Expansion across Russia: Vimpelcom receives new GSM licenses

licenses. Following on the heels of the Company's regional AMPS expansion in 1997, 1998 developments focused on the acquisition of new GSM licenses. The Company was highly successful in its efforts, receiving four new GSM-1800 licenses and the frequencies and right to build a dual band GSM-900/1800 network in Moscow and in the Central and Central Black Earth Region of Russia.

GSM-1800

In April 1998, VimpelCom was awarded four new GSM-1800 licenses. These licenses were issued to VimpelCom by the State Committee on Communications and Informatization of the Russian Federation (SCCI) as a result of a competitive tender. As part of the tender, VimpelCom's GSM-1800 license for Moscow was also reissued. A total of 16 licenses were awarded by the SCCI to operate GSM-1800 cellular networks. Two licenses were issued in each of eight areas ("super regions") which, in the aggregate, comprise the territory of the Russian Federation.

Specifically, VimpelCom was awarded GSM-1800 licenses for the following four Russian "super regions":

• The Central and Central Black Earth Region, which encompasses 17 administrative regions, has a population of approximately 26 million. VimpelCom's main competitor in the Moscow market will compete with VimpelCom for subscribers in the Central and Central Black Earth Region.
• The Volga Region, which encompasses 12 administrative regions, has a population of approximately 24 million. VimpelCom's main competitor in the Samara license area will compete with VimpelCom for subscribers in the Volga Region.
• The North Caucasus Region, which encompasses 10 administrative regions, has a population of approximately 18 million. A company developing a nationwide NMT-450 analog cellular standard network will compete with VimpelCom for subscribers in the North Caucasus Region.
• The Siberian Region, which encompasses 11 administrative regions, has a population of approximately 16 million. The same company competing in the North Caucasus Region will compete with VimpelCom for subscribers in the Siberian Region.

The Central and Central Black Earth, Volga and North Caucasus Regions, together with VimpelCom's Moscow license area, form a contiguous territory in the European part of Russia, covering a population of approximately 84 million.

The new GSM-1800 licenses expanded the total population covered by VimpelCom's licensed territories from 28 million to approximately 100 million people. As a result of these developments, the Company's license area (including licenses under which VimpelCom has not yet commenced operations) now cover approximately 70% of the population of the Russian Federation. The new GSM-1800 licenses will provide VimpelCom with new opportunities to continue its business strategy of expanding its operations across Russia which VimpelCom will pursue to the extent such opportunities are economically viable.

GSM-900

In August 1998, VimpelCom's GSM-1800 licenses for Moscow and the Central and Central Black Earth Region of Russia were amended, allowing the Company to build dual band GSM-900/1800 networks using 2 x 3 MHz of bandwidth in the 900 MHz frequency range in each of these areas. VimpelCom began providing dual band GSM-900/1800 services in Moscow in October 1998.

Dual-band GSM-900/1800 networks are presently considered to be the most advanced and cost efficient cellular networks. They are especially efficient in Russia, where densely populated large cities are surrounded by sparsely populated rural areas. The dual band technology offers the most efficient solution using the GSM-900 to provide a wide coverage zone while GSM-1800 secures the necessary capacity in more densely populated areas of large cities.

VimpelCom's Moscow license area, which includes the City of Moscow and the surrounding Moscow region, along with the Central and Central Black Earth Region, represent the core of Russia with a population of more than 40 million people. This area constitutes a tremendous potential for growth driven by the strength of Moscow as the capital and industrial and financial center of the country, and Nizhny Novgorod, a large industrial center and the third most populous Russian city after Moscow and St. Petersburg. VimpelCom considers its acquisition of 900 MHz in addition to 1800 MHz frequencies to be an extremely important strategic development which will enable it to roll out and operate the most advanced GSM-900/1800 network in this vital area of the country.