A srategic move to increase direct sales
Moscow and New York (December 5, 2000) - Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP), a leading provider of mobile telecommunications services in Russia, today announced that it intends to acquire MCC-Start, operating under the tradename "Mobile-Center", one of the largest retail mobile phone distribution networks in Moscow.
Pursuant to the terms of the acquisition, VimpelCom will purchase a super-majority stake in MCC-Start (over 75% of the shares). Mobile-Center currently provides services to all Moscow mobile operators, however after the acquisition is completed, it will distribute "Bee Line" and "Bee +" products exclusively, except for a small number of "MCC" phones which it will continue to sell. In the near-term, Mobile-Center will continue to operate under its well-known tradename.
Commenting on this strategic move, Nikolai Prianishnikov, the First Vice President and Commercial Director of VimpelCom, said, "This acquisition will provide us with a unique opportunity to strengthen our position in the Moscow market by immediately expanding our direct sales reach from three company-owned distribution points to fifteen offices with good central locations, gaining better control over our distribution network and, through the increased direct sales outlets, contributing to the reduction of our subscriber acquisition costs."
Mr. Vladimir Suslov, who will remain the President of Mobile-Center, said: "We built a powerful retail infrastructure with a wide network of stores, highly-skilled personnel and well developed and proven logistics and sales procedures. We were in need of a strategic partner and we found that our interests and strategy coincided with those of VimpelCom. Our management team is very pleased with this decision."
VimpelCom is a leading wireless telecommunications service company in Russia, operating under the "Bee Line" family of brand names, which are among the most recognized brand names in Russia. VimpelCom's license portfolio covers approximately 70% of Russia's population (100 million people), including the City of Moscow and the Moscow Region, which is the Company's primary market. 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". VimpelCom's convertible notes are listed on the NYSE under the symbol "VIP 05".
MCC-Start was established in April 1995. It quickly built a wide retail cellular distribution network, taking a leading position among mobile distributors in Moscow. Its trademark, Mobile-Center, is well-known in Moscow and is associated with a wide range of high-quality services for cellular subscribers. Currently, the Mobile-Center network has 12 retail distribution offices.
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 development and 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 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. As a result of such risks and uncertainties, there can be no assurance that the effects of competition or 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, 1999 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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