the US Fed begins to look at interest hikes and an expect increase either in December 2015 or the latest March 2016, further downward pressure on the emerging market currencies will have an ongoing negative effect on Vimpelcom revenues.