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Vimpelcom

The implied WACC of VIP, given its current valuation, is approximately 14%. We calculate this on a 2010 basis, using an EV/Capital Employed, and divide that by a ROCE/WACC. This multiple should equal 1. Assuming WACC is X, we find out that the WACC being implied here is 14%. While one might justify this now, medium-term this is far too high. Why? Vimpelcom is a telecom. Russia’s technocratic regime is unlikely to change, and inflation will certainly subside over the next 12 months.



2008-09-22   
 
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