VimpelCom Acquires STM

VimpelCom acquires 84.4% stake in Sakhalin Telecom Mobile and 60% share of Sakhalin Telecom for a total of $56.2M

July 13, 2005

2 Min Read

MOSCOW -- Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE:VIP) today announced it has completed the acquisition of approximately 84.4% of the outstanding shares of Closed Joint Stock Company "Sakhalin Telecom Mobile" ("STM") which holds GSM-1800 and D-AMPS licenses for the territory of Sakhalin, and 60% of Limited Liability Company Joint Venture "Sakhalin Telecom Limited ("ST"), a fixed line alternative operator. As a result, VimpelCom has secured its entry to the mobile telephony market of Sakhalin, one of the regions within the Far East super-region where the Company does not have a super-region license to conduct cellular operations. VimpelCom purchased 84.4% of the outstanding shares of STM for a total cash purchase price of approximately $51.2 million and 60% of ST for a total cash purchase price of approximately $5 million (in each case subject to certain adjustments).

The main shareholder of both operators was the British company Cable and Wireless plc ("Cable & Wireless"), which owned 61.4% of STM (through a subsidiary) and 60% of ST. Under the terms of the transaction, STM and ST were to be purchased simultaneously. Further, VimpelCom has undertaken, as the majority shareholder, to ensure that ST repays its debt of US$2.2 million to Cable & Wireless. VimpelCom has intention to sell the 60% of ST in the future.

STM's GSM-1800 and D-AMPS licenses cover a territory with a population of approximately 550,000. According to company estimates, STM's subscriber base at the end of June 2005 was more than 96,000 (including more than 95,500 GSM subscribers), which according to company estimates represented a market share of approximately 45.7% in the Sakhalin region. According to independent estimates, the penetration rate in Sakhalin is approximately 35.5%.

Commenting on today's announcement, Nikolai Pryanishnikov, Executive Vice President - General Director, Regions, VimpelCom, said, "We are very pleased to announce the acquisition of STM which gives us access to operations in an important region of the Far East, where we do not have GSM license".

JSC Vimpel-Communications (VimpelCom)

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