184% Subscriber growth during 1999
Moscow and New York (January 20, 2000) - Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP) today reported preliminary subscriber statistics for the fourth quarter and the fiscal year ended December 31, 1999. VimpelCom expects to release U.S. GAAP audited financial results for these periods in April 2000.
As of December 31, 1999, VimpelCom had approximately 352,000 subscribers on its Moscow GSM and D-AMPS networks. This represents an increase of approximately 184% from the 124,000 subscribers reported at the end of 1998. Subscriber growth was particularly strong in the fourth quarter, as the Company reported gross sales of approximately 170,000 and net additions of 155,000 for such period.
During 1999, VimpelCom significantly improved the coverage of its Moscow GSM network, by increasing the number of its GSM base stations to 485, as compared to 244 base stations at year end 1998 which increased the Company's GSM coverage area to approximately 41,600 sq. km., as compared to 4,000 sq. km. at the end of 1998. The Company's GSM coverage area now encompasses approximately 99.1% of the population of the City of Moscow and the surrounding Moscow Region.
VimpelCom's continued build out of its Moscow GSM network was a substantial factor in the Company increasing its Moscow GSM subscriber base to approximately 132,000 as of December 31, 1999, an increase of approximately 529%, compared to approximately 21,000 subscribers reported at year end 1998. GSM subscribers now constitute approximately 38% of the Company's total Moscow subscriber base, compared to 17% reported as of December 31, 1998. The Company expects GSM subscribers to constitute a greater percentage of the Company's Moscow subscriber base in the future. As of December 31, 1999, prepaid subscribers constituted approximately 64% of VimpelCom's total Moscow subscriber base. The Company expects that its proportion of prepaid subscribers will continue to increase during 2000.
VimpelCom's estimated annual average monthly airtime usage per subscriber in 1999 was 136 minutes, a decrease of approximately 54% from the 295 minutes reported in 1998. The Company's estimated average revenue per user (ARPU) for 1999 was approximately US$99, a decrease of approximately 54% from the US$213 reported in 1998. For the fourth quarter ended December 31, 1999, estimated average monthly airtime usage per subscriber was approximately 109 minutes and ARPU was approximately $68, compared to 130 minutes and $95 respectively, reported in the third quarter of 1999. Management believes that the increased rate of decline in average monthly airtime usage per subscriber was primarily the result of an increased number of prepaid subscribers who tend to use less airtime than contract subscribers, and that the decrease in ARPU reflects the overall decline in minutes of airtime usage during 1999.
Churn decreased significantly during 1999 to 25% from 54% reported in 1998. The Company believes that the decrease in churn was the result of an improvement in the Russian economy during 1999 as well as the increased number of prepaid subscribers on the Company's networks.
Commenting on today's announcement, Dr. Dmitri Zimin, President and Chief Executive Officer of VimpelCom, said: "We made tremendous strides in 1999, following a turbulent 1998, and we are very pleased to report today our strong subscriber growth. VimpelCom's growth during 1999 was driven by the launch of the dual band GSM-900/1800 network in Moscow, along with aggressive marketing and promotion efforts to segment the market, and to develop a mass consumer market segment through the introduction of prepaid services and products. These initiatives made VimpelCom a market leader in sales and enhanced its competitive position. We believe the overall market will continue its growth and VimpelCom intends to be at the forefront of this development."
VimpelCom is a leading provider of cellular telecommunications in Russia, marketing its services under the brand name "Bee Line." The VimpelCom Group operates GSM-900/1800 and Digital-AMPS cellular networks in the Moscow License Area, which includes the City of Moscow and the Moscow Region. The Group is also building cellular networks in its other licensed territories. The VimpelCom Group holds cellular licenses covering a total population of approximately 100 million (70% of Russia's population). VimpelCom was the first Russian company listed on the New York Stock Exchange (November 1996), and its ADSs trade under the symbol "VIP."
This press release contains forward-looking statements related to the development of the Company's business which involve risks and uncertainties. These statements are based on Management's best assessment of future market conditions and trends. The actual outcome may differ materially 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 and other factors. 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. 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, 1998 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.
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