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VimpelCom Announces Fourth Quarter and Audited Annual 2008 Financial and Operating Results

Posted on: Wednesday, 13 May 2009, 05:45 CDT

MOSCOW and NEW YORK, May 13 /PRNewswire-FirstCall/ -- Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP), the leading provider of telecommunications services in Russia and the Commonwealth of Independent States (CIS), today announced its financial and operating results for the quarter and year ended December 31, 2008.

Full Year 2008 Financial and Operating Highlights

• Net operating revenues reached $10,117 million, an increase of 41.1% versus 2007.
• OIBDA reached $4,860 million, an increase of 35.1% versus 2007.
• Consolidated OIBDA margin was 48.0%, including 48.9% in Russia and 51.4% in Kazakhstan.
• Net income totaled $524 million, a reduction of 64.2% versus 2007, reflecting strong adverse currency impact and charges related to impairment loss.
• Operating cash flow for the year amounted to $3,422 million.

Fourth Quarter 2008 Financial and Operating Highlights

• Net operating revenues reached $2,555 million, an increase of 27.1% versus 4Q07.
• OIBDA reached $1,124 million, an increase of 22.4% versus 4Q07.
• Consolidated OIBDA margin was 44.0% including the fixed-line business.
• Net loss amounted to $816 million, reflecting $1,012 million loss due to currency devaluation and $443 million impairment loss.
• Mobile subscribers increased by 3.3 million versus 3Q08, reaching 61.0 million.

Commenting on today's announcement, Boris Nemsic, Chief Executive Officer of VimpelCom, said, "2008 was an important year in the development of VimpelCom. We significantly expanded both the scale and scope of our business. Our consolidated revenues passed the $10 billion mark and the consolidated OIBDA margin stayed close to 50%. Operating cash flow exceeded $3.4 billion. The scale and scope of our business, good cash flow generation and a broad range of anti-crisis measures we have been implementing make us confident that VimpelCom will be able to get through the period of macroeconomic uncertainty and sustain its leadership position".

In commenting on the announcement, Elena Shmatova, Chief Financial Officer of VimpelCom, said, "Considering the importance and scarcity of liquidity in the current market environment we continue to optimize our debt portfolio. The signing of loan agreements with Sberbank in March was one of the steps we are taking in this regard."

The economic turmoil in the fourth quarter of 2008 marked the beginning of a different economic environment, which will test the robustness of the business. Our operations in Russia and the CIS showed resilience, delivering 41.1% growth in net operating revenues year-on-year, but more importantly maintaining local currency revenues in line with the previous quarter.

At the same time, in the first months of 2009, we see that the economic conditions in all our markets are deteriorating with a substantial drop in industrial production and growing unemployment. We anticipate that these developments could have a negative impact on the telecom sector. Therefore, while defending our market position, we continue to focus our efforts on cost reduction, operational excellence and effective cash management.

Key Consolidated Financial and Operating Results

CONSOLIDATED OPERATIONS 4Q 4Q 3Q (US$, millions) 2008 2007** y-o-y 2008 Net operating revenues 2,555 2,010 27.1% 2,843 OIBDA 1,124 918 22.4% 1,388 OIBDA margin, % 44.0% 45.7% 48.8% Net income (loss) -816 368 n/a 269 Net income (loss) per common share, (US$) -16.12 7.25 5.31 Net income (loss) per ADS equivalent, (US$) -0.81 0.36 0.27 Capital expenditures 855.5 795.8 7.5% 692.9 Mobile subscribers ('000) 61,029 51,740 18.0% 57,758 Broadband subscribers ('000) 1,206 n/a 780 CONSOLIDATED OPERATIONS (US$, millions) q-o-q 2008 2007** y-o-y Net operating revenues -10.1% 10,117 7,171 41.1% OIBDA* -19.0% 4,860 3,597 35.1% OIBDA margin, % 48.0% 50.2% Net income (loss) n/a 524 1,463 -64.2% Net income (loss) per common share, (US$) 10.34 28.78 Net income (loss) per ADS equivalent, (US$) 0.52 1.44 Capital expenditures 23.5% 2,570.8 1,772.8 45.0% Mobile subscribers ('000) 5.7% 61,029 51,740 18.0% Broadband subscribers ('000) 1,206 n/a * See definitions in Attachment A. ** 2007 figures here and below do not include Golden Telecom operations Net operating revenues 4Q 2008* (US$ millions) Russia CIS Eliminations Total Mobile business 1,797 354 -3 2,148 Fixed business 439 73 -13 499 Eliminations -79 -7 -6 -92 Total net operating revenue 2,157 420 -22 2,555 * Due to the increasing integration between different parts of our business, we include inter-company transactions in the reported revenues of geographic and business segments, and indicate the amount of inter-company eliminations within and between the segments.

While we have not seen a direct immediate impact of the economic crisis on our operations during the fourth quarter, our financial results were affected by the sharp devaluation of local currencies in Russia and Ukraine.

This resulted in a $1,012 million quarterly net foreign exchange loss related primarily to revaluation of our long-term foreign currency debt. Furthermore, a significant drop in currency exchange rates and increased risk perception resulted in a $443 million impairment of goodwill and long-lived assets related to acquisitions made in Russia and Ukraine.

Consequently, our fourth quarter income statement showed a net loss of $816 million. If we exclude the foreign currency exchange losses and impairment losses, our income before tax, adjusted for the fourth quarter would have been $639 million [Attachment F].

As of year end our debt obligations due in 2009 constituted approximately $1,909 million. Our closing cash balance on December 31st was $915 million.

Russia - Financial and Operating Results

RUSSIA (US$ millions) 4Q 4Q 3Q 2008 2007 y-o-y 2008 Net operating revenues 2,157 1,702 26.7% 2,426 OIBDA 948 773 22.6% 1,215 OIBDA margin, % 43.9% 45.4% 50.1% SG&A 667 633 5.4% 627 including Sales & Marketing Expenses 246 186 32.3% 203 including General & Administrative Costs 421 447 -5.8% 424 SG&A percentage 30.9% 37.2% 25.8% Net income (loss) -445 364 n/a 259 RUSSIA (US$ millions) q-o-q 2008 2007 y-o-y Net operating revenues -11.1% 8,619 6,094 41.4% OIBDA -22.0% 4,215 3,101 35.9% OIBDA margin, % 48.9% 50.9% SG&A 6.4% 2,384 1,903 25.3% including Sales & Marketing Expenses 21.2% 787 600 31.2% including General & Administrative Costs -0.7% 1,597 1,303 22.6% SG&A percentage 27.7% 31.2% Net income (loss) n/a 880 1,422 -38.1%

Our quarterly revenues in Russia showed year-on-year growth of 26.7% in US dollar terms. In local currency terms, the revenues grew by 40.0%. The quarterly consolidated OIBDA margin in Russia was 43.9%, down from 50.1% reported in the previous quarter.

In the mobile segment, we reported 5.6% year-on-year growth in quarterly mobile revenues in US dollar terms or 16.7% in ruble terms. Mobile OIBDA margin decreased to 46.7% when compared to 54.2% reported in the previous quarter mainly due to focused seasonal sales efforts, more intensive marketing activities and costs of 3G handsets sales launched during the quarter.

The mobile business remains competitively very agile and capable of responding effectively to market challenges. Our retail distribution strategy is paying off, as we added more than 5 million active mobile subscribers in the second half of 2008. Usage in the fourth quarter remained stable as illustrated by flat MOU.

Our fixed-line revenue increased by 10.9% in local currency terms in fourth quarter 2008 compared to the third quarter 2008. OIBDA margin remained stable reflecting our cost reduction efforts and ability to defend our price levels. However, deteriorating macroeconomic factors forced us to recognize a $315 million impairment loss related to our acquisition of Golden Telecom in February 2008.

We continue increasing our foothold in the fast growing residential broadband market in Russia providing both fixed and mobile solutions. By the year end we operated FTTB networks in 47 cities and 3G networks in 40 cities. In the fourth quarter of 2008 our total number of residential broadband subscribers in Russia including FTTB and 3G increased by 0.4 million subscribers and reached 1.2 million.

RUSSIA REVENUES 4Q 4Q 3Q (US$ millions) 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Net operating revenues 2,157 1,702 26.7% 2,426 -11.1% 8,619 6,094 41.4% Mobile revenues 1,797 1,702 5.6% 2,037 -11.8% 7,372 6,094 21.0% Fixed revenues 439 n/a 445 -1.3% 1,429 n/a Eliminations -79 n/a -56 n/a -182 n/a RUSSIA OIBDA DEVELOPMENT 4Q 4Q 3Q (US$ millions) 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y OIBDA Total 948 773 22.6% 1,215 -22.0% 4,215 3,101 35.9% Mobile OIBDA 840 773 8.7% 1,104 -23.9% 3,872 3,101 24.9% Fixed OIBDA 108 n/a 111 -2.7% 343 n/a Total OIBDA margin, % 43.9% 45.4% 50.1% 48.9% 50.9% Mobile OIBDA margin, % 46.7% 45.4% 54.2% 52.5% 50.9% Fixed OIBDA margin, % 24.6% n/a 24.9% 24.0% n/a 4Q 4Q 3Q RUSSIA OPERATING DEVELOPMENT 2008 2007 y-o-y 2008 Mobile subscribers ('000) 47,677 42,221 12.9% 45,093 Subscriber market share*, % 25.4% 29.9% 25.1% MOU, min 227.8 204.1 11.6% 228.5 ARPU mobile, US$ 12.5 13.5 -7.4% 15.2 Broadband subscribers ('000) 1,182 n/a 764 RUSSIA OPERATING DEVELOPMENT q-o-q 2008 2007 y-o-y Mobile subscribers ('000) 5.7% 47,677 42,221 12.9% Subscriber market share*, % 25.4% 29.9% MOU, min -0.3% 219.1 192.1 14.1% ARPU mobile, US$ -17.8% 13.9 12.6 10.3% Broadband subscribers ('000) 54.7% 1,182 n/a * Subscriber market share data presented here and in the following country tables are published by AC&M-Consulting. Starting from January 1, 2008 VimpelCom's subscriber market share is being reported solely on the basis of active subscribers, while previously it was based on registered subscribers. The drop in the reported market share in the fourth quarter of 2008 as compared to the fourth quarter of 2007 is caused by the change of reporting methodology.

CIS - Financial and Operating Results

CIS OPERATIONS 4Q 4Q 3Q (US$ millions) 2008 2007 y-o-y 2008 Net operating revenues 419.6 314.4 33.5% 439.8 OIBDA 179.3 145.2 23.5% 174.7 OIBDA margin, % 42.7% 46.2% 39.7% SG&A 116.9 83.9 39.3% 121.4 including Sales & Marketing Expenses 39.5 33.1 19.3% 39.1 including General & Administrative Costs 77.4 50.8 52.4% 82.3 SG&A percentage 27.9% 26.7% 27.6% Net income (loss) -278.5 4.6 n/a 13.3 CIS OPERATIONS (US$ millions) q-o-q 2008 2007 y-o-y Net operating revenues -4.6% 1,564.3 1,091.2 43.4% OIBDA 2.6% 652.6 495.9 31.6% OIBDA margin, % 41.7% 45.4% SG&A -3.7% 448.0 304.6 47.1% including Sales & Marketing Expenses 1.0% 141.6 108.3 30.7% including General & Administrative Costs -6.0% 306.4 196.3 56.1% SG&A percentage 28.6% 27.9% Net income (loss) n/a -257.1 40.5 n/a

Our total quarterly revenues from the CIS markets increased year-on-year by 33.5% to approximately $420 million and OIBDA grew by 23.5% to $179 million. The CIS markets now represent 16% of the total group consolidated revenues and OIBDA.

In 2008, we observed both a good increase in subscriber numbers and strong annual revenue growth across all markets where we operate. During the turbulent fourth quarter the CIS business showed resilience and maintained stable margin levels, as we had not yet seen the full impact of the economic crisis.

The currency devaluation in Ukraine during the fourth quarter resulted in a foreign exchange loss of $231 million and triggered an impairment write off of $90 million related to our operations of URS.

CIS Revenues Development

KAZAKHSTAN 4Q 4Q 3Q (US$ mln) 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Net operating revenues 196.9 174.6 12.8% 198.6 -0.9% 743.6 610.5 21.8% Mobile 193.7 174.6 10.9% 195.9 -1.1% 734.2 610.5 20.3% Fixed 7.1 n/a 6.0 18.3% 19.1 n/a Elimination -3.9 n/a -3.3 -9.7 n/a UKRAINE 4Q 4Q 3Q (US$ mln) 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Net operating revenues 70.5 34.5 104.3% 94.2 -25.2% 280.7 111.6 151.5% Mobile 47.5 34.5 37.7% 68.2 -30.4% 197.8 111.6 77.2% Fixed 26.4 n/a 32.5 -18.8% 96.1 n/a Elimination -3.4 n/a -6.5 -13.2 n/a ARMENIA (US$ mln) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Net operating revenues 63.7 59.8 6.5% 68.8 -7.4% 256.2 235.8 8.7% Mobile 27.2 23.5 15.7% 31.6 -13.9% 108.0 92.4 16.9% Fixed 36.5 36.3 0.6% 37.2 -1.9% 148.2 143.4 3.3% Elimination 0.0 0.0 0.0 0.0 0.0 UZBEKISTAN 4Q 4Q 3Q (US$ mln) 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Net operating revenues 66.5 36.5 82.2% 58.4 13.9% 216.4 108.1 100.2% Mobile 63.5 36.5 74.0% 55.5 14.4% 207.1 108.1 91.6% Fixed 3.0 n/a 2.9 3.4% 9.3 n/a Elimination 0.0 n/a 0.0 0.0 n/a TAJIKISTAN 4Q 4Q 3Q (US$ mln) 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Net operating revenues 16.4 8.1 102.5% 14.8 10.8% 50.8 23.8 113.4% Mobile 16.4 8.1 102.5% 14.8 10.8% 50.8 23.8 113.4% GEORGIA (US$ mln) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Net operating revenues 5.9 0.9 555.6% 5.4 9.3% 17.7 1.5 1080% Mobile 5.9 0.9 555.6% 5.4 9.3% 17.7 1.5 1080% CIS (US$ mln) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Net operating revenues 419.6 314.4 33.5% 439.8 -4.6% 1,564.3 1,091.2 43.4% Mobile 354.1 278.1 27.3% 371.2 -4.6% 1,315.0 947.8 38.7% Fixed 73.0 36.3 101.1% 78.6 -7.1% 272.7 143.4 90.2% Elimination -7.5 0.0 -10.0 -23.4 0.0

CIS OIBDA Development

KAZAKHSTAN (US$ mln) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y OIBDA total 97.7 92.2 6.0% 106.1 -7.9% 382.2 322.6 18.5% Mobile 93.8 92.2 1.7% 102.9 -8.8% 372.5 322.6 15.5% Fixed 3.9 n/a 3.2 21.9% 9.7 n/a OIBDA Margin, % 49.6% 52.8% 53.4% 51.4% 52.8% UKRAINE (US$ mln) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y OIBDA total 11.6 3.6 222.2% -1.6 n/a 22.5 0.5 4400% Mobile 5.7 3.6 58.3% -8.9 n/a 0.4 0.5 -20.0% Fixed 5.9 n/a 7.3 -19.2% 22.1 n/a OIBDA margin, % 16.5% 10.4% n/a 8.0% 0.4% ARMENIA (US$ mln) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y OIBDA total 31.7 32.5 -2.5% 33.5 -5.4% 124.6 122.7 1.5% Mobile 12.5 9.7 28.9% 13.9 -10.1% 47.0 45.8 2.6% Fixed 19.2 22.8 -15.8% 19.6 -2.0% 77.6 76.9 0.9% OIBDA Margin, % 49.8% 54.3% 48.7% 48.6% 52.0% UZBEKISTAN 4Q 4Q 3Q (US$ mln) 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y OIBDA total 34.2 17.8 92.1% 33.0 3.6% 115.9 54.7 111.9% Mobile 33.0 17.8 85.4% 32.0 3.1% 112.8 54.7 106.2% Fixed 1.2 n/a 1.0 20.0% 3.1 n/a OIBDA Margin, % 51.4% 48.8% 56.5% 53.6% 50.6% TAJIKISTAN 4Q 4Q 3Q (US$ mln) 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y OIBDA total 5.3 1.4 278.6% 4.8 10.4% 14.0 2.8 400.0% Mobile 5.3 1.4 278.6% 4.8 10.4% 14.0 2.8 400.0% OIBDA Margin, % 32.3% 17.3% 32.4% 27.6% 11.8% GEORGIA (US$ mln) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y OIBDA total -1.2 -2.3 n/a -1.1 n/a -6.6 -7.4 n/a Mobile -1.2 -2.3 n/a -1.1 n/a -6.6 -7.4 n/a OIBDA Margin, % n/a n/a n/a n/a n/a CIS (US$ mln) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y OIBDA total 179.3 145.2 23.5% 174.7 2.6% 652.6 495.9 31.6% Mobile 149.1 122.4 21.8% 143.6 3.8% 540.1 419.0 28.9% Fixed 30.2 22.8 32.5% 31.1 -2.9% 112.5 76.9 46.3% OIBDA margin, % 42.7% 46.2% 39.7% 41.7% 45.4%

CIS Operating Highlights

KAZAKHSTAN 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Mobile subscribers ('000) 6,270 4,604 36.2% 5,614 11.7% 6,270 4,604 36.2% Subscriber market share*, % 43.4% 46.5% 41.2% 43.4% 46.5% MOU, min 100.5 98.9 1.6% 108.1 -7.0% 104.3 94.6 10.3% ARPU mobile, US$ 10.8 13.0 -16.9% 12.1 -10.7% 11.7 13.1 -10.7% UKRAINE 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Mobile subscribers ('000) 2,052 1,941 5.7% 2,403 -14.6% 2,052 1,941 5.7% Subscriber market share*, % 3.6% 4.8% 4.3% 3.6% 4.8% MOU, min 230.0 183.2 25.5% 261.5 -12.0% 231.8 163.2 42.0% ARPU mobile, US$ 7.0 5.6 25.0% 9.7 -27.8% 7.6 4.7 61.7% Broadband subscribers ('000) 24 n/a 16 50.0% 24 n/a ARPU broadband, US$ 13.5 n/a 15.7 -14.0% 15.3 n/a ARMENIA 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Mobile subscribers ('000) 544 442 23.1% 784 -30.6% 544 442 23.1% Subscriber market share*, % 21.2% 26.1% 30.5% 21.2% 26.1% MOU, min 150.0 171.8 -12.7% 139.9 7.2% 152.1 169.9 -10.5% ARPU mobile, US$ 13.6 17.4 -21.8% 13.9 -2.2% 14.6 16.7 -12.6% UZBEKISTAN 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Mobile subscribers ('000) 3,636 2,120 71.5% 3,148 15.5% 3,636 2,120 71.5% Subscriber market share*, % 29.6% 37.3% 29.8% 29.6% 37.3% MOU, min 288.6 283.4 1.8% 298.5 -3.3% 287.8 274.0 5.0% ARPU mobile, US$ 6.5 6.8 -4.4% 6.5 0.0% 6.4 7.1 -9.9% TAJIKISTAN 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Mobile subscribers ('000) 625 339 84.4% 527 18.6% 625 339 84.4% Subscriber market share*, % 18.3% 18.1% 18.3% 18.3% 18.1% MOU, min 243.4 216.3 12.5% 255.9 -4.9% 238.9 220.6 8.3% ARPU mobile, US$ 9.6 9.0 6.7% 10.4 -7.7% 9.5 9.7 -2.1% GEORGIA 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Mobile subscribers ('000) 225 73 208.2% 189 19.0% 225 73 208.2% Subscriber market share*, % 6.0% 3.5% 5.3% 6.0% 3.5% MOU, min 129.8 121.5 6.8% 109.8 18.2% 113.6 102.5 10.8% ARPU mobile, US$ 9.7 9.0 7.8% 9.9 -2.0% 9.0 7.4 21.6% * Source: AC&M-Consulting. The drop in the reported market share is caused by the fact that starting from January 1, 2008 VimpelCom's market share is calculated on the basis of active subscribers, while before that date it was based on registered subscribers.

Other Operations

In October 2008, VimpelCom made a $267 million cash contribution to the charter capital of GTEl-Mobile, our joint-venture in Vietnam. The funds will be used for establishing operations, including the network rollout. We expect the commercial launch of the network in Vietnam in mid-summer of 2009.

Our operations in Cambodia are also developing according to plan and we expect commercial launch of the network in May of 2009.

OTHER (US$ mln) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y OIBDA total -3.3 n/a -2.2 n/a -8.1 n/a

Recent Developments

• On April 24, 2009, the Board of Directors recommended to the General Shareholders Meeting to forego dividend payments related to 2008.

• As of March 31, 2009, the Company had repaid 100% of the debt which came due in the first quarter of 2009 (or $549 million calculated using the exchange rate as of December 31, 2008).

• On March 2, 2009, the Board of Directors appointed Alexander Torbakhov as the General Director of VimpelCom and Boris Nemsic as the CEO of VimpelCom, effective from April 2, 2009.

• On March 10, 2009, the Company entered into a loan agreement with Sberbank to borrow 8 billion rubles for three years at a maximum annual interest rate of 19% and $250 million for four years at a maximum annual interest rate of 13%.

• On March 17, 2009, Jean-Pierre Vandromme, Executive Vice-President for Russian operations, resigned from the Company.

• In an effort to more accurately reflect the underlying operational performance the Company decided to change the reporting currency to the Russian ruble, which is the functional currency of core market operations. The changes become effective starting from the first quarter of 2009. Our selected financial indicators in local currencies are presented in Attachment E.

For more information on financial and operating data for specific countries, please refer to the supplementary file FinancialOperatingQ42008.xls on our website at http://www.vimpelcom.com/news/qrep.wbp.

The Company's management will discuss its fourth quarter and annual 2008 results during a conference call and slide presentation on May 13, 2009 at 6:30 pm Moscow time (10:30 am ET). The call and slide presentation may be accessed via webcast at the following URL address http://www.vimpelcom.com. The conference call replay will be available through May 20, 2009. The slide presentation webcast will also be available for download on VimpelCom's website http://www.vimpelcom.com.

The VimpelCom Group consists of telecommunications operators providing voice and data services through a range of mobile, fixed and broadband technologies. The Group includes companies operating in Russia, Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia, Armenia, as well as Vietnam and Cambodia, in territories with a total population of about 340 million. VimpelCom was the first Russian company to list its shares on the New York Stock Exchange ("NYSE"). VimpelCom's ADSs are listed on the NYSE under the symbol "VIP".

This press release contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements relate to the Company's strategic and development plans, including network development plans and developments in the telecommunications markets in which the Company operates, and management's expectations about the Company's ability to meet its obligations. These and other forward-looking statements are based on management's best assessment of the Company's strategic and financial position and of future market conditions and trends. These discussions involve risks and uncertainties. The actual outcome may differ materially from these statements as a result of continued volatility in the economies in the markets in which the Company operates, unforeseen developments from competition, governmental regulation of the telecommunications industries and general political uncertainties in the markets in which the Company operates and/or litigation with third parties. The actual outcome may also differ materially if the Company is unable to obtain all necessary corporate approvals relating to its business, if the Company is unable to successfully integrate newly-acquired businesses, including Golden Telecom, and other factors. There can be no assurance that such risks and uncertainties will not have a material adverse effect on the VimpelCom Group. Certain factors that could cause actual results to differ materially from those discussed in any forward-looking statements include the risks described in the Company's Annual Report on Form 20-F for the year ended December 31, 2007 and other public filings made by the Company with the United States Securities and Exchange Commission, which risk factors are incorporated herein by reference. VimpelCom disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments.

- Definitions and tables are attached -

Attachment A: Definitions

Mobile subscribers are those subscribers in the registered subscriber base who were a party to a revenue generating activity in the past three months and remain in the base at the end of the reported period. Such activities include all incoming and outgoing calls, subscriber fee accruals, debits related to service, outgoing SMS, MMS, data transmission and receipt sessions, but do not include incoming SMS and MMS sent by our Company or abandoned calls.

Each ADS represents 0.05 of one share of common stock. This ratio was established effective August 21, 2007.

ARPU (Monthly Average Revenue per User), a non-U.S. GAAP financial measure, is calculated by dividing the Company's service revenue during the relevant period, including roaming revenue and interconnect revenue, but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of the Company's subscribers during the period and dividing by the number of months in that period. The Company believes that ARPU provides useful information to investors because it is an indicator of the performance of the Company's business operations and assists management in budgeting. The Company also believes that ARPU provides management with useful information concerning usage and acceptance of the Company's services. ARPU should not be viewed in isolation or an alternative to other figures reported under U.S. GAAP.

Broadband subscribers are those subscribers in the registered subscriber base who were a party to a revenue generating activity in the past three months. Such activities include monthly internet access using FTTB, xDSL and WiFi technologies as well as mobile home internet service via USB modems.

CIS Geographic Segment for the purpose of VimpelCom reporting includes our operations in the following countries: Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Armenia and Georgia.

Fixed-line subscriber is an authorized user of fixed-line communications services.

General and administrative costs (G&A) include salaries and outsourcing costs, including related social contributions required by Russian law; stock price-based compensation expenses; repair and maintenance expenses; rent, including lease payments for base station sites; utilities; other miscellaneous expenses, such as insurance, operating taxes, license fees, and accounting, audit and legal fees.

Households passed are households located within buildings, in which indoor installation of all the FTTB equipment necessary to install terminal residential equipment has been completed.

Market share of subscribers for each relevant area is calculated by dividing the estimated number of our mobile subscribers in Russia, Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia and Armenia, respectively, by the total estimated number of mobile subscribers in Russia, Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia and Armenia, respectively, and is provided by AC&M-Consulting.

Mobile services are wireless voice and data transmission services excluding WiFi.

MOU (Monthly Average Minutes of Use per User) is calculated by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile subscribers during the period and dividing by the number of months in that period.

OIBDA is a non-U.S. GAAP financial measure. OIBDA, previously referred to as EBITDA by the Company, is defined as operating income before depreciation, amortization and impairment loss. The Company believes that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our business operations, including our ability to finance capital expenditures, acquisitions and other investments and our ability to incur and service debt. While depreciation, amortization and impairment loss are considered operating costs under U.S. GAAP, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our OIBDA calculations are commonly used as bases for some investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the telecommunications industry. OIBDA should not be considered in isolation as an alternative to net income, operating income or any other measure of performance under U.S. GAAP. OIBDA does not include our need to replace our capital equipment over time. Reconciliation of OIBDA to operating income, the most directly comparable U.S. GAAP financial measure, is presented below in the reconciliation tables section.

OIBDA margin is OIBDA expressed as a percentage of net operating revenues. Reconciliation of OIBDA margin to operating income as a percentage of net operating revenues, the most directly comparable U.S. GAAP financial measure, is presented below in the reconciliation tables section.

Prepaid subscribers are those subscribers who pay for their services in advance.

Sales and marketing costs (S&M) include marketing, advertising and dealer commissions expenses.

Take-up rate for the FTTB network is calculated by dividing the number of FTTB subscribers by the total number of households passed.

Attachment B: VimpelCom financial statements

Open Joint Stock Company "Vimpel-Communications" Condensed Consolidated Statements of Operations

Three months ended Year ended December 31, December 31, (unaudited) 2008 2007 2008 2007 (In thousands of US dollars , except per share (ADS) amounts) Operating revenues: Service revenues $2,489,532 $2,006,440 $9,999,850 $7,161,833 Sales of equipment and accessories 64,417 2,307 107,946 6,519 Other revenues 3,944 2,504 17,190 6,528 Total operating revenues 2,557,893 2,011,251 10,124,986 7,174,880 Revenue based tax (2,558) (1,305) (8,054) (3,782) Net operating revenues 2,555,335 2,009,946 10,116,932 7,171,098 Operating expenses: Service costs 578,825 365,653 2,262,570 1,309,287 Cost of equipment and accessories 59,322 1,592 101,282 5,827 Selling general and administrative expenses 787,212 715,892 2,838,508 2,206,322 Depreciation 378,642 331,725 1,520,184 1,171,834 Amortization 94,520 56,040 360,980 218,719 Impairment loss 442,747 - 442,747 - Provision for doubtful accounts 5,995 8,399 54,711 52,919 Total operating expenses 2,347,263 1,479,301 7,580,982 4,964,908 Operating income 208,072 530,645 2,535,950 2,206,190 Other income and expenses: Interest income 14,241 11,554 71,618 33,021 Interest expense (153,595) (50,274) (495,634) (194,839) Net foreign exchange (loss)/gain (1,011,996) 21,614 (1,142,276) 72,955 Equity in net loss of associates (63,719) (211) (61,020) (211) Other (expenses)/ income, net 804 31,588 (17,404) 3,240 Total other income and expenses (1,214,265) 14,271 (1,644,716) (85,834) Income (loss) before income taxes and minority interest (1,006,193) 544,916 891,234 2,120,356 Income tax expense (benefit) (208,877) 159,225 303,934 593,928 Minority interest in net earnings of subsidiaries 18,412 17,583 62,966 63,722 Net income (loss) (815,728) 368,108 524,334 1,462,706 Net income (loss) per common share ($16.12) $7.25 $10.34 $28.78 Net income (loss) per ADS equivalent ($0.81) $0.36 $0.52 $1.44 Weighted average common shares outstanding (thousands) 50,617 50,777 50,700 50,818

Open Joint Stock Company "Vimpel-Communications" Condensed Consolidated Balance Sheets

December 31, December 31, 2008 2007 (In thousands of US dollars) Assets Current assets: Cash and cash equivalents $914,683 $1,003,711 Trade accounts receivable 475,667 281,396 Other current assets 1,016,157 441,810 Total current assets 2,406,507 1,726,917 Non-current assets Property and equipment, net 6,425,873 5,497,819 Telecommunication licenses, net 764,783 915,211 Other intangible assets, net 4,359,772 1,302,318 Investments in associates 493,550 5,908 Other assets 1,274,668 1,120,711 Total non-current assets 13,318,646 8,841,967 Total assets $15,725,153 $10,568,884 Liabilities and shareholders' equity Current liabilities: Accounts payable $896,112 $697,816 Customer advances and deposits 454,738 423,611 Short-term debt 1,909,221 526,512 Accrued liabilities 554,231 351,762 Total current liabilities 3,814,302 1,999,701 Deferred income taxes 644,475 576,276 Long-term debt 6,533,705 2,240,097 Other non-current liabilities 122,825 52,614 Minority Interest 221,040 288,410 Shareholders' equity 4,388,806 5,411,786 Total liabilities and shareholders' equity $15,725,153 $10,568,884

Open Joint Stock Company "Vimpel-Communications" Condensed Consolidated Statements of Cash Flows

Year ended December 31, 2008 2007 (In thousands of US dollars) Net cash provided by operating activities $3,421,858 $3,037,690 Purchases of property and equipment (2,002,452) (1,238,305) Purchases of intangible assets (75,012) (73,814) Acquisition of subsidiaries, net of cash acquired (4,134,609) (301,355) Investments in associates (491,265) - Loan granted (350,000) - Short-term deposits 43,179 (42,356) Exercise of escrow cash deposit 200,170 (200,170) Purchase of minority interest in consolidated subsidiaries (992,825) - Purchases of other assets, net (367,227) (378,552) Net cash used in investing activities (8,170,041) (2,234,552) Proceeds from bank and other loans 6,209,392 666,348 Proceeds from sale of treasury stock 25,488 39,787 Purchase of treasury shares (114,476) (81,069) Repayments of bank and other loans (721,222) (472,545) Payment of dividends (587,302) (331,885) Payments of fees in respect of debt issues (68,159) (14,380) Net cash provided by/(used in) financing activities 4,743,721 (193,744) Effect of exchange rate changes on cash and cash equivalents (84,566) 49,823 Net (decrease)/ increase in cash and cash equivalents (89,028) 659,217 Cash and cash equivalents at beginning of period 1,003,711 344,494 Cash and cash equivalents at end of period $914,683 $1,003,711 Supplemental cash flow information Cash paid during the period: Income tax $647,597 $601,939 Interest 406,020 201,259 Non-cash activities: Equipment acquired under financing agreements 2,726 48,514 Accounts payable for equipment and other long-lived assets 448,218 417,478 Issue of promissory notes 81,660 - Non-cash discounts from suppliers of equipment 2,464 (5,441) Acquisitions: Fair value of assets acquired 2,645,655 84,125 Fair value of minority interest acquired 206,129 41,636 Difference between the amount paid and the fair value of net assets acquired 3,517,062 182,034 Consideration for the acquisition of subsidiaries (5,348,180) (291,928) Change in fair value of liabilities assumed $1,020,666 $15,867

Attachment C: Reconciliation Tables (Unaudited)

Reconciliation of Consolidated OIBDA

(In millions of US dollars)

OIBDA Consolidated 4Q 4Q 3Q Total 2008 2007 2008 2008 2007 OIBDA 1,124 918 1,388 4,860 3,597 Depreciation (379) (331) (400) (1,520) (1,172) Amortization (94) (56) (98) (361) (219) Impairment loss (443) 0 0 (443) 0 Operating income 208 531 890 2,536 2,206

Reconciliation of Consolidated OIBDA Margin

OIBDA Margin Consolidated 4Q 4Q 3Q Total 2008 2007 2008 2008 2007 OIBDA margin 44.0% 45.7% 48.8% 48.0% 50.2% Less: Depreciation as a percentage of net operating revenues (14.9%) (16.5%) (14.1%) (15.0%) (16.3%) Less: Amortization as a percentage of net operating revenues (3.7%) (2.8%) (3.4%) (3.5%) (3.1%) Less: Impairment loss as a percentage of net operating revenues (17.3%) 0.0% 0.0% (4.4%) 0.0% Operating income as a percentage of net operating revenues 8.1% 26.4% 31.3% 25.1% 30.8%

Attachment D: Capex Development

CAPEX (in US$ millions) 4Q 4Q 3Q 2008 2007 y-o-y 2008 q-o-q 2008 2007 y-o-y Total capex 855.5 795.8 7.5% 692.9 23.5% 2,570.8 1,772.8 45.0% Russia 641.5 467.2 37.3% 504.1 27.3% 1,776.4 1,072.5 65.6% CIS 203.5 328.6 -38.1% 186.8 8.9% 775.1 700.3 10.7% Kazakhstan 79.7 96.4 -17.3% 77.1 3.4% 254.8 213.9 19.1% Ukraine 57.8 55.2 4.7% 46.9 23.2% 185.4 156.5 18.5% Armenia 23.7 44.3 -46.5% 19.1 24.1% 78.3 90.8 -13.8% Uzbekistan 17.2 83.6 -79.4% 28.4 -39.4% 176.3 133.9 31.7% Tajikistan 18.0 20.2 -10.9% 6.4 181.3% 45.1 45.5 -0.9% Georgia 7.1 28.9 -75.4% 8.9 -20.2% 35.2 59.7 -41.0% Other 10.5 n/a 2.0 425.0% 19.3 n/a

Attachment E: Key Financial Results in Local Currencies

Russia

RUSSIA (RUB millions) 4Q 3Q q-o-q 2008 2008 Net operating revenues 58,748 58,803 -0.1% OIBDA 25,751 29,395 -12.4% OIBDA margin, % 43.8% 50.0%

Ukraine

UKRAINE (UAH millions) 4Q 3Q 2008 2008 q-o-q Net operating revenues 424 457 -7.2% OIBDA 75 -8 n/a OIBDA margin, % 17.7% n/a

Attachment F: Reconciliation of Net Income Adjusted to Net Loss Reported

Adjusted Consolidated Net Income (in US$millions) 4Q 2008 Net income (loss) reported (816) Net foreign exchange loss (1,012) Russia fixed goodwill impairment (315) Ukraine goodwill and LLA impairment (90) DVBH/DVBT licenses write off (38) Income before tax, adjusted 639 Income tax effect on above mentioned transactions (252) Adjusted net income 387

SOURCE Vimpel-Communications

Source: PR Newswire

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