New wave of growth

Regional wireless subscribers started to grow in the year 2000 at a rate comparable to that of Moscow. The overall subscriber base outside of Moscow grew from approximately 638,000 at the end of 1999 to 1,350,000 at the end of 2000, an annual growth rate of 112%. We believe that this trend will transform the regions into the next great growth opportunity in the Russian cellular market, as nationwide cellular penetration has reached only 2.4%, or 1.0% excluding Moscow. Despite the significant upturn in the number of cellular subscribers throughout the regions, revenue per user continued to be stable, averaging approximately $40 per month, with little evidence so far of the erosion that has been witnessed in the more penetrated Moscow market.

Much higher growth rates are expected in the coming years as economic conditions improve and competition develops. As we look forward, we believe that the growth of our business in the future will eventually be determined by our success in transforming VimpelCom into a nationwide operator.

In 2001, through alliances with strategic partners, we intend to make a significant step forward in the development of our regional GSM licenses, which cover a population of approximately 85 million, and transition from a primarily Moscow–based operator to a world class national operator throughout Russia. This will bring new sources of revenues, make our services more attractive to subscribers and ensure that we are a significant player in the ongoing globalization process in the telecom industry.