Mergers and acquisitions are in vogue in the mobile phone world, and not just with AT&T's (NYSE:T) acquisition of Deutsche Telekom's T-Mobile. Companies around the globe are shuffling their decks and Russia's VimpelCom (NYSE:VIP) has been among the most active. Once the dust clears, this company looks to be one of the largest operators in the world, and a decent way for retail investors to play emerging markets with few publicly-traded companies of their own.

Tutorial: Investing Concepts

A Mixed Close to the Year
VimpelCom posted 22% revenue growth in the final quarter of the year, beating the average analyst estimate. Growth was helped by higher subscriber counts and improved usage stats in the company's peripheral operating areas (CIS, Kazakhstan, Uzbekistan and so on), growth that more than offset flatter (albeit still positive) performance in Russia and Ukraine.

Profitability was more mixed. VimpelCom reported OIBDA (similar to EBITDA) growth of 15% and overall profitability was a bit below the average expectations. The company also significantly ramped up its capital spending in the back half of the year as part of its overall plan to regain market share in its core markets.

Transformation Is Coming
Although the company's efforts to acquire Wind Telecom have been controversial, complicated and convoluted, it looks like the deal is going to go through - even over Telenor's (Nasdaq:TELNY.PK) strenuous objections. With the deal, VimpelCom will become a top five (or top six, depending on the metric used) cellular operator, operating in 19 countries and boasting 173 million subscribers. After the deal, the company will get about one-third of its revenue from Russia and another third from Italy, and will add operations in other countries like Canada, Bangladesh and Pakistan. (For more, see Dial Up Choice Telecom Stocks.)

On top of that, the company is moving forward in Southeast Asia. The company has announced that it will be resuming operations in Vietnam, where it has been a leading operator, after straightening out some financing and ownership issues. This follows in the wake of the company's deal with
Millicom (Nasdaq:MICC) to acquire that company's interests in a joint venture in Laos. VimpelCom now has significant operations in Vietnam, Laos and Cambodia, and it would not be surprising to see the company investigate some opportunities in countries like Malaysia, Thailand, or Myanmar.

An Emerging Opportunity in Emerging Markets?
There was a time when mobile phone operators like VimpelCom where virtually the only options investors had for investing in emerging markets. That is still true to a point, but the rise of ETFs has given investors more and better options. That would seem to be especially relevant as rapid penetration of mobile coverage has compressed some of the easy organic growth opportunities in phone service and the never-ending capacity arms race has made it increasingly expensive to compete.

The Bottom Line

All of that said, VimpelCom could still be worth a serious look. The company produces decent profit and returns on its asset base, but offers a pretty undemanding valuation. The same is true of VimpelCom's top competitor in Russia,
Mobile Telesystems (NYSE:MBT), but the latter is not as geographically diverse as VimpelCom with its primary operations in former Soviet states and India. (For more, see Investing In Mother Russia.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  2. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  3. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  4. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  5. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  6. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  7. Stock Analysis

    The Biggest Risks of Investing in Netflix Stock

    Examine the current state of Netflix Inc., and learn about three of the major fundamental risks that the company is currently facing.
  8. Stock Analysis

    What Seagate Gains by Acquiring Dot Hill Systems

    Examine the Seagate acquisition of Dot Hill Systems, and learn what Seagate is looking to gain by acquiring Dot Hill's software technology.
  9. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  10. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  1. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  2. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  3. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  4. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  5. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  6. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!