VimpelCom and Telenor enter into strategic alliance

Open Joint Stock Company Vimpel-Communications («VimpelCom» or the «Company») (NYSE: VIP) and Telenor AS («Telenor») today announced that they have reached an agreement for Telenor to purchase a strategic ownership interest in VimpelCom.

Published: 12 January 1998 17:12

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Pursuant to the transaction, Telenor will acquire 25% plus one share of VimpelComs total voting stock in consideration for a total cash payment of approximately US$ 160 million, the full amount of which has been placed in escrow to fund the purchase of the shares. This capital infusion will be used by VimpelCom to develop its GSM licenses, fiber optic network and Internet services as well as other telecommunications projects. The issuance of such shares to Telenor and certain other aspects of the transaction will be subject to a ¾ majority approval by VimpelComs shareholders and various Russian regulatory approvals (including the State Antimonopoly Committee of the Russian Federation, the Russian Federal Commission on the Securities Markets and the Central Bank of Russia) as well as other customary closing conditions. The VimpelCom Board of Directors is recommending the terms of the transaction to VimpelComs shareholders and expects to hold a special shareholder meeting in late January 1999 to consider the matters requiring shareholder approval. Subject to obtaining necessary shareholder and regulatory approvals, the Company anticipates closing the transaction by June 1, 1999. The transaction also contemplates Telenor receiving three (3) out of nine (9) Board seats.



Telenor and VimpelCom will exchange technical know-how and marketing expertise pursuant to services agreements. VimpelCom is expected to benefit from Telenor’s experience in penetrating and developing the cellular communications mass market and Telenor intends to benefit from VimpelCom’s extensive engineering expertise. The parties believe that the combined expertise of the alliance will give VimpelCom the competitive advantage necessary to position itself as a leading telecommunications group in Russia and the CIS.



Commenting on today’s announcement, Dr. Zimin, VimpelComs President and CEO, said, «We are delighted to announce that we are on the verge of concluding a very important alliance for our company. We believe that the infusion of capital into the Company at this time will strengthen the Company’s competitive position in the Russian cellular market and will also enable the Company to move faster to market with a number of new projects, at a time when it is difficult for Russian companies to obtain financing. Telenor is an excellent strategic partner for VimpelCom due to their extensive European operations, their existing investments in the Russian telecommunications marketplace, and, most importantly, the support and experience they will provide to us which will help us to realize our full potential.”



“Russia is a huge market for mobile telephony and an important part of Telenors international growth strategy”, said Tormod Hermansen, President and CEO of Telenor. “VimpelCom, with its strong position in the Moscow market, its well-known brand name ‘Bee Line and its recently awarded regional GSM licenses, fits well with our existing Russian investments. VimpelCom is a quality-run business with strong management, has a proven track record, and is well positioned to develop into a nationwide telecommunications provider. We look forward to working with our partners in developing the mobile mass market in Russia.”



Telenor is a provider of fixed, mobile, satellite and Internet services and is headquartered in Oslo, Norway. Telenor operates GSM mobile networks in Norway, Germany, Ireland, Greece, Bangladesh, Austria, Montenegro, Ukraine and Russia. The current Telenor mobile subscriber base in Norway numbers 1.5 million, a 75% market share in one of the world’s most heavily penetrated mobile markets where the penetration rate is approximately 43%. Telenor’s satellite based telephony operations are amongst the largest in the world. Telenor is a co-owner of the INTELSAT, EUTELSAT and INMARSAT satellite organizations. Telenor is the largest distributor of TV-programs to the Scandinavian market.



VimpelCom is a leading provider of cellular telecommunications in Russia, marketing its services under the brand name «Bee Line». The VimpelCom Group operates GSM and the only Digital-AMPS cellular network in the Moscow License Area, which includes the City of Moscow and the Moscow Region. The VimpelCom Group holds various cellular licenses covering a total population of approximately 100 million (68% of Russia’s population). VimpelCom was the first Russian company listed on the New York Stock Exchange (November 1996), and trades under the symbol «VIP».



This press release contains forward-looking statements related to the development of the Company’s business. These statements are based on VimpelComs and Telenors best assessments of future market conditions and trends. The actual outcome may differ from these statements as a result of unforeseen developments from competition, governmental regulations of the wireless telecommunications industry, general political uncertainties in Russia and general economic developments in Russia, all of which may be aggravated by the current economic and political crisis. No assurance can be given that the economic crisis will abate in the foreseeable future or that the full impact of the economic crisis on the VimpelCom Group can be assessed at this time. As a result of such uncertainties, there can be no assurance that current or future changes in the political, economic and social environment or current or future regulation of the Russian telecommunications industry will not have a material adverse effect on the VimpelCom Group. Each of VimpelCom and Telenor disclaim 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.



Fact sheet:




Telenor



Telenor in the international arena



Telenor in the international mobile markets



Telenor – mobile operations in Russia



VimpelCom





Telenor and VimpelCom enter into strategic alliance