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DJ VimpelCom CEO: Armenia, Georgia Capex In Line With Strategy

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  • DJ VimpelCom CEO: Armenia, Georgia Capex In Line With Strategy

    DJ VIMPELCOM CEO: ARMENIA, GEORGIA CAPEX IN LINE WITH STRATEGY

    Prime-Tass English-language Business Newswire
    November 16, 2006 Thursday 7:22 PM EET

    Capital expenditure plans for Georgia and Armenia will generally
    follow OAO Vimpel Communications' pattern of investment in second-tier
    countries, Chief Executive Officer Alexander Izosimov told Dow Jones
    Newswires on Wednesday.

    That is to say $100 per subscriber, Izosimov said. He added that the
    company could reach one million subscribers - and $100 million in
    expenditures - in both countries in about 36 months.

    Izosimov said he couldn't disclose more specific numbers or timeframes
    at the moment.

    In the case of Armenia, the deal in that country has just won approval
    from the Armenian government and it is too early to talk about set
    numbers, Izosimov said.

    "We are very happy to see the Armenian government give its blessings,"
    he said. "We have yet to finalize a capex plan."

    VimpelCom last week bought 90% of Armenian operator Armentel from
    Greece's Hellenic Telecommunications Organization SA or OTE, for
    EUR341.9 million in cash and EUR40 million in debt. The deal met
    official approval last week.

    Izosimov was in New York to celebrate the company's 10th anniversary
    of listing in the New York Stock Exchange. VimpelCom, as it is more
    commonly known, is Russia's No. 2 mobile phone provider after OAO
    Mobile TeleSystems, or MTS.

    "We already entered key markets" outside Russia, such as Ukraine,
    he said. "We're now going through the second-tier (countries)" and
    Armenia and Georgia are important for the company's strategy in the
    Caucasus region, Izosimov said.

    In terms of measuring its growth, the company is now focusing on
    "real, quality subscribers" rather than raw subscriber numbers based
    on phone card sales.

    Real subscribers are people who not only buy mobile phone cards but
    also use them in a chargeable transaction in three months' time,
    he said.

    "Our aspiration is leadership," Izosimov said. "We are very close,
    we are a stone's throw from closing the gap."

    Izosimov said relations between Russia and Georgia aren't interfering
    with company's business in Georgia.

    Relations between the two countries have become strained, with Georgia
    recently vowing to reduce its dependence on Russian gas and in an
    apparent effort to counteract pressure from its neighbor.

    "It has not affected at all. We enjoy great support from the (Georgian)
    government," he said.

    In September, VimpelCom posted a 23% rise in second-quarter net
    profit, driven by price increases and tight cost controls. Net profit
    increased to $194.9 million from $158.8 million a year earlier,
    and revenue rose 46% to $1.12 billion from $769.8 million.

    Shares of VimpelCom in New York were down 0.2% at $66.50 in early
    afternoon trade Wednesday, when most Russian American Depositary
    Receipts were seeing red.
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