International man of IR
Russian telecoms giant VimpelCom operates in 16 countries under various brand names, with IR teams spread across four cities, as well as having a North American presence through its investment in Canadian telecoms operator Wind Mobile.
Head of IR Gerbrand Nijman talked recently to IR Magazine about the firm’s switch from the NYSE to NASDAQ, VimpelCom’s award-winning website and the challenges of heading up a truly global IR team.
VimpelCom is a very international company – how does that affect your IR program?
Gerbrand Nijman, VimpelCom head of IR
It obviously affects IR when you’re operating in several countries. To make things more interesting, we also have a subsidiary – Global Telecom Holding – which is listed in Cairo and London, of which we own 52 percent.
You have to take certain measures and a very structured approach to deal with the many time zones and different locations. There needs to be a great deal of co-ordination within the team, and I have teams in four cities: Moscow, Rome, Cairo and Amsterdam, so any activity in IR really is 24/7. The business in Cairo is open on Sunday, for example.
In this set-up you need very short communication lines within the team. We’re not located in the same office but we still have to make sure we send a consistent message to the market. For example, we created a chat application to instantly inform our colleagues in other countries when we have been approached by a certain analyst or investor. But we don’t need to agree on answers [as they come up] because we have agreed [them] beforehand. We have a very well-written Q&A document.
You joined VimpelCom in 2011. What changes have you been making to the IR program?
When I joined, it was 15 days after the merger with [telecoms investment company] Wind Telecom. We needed to integrate all the reports and harmonize the reporting date, so now all our publications are released on the same date. We also developed a strategic, three-year IR program. At a firm like VimpelCom I think it’s important to have that longer-term view and have the steps [set out] toward that value creation, which is what we aim to do.
We are trying to create a real team, and this is more challenging when you have more than one location, but we do spend time on that. Once a year we have an IR training day off-site. [What we do] differs each year but we always cover a topic that will bring the team’s knowledge to the next level.
Finally, I empowered the IR directors because we need people who can make decisions. Each IR director has certain ‘focus points’ – it could be the business in Russia, Italy or in African nations – and he or she needs to know the ins and outs of these business units while operating as part of a global team.
What are some of the most common questions you are asked by analysts and investors?
VimpelCom is a very interesting company, [operating] in several countries, and sometimes you have issues in certain countries. In Algeria, the government would like to acquire a majority stake in our operations, for example. Negotiations between VimpelCom and the Algerian government started in early 2012 and are ongoing, so there are always questions from investors about that.
In addition, our Italian business is highly leveraged (because we acquired it like that) so at every meeting we are asked how we are going to optimize the financing of the Italy unit and therefore our leverage of the group. Clearly, the biggest operational unit is Russia so people want to know about developments in Russia as well.
What have been some of the key IR challenges you have faced since joining VimpelCom?
In 2012 Russia issued a federal anti-monopoly injunction against us, in effect freezing our cash in Russia, and as a result we had to delay our already announced dividend payment. That was a unique situation to be in and required a lot of communication with the stock market. In the end we paid the dividend at the end of 2012/early 2013.
A positive challenge was the listing on NASDAQ and the inclusion on the main index on the NASDAQ 100. We even won a platinum Magellan Award for our communication around the switch. More recently, we wrote down our investments in Ukraine and Canada. These are technical exercises [that] affected reported net income, [though] not our cash flows. This made our task even more challenging with the Q4 2013 earnings release.
[VimpelCom’s Q4 2013 results – released on March 6, 2014 – revealed a $2 bn writedown on assets in Ukraine as a result of the country’s political turmoil, though the company says it remains committed to its business there. It also wrote down its investment in Wind Mobile to zero.]
Why did VimpelCom decide to switch its listing to NASDAQ?
We were listed on the NYSE in 1996. At that time there was clearly an opportunity to get funding and to increase recognition as VimpelCom is the company name, not the brand names we use in the markets. We have high standards of transparency and corporate governance that fit well with being a US-listed company and with SEC regulation.
There were a couple of reasons for the switch: first was inclusion in the main index. The second was that we wanted to increase the liquidity in our stock, and that increased it substantially: at the NYSE it was around 1 mn shares a day and now it’s around 2.5 mn shares traded per day.
Did this have an impact on your typical investor profile?
We see more index investors since the NASDAQ 100 inclusion. Most are still value investors, but we see more hedge funds now. More than half of these come from the existing free float out of the US.
Would you consider dual listing?
Yes, we are considering it – it will most likely be a technical listing somewhere in Europe. But that is a project that takes some time.
VimpelCom also moved its headquarters from Moscow to Amsterdam in 2010. What impact has that had?
I wasn’t at the firm then but the reason we moved to Amsterdam was to become an international global player. In the end it was decided by [strategic shareholders] Telenor and Altimo, and they chose Amsterdam. If you look at the traveling and the logistics, it is good to be in Amsterdam – you can travel to more than 70 countries from here far more easily than from Moscow.
Your website has won a number of awards. Why do you think it has been so successful?
We did a whole revamp of our external website [which launched in May 2013], where we moved to ‘adaptive technology’, which means you can use the website on any device: laptop, desktop PC, smartphone or tablet.
The website used to be really focused on analysts and investors and now we’ve enlarged the audience. We got a lot of positive comments from analysts and investors and [the website] has won four awards, including a Golden Stevie for the best website in the telecoms sector. We also launched an iPad app, which is very handy [because] everybody wants to download documents and read them on the move.
How has IR changed since you joined the profession in 2000?
There’s so much more communication these days. When I started in the early days of the internet, you could still talk about local media – that doesn’t exist any more. Everything is already out there.
I think, over time, IR will play an even more important role in supporting decisions at companies as IROs have so much knowledge of the market and of course they talk with investors and understand a lot about the strategic direction of a firm. They also see and hear a lot from other companies.
IR, especially at a company like VimpelCom, is very exciting. There’s never a dull moment in this firm, which in 2011 was a kind of start-up – albeit a start-up with more than $20 bn in revenue.
VimpelCom by numbers
- Founded in Russia in 1992
- Operations in 16 countries, plus a stake in Canadian telecoms operator Wind Mobile
- IR teams in four cities in four different counties
- Share structure: 47.9 percent Altimo, 43 percent Telenor, 9.1 percent minority shareholders
- Total mobile customers: 220 mn
- 2013 revenue: $22.5 bn