Telenor to increase investments in Russian mobile expansion

The agreement to invest in further mobile expansion in Russia was signed in connection with the Russian President Vladimir Putin's visit to Norway, in the presence of both President Puitin and Norway's Prime Minister Kjell Magne Bondevik. The agreement represents the second tranche of equity investments into VimpelCom's subsidiary VimpelCom-Region. The third and final tranche is scheduled to be completed by November 2003, when Alfa Group is to invest an additional USD 58.52 million in the company. Following the completion of the agreements entered into in Oslo this Tuesday, VimpelCom's economic interest in VimpelCom-Region is approximately 65 per cent, while Telenor and Alfa Group will be holding approximately 17.5 per cent each.

"Telenor has now been active in the Russian market for 10 years. We have already invested USD 350 million in Russia, primarily in mobile activities, and we are pleased to be able to contribute to the further expansion of mobile services in Russia. We are satisfied with our Russian investments so far, and we expect the growth in the Russian mobile market to continue," said Telenor's Chief Executive Officer, Jon Fredrik Baksaas.

"We see this second phase of investment in VimpelCom-Region as further evidence of the strong commitment of our strategic partners, Alfa Group and Telenor, to the development of our Company and its regional expansion. VimpelCom-Region will use the proceeds from this investment tranche to continue its network and infrastructure build-out in the regions of Russia," said Jo Lunder, Chief Executive Officer of VimpelCom.

VimpelCom is a leading provider of telecommunications services in Russia, operating under the "Bee Line" family of brand names, which are among the most recognized brand names in Russia. The VimpelCom Group's license portfolio covers approximately 79 per cent of Russia's population (115 million people), including the City of Moscow, the Moscow Region and the City of St. Petersburg. VimpelCom was the first Russian company to list its shares on the New York Stock Exchange (NYSE).

The Alfa Group of companies was established in Russia in 1988 and has since evolved into one of Russia's largest financial industrial groups. Alfa Group is active in the banking, insurance, telecommunications, asset management, oil, gas and other primary commodities, food and retail sectors. Alfa Eco is the group's main trading and industrial arm with interests in oil, metals, mining, telecommunications, foodstuffs and beverages. Alfa Bank is the largest privately owned bank in Russia with an extensive nationwide network of more than 70 branches, and subsidiaries in Ukraine, Kazakhstan, the United Kingdom, the United States and the Netherlands.

Telenor has been active in the Russian market since 1992, and has invested a total of USD 350 million during this ten-year period. The first investments were made in the Murmansk-area, where Kolatelecom was established as a result of a partnership with the regional Russian telecommunications company. Later in the same year, the mobile operation North-West GSM was set up as a consortium in St. Petersburg, with Telenor as one of the partners. This ownership interest has since been sold.

Telenor became part owner in the mobile operation Extel in Kaliningrad in 1996 and acquired a stake in the mobile operation StavTeleSot in Stavropol in 1997. In 1998, Telenor became part owner in VimpelCom. Telenor has also invested in the company Comincom/Combellga, which is a leading provider of telecommunications services to the business market in Moscow and to 29 regions in Russia. Telenor has had a representative office in Moscow since 1999.

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