2008 VimpelCom Annual Report ВымпелКом Годовой отчет CONTENTS СОДЕРЖАНИЕ

2 Company Profile 2 Информация о Компании 6 Financial Highlights 6 Основные финансовые показатели 13 Letter to Shareholders 13 Письмо акционерам 18 Strategic Achievements of 2008 18 Стратегические достижения 2008 года 22 Broadening Horizons 22 Новые горизонты 25 Increasing Functionality 25 Новые функциональные возможности 28 Maintaining Customer Focus 28 Фокус на потребностях клиента 30 The Legacy of VimpelСom Founders’ 3o Традиции «ВымпелКома»: Pioneering Spirit новаторский дух учредителей 32 Board of Directors 32 Совет директоров 34 Senior Management 34 Старший менеджмент 37 Corporate Information 37 Корпоративная информация 38 Financial Information 38 Финансовая информация VimpelCom / Annual Report 2008 2 ИНФОРМАЦИЯ ОКОМПАНИИ ИНФОРМАЦИЯ PROFILE COMPANY 153 countrieson 341 partner networks. 212 countriesandsupportGPRS roamingin agreements with521GSMoperators in and foreignvisitorsVimpelComhasroaming the endof2008,foritstravelingcustomers position inprovidingroamingservices.By VimpelCom continuestomaintainitsleading 3G networksin40citiesRussia. we operatedFTTBnetworksin47citiesand fixed andmobilesolutions.Bytheyear-end broadband marketinRussiaprovidingboth our footholdinthefastgrowingresidential fixed-line services.Wecontinueincreasing became oneofthenationalleadersinproviding After themergerwithGoldenTelecomVimpelCom Georgia. Armenia, 625,000inTajikistanand225,000 in Ukraine,3.6millionUzbekistan,544,000 6.3 millionsubscribersinKazakhstan,2.1 base wasdistributedasfollows:approximately The Company’sremainingmobilesubscriber subscribers, including47.7millioninRussia. approximately 61millionactivemobile As ofDecember31,2008,VimpelComserved of about340million. Cambodia, interritorieswithatotalpopulation Armenia andGeorgiaaswellVietnam Kazakhstan, Ukraine,Uzbekistan,Tajikistan, includes companiesoperatinginRussia, fixed andbroadbandtechnologies.TheGroup and dataservicesthrougharangeofmobile, telecommunications operatorsprovidingvoice The VimpelComGroupisoneoftheleading в 40городахРоссии. в 47городах,асетьтретьего поколения(3G)– 2008 годанашаоптоволоконная сетьработала дных, такимобильныхтехнологий,кконцу доступа вИнтернетспомощьюкакпрово- на быстрорастущемрынкеширокополосного Мы продолжалинаращиватьсвоеприсутствие предоставлению услугфиксированнойсвязи. пелКом» сталоднимизроссийских лидеровпо После слиянияс«ГолденТелекомом»«Вым- нентов вГрузии. абонентов вТаджикистанеи225тысячабо- 544 тысячиабонентоввАрмении,625тысяч ине, 3,6миллионаабонентоввУзбекистане, в Казахстане, 2,1миллионаабонентоввУкра- приблизительно 6,3миллионаабонентов СНГ распределиласьследующимобразом: связи вРоссии.Абонентскаябазастранах 47,7 миллионапользователеймобильной ла около61миллионаабонентов,включая абонентская база«ВымпелКома»составля- По даннымна31декабря2008года,активная населением около340миллионовчеловек. Вьетнаме иКамбодже–натерриториисобщим не, Узбекистане,АрмениииГрузии,атакжево ги вРоссии,Казахстане,Украине,Таджикиста- входят компании,предоставляющиесвоиуслу- в Интернет.Вгруппукомпаний«ВымпелКом» ной связи,атакжеширокополосногодоступа спектра технологиймобильнойификсирован- связи ипередачиданныхнаосновеширокого каций, предоставляющийуслугиголосовой ведущих оператороввсферетелекоммуни- Группа компаний«ВымпелКом»–одиниз Beyond gravity Неподвластны обстоятельствам of circumstances VimpelCom / Annual Report 2008 4 Best CorporateGovernment Telecommunications. In2008,wealsoreceived Izosimov theBestRussianBusinessLeaderin Magazine hasnamedVimpelCom’sCEOAlexander During thelastfouryearsInstitutionalInvestor are essentialtotheCompany’scorevalues. and corporategovernance–categorieswhich organizations asaRussianleaderintransparency independent analysts,agenciesandprofessional been recognizedonnumerousoccasionsby Since itslistingontheNYSE,VimpelComhas the symbol“VIP.” VimpelCom’s ADSsarelistedontheNYSEunder shares ontheNewYorkStockExchange(NYSE). the firstRussiancompanysince1903tolistits In 1996,VimpelCommadehistorybybecoming brand. Corbina Telecomareofferednowunderthesingle clients byGoldenTelecomanditssubsidiary and servicesthathadbeenprovidedtocorporate was estimatedat$7.4billion.*Alltheproducts brands. In2008,thevalueofBeelinebrand the rankingsofmostvaluableRussian 2005, theBeelinetrademarkeachyeartopped brand namesinRussiaandtheCIS.Since “Beeline” brandisoneofthemostrecognized participates inprogramsaimedtoimprove Being aresponsiblecorporatecitizen,VimpelCom Russia. and BestIRbytheCEOawardsfromMagazine * consulting company international By the InterbrandZintzmeyer. rates onthedatesofratings. Brands valuedinRussianrubles;figureshere presentedatexchange

, BestAnnualReport «Билайн» составила7,4млрд дов. В2008годустоимостьторговоймарки в рейтингесамыхдорогихроссийскихбрен- «Билайн» являетсянеизменнымлидером в РоссииистранахСНГ.Начинаяс2005года одна изнаиболееизвестныхторговыхмарок Торговая марка«ВымпелКома»«Билайн»– лялся всетях341 операторовв153 странах. в 212странахмира.GPRS-роумингпредостав- соглашения ороумингес521GSM-операторами ным наконец2008года,«ВымпелКом»имел ние впредоставленииуслугроуминга.Подан- «ВымпелКом» сохраняетлидирующееположе- ми всистемеосновныхценностейКомпании. принципы всегдаявлялисьважнымиэлемента- управления ипрозрачностивРоссии.Эти ми лидеромсточкизрениякорпоративного многочисленными независимымиэксперта- биржу «ВымпелКом»изгодавгодпризнается С моментавыходанаНью-Йоркскуюфондовую символом «VIP». Акции «ВымпелКома»котируютсянаNYSEпод фондовой бирже(NYSE)после1903года. которой былиразмещенынаНью-Йоркской как перваяроссийскаякомпания,акции В 1996году«ВымпелКом»вошелвисторию узнаваемым брендом. ентов такжепредоставляютсяподэтимединым и «КорбинаТелеком»длякорпоративныхкли- продукты иуслугикомпаний«ГолденТелеком» 1 бренд оценивался вроссийских Zintzmeyer; По оценкеInterbrand согласно официальному курсунаденьоценки. рублях; представленные здесьданныевдолларах СШАрассчитаны 1 долл.США.Все our websiteatwww.vimpelcom.com For moreinformationonVimpelCompleasevisit initiative. mobile phonesthroughourMobileEtiquette We alsopromotesociallyresponsibleuseof veterans, pensioners,thedisabledandorphans. Committee alsofocusesonassistingWorldWarII from Russianuniversities.TheCompany’sCharity remote areasandofferinginternshipstostudents providing Internetaccessforschoolslocatedin children andyouthtoreachtheirfullpotential, quality oflife.Weoffereducationalsupportfor можно найтинасайте:www.vimpelcom.com Дополнительную информациюо«ВымпелКоме» в общественныхместах. ное использованиемобильныхтелефонов с помощьюкоторойпропагандируемкоррект- разработали программу«Мобильныйэтикет», оставшимся безродителей.Крометого,мы войны, пенсионерам,инвалидамидетям, помощь ветеранам Великой Отечественной рительный комитет«ВымпелКома»оказывает полностью раскрытьсвойпотенциал.Благотво- Компанию, темсамымпомогаямолодежи приглашаем студентовнастажировкувнашу ленных населенныхпунктахРоссии,атакже бесплатный доступвИнтернетшколамуда- качества жизнилюдей.Мыпредоставляем мероприятиях, направленныхнаулучшение «ВымпелКом» принимаетучастиевразличных Будучи социальноответственнойкомпанией, IR MagazineRussia. со стороныгенеральногодиректора»журналом «Годовой отчет»и«Отношениясинвесторами в номинациях«Корпоративноеуправление», был признанлучшейроссийскойкомпанией Investor Magazine.В2008году«ВымпелКом» телекоммуникаций поверсииInstitutional лучшим генеральнымдиректоромвсфере директор АлександрИзосимовбылпризнан отмечен следующиминаградами:Генеральный За последниечетырегода«ВымпелКом»был

ВымпелКом / Годовой отчет 2008 5 VimpelCom / Annual Report 2008 6 FINANCIAL HIGHLIGHTS FINANCIAL ОСНОВНЫЕ ФИНАНСОВЫЕ ПОКАЗАТЕЛИ ОСНОВНЫЕ ФИНАНСОВЫЕ oa sesU$1,2,5 S 05884U$84656US$6,307,036 US$ 2,740,549 1,998,166 3,211,112 US$8,436,546 3,566,487 (457,927) US$3,942,910 US$10,568,884 US$5,411,786 2,489,432 US$15,725,153 1,500,799 4,615,675 4,493,636 (487,420) US$4,388,806 2,766,609 1,957,949 5,497,819 US$ 363,646 5,157,098 (272,784) 1. OIBDA isanon-USGAAPfinancialmeasure.definedasoperatingincome beforedepreciation,amortizationandimpair 8,442,926 US$344,494 2,217,529 6,425,873 11,336,347 (1,407,795) US$1,003,711 5,124,555 US$914, 683 Total shareholders’equity Total liabilitiesincludingminorityinterest Total debtincludingcurrentportion Total assets 4 Intangible assets,netincludinggoodwill Property andequipment,net Working capital(deficit) Cash andcashequivalents (In thousandsofUSdollars) OIBDA margin(2) OIBDA (1) Net operatingrevenues Operating Results (US GAAP) (In thousandsofUSdollars,exceptpershare(ADS)amounts) FINANCIAL HIGHLIGHTS 3. VimpelCom changedtheratioofitsADSs tradedonTheNewYorkStockExchangefromfourADRsforonecommonshareto twenty 2. OIBDA marginisexpressedasapercentageofnetoperatingrevenues.Reconciliation ofOIBDAmargintooperatinginco US$615,131 US$811,489 US$1,462,706 US$524,334 % netoperatingrevenues Net income e noeprASeuvln 3 S .2U$14 S .0US$0.60 US$12.05 US$0.80 US$15.94 US$1.44 US$28.78 US$ 0.52 US$ 10.34 CONSOLIDATED BALANCESHEETDATA Net incomeperADSequivalent(3) Net incomepercommonshare located athttp://www.vimpelcom.com a percentageofnetoperatingrevenues,themostdirectlycomparableUSGAAPfinancial measureispresentedontheCompany’swe the Company’swebsite,locatedathttp://www.vimpelcom.com and servicedebt.ReconciliationofOIBDAtooperatingincome,themostdirectlycomparable USGAAPfinancialmeasure,isprese our businessoperations,includingabilitytofinancecapitalexpenditures,acquisitions andotherinvestmentsourabil The CompanybelievesthatOIBDAprovidesusefulinformationtoinvestorsbecause itisanindicatorofthestrengthandperform common shareeffectiveAugust21,2007.

0169271108487983,211,118 4,867,978 7,171,098 10,116,932 898135673241731,571,310 2,451,783 3,596,743 ,859,861 80 02 04 48.9% 50.4% 50.2% 48.0% .%2.%1.%19.2% 16.7% 20.4% 5.2% 0820 062005 2006 2007 2008 0820 062005 2006 2007 2008 ity toincur ment loss. me as ance of nted on ADRsforone b site сонесесв,нто6458354789465653211112 US$2740549 US$3942910 4615675 (457927) US$5411786 48,9% US$4388806 5497819 (487420) 1. OIBDA неявляетсяфинансовойвеличинойОПБУСША.ПоказательOIBDA,ранее упоминавшийсяКомпаниейкакEBITDA,определяетсяк 1500799 6425873 50,4% 1957949 (272784) 1571310 US$363646 Собственный акционерныйкапитал US$ 0,60 2451783 2217529 (1407795) меньшинства US$344494 US$615131 50,2% Общая суммаобязательств,включаядолю US$0,80 US$1003711 3596743 US$811489 за текущийпериод 5124555 Общая задолженность,включаязадолженность US$914683 US$1462706 Общая суммаактивов US$12,05 48,0% 4859861 US$1,44 3211118 Нематериальные активы,нетто,включаягудвил US$524334 Основные средства,нетто US$15,94 4867978 Оборотный капитал (дефицит) US$0,52 Денежные средстваиихэквиваленты US$28,78 7171098 (В тысячахдолларовСША) ДАННЫЕ КОНСОЛИДИРОВАННОГОБАЛАНСА US$10,34 10116932 Чистая прибыльнаэквивалентАДР(3) Чистая прибыльнаоднуобыкновеннуюакцию % отчистогооперационногодохода Чистая прибыль Маржа OIBDA(2) OIBDA (1) Чистые операционныедоходы (ОПБУ США) (В тысячахдолларовСША,кромесуммнаакцию(АДР)) РЕЗУЛЬТАТЫ ОПЕРАЦИОННОЙДЕЯТЕЛЬНОСТИ 3. Компания изменилакоэффициентрасчета АДР,обращающихсянаНью-Йоркскойфондовойбирже,счетырехАДР одну обыкновенную 2. Маржа OIBDA–этопоказательOIBDA,выраженныйкакпроцентотчистогооперационного дохода.СоотношениемеждумаржойOIBDA акцию надвадцатьАДРоднуобыкновенную акцию,которыйвступилвсилу21августа2007года. ОПБУ США,–приведенонакорпоративном веб-сайтепоадресу:http://www.vimpelcom.com и операционнойприбылью,выраженной впроцентахотчистогооперационногодохода–наиболеесопоставимойфинансовой величиной величиной ОПБУСШАприведенонанашемвеб-сайтепоадресу:http://www.vimpelcom.com брать займыиобслуживатьдолг.СогласованиепоказателяOIBDAсоперационной прибыльюкакнаиболеесопоставимойфинансовой компании, включаяееспособностьфинансироватькапитальныезатраты,приобретения идругиеинвестиции,атакжевозможность активов. Компаниясчитает,чтопоказательOIBDAдаетважнуюинформациюинвесторам, потомучтоотражаетсостояниебизнеса операционная прибыльдовычетаизносаосновныхсредств,амортизациинематериальных активовипотерь,связанныхсобесцениванием US$ 15 725 153 US$ 10 568 884 568 10 US$ US$ 15725153 1363751708443663566 487 4493636 5157098 11 336347 4 2 6 0 8 3 1998 166 2489432 2766609 8 442926 ,%2,%1,%19,2% 16,7% 20,4% 5,2% 0820 062005 2006 2007 2005 2008 2006 2007 2008 S 3 4 US$6307036 US$ 8436546 ак

ВымпелКом / Годовой отчет 2008 7 VimpelCom / Annual Report 2008 8 5. Subscriber marketsharedatapresentedherearepublishedbyAC&M-Consultingand aregenerallybasedonregisteredsubscrib eri %4 / n/a 10% 1% n/a n/a 7% 4% 4% 27% n/a 18% 5% 6% 37% n/a 13,900 38% 18% 4% 30% 21,300 n/a n/a 26% n/a 23,200 37% 72,028 249,189 72,655 34% n/a 4. VimpelCom anditsprincipalsubsidiariesacquisitions,includingemployeesin Kazakhstan,Ukraine,Tajikistan,Uzbekist 21% 37,999,483 38,400 1,813,938 700,470 45,547,713 1,523,682 339,393 49% 35,936,356 225,055 32% 415,965 51,739,947 3,052,878 2,119,612 1,941,251 39,782,690 624,624 Georgia 61,029,457 Armenia (mobilesubscribermarketshare) 46% 4,603,300 442,484 42,221,252 3,636,243 2,052,493 30% Tajikistan Uzbekistan 47,676,844 6,269,927 Ukraine 544,271 Kazakhstan 43% Russia 25% Market share(5) Employees (4) Total subscribers Georgia Armenia (mobilesubscribers) Tajikistan Uzbekistan Ukraine Kazakhstan Russia End ofperiodactivesubscribers STATISTICS 2008 VimpelCom’smarketshareispresentedonthebasisofactivesubscribers. Armenia. Thegrowthinemployees2008wascausedmainlybytheacquisitionof GoldenTelecom. 0820 062005 2006 2007 2008 an, Georgiaand ers. Startingfrom рзя6 %–– – 1% 10% – 37% 34% 4% 4% 7% 27% – 49% 32% 6% 5% 18% 37% – 38% 46% 30% 18% 4% 30% – 26% 43% 25% – 5. Показатели долирынкапоабонентам,приведенныевданнойтаблице,предоставлены агентствомAC&MConsultingиоснованыбольш – 21% 72655 4. Сотрудники «ВымпелКома» иегоосновныхдочернихпредприятий,атакжеприобретенныхкомпанийстранСНГ,включаяКазахстан, 72028 249189 37999483 – 700470 1813938 225055 45547713 1523682 339393 35936356 51739947 3052878 2119612 1941251 39782690 Грузия 61029457 415965 624 Армения (долярынкасотовойсвязи) 4603300 3636243 42221252 Таджикистан 2052493 Узбекистан 442484 6269927 Украина 47676844 Казахстан Россия 544271 Доля рынка(5) Количество сотрудников(4) Итого абонентов Грузия Армения (абонентысотовойсвязи) Таджикистан Узбекистан Украина Казахстан Россия Количество активныхабонентовнаконецгода СТАТИСТИЧЕСКИЕ ДАННЫЕ активных абонентов. частью напоказателезарегистрированнойабонентскойбазы.Начинаяс2008года долярынка«ВымпелКома»рассчитываетсянабазе с приобретениемкомпании«ГолденТелеком». Украину, Узбекистан,Таджикистан,ГрузиюиАрмению.Увеличениечисласотрудников в2008годусвязаноглавнымобразом 8402 0 13013900 21300 23200 38 400 0820 062005 2006 2007 2008 ей

ВымпелКом / Годовой отчет 2008 9 10 VimpelCom / Annual Report 2008 OIBDA (тыс.долл.США) OIBDA (US$,000) 0620 2008 2007 2006 0620 2008 2007 2006 ЧИСТЫЕ ОПЕРАЦИОННЫЕ ДОХОДЫ (тыс.долл.США) NET OPERATING REVENUES(US$,000) 4 867 9784 867 2 451 783 0620 2008 2007 2006 2006 7 171 098 3 596 743 2007

10 116 932 4 859 861 2008 НА АБОНЕНТА (РОССИЯ) ЕЖЕМЕСЯЧНОЕ КОЛИЧЕСТВОМИНУТ MINUTES OFUSE(RUSSIA) СОТОВОЙ СВЯЗИ ОБЩЕЕ КОЛИЧЕСТВОАКТИВНЫХАБОНЕНТОВ ACTIVE MOBILESUBSCRIBERS TOTAL 0620 2008 2007 2006 2008 2007 2006 45 547 713 145.9 2006 062007 2006 51 739 947 192.1 072008 2007 61 029457 219.1 2008 11 ВымпелКом / Годовой отчет 2008 LETTER TO SHAREHOLDERS ПИСЬМО АКЦИОНЕРАМ

Dear Shareholders!

For VimpelCom 2008 was a year of significant achievements and considerable change, beginning with our transformation into an integrated provider of telecommunications services through the acquisition of Golden Telecom and ending with Russia’s entry into the global financial crisis.

Despite the global financial crisis, our financial and operating results for 2008 were excellent, a testament to the strength of the business and our market position. Our net operating revenues grew by 41%, crossing the US$ 10 billion mark. OIBDA reached nearly US$ 5 billion, an increase of 35% versus 2007, and the OIBDA margin was 48%. Of course, we did not escape the effects of the global financial crisis. Our bottom line was negatively impacted by local currency devaluations in Russia and Ukraine, primarily due to the revaluation of our long-term dollar denominated debt. Net income totaled US$ 524 million, a reduction of 64% versus 2007. However, our closing cash balance on December 31, 2008, was a very solid US$ 915 million.

From a strategic perspective, 2008 was a critical year for VimpelCom. We implemented our strategy to transform VimpelCom into an integrated provider of telecommunications services with the purchase and successful integration of Golden Telecom, Inc. and Corbina Telecom.

Today, we are the only telecom operator in Russia and the CIS offering both corporate and 14 VimpelCom / Annual Report 2008 составил 915млндолл.США. средств на31декабря2008 года Несмотря наэто,остатокденежных на 64%посравнениюс2007 годом. составила 524млндолл.США,снизившись в долларахСША.Чистаяприбыльзагод долговых обязательств,деноминированных из-за переоценкинашихдолгосрочных прибыли, чтопроизошлоглавнымобразом повлияла нанашпоказательчистой в РоссииигривнынаУкраиненегативно финансового кризиса.Девальвациярубля обошли сторонойпоследствиямирового составила 48%.Ксожалению,насне годом, втовремякакмаржаOIBDA чившись на35%посравнениюс2007 достиг почти5млрддолл.США,увели- в 10млрддолл.США.ПоказательOIBDA выросла на41%,превысивотметку на рынке.Чистаяоперационнаявыручка Компании иеелидирующегоположения подтверждением сильныхпозицийнашей и финансовыхрезультатов,чтоявляется смогли достичьотличныхоперационных Несмотря накризис,в2008годумы финансовый кризис. вхождением Россиивмировой телекоммуникационных услуг,аокончание– в интегрированногопоставщика что позволилопреобразовать«ВымпелКом» ретением компании«ГолденТелеком», перемен. Егоначалоознаменовалосьприоб- годом большихдостиженийизначительных Для компании«ВымпелКом»2008годстал Уважаемые акционеры! крупнейшего сотовогоритейлера России. тарный пакетакцийкомпании «Евросеть», в октябре2008годамыприобрели минори- каналов распространения. Кроме того, продолжили продвижениесобственных с ключевымиритейлерами,атакже Мы наладилиболеетесныеконтакты стратегия вобластирозничныхпродаж. В 2008годунамибылареализованановая России, работающимподединымбрендом. тором всферетелекоммуникационнойсвязи «ВымпелКом» являетсясамымкрупнымопера- пившем 2009году,радыконстатировать,что пути этихпреобразований,исегодня,внасту- прогрессом, которогоудалосьдобитьсяна брендом «Билайн».Мыудовлетворенытем время этиуслугипредоставляютсяпод лосного доступавИнтернет.Внастоящее и фиксированнойсвязи,атакжеширокопо- широкого спектратехнологиймобильной услуг связиипередачиданныхнаоснове тивным ичастнымклиентамполныйнабор и странахСНГ,предоставляющимкорпора- телекоммуникационных услугвРоссии является единственнымоператором На сегодняшнийдень«ВымпелКом» муникационных услуг. в интегри рованного поставщикателеком- по преобразованию«ВымпелКома» бизнес, мыреализовалисвоюстратегию Телеком» иихуспешнойинтеграциивнаш компаний «ГолденТелеком»и«Корбина нас ключевым.Благодаряприобретению развития Компании,2008годсталдля С точкизрениястратегическихперспектив transformation and brand. Wearepleasedwithourprogressinthis services arebeingprovidedunderthe“Beeline” and broadbandtechnologies.Todayallofthese services usingabroadrangeofmobile,fixed residential customersavarietyofvoiceanddata were inGeorgia. 0.5 millionwereinArmenia, and 0.2million inTajikistan,were inUkraine,0.6 were million 3.6 millionwereinUzbekistan, 2.1million were inRussia,6.3millionKazakhstan, Of thosesubscribers,approximately47.7million year, almost10millionmorethanayearago. active mobilesubscribersbytheendof Overall, weservedapproximately61million consolidated revenuesand13%ofOIBDA. totalaccounting for16%ofthe group but thecontributionfromCISisgrowing, Russia remainedourmajormarketin2008, and pre-paidcards. CISwherecustomerscanbuyourservices the approximately 34,500 pointsofsalethroughout 35,000 than pointsofsaleinRussiaand more our competitiveposition.Currentlywehave in thedistributionchannelsand,therefore, these measureshaveimprovedourstrength leading telecomretailerinRussia.Allof we acquiredaminoritystakeinEuroset,the distribution channelsaswell.InOctober, with keyretailersandpromotingourown strategy. Webeganworkingmoreclosely In 2008,weembarkeduponanewdistribution a commonbrand. telecom operatorinRussiaoperatingunder proud toreportthatVimpelComisthelargest

, asweenter2009,are мический кризисразрастался, мы По меретого,какглобальный эконо- пришлось решатьсложные задачи. Несмотря наэтиуспехи,в2008годунам обладают огромнымпотенциаломроста. населением в100миллионовчеловек во ВьетнамеиКамбодже.Этирынкисобщим с приобретениемлицензиинадеятельность и СНГвоплотиласьвжизнь2008году Наша стратегияэкспансиизапределыРоссии и 0,2 миллиона абонентов–вГрузии. в Таджикистане, 0,5миллиона–вАрмении 2,1 миллиона–вУкраине,0,6 миллиона– в Казахстане,3,6миллиона–Узбекистане, проживают вРоссии,6,3миллиона– примерно 47,7миллионаабонентов в прошломгоду.Изэтогоколичества на 10миллионовабонентовбольше,чем превысила 61миллиончеловек,чтопочти активная абонентскаябазаКомпании выручки и13%OIBDA.Кконцугодаобщая и составил16%консолидированной выручки, полученнойвстранахСНГ,вырос основным рынком,однакоразмер В 2008годуРоссияоставаласьнашим «ВымпелКома». СНГ предлагаютклиентампродуктыиуслуги и почти34 500 пунктовпродажвстранах пунктовпродажвРоссииболее 35000 возможности нарынке.Внастоящеевремя вательно, усилилииееконкурентные в сферерозничнойторговли,аследо- Все этимерыукрепилиположениеКомпании 15 ВымпелКом / Годовой отчет 2008 16 VimpelCom / Annual Report 2008 as GeneralDirector.Alexander Izosimovwill Chief ExecutiveOfficerandAlexander Torbakhov beginning April2,2009,isled byBorisNemsicas a strongandseasonedmanagement teamwhich, optimistic aboutthefuture.Thecompanyhas operations andmarketpositionare However, weareconfidentinthecompany’s the economiclandscaperemainsuncertain. As wemoveinto2009,acknowledgethat financial flexibilityatthistime. that webelievewasnecessarytopreserveour an actionthatwedidnottakelightly,butone the dividendpaymentfor2008.Thiswas General MeetingofShareholderstosuspend the difficultdecisiontorecommendourAnnual the expenseofourgrowthplans.Wealsomade to enhanceourfinancialposition,butnotat opportunities –allofwhichwereprudentsteps budgets andputonholdanynewexpansion We alsoreducedourcapitalexpenditure associated withtheGoldenTelecomacquisition. accelerating realizationofsomecostsynergies we reducedoperatingexpenses,including financial position.Toincreaseourliquidity definitive actiontoensureourcontinuedsolid As theglobaleconomiccrisisunfolded,wetook considerable challenges. Despite oursuccesses,2008wasalsoayearof 100 million. growth prospectswithatotalpopulationof and Cambodia.Thesemarketsprovidegreat acquired thelicensestooperateinVietnam and theCIStookrootin2008whenwe Our strategyofexpansionbeyondRussia Изосимов останетсявКомпании вдолжности Генерального директора.Александр директора иАлександрТорбахов вкачестве в качествеГлавногоуправляющего 2009 годаруководятБорисНемшич ленческая команда,которойсо2апреля В Компанииработаетсильнаяуправ- и мысоптимизмомсмотримвбудущее. ности нашегоположениянарынке, в успехенашейКомпанииистабиль- предсказуемыми. Темнеменее,мыуверены развития экономикиостаютсясложно 2009 года,мыпонимаем,чтоперспективы Сегодня, работаявусловияхнаступившего в непростоевремя. нения финансовойгибкостиКомпании считаем, этобылонеобходимодлясохра- Данный шагдалсянамнелегко,но,какмы выплачивать дивидендыпоитогам2008года. собранию акционеров«ВымпелКома»не решение рекомендоватьГодовомуОбщему ее потенциалроста.Мыпринялитрудное положения Компании,сохраняяприэтом направлены наукреплениефинансового по расширениюдеятельности.Этишаги вложения иприостановленыновыепроекты сокращены бюджетынакапитальные к расходнойчастибюджета.Такжебыли по реализациисинергий,относящихся Телеком» –ускореновыполнениепланов с приобретениемкомпании«Голден ционные затраты,втомчисле–связи были существенносокращеныопера- показателей. Дляувеличенияликвидности обеспечению устойчивостифинансовых предпринимали решительныедействияпо General Director Alexander Torbakhov Chairman oftheBoard Alexey Reznikovich beyond. growth opportunitiesinRussia,theCISand the Companywillbeinagoodpositiontopursue excellent. Whenthestormcloudshavepassed, its value,andourcurrentmarketpositionis transformational strategycontinuestoprove In closing,ourfinancialpositionisstrong, provide supportthroughthetransitionperiod. 2009 inanon-executiveroleofPresidentto remain withthecompanythroughendof Chief Executive Officer Chief Executive Nemsic Boris Алексей Резникович в России,странахСНГидругихрегионах. положении длярасширениясвоегобизнеса Компания будетнаходитьсявхорошем плоды. Когдагрозовыетучиразвеются, преобразованию Компанииприноситсвои рынке, ареализациянашейстратегиипо совые позиции,прекрасноеположениена что «ВымпелКом»сохраняеткрепкиефинан- В заключениемыхотимещеразотметить, руководству. периода будетоказыватьсодействиеновому до конца2009годаивтечениепереходного Президента безисполнительныхфункций Главный управляющий директор Борис Немшич Генеральный директор Александр Торбахов Председатель Советадиректоров 17 ВымпелКом / Годовой отчет 2008 18 VimpelCom / Annual Report 2008 which weacquiredaminority stake.Thisnew Russia’s largesttelecomretailer Euroset,in and largeregionaldealers; through through ourpartnershipswith keynational a networkofourownoutletsandbooths, we nowreachpotentialcustomersthrough distribution. Withourthree-prongedapproach, In 2008westrengthenedourfocusonretail mobile customers. the rangeofproductsandservicesofferedtoour in 40Russiancities,significantlyexpanding the endofyear,launchednew3Gservices began thedeploymentof3Gnetworksand,by an attractiveOIBDAmarginof52.5%.Wealso resulting in21%mobilerevenuegrowthand led toa14%year-on-yearincreaseinusage, subscribers. Ourfocusedmarketingefforts customer baseinthecountrytonearly48million subscriber additions,increasingouractive leader forthelasttwoquartersof2008innew deliver outstandingresults.Wewerethemarket Our mobileoperationsinRussiacontinuedto capabilities. on furtherstrengtheningourmanagement drive foroperationalexcellenceandourfocus our strategicdirectionisunderpinnedby to expandintonewbusinessareas.Furthermore, the CISand5)capturingattractiveopportunities access business,4)growingourbusinessin segment, 3)developingtheconsumerInternet 2) strengtheningthecorporatebusiness from theRussianmobileconsumerbusiness, a strategyaimedat1)extractingmaximumvalue scope in2008.Wecontinuedtheexecutionof VimpelCom reachednewlevelsofscaleand СТРАТЕГИЧЕСКИЕ ДОСТИЖЕНИЯ 2008 ГОДА 2008 СТРАТЕГИЧЕСКИЕ ДОСТИЖЕНИЯ OF2008 STRATEGIC ACHIEVEMENTS и региональныхдилеров,скоторыми заключили магазинов, салоныкрупных федеральных там своиуслуги,используясеть собственных дуктов иуслуг.Теперь мыпредлагаем клиен- внимание развитиюдистрибуциинашихпро- В 2008годуКомпаниятакже уделилаособое нашим абонентаммобильнойсвязи. ственно расширивлинейкууслуг,предлагаемых скую эксплуатациюв40городахРоссии,суще- и ужекконцугодазапустилиэтусетьвкоммерче- строительство сетитретьегопоколения(3G), уровне 52,5%.Крометого,в2008годумыначали выручки на21%споказателем маржиOIBDAна вания голосовымиуслугами,чтопривелокросту нам удалосьувеличитьна14%уровеньпользо- Благодаря продуманномуцелевомумаркетингу абонентскую базудо48миллионовчеловек. по количествуновыхподключений,доведясвою второго полугодия2008годамыбылилидерами монстрировать прекрасные результаты. Втечение Наш мобильныйбизнесвРоссиипродолжаетде- ности иуправленческихрешений. ному совершенствованиюоперационнойдеятель- этой стратегиислужитнашестремлениекпостоян- бизнеса иновыерынки.Основойдляреализации возможностей дляэкспансиивсмежныеобласти СНГ, атакже5)использованиепривлекательных го доступавИнтернет;4)ростбизнесастранах тивном рынкесвязи;3)развитиеширокополосно- в России;2)расширениеприсутствиянакорпора- рост доходовотоказанияуслугмобильнойсвязи направленной на:1)максимальновозможный продолжили движениеврусленашейстратегии, ход бизнесанакачественноновыйуровень.Мы Для «ВымпелКома»2008годознаменовалпере- of achallenging to the call to the Rising работать работать Не боимся время в трудное time 19 ВымпелКом / Годовой отчет 2008 20 VimpelCom / Annual Report 2008 and rapidlygrowingtelecom markets. Webegan growing population,burgeoning economies, us afootprintinSoutheastAsia, withafast Vietnam andoursubsidiaryin Cambodiagive CIS marketsin2008.Ourjoint venturein expanded itsreachbeyondourtraditional For thefirsttimeinourhistory,VimpelCom brand. services underourwellestablished“Beeline” high-quality networksandprovidetopquality growing usage.Inallofourmarkets,weoperate through increasingmobilepenetrationand opportunities forfuturegrowthintheregion subscribers byyearend.Weseesignificant region increasedby40%andexceeded13million growth. OuractivesubscriberbaseacrosstheCIS countries, whichweseeasaplatformforfuture We continuetoexpandourbusinessintheCIS a coordinatedsalesapproach. networks, improvingoperationalefficiency,and synergies fromtheintegrationoftransport market. Thecombinedcompanyisrealizing and therapidlygrowingbroadbandInternet services totelecommunicationoperators telecommunications services,wholesale This fixed-linemarketincludescorporate fixed-line marketinRussiaandtheCIS. us excellentaccesstoalargeandrobust alternative fixed-lineoperatorinRussia,gave Our acquisitionofGoldenTelecom,theleading fixed broadband. the deliveryofnewservicessuchasmobileand Russian mobilemarketandopenedthedoorto our competitivepositioninthesaturated approach todistributionsignificantlyimproved брендом «Билайн». ляем услугиподединым,хорошо узнаваемым чественные сетипередачиданных ипредостав- странах СНГмыиспользуем новейшие высокока- мобильной связью.Стоитотметить, чтововсех чения уровняпроникновенияипользования который можетбытьдостигнутзасчетувели- Мы видимзначительныевозможностидляроста, сив 13миллионовчеловекнаконец2008года. Компании встранахСНГвырослона40%,превы- для дальнейшегороста.Количествоабонентов рынки мырассматриваемвкачествеплатформы Продолжается нашаэкспансиявстраныСНГ,чьи и координации вобластипродаж. сети, повышенияоперационнойэффективности тические эффектыотобъединениятранспортной сейчас нашаединаяКомпанияреализуетсинерге- рынок широкополосногодоступавИнтернет.Уже другим операторам,атакжебыстрорастущий оптовую продажуканаловсвязииоказаниеуслуг муникационных услугкорпоративнымклиентам, включающему всебяпредоставлениетелеком- получил доступкэтомумасштабномурынку, фиксированной связивРоссии,«ВымпелКом» Телеком», ведущегоальтернативногооператора Благодаря приобретениюкомпании«Голден мобильной ификсированнойсвязи. доступ вИнтернетсиспользованиемтехнологии гать новыеуслуги,такиекакширокополосный а крометого,позволилболееуспешнопродви- позиции нароссийскомрынкемобильнойсвязи, буции существенноукрепилнашиконкурентные ром которогомыстали.Новыйподходкдистри- ритейлера «Евросеть»,миноритарнымакционе- магазинов крупнейшегороссийскогосотового специальные партнерскиесоглашения,исеть the strategicachievementsof2008. development ofourbusinesscapitalizingon Life Insurance–willjointlyleadthefuture Alexander Torbakhov,formerCEOofRosgosstrakh Austria Group–andthenewGeneralDirector CEO –BorisNemsic,formerofTelekom of theCompanyonApril2,2009.Thenew A newtop-managementteamassumedleadership and isreadytorespond. continues tomonitorthesituationveryclosely so fardemonstratedresilienceandmanagement debt repayment.TheRussiantelecommarkethas margin protection,cashflowgeneration,and environment, focusingonoperationalefficiency, prudently balancedourapproachtothenew environment. Inresponsetothiscrisis,wehave created adifficultandunpredictablebusiness unfolded duringthesecondhalfofyear challenges. Theglobaleconomiccrisisthat VimpelCom theyearalsopresentedunique While 2008wasatransformationalyearfor and plancommerciallaunchin2009. the constructionofnetworksinbothcountries стратегические успехи,достигнутые в2008году. шим развитиембизнесаКомпании, опираясьна и Александрбудутсовместноруководить дальней- лявший ООО«СК“Росгосстрах-Жизнь”». Борис директором –АлександрТорбахов, ранеевозглав- ний «ТелекомАвстрия»,ановымГенеральным ший аналогичнуюдолжностьвгруппекомпа- директором сталБорисНемшич,ранеезанимав- команда топ-менеджеров.Главнымуправляющим 2 апреля2009годавКомпаниюпришлановая своевременно принятьнужныемеры. следить заситуацией,чтобыпринеобходимости руководство Компаниипродолжаетвнимательно ный рынокдемонстрируетустойчивость,однако долгов. Внастоящеевремятелекоммуникацион- ности, увеличенииденежногопотокаивыплате тивности, сохранении высокого уровнядоход- внимание наповышенииоперационнойэффек- сированный пландействий,концентрирующий преодоления кризисабылразработансбалан- но ухудшилусловиядляведениябизнеса.Для проявился вовторойполовинегода,существен- номический кризис,которыйособенносильно уникальных посложностизадач.Мировойэко- тельных преобразованийиодновременно годом 2008 годсталдля«ВымпелКома»годомзначи- ем ихкоммерческийзапусквсередине2009года. к строительствусетейвобеихстранахипланиру- телекоммуникационного рынка.Мыприступили экономикой истремительнымитемпамиразвития с быстрорастущимнаселением,динамичной развития бизнесавЮго-ВосточнойАзии,регионе нее предприятиевКамбоджесталиосновойдля Совместное предприятиевоВьетнамеидочер- пределы своеготрадиционногорынкастранСНГ. В 2008годувпервые«ВымпелКом»шагнулза 21 ВымпелКом / Годовой отчет 2008 22 VimpelCom / Annual Report 2008 we laidthefoundationforour entryinto our entryintotheGTeljoint-venture inVietnam, With ouracquisitionofSotelco inCambodiaand a presenceoutsideoftheformer SovietUnion. in 2008whenforthefirsttimeweestablished VimpelCom reachedanimportantmilestone and offerattractivemargins. in theCIScountrieshavesolidgrowthpotential that bothmobileandfixedlinecommunications growth inthesecountries,however,webelieve growth. Theglobaleconomiccrisismaydelay capturing marketshareduringtheperiodsof will continuetoincreaseandwearefocusedon mobile market.Weexpectthatpenetrationlevels reminiscent ofthedevelopmentRussian of theCIScountriesinrecentyearsis The marketdevelopmentweobservedinmost important driverforourfuturegrowth. The CISbusinessoutsideofRussiaisavery our vastcountry. operator servicingcustomersineveryregionof attractive. VimpelComisnowatrulyRussia-wide cost-efficient andourserviceofferingsmore Russia, madeournetworksmoreflexibleand enhanced ourpresenceinkeyregionsof Telecom andCorbinasignificantly 3G network.OurstrategicacquisitionsofGolden in theFarEastregionsusingastate-of-the-art In Russia,westartedtoprovidemobileservices driver ofourbusiness. new marketshashistoricallybeenthekeygrowth coverage inexistingmarketsandexpansioninto been akeyfocusforVimpelCom.Increasingour Geographic expansionofourserviceareahas НОВЫЕ ГОРИЗОНТЫ BROADENING HORIZONS еще ипотому,чтовпервые«ВымпелКом» смог 2008 годсталособымвистории Компании гут обеспечитьвысокийуровень доходности. СНГ имеютхорошиеперспективыразвития имо- мобильная, такификсированнаясвязьвстранах роста бизнесавэтихстранах,ноцеломкак номический кризис,вероятно,замедлиттемпы долю рынкавпериодэтогороста.Мировойэко- и постараемсяполучитькакможнобольшую проникновения сотовойсвязитамбудетрасти, ной связивРоссии.Мыожидаем,чтоуровень многом повторяетдинамикуразвитиямобиль- сотовой связивбольшинствестранСНГ,во дальнейшего роста.То,какразвивалсярынок является длянасоченьважнымсточкизрения Бизнес встранахСНГ,запределамиРоссии, в каждомуголкенашейогромнойстраны. сийский оператор,обслуживающийабонентов «ВымпелКом» –этопо-настоящемувсерос- более привлекательнымидляклиентов.Сегодня сеть болееэффективной,апродуктыиуслуги в ключевыхроссийскихрегионах,сделали мы существенноусилилисвоеприсутствие паний Благодаря стратегическомуприобретениюком- ном округенаосновесетитретьегопоколения. мобильной связивДальневосточномфедераль- В 2008годумыначалипредоставлятьуслуги ми факторамиростанашегобизнеса. и выходнановыерынкивсегдабылиключевы- рение зоныпокрытиянатрадиционныхрынках ности для«ВымпелКома».Постоянноерасши- являлось приоритетнымнаправлением деятель- Расширение географическогоприсутствия «Голден Телеком» и «Корбина Телеком» «Голден Телеком»и«Корбина

Opening up new Находим возможности vistas новые

23 ВымпелКом / Годовой отчет 2008 24 VimpelCom / Annual Report 2008 three tofiveyears. in 2009andplantobecomeatopplayerwithin launch commercialoperationsinthesemarkets with lesscompetitivepressure.Weexpectto to buildmorecost-efficientnetworksinmarkets the currenteconomicsituationasanopportunity and offerattractivegrowthopportunities.Wesee The localtelecommarketsarestilldeveloping young populationofalmost100millionpeople. and Cambodiaarehometoadynamic the SoutheastAsianregion.Together,Vietnam занять прочныепозициинарынке. эксплуатацию в2009году,итечение3–5лет планировалось, ввестиеевкоммерческую с меньшимизатратами,чемпервоначально позволит нампостроитьсетьвэтихстранах считаем, чтотекущаяэкономическаяситуация вают прекрасныевозможностидляроста.Мы только развиваютсяи,следовательно,откры- люди, ателекоммуникационныерынкитамеще большинство изкоторыхмолодыеактивные же проживаетпочти100миллионовчеловек, в Юго-ВосточнуюАзию.ВоВьетнамеиКамбод- заложили фундаментдлянашейэкспансии предприятия «ДжителМобайл»воВьетнаме ратора «Сотелко»исозданиесовместного Союза. Приобретениекамбоджийскогоопе- выйти запределыстранбывшегоСоветского НОВЫЕ ФУНКЦИОНАЛЬНЫЕ ВОЗМОЖНОСТИ НОВЫЕ ФУНКЦИОНАЛЬНЫЕ existing networksformasolid foundationfor VimpelCom canoffertoitscustomers. Our new dimensionofproductsand servicesthat Video Broadcastingopenupa completely of 3G),Fiber-To-The-Building,andDigital Packet Service(themostadvancedversion New technologiessuchasHighSpeedData operate. business modelinallofthemarketswhichwe segments. Weplantoreplicatetheintegrated position inbothcorporateandresidential at attractivepriceswillstrengthenourmarket expect thatourabilitytoofferbundledsolutions opportunities. Furthermore,inthelongtermwe operations andprocurement,cross-selling transport network,efficiencygainson with costandrevenuesynergiesinacombined services underonebrandprovidesVimpelCom The combinationofmobile,fixedandbroadband and Asia. global industryleadersinEurope,NorthAmerica, trend, whichisalsoreflectedinthestrategyof and fixedlinedataservicesispartoftheglobal competitive advantage.Convergenceofmobile centered ondataserviceswillbecomeakey the abilitytoofferfullfledgedbundledproducts that withthesaturationofmobilemarkets, expansion ofresidentialbroadband.Webelieve a percentageoftotalrevenueandtherapid see theriseinrevenuefromdataservicesas Throughout theglobaltelecomsindustrywe mobile, fixedandbroadbandservices. becoming afullyintegratedoperatoroffering Telecom openedthedoortoVimpelCom Our acquisitionsofGoldenTelecomandCorbina INCREASING FUNCTIONALITY вать единуюинтегрированную бизнес-модель зи. Вдальнейшеммынамереваемся использо- корпоративном ипотребительском рынкесвя- должны укрепитьположение «ВымпелКома»на емлемым ценамвдолгосрочнойперспективе реализации пакетныхпредложенийпопри- крестных продаж.Болеетого,возможностипо онной деятельностиизакупок,атакжепере- транспортных сетей,оптимизацииопераци- вать синергетическийэффектотобъединения брендом позволяет«ВымпелКому»использо- полосного доступавИнтернетподединым ной ификсированнойсвязи,атакжешироко- Предоставление полногоспектрауслугмобиль- Америке иАзии. лидеров вобластисвязиЕвропе,Северной нашла своеотражениевстратегиимировых становится общемировойтенденцией,которая основе мобильнойификсированнойсвязи Переход коказаниюконвергентныхуслугна пакет услуг,основанныйнапередачеданных. Компании предоставлятьинтегрированный ством, понашемумнению,станетспособность услуг, ключевымконкурентнымпреимуще- рынках. Сучетомнасыщениярынкамобильных тенденций намировыхтелекоммуникационных годняшний деньявляютсяоднимиизосновных широкополосного доступавИнтернетнасе- услуг попередачеданныхибыстроеразвитие ного доступавИнтернет.Ростдоливыручкиот и фиксированнойсвязи,атакжеширокополос- ставляющего полныйспектруслугмобильной телекоммуникационного оператора,предо- «ВымпелКом» вполностьюинтегрированного и «КорбинаТелеком»позволилопреобразовать Приобретение компаний«ГолденТелеком» 25 ВымпелКом / Годовой отчет 2008 26 VimpelCom / Annual Report 2008 and beyond. growing residentialbroadbandmarketinRussia become oneofthemarketleadersinfast in thecorporatesegmentandwillstriveto to sustainGoldenTelecom’sleadershipposition benefit ourbusinessoverthelongterm.Weaim into thelargeRussianfixed-linemarketwill We expectthatourstrategicdecisiontoexpand a relationshipbasedsolelyonmobileservices. company andcorporateclientstickierthanin solutions maketherelationshipsbetweenour centric servicesandcustom-madefixed-line the impactofeconomicslowdown.Data Diversification ofourrevenuebasealsodampens products andservices. the futuredesignanddeliveryofstate-of-the-art в ИнтернетРоссииидругихстранах. растущем рынкеширокополосногодоступа а такжестатьоднимизлидеровнабыстро- Компании всегментекорпоративныхуслуг, стремимся удержатьлидирующееположение Компании вдолгосрочнойперспективе.Мы окажет благоприятноевоздействиенабизнес фиксированной связиРоссии,несомненно, Наша стратегиявыходанаобширныйрынок ставление услугтолькомобильнойсвязи. ний скорпоративнымиклиентами,чемпредо- формирует основудляболеепрочныхотноше- ботанных сучетомтребованийпользователя, данных иуслуг фиксированной связи,разра- зиса. Предложениеуслугнаосновепередачи сглаживать последствияэкономическогокри- Диверсификация источниковдоходовпомогает рабатывать ипредлагать своимклиентам. и продуктов,которые«ВымпелКом» можетраз- обеспечивают высочайшийуровеньуслуг видения намобильныетелефоны (DVB-H), (FTTB) ипередача сигналов цифрового теле- прокладка кзданиямоптоволоконныхсетей (HSDPA) –наиболеесовременнаяверсия3G, высокоскоростная пакетнаяпередачаданных Новые передовыетехнологии,такиекак ляет своиуслуги. на всехрынках,гденашаКомпанияпредостав- Проявляем Flexibility in new thinking and decision making, гибкость мышления и принятия решений, fortifying укрепляем the present, настоящее, готовимся looking ahead to tomorrow к будущему 28 VimpelCom / Annual Report 2008 MAINTAINING CUSTOMER FOCUS significantly improvegrosssales andstrengthen This increasedfocusonretail allowedusto a saturatedRussianmobilemarket. significantly increaseourcompetitivenessin promotion intheretaildistributionchannelsto product quality,world-classbranding,andactive at puttingthecustomerfirst.Wecombineexcellent Our increasedfocusonretaildistributionisaimed under the“Beeline”brand. launch ouroperationsinCambodiaandVietnam consultation withlocalpartners,wedecidedto Business” brand.Aftercarefulanalysisand services havebeenofferedunderthe“Beeline Starting September2008,allcorporatefixed-line excellence. synonymous withtrustandourcommitmentto Throughout theyears,ourbrandhasbecome success story,definingwhoweareasacompany. always playedanimportantroleinVimpelCom’s of approximatelyUS$7.4billion.Brandinghas the 2008rankingwithanestimatedbrandvalue VimpelCom maintaineditsNo.1positionin consultancy InterbrandZintzmeyer&LuxAG. brand inRussiabytheinternationalmarketing been namedasthestrongestandmostvaluable For thepastfouryears,our“Beeline”brandhas results inaverycompetitivemarketenvironment. “Beeline” brand,helpedusachieveoutstanding efforts, coupledwiththestrengthofour innovation andcreativity.Ourtailoredmarketing we haveemphasizedastrongserviceculture, focus andmarketing.Throughoutourhistory, VimpelCom wasbuiltonacultureofcustomer ФОКУС НА ПОТРЕБНОСТЯХ КЛИЕНТА ФОКУС ПОТРЕБНОСТЯХ НА бренд международногоуровня иактивное Сочетая продуктыотличного качества, поставить интересыклиента воглавуугла. дистрибуции розничныхпродуктов иуслуг– Основная цельрасширениянашихканалов нама такжеподторговоймаркой«Билайн». решение овыходенарынкиКамбоджииВьет- таций сместнымипартнерамибылопринято внимательного изученияситуациииконсуль- клиентам подбрендом«БилайнБизнес».После ной связипредоставляютсякорпоративным С сентября2008годавсеуслугификсирован- высоким стандартамведениябизнеса. синонимом доверияиприверженностисамым Компании. Современембренд«Билайн»стал жение брендавсегдаспособствовалоуспеху близительно в7,4млрддолларовСША.Продви- 2008 года,когдаего брендбылоцененпри- собой лидирующееположениеврейтинге брендом России.«ВымпелКом»сохранилза лайн» признавалсясамымсильнымидорогим Interbrand Zintzmeyer&LuxAG,бренд«Би- сии международногомаркетинговогоагентства На протяжениипоследнихчетырехлет,повер- связи РоссиииСНГ. постоянной конкуренциинарынкахмобильной достичь выдающихсярезультатоввусловиях пулярным брендом«Билайн»позволилинам правленные маркетинговыеусилиявкупеспо- инновациям икреативномуподходу.Целена- всегда уделялоськультуреобслуживания, ента иактивногомаркетинга.Особоевнимание составляют принципыориентированиянакли- Основу корпоративнойкультуры«ВымпелКома» industry. VimpelCom attheforefrontoftelecom cutting-edge technologicalpotential,willkeep in marketingandsales,togetherwithour The experienceandexpertisewehavedeveloped focus inallofthemarketswhichweoperate. continue tostriveforthesamelevelofcustomer to maintainaloyalcustomerbase.Wewill of offeringhighqualityproductsandservices management clearlyunderstandstheimportance In additiontofocusonretaildistribution, by theearlyresultsofourretailstrategy. around forbetterdeals.Weareveryencouraged difficulty asweexpectmoreconsumerstoshop increasingly importantintimesofeconomic A strongpresenceinretaildistributionbecomes the promotionofournewproductsandservices. ние виндустрии телекоммуникаций. « ВымпелКому» сохранитьлидирующееположе- на последнихдостиженияхнауки,позволят технологического потенциала,основанного даж, атакжеосвоениесамого современного полученные вобластимаркетингаипро- рынках нашегоприсутствия.Опытинавыки, и внимательногоотношениякклиентунавсех сти. Мыбудемдобиватьсяединыхстандартов клиентскую базусвысокимуровнемлояльно- продуктов иуслуг,позволяющихсохранить важность предоставлениявысококачественных дистрибуции руководствоКомпанииосознает В дополнениекусилениюпозицийвсфере обнадеживающими. ничных продажпредставляютсянамвесьма реализации новойстратегиивобласти роз- жения вусловияхкризиса.Первыерезультаты пытаться найтинаиболеевыгодныепредло- очевидно, чтовсебольшепотребителейбудут в сложныхэкономическихусловиях,поскольку становится всеболееважнымфактором продвижение новыхпродуктовиуслуг.Это увеличить валовойобъемпродажиусилить ничном сегментепозволилонамзначительно Расширение присутствияКомпаниивроз- в условияхнасыщениярынкамобильнойсвязи. но укрепитьсвоиконкурентныевозможности продвижение услуг,мыстремимсясуществен- 29 ВымпелКом / Годовой отчет 2008 30 VimpelCom / Annual Report 2008 carry intothefuture. the visionthattheirsuccessorsshouldtakeand the principles,establishedrulesanddefined courageous andvisionaryfounders.Theyset but expressdeepgratitudeandrespecttoits its extraordinaryachievements,onecannot as aNYSElistedcompany,lookingbackat Today, asVimpelComhaspassedits12 Eastern Europe. the largestcompaniesinRussia,CIS,Centraland the foundationthathasmadeVimpelComoneof Exchange in1996.Messrs.ZiminandFabelalaid since 1903tobelistedontheNewYorkStock step ofbecomingthefirstRussiancompany from itsinceptionin1992,tohistory-making and aleaderintheindustry.TheyledVimpelCom made VimpelComuniqueinRussiaandtheCIS spirit –valuesandcharacteristicsthathave governance, quality,innovationandapioneering the Company’stransparency,strongcorporate Emeritus AugieK.FabelaIIhaveinspired Dr. DmitriB.ZiminandCo-FounderChairman VimpelCom’s FounderandHonoraryPresident НОВАТОРСКИЙ ДУХ УЧРЕДИТЕЛЕЙ НОВАТОРСКИЙ ДУХ «ВЫМПЕЛКОМА»: ТРАДИЦИИ PIONEERING SPIRIT THE LEGACYOFVIMPELCOM FOUNDERS’ th year для развития бизнеса вбудущем. которые ихпреемникисмогутвзятьзаоснову поведения инаправление развития Компании, вополагающие принципы,определили нормы новидным основателям. Онизаложилиосно- благодарность иуважениеего смелым идаль- фондовой бирже,хочетсявыразить глубокую 12-летний рубежлистинга наНью-Йоркской Сегодня, когда «ВымпелКом» ужеперешагнул России, СНГ, Центральной иВосточнойЕвропы. крупнейших телекоммуникационных компаний рый позволил«ВымпелКому» стать однойиз и г-н Фабела заложилитотфундамент, кото- фондовой биржипосле1903 года. Д-рЗимин панией, включенной влистингНью-Йоркской да «ВымпелКом» стал первойроссийскойком- ее кисторическомудостижению1996 года, ког- с момента ееоснования в1992 году ипривели в своейиндустрии. Онивозглавляли Компанию ной России истранах СНГ, атакже лидером Компанию уникальнымявлениемвсовремен- корпоративного управления, которыесделали дух, прозрачность бизнеса ивысокийуровень приоритет высокого качества, новаторский принятия таких ценностей ипринципов,как г-н О.К. Фабела IIявляютсяинициаторами и ПочетныйПредседатель Совета директоров пелКома» д-рД.Б.Зиминисоучредитель Учредитель иПочетныйПрезидент«Вым- 31 ВымпелКом / Годовой отчет 2008 32 BOARD OF DIRECTORS 33 СОВЕТ ДИРЕКТОРОВ

Jo Olav Lunder Leonid R. Novoselsky Hans Peter Kohlhammer President, Ferd Industrial Holding General Director, OOO GK Gradient Chief Executive Officer, Chairman of the Board, Swix Sport AS Kohlhammer Consulting Йо Олав Лундер Леонид Романович Ханс Петер Кохлхаммер Президент, Ferd Industrial Holding Новосельский Генеральный директор Председатель Совета директоров, VimpelCom / Annual Report 2008 Генеральный директор, консалтинговой фирмы Kohlhammer ВымпелКом / Годовой отчет 2008 Swix Sport AS ООО НТС «Градиент» Consulting

Alexey M. Reznikovich Mikhail M. Fridman Jan Edvard Thygesen Chairman of the Board of Directors, Chairman of the Supervisory Board, Executive Vice President, Telenor ASA VimpelCom Alfa Group Consortium Head of Central and Eastern European Chief Executive Officer, Altimo Chairman of the Board of Directors, operations, Telenor TNK-BP Алексей Михайлович Михаил Маратович Фридман Йан Эдвард Тюгесен Резникович Председатель Наблюдательного Исполнительный Вице-президент, Председатель Совета директоров, совета, Консорциум «Альфа-Групп» Telenor ASA «ВымпелКом» Председатель Совета директоров, Начальник управления операций Главный управляющий директор, TNK-BP Центральной и Восточной Европы, Altimo «Теленор»

Ole Bjorn Sjulstad Oleg A. Malis Kjell Morten Johnsen Head of Telenor, Russia Senior Vice President, Altimo Head of Telenor Serbia Senior Vice President of Telenor Central and Eastern Europe Оле Бъерн Съюлстад Олег Адольфович Малис Кьелл Мортен Йонсен Глава «Теленор» в России Старший вице-президент, Altimo Глава «Теленор» в Сербии Старший вице-президент подразделения «Теленор» по Центральной и Восточной Европе SENIOR Andrey E. Patoka Natalia V. Chumachenko Vladimir V. Riabokon Dmitry A. Pleskonos Alexander Yu. Torbakhov Boris Nemsic Alexander V. Izosimov Elena A. Shmatova Vladimir A. Filippov Jeffrey D. McGhie Kent McNeley MANAGEMENT Vice President, Vice President, Regional Director Executive Vice President, Executive Vice President, General Director – since April, 2009 Chief Executive Officer – Chief Executive Officer – Executive Vice President, Vice President, Vice President, General Counsel Vice President, Head of B2B Business Unit for the Moscow Region International Business Development Business Development in the CIS since April, 2009 through April, 2009 Chief Financial Officer Chief Information Officer Chief Marketing Officer

СТАРШИЙ Андрей Евгеньевич Патока Наталья Викторовна Владимир Васильевич Дмитрий Анатольевич Александр Юрьевич Борис Немшич Александр Вадимович Елена Александровна Владимир Александрович Джеффри Д. Мак Ги Кент Мак Нили МЕНЕДЖМЕНТ Вице-президент по развитию Чумаченко Рябоконь Плесконос Торбахов Главный управляющий Изосимов Шматова Филиппов Вице-президент по юридическим Вице-президент по маркетингу корпоративного бизнеса Вице-президент, Региональный Исполнительный вице-президент Исполнительный вице-президент Генеральный директор – директор – с апреля 2009 года Генеральный директор – покинул Исполнительный вице-президент, Вице-президент по архитектуре вопросам и корпоративным и продажам директор Московского региона по развитию международного бизнеса по развитию бизнеса в странах СНГ с апреля 2009 года Компанию в апреле 2009 года Главный финансовый директор и развитию отношениям CORPORATE INFORMATION КОРПОРАТИВНАЯ ИНФОРМАЦИЯ

Legal Advisers Юрисконсульт Akin, Gump, Strauss, Hauer & Feld, L.L.P. Эйкин, Гамп, Страус, Хауэр энд Фелд Л.Л.П.

Independent Auditors Независимый аудитор Ernst & Young (CIS) Limited Эрнст энд Янг (СНГ) Лимитед

Depositary Bank Банк-депозитарий The Bank of New York Бэнк оф Нью-Йорк

CUSIP #68370R109 CUSIP #68370R109

Custodian Bank Банк-хранитель в России ING Bank Eurasia ИНГ Банк Евразия

Primary Trading Information Символ на бирже NYSE: VIP (ADS) Нью-Йоркская фондовая биржа: VIP (АДР)

REQUESTS FOR CORPORATE INFORMATION: СПРАВКИ ПО КОРПОРАТИВНЫМ ВОПРОСАМ:

VimpelCom ВымпелКом 4 Krasnoproletarskaya Street, ул. Краснопролетарская, д. 4 Moscow, Russia 127006 Москва 127006, Россия Tel: +7 (495) 974-5888 Тел: +7 (495) 974-5888 Fax: +7 (909) 991-7903 Факс: +7 (909) 991-7903 [email protected] [email protected] www.vimpelcom.com www.vimpelcom.com

FD ФД Wall Street Plaza, 88 Pine Street, 32nd Floor 88 Пайн Стрит, 32-й этаж New York, N.Y. 10005 Нью-Йорк, Нью-Йорк 10005 USA США Tel: +1 (212) 850-5600 Teл: +1 (212) 850-5600 Fax: +1 (212) 850-5790 Факс: +1 (212) 850-5790 www.fd.com www.fd.com

All information contained herein is qualified in its entirety by reference to VimpelCom’s Annual Report on Form 20-F which will be filed with the US Securities & Exchange Commission by June 30, 2009, pursuant to Section 15(d) of the United States Securities Exchange Act of 1934, as amended. FINANCIAL INFORMATION Open Joint Stock Company “Vimpel-Communications” 6 Notes to Consolidated Financial 96 Consolidated 94 Consolidated 93 Consolidated 91 Consolidated Sheets Balance 90 Consolidated Financial 89 Public ofIndependentRegistered Report andProspects Review andFinancial Operating 46 Data Operating Selected 43 Data Financial Selected 40 CONTENTS введенными вРоссии) принципами бухгалтерского учета ГААП. рассчитанной всоответствии спринятымивСША(ноне оно базируется наконсолидированнойфинансовойотчетности, Компании приводитсятольконаанглийском языке,поскольку Публикуемое нижеподробноеописание финансового состояния and Accumulated Other Comprehensive Income Comprehensive Other and Accumulated Firm Accounting Statements ofCashFlows Statements Equity ofShareholders’ Statements ofIncome Statements Statements 39 ВымпелКом / Годовой отчет 2008 40 VimpelCom / Annual Report 2008 the section of this annual report entitled “Operating and Financial Review andProspects.” Review andFinancial “Operating entitled annualreport ofthis section the VimpelCom’s and notes statements annualreport included related inthis consolidated andtheir elsewhere financial &Young by Ernst with have beenaudited LLC. data inconjunction The below shouldberead financial forth selected set VimpelCom’s from notes, statements related derived consolidated andtheir endedandare financial then which years the of VimpelCom’s at December31, information consolidated historical financial 2008, 2007, 2006, 2005 and2004 andfor The followingconsolidated data selected statement offinancial data andconsolidated sheets balance present asummary DATASELECTED FINANCIAL Operating revenues: Operating Total revenues operating Operating expenses: Operating prtn noe 2,535,950 Other incomeandexpenses: income Operating Total expenses operating Income before income taxes, minority Income beforeincometaxes, minority Total other incomeandexpenses innet Equity Sales ofequipmentandaccessories revenues Service Other revenues Other Revenue basedtaxes Net operating revenues operating Net Service costs Service Provision fordoubtfulaccounts Provision Impairment Amortization Depreciation expenses andadministrative Selling, general Cost ofequipmentandaccessories Interest income Interest Other (expenses) income, (expenses) net Other expense Interest (loss) gain exchange foreign Net hnei conigpicpe 891,234 principle change inaccounting of effect interest andcumulative l oss ofassociates l oss 17,190 107,946 10,124,986 10,116,932 (8,054) 54,711 442,747 360,980 1,520,184 2,838,508 101,282 2,262,570 7,580,982 (17,404) (495,634) (1,142,276) 618 71, (1,644,716) (61,020) $ 9,999,850 0820 0620 2004 2005 2006 2007 2008 (In thousandsofUSdollars,exceptpershareandADSamounts) 6,528 2,931 6,519 19,265 30,478 38,711 5,419 3,571 7,174,880 4,869,857 3,211,118 2,113,002 3,211,118 7,174,880 4,869,857 71108 ,6,7 321183,211,118 2,113,002 7,171,098 4,867,978 (3,782) – – (1,879) 22610 13739 9802 674,166 978,032 1,397,319 2,206,190 8,166 11,583 21,848 52,919 – 281,129 451,152 7,354 218,719 874,618 720,127 1,171,834 1,085,807 1,503,615 179,846 2,206,322 327,403 514,124 142,126 5,827 872,388 18,344 28,294 30,585 1,309,287 64,072 49498 3,470,659 4,964,908 1,438,8362,233,086 320 3,240 (85,663) (147,448) (38,844) (186,404) 3,563 (194,839) (5,853) 7,041 5,712(12,153) 24,596 72,955 8,658 15,471 33,021 21036 12218 8040 585,625 840,430 1,212,138 2,120,356 (85,834) (185,181) (88,541)(137,602) (211)––– $ 7,161,833 $ 4,847,661 $ 3,175,221 $ 2,070,720 $ 3,175,221 $ 4,847,661 $ 7,161,833 $ Years EndedDecember31, Selected FinancialData (2) (1) Weighted average common shares commonshares Weighted average Income before cumulative effect of effect cumulative Income before of effect cumulative Income before Diluted incomeperADSequivalent net effect Diluted cumulative incomebefore Income tax expense Net income Net of effect incumulative interest Minority ofchangein effect Cumulative of effect cumulative Income before of inearnings interest Minority Dividends perADSequivalent Dividends pershare Dividends Diluted incomepercommonshare net effect Diluted cumulative incomebefore diluted Weighted shares average incomeperADSequivalent Net incomepercommonshare Net andADSequ anddiluted incomepercommonshare net principle ofchangeinaccounting effect Diluted cumulative incomebefore 22, ofcommon stock. OnNovember ofoneshare ofourADSs 2004, ratio we changed the to one-twentieth ADSisequivalent Each the change in the ratio. There were nochangesto There ratio. ourunderlying commonshares. change inthe were the at close the ofbusiness onAugust 17, ADSheld. presented h ADSsforevery information Allshare fouradditional 2007 received a ADSholders ADSsforonecommonshare.VimpelCom to twenty fourADSsforonecommonshare NYSEfrom onthe of ourADSstraded ADSheld. ADSsforevery at close the 19, ofbusinessonNovember OnAugust 8,record additional 2007, two 2004 received wecha The to ADSho fourADSsforonecommonshare.VimpelCom common shares NewYork Stock four ADSsforthree Exchange (“NYSE”)from includes dilution foremployee for2008, 2007, stock options 2006, 2005 and2004. outstanding (thousands) ADS equivalent ADS equivalent per principle change inaccounting common share per principle change inaccounting ADS equivalent ADS equivalent per principle of changeinaccounting change in accounting principle change inaccounting principle accounting principle change inaccounting principle of changeinaccounting effect cumulative subsidiaries, before common share common share per principle of changeinaccounting (thousands) (2) (1) (2) (1) (2) (2) 50,700 303,934 – – 524,334 62,966 50,703 $ 524,334 $ 10.34 $ 10.34 $ 10.34 $ 10.34 $ 11.46 $ 0.52 $ 0.52 $ 0.52 $ 0.52 $ 0.57 0820 0620 2004 2005 2006 2007 2008 (In thousandsofUSdollars,exceptpershareandADSamounts) 50,818 50,911 51,066 41,224 51,066 50,911 50,818 5398 9,6 2191155,000 221,901 390,663 593,928 – 350,396 – 615,131 813,371 – – (1,882) 1,462,706 80,229 3,398 8,104 63,722 5,1 5,4 5,8 41,272 51,085 50,947 50,818 ,6,0 1,8 1,3 $350,396 $615,131 $811,489 $ 1,462,706 87 59 20 $8.50 $12.05 $15.98 $ 28.78 87 59 20 $8.49 $12.04 $8.49 $15.93 $12.04 $ 28.78 $15.97 $ 28.78 87 59 20 $8.50 $12.05 $15.94 $ 28.78 .4$07 .0$0.42 $0.42 $0.60 $0.60 $0.79 $0.80 $ 1.44 $0.43 $ 1.44 $0.43 $0.60 $0.60 $0.80 $0.80 $ 1.44 $ 1.44 $ – – – 0.32 $ – – – 6.47 Years EndedDecember31, nged the ratio ratio nged the erein reflects reflects erein ivalent ivalent s of record s ofrecord lders asof lders traded on traded 41 ВымпелКом / Годовой отчет 2008 42 VimpelCom / Annual Report 2008 Selected FinancialData (2) (1) Total equity shareholders’ Total Total portion including debt, current Total assets Telecommunications net andequipment, Property Working capital (deficit) capital Working Cash andcashequivalents data:Consolidated balancesheets Includes bank assets iscalculated capital ascurrent Working these changes, see “Operating and Financial Review and Prospects–Liquidity and Capital Resources–Financing activities.” Resources–Financing andCapital andProspects–Liquidity Review andFinancial changes,these see“Operating to December31, ofouroutstanding changesincertain indebtedness. For informatio havebeenanumberofadditional 2008, there and other intangible assets, net offrequencies, goodwill allocations l iabilities and minority interest andminority iabilities l oans, denominated andcapital bonds, Russianruble equipmentfinancing l icenses and (1) (2) l ess current 8,442,926 15,725,153 5,124,555 6,425,873 (1,407,795) 11,336,347 $ 914,683 $ 4,388,806 l iabilities. 0820 0620 2004 2005 2006 2007 2008 1,6,8 ,3,4 ,0,3 4,780,241 6,307,036 1,581,138 1,998,166 2,489,432 2,766,609 8,436,546 10,568,884 1,338,305 1,957,949 1,500,799 2,217,529 3,211,112 2,314,405 5,497,819 4,615,675 (457,927)(127,903) (272,784) (487,420) 51708 ,9,3 356472,623,108 3,566,487 4,493,636 5,157,098 $ 5,411,786 $ 3,942,910 $ 2,740,549 $ 2,157,133 $ 2,740,549 $ 3,942,910 $ 5,411,786 $ ,0,1 4,9 6,4 $305,857 $363,646 $344,494 $ 1,003,711 (In thousandsofUSdollars) At December31, l ease obligations for all periods presented. forallperiods Subsequent ease obligations n regarding n regarding reported on the basis of active subscribers. basisofactive onthe reported table inthe Prospects.” below data, are foryear2008 Oursubscriber figures andchurn 2005–2008 ARPUandMOUforyears and Review andFinancial “Operating entitled annualreport ofthis section andthe annualreport inthis elsewhere VimpelCom’s with notes statements included inconjunction related below consolidated andtheir shouldberead financial data The to bereliable. operating forth that webelieve selected set independentsources company andfrom sources dataThe followingoperating selected asofDecember31, 2008, 2007, internal 2006, from 2005 and2004 hasbeenderived SELECTED OPERATING DATA oa oiesbcies 6,2,5 17997 4,4,1 37,999,483 45,547,713 51,739,947 61,029,457 Total mobilesubscribers mobilesubscribers: End ofperiod companySelected data: operating rate: penetration Mobile mobilesubscribers: Estimated Estimated population: Estimated data: industryoperating Selected Russia Russia Georgia Armenia Uzbekistan Tajikistan Ukraine Kazakhstan Russia Georgia Armenia Uzbekistan Tajikistan Ukraine Kazakhstan Russia Georgia Armenia Uzbekistan Tajikistan Ukraine Kazakhstan Georgia Armenia Uzbekistan Tajikistan Ukraine Kazakhstan

(1) (3) (2) 187,830,000 142,008,800 225,055 544,271 3,636,243 624,624 2,052,493 6,269,927 47,676,844 83.5% 79.3% 45.3% 47.5% 120.8% 92.7% 132.3% 3,757,055 2,561,280 12,276,098 3,428,061 55,793,102 14,437,927 4,500,000 3,230,100 27,100,000 7,215,700 46,192,300 15,571,500 0820 0620 2004 2005 2006 2007 2008 172,870,000 151,920,000 74,350,000 125,760,000 145,166,700 145,166,700 145,166,700 142,008,800 – – – – 72,655 – 442,484 – 249,189 2,119,6121,523,682 1,941,251 1,813,938 3,052,878 339,393 4,603,300 35,936,356 415,96539,782,690 42,221,252 – 72,028700,470 – – – 59.8% – 57.8% – 4.1% 11.9% 29.5% 21.9% 63.8% 103.4% 120.4% 18.1% 37.0%36.9% 51.7% 81.5% 51.2% 10.4% – 86.6% 121.7% 104.6% – – – 275,000 2,690,405 821,500 2,131,103 1,868,571 30,205,100 49,219,900 55,596,318 2,700,000 5,931,796 – 5,510,300 – – 7,735,500 12,692,511 1,184,000 – – 2,716,700 – – 4,500,000 6,780,400 6,919,900 7,215,700 3,230,100 46,192,300 48,457,000 48,457,000 – – 27,100,000 – 15,571,500 3,200,000 14,953,000 14,938,400 14,938,400 – – 26,021,300 As ofDecember31 – 43 ВымпелКом / Годовой отчет 2008 44 VimpelCom / Annual Report 2008 Selected OperatingData Market share: Market Number ofGSMbasestations permobile revenue average Monthly minutes ofuseper average Monthly Churn rate Churn Russia Georgia Armenia Uzbekistan Tajikistan Ukraine Kazakhstan Russia Georgia Armenia Uzbekistan Tajikistan Ukraine Kazakhstan Russia Georgia Armenia Uzbekistan Tajikistan Ukraine Kazakhstan Tajikistan Ukraine Uzbekistan Georgia Armenia Russia Georgia Armenia Uzbekistan Tajikistan Ukraine Kazakhstan Kazakhstan Russia (“ARPU”)subscriber (“MOU”) mobile subscriber (6) (4)

(7) (5) : 25.4% 47.2% 106.2% 55.6% 42.8% 84.0% 31.5% 34.6% 113.6 152.1 287.8 238.9 231.8 104.3 219.1 6.0% 21.2% 29.6% 18.3% 3.6% 43.4% 26,633 514 503 1,573 494 3,015 3,119 $ 13.9 $ 14.6 $ 11.7 $ 9.0 $ 6.4 $ 9.5 $ 7.6 0820 0620 2004 2005 2006 2007 2008 29.9%31.7% 34.3% 34.6% 1.0% – – 49.7% – – 9.1% 61.7% 4.6% 19.0% 30.3% – 32.8% – 23.5% 95.1% 29.3% 61.8% 30.4% 44.9%35.4% 32.9% – 18.6% – – – – – – – 178.0 – 169.9 102.5 274.0 – – – – 163.2320.5 220.6 55.3 70.4 – 94.6 149.7 120.4 – 145.9 36.2 192.1 121.1 – 3.7% – 9.6% – 26.1% 7.0% 18.1% 37.3% 0.9% 3.8% 4.8% 31.8% 37.2% 37.9%49.5% 46.5% 27.2% – – 22,088 19,241 15,659 10,659 15,659 19,241 22,088 215 – 379 – 928 – 205 326 596 – 6 107 1,653 626 586 2,294 – – 1,126 1,791 2,291 26$96$85– $8.5 $9.6 $ 12.6 67$1. – – $17.0 $ 16.7 31$1. 13– $11.3 $12.6 $ 13.1 . . . – $4.3 $5.0 $ 4.7 $ 7.4 ––– . . – – $6.8 $ 9.7 . 19–– – $11.9 $ 7.1 As ofDecember31 (9) (8) (7) (6) (5) (4) (3) (2) (1) Selected OperatingData End of period broadband subscribers broadband End ofperiod Monthly average revenue per broadband perbroadband revenue average Monthly Total subscribers broadband We calculate broadband ARPU as service revenue generated by broadband subscribers during the relevant period divided by the a by the divided period relevant the during subscribers by broadband generated revenue We ARPUasservice calculate broadband Including 3Gbasestations. sub basisofregistered onthe reported was years forprevious whilechurn subscribers isbasedonactive for2008 rate Churn relevan the total the MOUiscalculatedMonthly forincomingandoutgoingcallsduring by dividing numberofminutesusage 2008, 2007, years For the (Russia, area Kazakhstan, Taj Ukraine, relevant foreach ofsubscribers 2006 and2005, share market basedondata are by forRussiaandUkraine AC&M provided rates Consulting. 2006 and2005, years For Penetrat the penetration and2007, by 2008 AC&M years For provided the Consulting, were forallcountries aman statistics mobilesubscriber estimated Interstate by the published were and2007 year2008 forthe forallcountries statistics population Estimated Broadband subscribers are those subscribers in the registered subscriber base who were a party to a revenue generating activi generating apartyto arevenue basewhowere subscriber registered inthe subscribers those are subscribers Broadband number of the Company’s broadband subscribers during the period and divided by the number of months inthat period. numberofmonths by the anddivided period the Company’snumber ofthe during subscribers broadband not ofpayment eventhoug forms aschurn, to rate technically ourchurn was prepaid whichcontributed recorded andcontract between anddependedonthe by country varied to prior disconnection numberofmonths months. The specifi andmarket exact legislation f transaction to nochargeable US$0orbelow showed drops forupto or(2)anaccount balance sixmonths the been blocked after cases:(1)an intwo disconnected hadnot were months. Prepaid paid ifthey billsforuptodisconnected their two subscribers subs at beginningandendofthat period. the Contract inournetwork subscribers midpointofregistered ofthe as apercentage perio agiven within ournetwork from disconnected total subscribers asthe numberofregistered subscribers ofregistered rate wedefi period. periods For previous baseforreported andchangingofactive period reported salesinthe between a difference period. baseat beginningandat endofthe the the The iscalcul total midpointofactive of the subscribers number ofchurned who subscribers numberofactive asthe subscribers ofactive our churn methodology. of reporting ascompared to in2008 2007 share iscaused market The reported inthe subscribers. drop basedonregistered was previously it su solely 1, basisofactive onthe VimpelCom’s January isbeingreported 2008 share from market Starting estimates. subscriber isbasedondata year2004 isbasedonou forthe andGeorgia) Armenia by AC&M provided ofsubscribers Consulting. share Market Kazakhstan, Uzbekistan, Tajikistan, 2006, by years ourcompany. forthe provided 2005 and2004 andGeorgia were Armenia statis by mobilesubscriber ourcompany. provided were registered Estimated forRussiaandUkraine statistics mobile subscriber by AC&M Consulting. published were year2004, For the for RussiaandUkraine estimated statistics mobilesubscriber registered 2006 and20 years CIS.For the inRussiaandthe industry telecommunications inthe specializing agency consulting andresearch by the published were forKazakhstan statistics population of Russia; estimated (excluding guest roamers) by the average number of subscribers during the period and dividing by the number of months inthat p numberofmonths by the anddividing period the during numberofsubscribers average by the (excluding guestroamers) period. relevant the (seeNote (1)) (seeNote insucharea total (2))by the area population estimated relevant ineach number ofmobilesubscribers 2008, 2007 years the calculated forthe by and2004 are dividing 2006 and2005 andallcountries years forthe other countries by ourcompany. forUzbekistan, we statistics andGeorgia by Armenia Goskomstat population published andestimated ofUkraine; were for Ukraine Federal by the published forRussiawere 2006, years the statistics 2005 and2004, population estimated counted as churn. Policies regarding the calculation of churn differ amongoperators. differ ofchurn calculation the regarding counted aschurn. Policies via USBmodems.via technologies aswellmobilehomeint include usingFTTB,xDSLandWiFi access monthly internet months. Suchactivities three Russia subscriber (“broadband ARPU”) subscriber Ukraine Russia Ukraine l ose those subscribers. Similarly, prepaid customers who changed tariff plans by purchasing a new SIM card with ourcompany with were anewSIMcard by purchasing plans prepaid Similarly, customers subscribers. whochangedtariff ose those

(9) (8) : 1,206,063 24,147 1,181,916 $ 15.2 $ 15.3 0820 0620 2004 2005 2006 2007 2008 – – – – – l eft active base over the reported period expressed as a percentage asapercentage expressed period reported baseoverthe active eft Statist As ofDecember31 ics Agency of Kazakhstan; estimated population statistics statistics population estimated ofKazakhstan; ics Agency State Statist State Statist ical Committee of the CIS.For ofthe ical Committee ics Service, orGoskomstat, ics Service, ikistan, Uzbekistan, scribers. We define We define scribers. agement agement ated as account had account ty in the past inthe ty total estimated bscribers, while ned our churn ned ourchurn t period t period ion rates forall ion rates d expressed d expressed as of the endof asofthe registered registered cribers were were cribers by the change by the tics for tics ernet service service ernet r company’s 05, estimated verage verage or upto ten cs. Migration cs. Migration eriod. h wedid re provided provided re also 45 ВымпелКом / Годовой отчет 2008 46 VimpelCom / Annual Report 2008 OPERATING REVIEWANDPROSPECTS ANDFINANCIAL telecommunication services under the “Beeline” brand name, although, brand “Beeline” carry underthe still services telecommunication someservices CIS.We inRussiaandthe intend, provider telecommunications integrated allofourintegrated possible, wherever to offer into VimpelCom a inRussia, wehavetransformed services andInternet telecommunications offixed-line provider leading atotal ofapproximately with population ofGoldenTelecom, 340.0territory ouracquisition a million. With leading ofCambodia, Kingdom covering andthe ofVietnam Republic Armenia, Socialist Tajikistan aswellinthe andGeorgia technologies. The ofcompanies group VimpelCom includes inRussia, companies Kazakhstan, Uzbekistan, operating Ukraine, ofmobile, andbroadband fixed arange voiceanddata operator, providing through atelecommunications We are services OVERVIEW numerous factors. lookingstatementsasaresult fromthoseanticipated intheforward materially Ouractualresultscoulddiffer uncertainties. and lookingstatementsthatinvolve Thisdiscussioncontainsforward notes risks includedelsewhere inthisannualreport. statementsandtherelated The followingdiscussionandanalysisshouldbereadinconjunctionwithourconsolidated financial includes fixed inKazakhstan, results Tajikistan, Ukraine, ofallmobile operations operating the Uzbekistan, CISfixed andArmenia. Georgia CISmobileincludes andconsumerInternet. services,broadband telecommunication includesRussia fixed wireline inRussia. results Russiamobile includes ofallmobileoperations areas. operating the geographical indifferent activities Telecom, business Russiamobile, segmentsbasedonthe Russiafixed, weidentified reporting CISmobileandfixed ofGolden date the from basis. ofacquisition Starting segmentsonageographical ourreportable Historically, wereflected Segments Reportable Golden Telecom yearendedDecember31, forfiscal 2008. yearendedDecember31, resultsforfiscal forGeorgia results ofoperating months for ofoperating 2006 andtenmonths December 31, 2006, dates and, ofacquisition, asaresult, include only 11 yearended results fiscal forthe forUzbekistan ofoperating months respective their from weacquired operators ofthe contribution the followingand the discussionandanalysis reflect data, financial Our selected statements notes annualreport included consolidated andrelated inthis financial elsewhere ended December31, 2008, compared to US$1,462.7 yearendedDecember31, forthe million 2007. compared to US$2,206.2 yearendedDecember31, forthe million 2007. US$524.3 incomewas Ournet year forthe million yearendedDecember31,for the 2007. US$2,536.0 incomewas Ouroperating yearendedDecember31, forthe million 2008, US$ were revenues operating Our net acquisitions. recent for periods prior to prior 2008. for periods segments reportable discussionandanalysis notin 2008, andCISfixed this does include for ourRussiafixed information Because ourcompany’s fixed inthe operations segments, statements please seeNote 20 consolidated annualreport. included to inthis ouraudited financial elsewhere onourreportable information For strategies. more investment andmarketing different areas, requiring geographical ofdevelopment stages indifferent different andthe economicenvironments segments separately different becauseofthe l ine operations inKazakhstan, andUzbekistan. Armenia Ukraine, analyzesine operations Ourmanagement reportable the l ess than two months of operating results for Armenia for the fiscal yearendedDecember31, results fiscal forthe forArmenia ofoperating months two 2006,ess than six 10,116.9 million for the yearendedDecember31, forthe million 2008, compared to US$7,171.1 million l ine business were not significant prior to our acquisition ofGoldenTelecom to prior ouracquisition not significant ine businesswere l ocal brands becauseof brands ocal of plus equal to LIBOR+1.95% 6-month interest perannum. date The maturity ofthe loan is2016. basis. The on areimbursement by amountwillberepaid principal VimpelCom in14 Ericsson equalsemi-annualpayments to provided equipmentandservices isto finance agency. The credit facility by EKNexport isguaranteed The facility we are focusing we are December 31, 42.2 2008, from asofDecember31, million 2007. saturation, inRussia hasapproached mobilemarket Asthe to 47.7 baseinRussiaincreased Ourmobilesubscriber mobilesubscribers. our existing from revenues asof million additional ourtotal by base, increasing primarily aswell by extracting mobilesubscriber revenues operating our net 72.3%which represented revenue,ascompared to consolidated 84.9% ofournet operating for2007. We haveincreased segment, Russiamobilereporting came predominantly from revenues operating inournet growth organic In 2008, the ofGoldenTelecom. acquisition the CIS, addedthrough and businessinRussianFederation both ourmobileandfixed weincreased In2008 revenues. operating inournet growth We whichhasresulted years havesignificantly expanded inconsiderable scaleandscopeofourbusinessinrecent both the inOperatingResults Trends 24,On March 2009, signedasevenyear VimpelCom avalue ofUS$257.5 equipmentwith pledgeoftelecommunications by the willbesecured agreement million. The ofupto 13.0% rate loan anannualinterest bears onDecember27, andmatures 2012. The indebtedness underthis 10,On March 2009, signedafouryear VimpelCom US$235.5 10, asofMarch rate BankofRussiaexchange 2009. at Central the million this 10, 2009. The ofupto 19.0% rate loan anannualinterest bears onDecember 27, andmatures 2011. The indebtedness under ofapproximatelyrubles, equivalent whichisthe US$223.9 as ofMarch rate BankofRussiaexchange at Central the million 10,On March 2009, year signedathree VimpelCom bonds, issuethe willbeableto does fullamountintended. issuebondsforthe that it bondsorthat ifit these development andthe ofVimpelCom’scurrency business. willbeableto that VimpelCom There issue core isnoassurance indebtedness denominated inforeign existing ofits bondsforrefinancing the from intendsto proceeds VimpelCom usethe result placement. asthe ofapublic The willbedefined rate conditions. annualinterest orredemption, dependingonmarket put-option ofthe to prior exercise period forthe willbedetermined series for each values face of10,000.0 with The series foreach, bondsmay Russianrubles beissuedinthree couponrate million andthe placement. to public prior the whichwillbedetermined underconditions bondsto earlier sell their VimpelCom-Invest years. The to isfive bepaid couponsare to semiannually. period The right willhavethe Bondholders maturity proposed 11, asofFebruary rate Bank ofRussiaexchange 2009. The by VimpelCom. bondswillbeguaranteed issueisuptothe 30,000.0 ofapproximately Russianrubles, equivalent whichisthe million US$835.0 at Central the million documentation. The amountof submitted proposed the registers Service Markets Financial RussianFederal on whichthe VimpelCom. The date bondsmay the beissueddependingonVimpelCom’s ofoneyearfrom aperiod fundingneedswithin LLC of awholly subsidiary VimpelCom-Invest, owned bondsthrough issuanceofRussianruble-denominated potential the for required documentation 11, Service On February Markets Financial to RussianFederal the submitted 2009 VimpelCom Developments Recent Operating andFinancialReviewProspects l oan agreement is secured by the pledge of telecommunications equipment with a Russian ruble value equivalent to value equivalent aRussianruble equipmentwith pledgeoftelecommunications by the issecured oan agreement l ess on subscriber market share growth and more on revenue growth inRussia, asaresult ourARPUin growth onrevenue and more growth share market ess onsubscriber l oan agreement with Sberbank in the amountofUS$250.0 inthe Sberbank with oan agreement million. l l oan agreement with Sberbank in the amountof8,000.0 inthe Russian Sberbank million with oan agreement oan agreement with HVB in the amountofUS$160.2 HVBinthe with million.oan agreement l oan 47 ВымпелКом / Годовой отчет 2008 48 VimpelCom / Annual Report 2008 of revenue from fixed operations. fixed from of revenue intotal share andits revenue. Currently, the developmentthe service ofeach isabout40% wholesaleoperation low margin by willbeaffected margin 55%, gross 25% that ourfuture (around We and30–40% expect respectively). different are margins and, gross sincetheir operations, businessservices,wholesale services dynamicsdepend onthe ofits residential business forfixed margins Gross 80–82%. between varied to mobilebusinesses. margin Traditionally, ourmobilegross dueto generally the margins gross ofGoldenTelecom’s consolidation becauseofthe In 2008 onour asomewhat effect business, dilutive weexperienced (US$9.3 (allamountspresented including revenues)). million intersegment (US$148.3 inArmenia (US$96.1operations Ukraine (US$19.1 million), Kazakhstan million), andUzbekistan million) from US$225.1 or2.2% derived andwas revenues oftotal transactions operating excluding intersegment net million fixed the In 2007 from ourrevenue saturation, Uzbekistan, specifically havenot reached mobilemarkets Tajikistan the where andGeorgia. countries in ouroperations from willcomeprimarily growth ourmobilesubscriber future,weexpect in whichweoperate. Inthe is inUkraine growth forsubscriber and accordingly, opportunity the isover120.8% inUkraine rate Russia, mobilepenetration inRussia.Like the ourmobileoperations than rate proportionate results at to to ahigher increase our financial countries inthese ofourmobileoperations contribution the we expect Goingforward, growth. onthis to capitalize well-positioned weare andwebelieve usingmobileservices new subscribers widely-accepted, numberof inthe becomesmore increases useofmobiledevices improves andthe substantial weexpect (45.3%),Uzbekistan Tajikistan (47.5%), (83.5%) Georgia (79.3%) andArmenia formobilenetworks infrastructure Asthe substantially rates penetration with growth subscriber a phaseofrapid in still CISare inthe mobilemarkets ofthe Most forourcustomers, growth. andservice andonsubscriber of coverage revenue significantly increased after the acquisition ofGoldenTelecom. fixed acquisition In2008 the after significantly increased revenue Operating andFinancialReviewProspects to improve subscriber and market highvalue ofthe subscriber ourshare inourmobilebusinessRussiawillbeto strategy increase growth the to US$13.9our Russiamobilesegmentincreased US$12.6 from in2008 in2007. components future,ourkey of Inthe mobile and broadband subscriber data subscriber ofour andacceptance usage mobile andbroadband andARPUmobileMOUisuseful inassessingthe about suchinformation outbelow. asset that presenting We to period believe period from evaluating ourperformance isusefulin it believes andbecausemanagement by management data reviewed isregularly operating this becauseit We not statements provide included included that are annualreport. butare inthis inourfinancial mobile subscribers ARPU, ormobileMOU,broadband ofour monthly total rate minutesofusepermobilesubscriber, andchurn average The data, following discussionanalyzes data, operating certain subscriber suchasmobileandbroadband mobileand Indicators Performance Certain increased to provide inorder operations, ourcommercial onstrengthening wewillfocus In ourCISmobilesegment, services. andbusinesscorporate broadband infixed that ourgrowth weexpect future Inthe other carriers. from competition andprice incumbentoperators monopolistic from received to forservices beimpacted bycontinue costsincreases margins isstrong, ouroverall Although growth ourrevenue networks. andsatellite-based optic usingourfiber services fixed volume 12.7% andcomprised inRussian excluding intercompany transactions, revenue.Ourtraffic operating ofournet in2008, US$1,286.7 comprised first appearing segment, million operating Russiafixed from revenue operating Net l ine business was increasing over the year, predominantly from the business and corporate services and interconnect andinterconnect services businessandcorporate the year, predominantly overthe from increasing ine businesswas l oyalty. l l ower margins associated with fixed-line telecommunications businessesascompared telecommunications fixed-line with associated margins ower ine business was only from our Armenian operations, while in 2008 ourfixed whilein2008 operations, only ourArmenian ine businesswas from l ess than the opportunity in other countries of the CIS ofthe inother countries opportunity the ess than l ower than inRussia, than includingower (92.7%), Kazakhstan l ine business will come primarily from from ine businesswillcomeprimarily l ine revenue in the CIS comprised CIScomprised inthe ine revenue l ine l evels total mobile subscriber base, for the periods indicated:total base, periods forthe mobilesubscriber The ofour asapercentage following aswellourprepaid figures, table indicates mobilesubscribers ourmobilesubscriber mobilesubscribers. million AsofDecember31, to andprepaid ourmobilesubscribers. services both contract We 2008, we hadapproximately offer 61.0 MOBILE SUBSCRIBERDATA mobilesubscribers. retain to isusefulinassessingourability rate ourmobilechurn andservices,that presenting products mobile andbroadband Operating andFinancialReviewProspects 1 roll-out of our services that enabled us to attract additional subscribers nationwide. subscribers additional that enabledusto attract ofourservices roll-out accelerated andthe coverage improvement ofournetwork dueto significant primarily the was baseinUkraine subscriber independent estimates, asofDecember31, The inour mobilemarket. 2008, wehada3.6% increase Ukrainian ofthe share of approximately 5.7% approximately overthe asofDecember31, 1.9 mobilesubscribers million 2007. to According Ukraine onnew sales.and focus country inthe ofmobile coverage growth dueto continuing primarily the was baseinKazakhstan insubscriber increase to independentestimates, asofDecember31,According Our 2008, wehada43.4% mobilemarket. Kazakh of the share of approximatelyan increase 36.2% asofDecember31, approximately overthe mobilesubscribers 4.6 million 2007. Kazakhstan 2008. 31, 2007. 8.2 inDecember2007 from million to basegrew 9.6 subscriber inDecember At ourMoscow sametime, million the l as ofDecember31, Moscow outside the regions the camefrom inRussia2008 2007. growth ofoursubscriber Most independent estimates, asofDecember31, we hada25.4% ascompared 2008 to Russianmobilemarket 29.9% ofthe share of approximately 12.9% approximately overthe asofDecember31, 42.2 mobilesubscribers million 2007. to According Russia Ukraine Kazakhstan Russia Uzbekistan Tajikistan oa ubro usrbr 61,029,457 ofprepaidPercentage subscribers Total numberofsubscribers Georgia Armenia Source: All market shares in Russian and CIS countrieas are provided by AC&M provided consulting. are inRussianandCIScountrieas shares Allmarket Source: icense area, where our subscriber base increased to 38.1 baseincreased oursubscriber asofDecember31,icense area,where million 34.0 asofDecember 2008, from million . AsofDecember31, 2008, wehadapproximately 47.7 anincrease inRussia, representing mobilesubscribers million . AsofDecember31, anincrease 2008, wehadapproximately representing 2.1 inUkraine, mobilesubscribers million . AsofDecember31, 2008, wehadapproximately inKazakhstan, 6.3 representing mobilesubscribers million 47,676,844 2,052,493 6,269,927 3,636,243 225,055 624,624 544,271 95.9% 0820 2006 2007 2008 As ofDecember31, 2212239,782,690 42,221,252 1799745,547,713 51,739,947 ,0,0 3,052,878 4,603,300 ,4,5 1,523,682 1,941,251 ,1,1 700,470 2,119,612 4,8 415,965 442,484 3,9 72,028 339,393 59 96.2% 95.9% 265– 72,655

49 ВымпелКом / Годовой отчет 2008 50 VimpelCom / Annual Report 2008 attractive prices on outgoing traffic to oursubscribers. onoutgoingtraffic prices attractive campaigns aimedat increasing tomarketing national attributable primarily was Russia Operating andFinancialReviewProspects Georgia inmobilecoverage. dueto primarily growth was baseinArmenia subscriber independent estimates, asofDecember31, 2007, wehada21.2% The inour mobilemarket. Armenian increase ofthe share of approximately 23.0% approximately overthe 443,000 asofDecember31, mobilesubscribers 2007. to According Armenia base. ourmobilesubscriber to rapidly grow marketing remains inUzbekistan penetration Mobile salesstrategy. development andactive dueto primarily ournetwork was baseinUzbekistan The inoursubscriber increase to independentestimates, asofDecember31,According 2008, wehada29.6% Uzbekmobilemarket. ofthe share ofapproximatelyan increase 71.5% approximately overthe 2.1 asofDecember31, mobilesubscribers million 2007. Uzbekistan prices. at competitive offers tariffs andattractive baseinTajikistan coverage dueto primarily ourincreased subscriber was independent estimates, asofDecember31, 2008, wehadan18.3% Tajik ofthe The share inour mobilemarket. increase of approximately 84.4% approximately overthe 339,000 asofDecember31, mobilesubscribers 2007. to According Tajikistan The following tables show our MOU for our mobile subscribers for the periods indicated: The periods forthe following tables ourMOUformobilesubscribers show inthat period. numberofmonths the by anddividing period the during numberofmobilesubscribers average by the (excluding guestroamers) period relevant the total the MOU iscalculated forincomingandoutgoingcallsduring by dividing numberofminutesusage MOBILE MOU channels inGeorgia. anddevelop oursalesanddistributions to network buildthe continuing We are mobilemarket. Georgian ofthe share asofDecember31,mobile subscribers 2007. to independentestimates, asofDecember31, According 2008, wehada6.0% ofapproximately anincrease 208.2%225,000 representing inGeorgia, approximately overthe mobilesubscribers 73,000 Georgia Armenia Uzbekistan Tajikistan Kazakhstan Russia Ukraine . In 2008, our MOU in Russia increased by 14.1%. In2008, ourMOUinRussiaincreased to 219.1 192.1 minutesfrom in2007. The inMOURussia increase . We . AsofDecember31, 2008, wehadapproximately anincrease 544,000 inArmenia, representing mobilesubscribers . AsofDecember31, 2008, wehadapproximately 625,000 inTajikistan, anincrease mobilesubscribers representing . AsofDecember31, 2008, wehadapproximately inUzbekistan, 3.6 mobilesubscribers representing million l aunched commercial operations in Georgia in March 2007 inMarch andasofDecember 31, inGeorgia operations wehadapproximately 2008 aunched commercial l ow at 45.3%, so we are focusing our efforts on network rollout and active andactive rollout onnetwork atow 45.3%, ourefforts focusing soweare 238.9 104.3 152.1 287.8 113.6 231.8 219.1 0820 2006 2007 2008 l Year endedDecember31, ocal traffic, which offered discountsand whichoffered traffic, ocal 2. 121.1 220.6 6. 178.0 169.9 0. – 102.5 6. 149.7 163.2 9. 145.9 192.1 7. 320.5 274.0 4670.4 94.6 resulted inanARPUdecline. whena crisis to current the face CIScountry the first squeezehit the liquidity local economyinSeptember 2007 andthat Kazakhstan base. ofourmobilesubscriber (VAS) andimproved quality ofARPU forvalue addedservices increase services by newtariffs), stimulated MOU(that was dueto increased onournetwork traffic to increased the attributable primarily Russia The indicated: following periods table ourARPUforthe shows period. inthat numberofmonths by the anddividing period the during mobilesubscribers numberofouractive average by the revenue, andother non-service fees, andaccessories connection salesofhandsets from revenue, butexcluding revenue period, andinterconnect relevant the including revenue during roaming revenue We ourservice calculate ARPUby dividing MOBILE ARPU ofGeorgia. territory onthe coverage ofnetwork andextension in2008 traffic Georgia with subscribers ofmassmarket basebeingcomprised ofourmobilesubscriber portion a growing Armenia that coverage ofnetwork extension Uzbekistan country. the due to expansion the throughout Tajikistan to minutes ofusage subscribers. unlimited with packages tariff special campaigns offering andmarketing quality improved service Ukraine, development throughout Ukraine andthe massmarket onthe plans new price discountsalsoresulted inMOUgrowth. off-peak ofacampaignlaunch offering The coverage. inandimprovement ofournetwork baseandanincrease inoursubscriber to of growth launch attributable Kazakhstan Operating andFinancialReviewProspects Georgia Armenia Uzbekistan Kazakhstan Tajikistan Ukraine Russia . In 2008, our ARPU in Russia increased by 10.3%. In2008, ourARPUinRussiaincreased to US$13.9 US$12.6 from in2007. The was inARPU2008 increase . In 2008, our MOU in Georgia increased by 10.8% increased . In2008, ourMOUinGeorgia to 113.6 102.5 from in2007. of dueto growth OurMOUincreased . In 2008, our MOU in Ukraine increased by 42.0% increased . In2008, ourMOUinUkraine to 231.8 163.2 from in2007. to network increase the We attribute . In 2008, our MOU in Armenia decreased by 10.5% decreased . In2008, ourMOUinArmenia to 152.1 169.9 from in2007. dueto OurMOUdecreased . In2008, ourMOUinTajikistan by 8.3% increased to 238.9 220.6 from in2007, growth mainly becauseoftraffic . In 2008, our MOU in Uzbekistan increased by 5.0%. In2008, increased ourMOUinUzbekistan to 287.8 274.0 from in2007. dueto OurMOUincreased . In 2008, our ARPU in Kazakhstan decreased by 10.7% decreased . In2008, ourARPUinKazakhstan to US$11.7 US$13.1 from in2007. was Kazakhstan . In 2008, our MOU in Kazakhstan increased by 10.3% increased . In2008, ourMOUinKazakhstan to 104.3 94.6 from in2007. The inMOUwas increase l ed togrowth. usage $ 14.6 $ 13.9 $ 11.7 $ 6.4 $ 9.0 $ 9.5 $ 7.6 0820 2006 2007 2008 Year endedDecember31, 26$9.6 $ 12.6 67$17.0 $ 16.7 31$12.6 $ 13.1 . $5.0 $ 4.7 . – $ 7.4 . $6.8 $ 9.7 . $11.9 $ 7.1 l ower usage. ower 51 ВымпелКом / Годовой отчет 2008 52 VimpelCom / Annual Report 2008 The following table shows our churn rates for the periods indicated: The periods forthe following rates table ourchurn shows ourcompany alsocountedaschurn. with are a newSIMcard not wedo eventhough rate ofpayment forms aschurn, to istechnically prepaid ourchurn whichcontributes recorded andcontract between Migration amongoperators. differ ofchurn calculation the regarding anddependedonthe by country varied to prior Policies disconnection number ofmonths specifics. andmarket legislation forupto tenmonths. The exact transaction to nochargeable US$0orbelow showed forupto or(2)anaccount sixmonths dropped balance the hasbeenblocked cases:(1)anaccount after intwo disconnected were months. Prepaid subscribers hadnot paid ifthey billsforupto disconnected their two were subscribers beginningandendofthat period.the Contract at inournetwork subscribers midpointofregistered ofthe asapercentage expressed period agiven within network our from disconnected total subscribers asthe rate ourchurn numberofregistered to prior 2008, wedefine For periods period. reported baseforthe changeinactive and the period reported sales inthe between period.of the The iscalculated difference total asthe subscribers numberofchurned baseat beginningandat end the the active midpointofthe ofthe asapercentage expressed period reported base overthe who subscribers numberofactive asthe subscribers ofactive our churn We define subscribers. registered basisof onthe reported was years forprevious whilechurn subscribers isbasedonactive The for2008 rate churn MOBILE CHURNRATE with subscribers ofmassmarket basebeingcomprised ofourmobilesubscriber portion to agrowing Operating andFinancialReviewProspects was primarily attributable to penetration growth with the addition of new subscribers with ofnewsubscribers addition the with growth to penetration attributable primarily was Tajikistan higherARPU. with newsubscribers attracted andthe that usage coverage unlimited with result improvement ofournetwork the ofsignificant ofnewtariffs launch Ukraine Armenia with ofregions coverage Uzbekistan, within asweincreased expansion ofourmobileoperations geographic baseandthe ofoursubscriber growth Uzbekistan Russia Kazakhstan Uzbekistan Tajikistan Ukraine Armenia Georgia oa hr 82 41 35.1% 34.1% 38.2% Total Churn . In 2008, our ARPU in Ukraine increased by 61.7% increased . In2008, ourARPUinUkraine to US$7.6 US$4.7 from in2007. The was in2008 increase . In 2008, our ARPU in Armenia decreased by 12.6% decreased . In2008, ourARPUinArmenia to US$14.6 US$16.7 from in2007 asaresult of . In2008, ourARPUinTajikistan by 2.1% decreased to US$9.5 US$9.7 from in2007. The inARPU2008 decline . In 2008, our ARPU in Uzbekistan decreased by 9.9%. In2008, decreased ourARPUinUzbekistan to US$6.4 US$7.1 from in2007 mainly dueto rapid the l ower income mass market subscribers. incomemassmarket ower l ose those subscribers. Similarly, prepaid customers who change tariff plans by purchasing by purchasing plans prepaid Similarly, customers subscribers. whochangetariff ose those 106.2% 84.0% 55.6% 42.8% 34.6% 31.5% 47.2% 0820 2006 2007 2008 Year endedDecember31, l ower 29 35.4% 32.9% 35 32.8% 23.5% 18 18.6% 61.8% 97 9.1% 49.7% 17 44.9% 61.7% .%95.1% 4.6% .%– 1.0% l evels ofincome. l ower usage. ower l l ower MOUdue ower eft the active active the eft we had broadband subscribers primarily in Ukraine and Ukraine broadband subscribers ARPU was US$15.3. ARPUwas subscribers broadband andUkraine inUkraine primarily subscribers we hadbroadband As ofDecember31, US$15.2. ARPUinRussiawas services blendedbroadband 2008 Asof December31, inCIScountries 2008 that period. in numberofmonths by the anddividing period the Company’s numberofthe during average subscribers the broadband by period relevant the during subscribers by broadband generated revenue We ARPU asservice calculate broadband BROADBAND ARPU in CIS. As ofDecember31, wehadapproximately 2008 1,182,000 inRussiaand 24,000 subscribers subscribers broadband broadband USBmodems. via service mobile homeinternet technologies aswell include usingFTTB,xDSLandWiFi access monthly internet months. Suchactivities pastthe three in activity generating apartyto arevenue basewhowere subscriber registered inthe subscribers those representing As ofDecember31, approximately CISwas inRussiaandthe 2008, ourtotal 1,206,000 subscribers numberofbroadband BROADBAND SUBSCRIBERS Tacom following ouracquisition. to oursubsidiary policy ofourchurn following application andcountedaschurn the disconnected number ofsubscribers inTajikistan rate The dueto highchurn in2006 was the ofsubscribers. churn relatively one-time in asignificant large subscribers that should have been disconnected from our network dueto ournetwork from that shouldhavebeendisconnected subscribers those monitored that better forprepaidcompared system to to subscribers dueto 2006 anewbilling was switching in2007 inArmenia rate inourchurn increase the inRussia.We believe ourpolicy months, to beconsistentwith inorder total inthe sixto three basefrom registration ofsubscriber period the to country, pursuant whichwedecreased in each policy calculation in2007 andUzbekistan dueto The achangeinoursubscriber were inUkraine rates highchurn tariffs. andreduced quality in2007 inKazakhstan compared rate to inourchurn dueto 2006 was improved network The reduction churn normal halfof2007 endof2007; by wereached the andhadalmostnochurn first inthe webelieve began operations resulted we at endofayear.InGeorgia, of2008 inhighchurn the campaigns quarters promotion insecondandthird sales InArmenia, short-term ourcompetitors. yearfrom compared the to 2007 during alsodueto pressure was highprice ofchurn increase InUkraine, subscribers. insteadofregistered subscribers ofactive churn reporting information on our significant acquisitions and dispositions, see “–Liquidity and Capital Resources–Investing activities.” Resources–Investing andCapital see“–Liquidity anddispositions, acquisitions onoursignificant information date outbelow statements asset havebeenconsolidated For first more sincethe into ofacquisition. acquired ourfinancial 2006, below. results from The summarized companies 2007 ofthe are financial and2008 acquisitions Our significant Acquisitions ofchurn forincrease reasons One ofthe Operating andFinancialReviewProspects l evel ofapproximately 50%inGeorgia. in2008 l evel in most of the CIS regions was a change in the methodology in 2008 to in2008 methodology achangeinthe was CISregions evel inmostofthe l ack of activity for three months. This forthree resulted ofactivity ack l evel in 2008 evel in2008 53 ВымпелКом / Годовой отчет 2008 54 VimpelCom / Annual Report 2008 Operating andFinancialReviewProspects (6) (5) (4) (3) (2) (1) Dominanta Buztel Сompany oec t.Cmoi uy20 80mlin9.%– 90.0% – $28.0 million 49.0% July 2008 July 2008 Cambodia Vietnam $ 408.3 million Sotelco Ltd. GTEL-Mobile June2008 Euroset company of Ltd, aholding Russia Holdings Morefront Telecom Corbina Golden Telecom Severnaya Korona Kazakhstan Corporation Armenia Teta Telecom ArmenTel Mobitel Unitel 2007,In April to sella33.3% into anagreement fora weentered subsidiary, Freevale inourwholly-owned interest ownership ofMo 25% shares to ofthe afurther years, respect three with after intoWe exercisable aputandcallarrangements, entered the to acquire usanoption ofDominanta that granted shareholder remaining the with agreement intoWe ashareholders entered en its to acquire usanoption that grants ofMobitel shareholder remaining the with agreement intoWe ashareholders entered into inJuly Unitel merged 2006.Buztel was aboutthe For information annu ofthis them, section companies heldby pleaseseethe weacquired these licenses at time the 2008, principal amount of debt outstanding under this agreement was US$41.9 was 2008, amountofdebt principal outstanding agreement underthis million. upto August 31, put andcallarrangement the 2009, becomeexercisabl date whichisthe first at putandcalloptions which the ofUS$20.0 to minim the borrowing forasasecured willbeaccreted million. accounted The was borrowing sale consideration the Intere to Minority Indexed the of aConsolidated andaDerivative Subsidiary Shares inthe foraTransaction Owner’s Accounting be price future innoeventwillthe however The isbased price purchaser. heldby the future interest remaining to sellto entire anoption usthe to purchaser the granted and, purchaser heldby the interest remaining entire the to to acquire usanoption granted purchaser the agreement, this with 21.0% owns million. Freevale onJune1 7.0% represents finalized The was ofUnitel. saleeffectively The ofUnitel. transaction Ltd. Ltd. Management by Rambert owned acquisition, please see Note 3 to our audited consolidated financial statements consolidated annualreport. pleaseseeNote included 3to inthis acquisition, ouraudited financial elsewhere weaccoun abouthow information anddispositions.” For more activities–Acquisitions Resources–Investing andCapital “–Liquidity remaining interest under certain circumstances for a price to be determined based on a prescribed procedure. based onaprescribed to foraprice bedetermined circumstances undercertain interest remaining and, shareholder heldby the interest remaining simultaneously, to sellto anoption us it shareholder remaining the wegranted formula. inaprescribed specified foraprice circumstances under certain (3) (2) (6) (4) (1)

(5) usaOtbr20 2. ilo 99 – 49.9% – 571,000 $226.0 million 2008 October – 100.0% 100.0% Russia $4,316.2 million 2008 February $234.2 million 75.0% Uzbekistan, USA August 2007 Kazakhstan, Russia, Ukraine, super-region) Region (Far East Russia-Irkutsk $10.5 million December2006 July 2006 Russia-Moscow 2006 Georgia February Uzbekistan 2006 January Uzbekistan ies raDt TotalPurchasePrice Date License Area l ess than US$57.5ess than US$60.0 than ormore million. Majority ofEITFNo. million Following provisions 00-4, the etme 07$1. ilo 0.%– 100.0% 100.0% $10.1 million September 2007 December 2006 – $501.0 million 2007 and April 2006 November qiycnrbto 00 – 40.0% contribution equity $ 267.0 as million – 364,000 2,500 51.0% 100.0% of $0.2 indebt million assumption the $ 12.6 plus million 100.0% indebt million approximately $7.7 of assumption the $ 200.0 plus million indebt million approximately $2.4 of assumption the $ 60.0 plus million Total Stake Acquired sale price ofUS$20.0 saleprice on a prescribed formula; formula; onaprescribed 4, 2007. Inconnection of SubscribersonDate e. AsofDecember31, simultaneously, we Approximate Number st inThat Subsidiary, 600,000 fixed-line um purchase price of of price um purchase refront Holdings refront 400,000 mobile al report entitled entitled al report s entire s entire tire interest interest tire of Acquisition entire entire ted for each ted foreach Operating andFinancialReviewProspects risk due to current economicvolatility. dueto current risk increased havebeenadjusted to method reflect underthis Assumptions including expenditures. factors capital estimated costsandother relevant The revenue,operating includes basisforourcashflow andforecasted assumptions historical businessandconsumerspending.reduced These businessperformance. dampened factors offuture ourexpectations global hasresultedthe economicrecession in, amongother things, unemployment, increased past. Inparticular, inthe judgmentthan more required units fair the value of2008, ofourreporting determining months inthe economicdownturn Asaresult significant judgment. ofthe ofsignificant application the fair few valueslast requires units, weemployed fair aDiscountedCashFlow values estimated reporting (“DCF”)analysis.the estimated ofthe Determining FAS fair accordance to with values. estimated their 142, units Indetermining reporting values book ofits wecompared net the impairment testin step(“Step goodwill 1”)ofthe first the Inperforming changesincircumstances. events orsubstantive ofSFASUnder provisions 142, istestedannually goodwill forimpairment asofDecember31 ofcertain occurrence oruponthe December 31, ispresented below US$): (thousands 2008 yearended forthe amountofgoodwill carrying changeinthe forwhichthe units We following havethe reporting GOODWILL Assets Impairment ofGoodwillandLong-Lived measure) margin is margin measure) (“OIBDA”, anon-U.S. usedin2007. GAAPfinancial those andAmortization than Depreciation IncomeBefore Operating by 18.0%; are to rates growth these zero from Rates ranged and others. Compound In2008, AnnualGrowth the share market growth, traffic projections, currency factors, country, GDPand foreign including inparticular sizeofmarket basedonnumerous year.These future vary andeach rates unit reporting foreach rates growth We revenue estimate The results of the DCF analyses were corroborated with other value indicators where available, such our market other value such ourmarket available, indicators with where The results corroborated DCFanalyses ofthe were 28.9% from to 54.5%. ranged OIBDA margins average the estimates on assumptions it believes to be reasonable, but which are unpredictable to andinherently uncertain. bereasonable,butwhichare believes it onassumptions estimates fair comparable valuecapitalization, analyst basesits company Management estimates. multiples earnings andresearch emnlgot ae335 3% 11.8–18.8% 3–3.5% 16.6–21.9% 7years –10 7years years period growth Start ofterminal rate Terminal growth (84) Discount Rate (503,379) (155,134) (1,110) – – – (315,049) – – – – – (28,221) – (41) – – (53,778) 2,753,883 – – – – – – 453,684 – 451,428 $(3,220) (12,870) – 10,211 – – $– 135,662 – TOTAL Russia fixed 154,061 13,063 81,999 Russia mobile $(7,045) fixed Armentel 12,911 Mobile Armentel $309,490 mobile Uzbekistan $180,481 Tadjikistan mobile mobile Ukraine fixed Kazakhstan mobile Kazakhstan Reporting units l ess dependent on those factors however the Company the however factors expects ess dependentonthose eebr2,20 Acquisition December 21,2007 ,3,1 ,1,5 1,1)$(6,2)$(691,189) $(368,827) $(19,915) $3,517,057 $ 1,039,816 Balance asof ucaePieImpairment Purchase Price Finalization of l ower margins than in2007. than margins ower In2008 l ower consumer confidence and and consumerconfidence ower adjustment Translation 2008 December 31,2008 l $ 3,476,942 $ Balance asof ower ower 1,935,455 $ 479,706 134,552 154,061 749,978 13,063 10,127 2007

– – 55 ВымпелКом / Годовой отчет 2008 56 VimpelCom / Annual Report 2008 respectively. For the reporting units discussed above, the relative decreases in fair value of reporting unit would be: would unit infair value decreases ofreporting discussed above, relative units the reporting For the respectively. ofapproximately units US$1,492.7 combinedfair inthe value reporting ofthe a decrease andUS$1,101.3 million million by 10.0% growth result would inrevenue in pointorareduction by onepercentage discountrate in the An increase to fail unit Step units, 1. achangeinfair value of30% not reporting other would reporting causethe As forthe ofUS$246.1charge berecorded. would million by to 10.0%, decrease were impairment unit anadditional Additionally, fair ifthe value reporting RussiaFixed ofthe ultimatethe amountofimpairment to determine to beperformed impairment berequired to testwould Step goodwill occur, caseswere 2ofthe If anyofthese Operating andFinancialReviewProspects the reporting units to all its the assets and assets the to allits units reporting the fair by Step the allocating value The inthe 2analysesunits. determined of was fair determined value implied ofgoodwill reporting forthese fair values. impairment performed testwas secondstep(“Step Asaresult, goodwill the 2”)of the estimated their exceeded units reporting ofthe assets values net ofthe units, carrying asthe reporting Mobile Ukraine and RussiaFixed The inthe impairment apotential ofgoodwill was results indicated Step that there ofthis 1process fair values, had the fair values of the following material reporting units beenhypothetically fair units values, fair hadthe values reporting following ofthe material changesinestimated to future impairments. impairments relative goodwill goodwill To ofpotential illustrate magnitude the fair values in estimated Consequently, 2008. couldresult decline during inadditional anyfurther units other reporting fair values estimated inthe ofallVimpelCom’s causedadecrease economiccrisis overall impairment, the goodwill recorded impairment failed testand, Step goodwill units 1ofthe Although reporting thus, Mobile only andUkraine Russia Fixed the of2008. quarter fourth the during pronounced whichbecamemore volatility, economic to current the cashflows attributable future estimated inthe inherent risks inthe increase anexpected reflect date and(b) acquisition the 17.0% denominated cashflows forruble ascompared to 12.8% valuation ofGoldenTelecom original asof usedinthe of to useofahigherdiscountrate (a)the attributable was unit The reporting RussiaFixed forthe impairment charge of21.9%rate ascompared to in2008 12.0% cashflows. in2007 inforecasted and(b)decrease to useofhigherdiscount (a)the attributable was unit reporting Mobile The Ukraine forthe impairment charge aggregate fair values to implied their asofDecember31, reset were units 2008. reporting these impairment Asaresultunits, taken goodwill respectively. ofthe asofDecember31, in values ofgoodwill carrying 2008, the impairments ofUS$315.0 goodwill recorded reporting andUS$53.8 Mobile million andUkraine at RussiaFixed the million inabusinesscombination. Asaresult hadbeenacquired Step ofthese unit 2analyses,taxes) we reporting asifthe below, the reporting unit book value would have exceeded fair value value haveexceeded table. by book would inthe approximately unit forth amountsset the below, reporting the aahtnMbl 43152.8 67.9 $90.1 34.3 37.7 $57.2 – 7.5 $24.2 Mobile Kazakhstan Mobile Armenia Fixed Armenia (in US$million) aahtnMbl .%7.1% 7.5% 6.0% 10.3% 6.8% 7.5% 6.4% 8.5% Mobile Kazakhstan Mobile Armenia Fixed Armenia Russia Fixed l ower projected future cash flows due to negative effect of current crisis. These crisis. assumptions ofcurrent cashflowseffect dueto future negative projected ower l oss to record. l iabilities (including any unrecognized intangible assets and related deferred deferred intangible andrelated (including assets anyunrecognized iabilities %aePitIces nDson ae10%DecreaseinRevenueGrowth 1% agePointIncreaseinDiscountRate 0 20% 10% l ower by the percentages by the ower l isted isted 30% roaming charges and charges for value added services (VAS) forvalue addedservices and“infotainment.” andcharges suchasmessaging, charges mobileinternet, roaming operators, other mobile andfixed-line feesfrom services,interconnect usingInternet online subscribers from charges time fees, andprepaid subscribers, monthly contract contract from charges airtime included from revenues revenues Our service SERVICE REVENUES consistedof: of revenues sources Ourprimary equipment andaccessories. services,aswellselling internet ofwireless, andbroadband fixed arange through services telecommunication endedDecember31, years voice, three the providing dataDuring from revenues 2008, andother wegenerated Revenues Companythe asofMay 6, US$10.81 2009 was billion. value Company the ofthe whoestimate companies. aswellsimilar parties of third The capitalization from market obtained partly ruble; devaluationand(e)reports ofthe recent causedby Russianmarket, the the with associated to risks the asawholebecauseofanoverreaction stock market the than in Russiahasbeennegatively impacted more companies forpublicly traded capitalization market that the (d)abelief stock market; overall the impacting other factors aswell market, current inthe companies illiquidity becauseofthe formanypublicly traded isdistressed capitalization Company;to the December31, market that the with premium associated (c)abelief control ofthe (b)anestimate 2008; US$21.341 Company between of the whichhasranged andUS$7.172 billion 1, October 2008 from period the during billion Company assessment that the this factors capitalization includethe inmaking hastaken market (a)the into consideration fair ofthe value Company ofthe fair asofDecember31, value aggregate reflection isanappropriate this of Some 2008. fair that these values andbelieves with associated analyses assumptions ofthe Company sensitivity the hasperformed impairment DCFanalyses tests. goodwill the Asdiscussedabove, usedinthe from Company’sof the units reporting The fair value Company ofthe asofDecember31, fair ofthe values US$15.004 was 2008 basedonanaggregation billion COMPARISON TOMARKETCAPITALIZATION date.an interim to suchassets betestedforimpairment at require orother factors ifourresults ofoperations period) aninterim during that suchimpairments, of2009 (i.e., quarter to ifrequired, fourth prior the andmay needto couldbematerial berecorded fair values estimated inthe couldresult decline inimpairments toAny further fair values at December31, 2008. to estimated their reset As aresult values impairments impaired were asset ofthe assets ofthe taken carrying in2008, the impairments other asset ofUS$37.6In addition,werecorded in2008. million impaired,concluded were suchassets impairment andanasset ofUS$36.3 recognized. was million we unit, reporting Mobile noimpairment. Ukraine was value forthe assets, However, ofthose there andthus carrying the the with cashflows associated undiscountedfuture the unit, exceeded assets long-lived reporting RussiaFixed the impairment to pursuant FASB intangible for assets units, finite-lived wealso testedthe impairmentsAs aresult at reporting goodwill these ofthe Assets Long-Lived Operating andFinancialReviewProspects Statement No. 144, Impairment Assets. forthe For orDisposalofLong-Lived Accounting l ong-lived assets or goodwill. Itispossible orgoodwill. assets ong-lived 57 ВымпелКом / Годовой отчет 2008 58 VimpelCom / Annual Report 2008 • other miscellaneous expenses, such as insurance, operating taxes, expenses,• other miscellaneous operating such asinsurance, and expenses; compensation • stock price-based • utilities; primarily oftelecommunications primarily mainly ourintangible by assets, us. equipmentandbuildingsowned We oftelecommunications whichconsisted amortized Depreciation expense andamortization Write offs andimpairments offs Write inbusinesscombinations. acquired CISandcustomerand the relations relevant factors, such as a change in tariff plans from pre-paid from to plans post-paid. factors, suchasachangeintariff relevant ofVAT net willultimately data that webelieve onhistorical receivable We estimate basedthe beuncollectible. andother Provision fordoubtfulaccounts values fair overtheir values. carrying oftheir excess amountsofthe the Operating andFinancialReviewProspects rental of base station sites. ofbasestation rental included, Ourother revenues We to oursubscribers. soldmobilehandsets, equipmentandaccessories amongother things, SALES OFHANDSETSANDACCESSORIESOTHERREVENUES • salaries and outsourcing costs, including related social contributions required by Russian required costs, contributions including andoutsourcing social related • salaries • dealers’ commissions; include: expenses andadministrative Ourselling, expenses. general andadministrative Selling, general 31, included: expenses ouroperating 2008 endedDecember years three the costsofhandsets, costsandthe during equipmentandaccessories, to service In addition OPERATING EXPENSES networks. foruseonour to oursubscribers forresale partymanufacturers third from handsets,purchased equipmentandaccessories payable amountthat was the soldrepresented goods, forthese ofVAT. net Our costsofequipmentandaccessories We COSTS OFEQUIPMENTANDACCESSORIES to special forconnection andcharges expenses costs, costs, channelrental telephone andtraffic costsincluded interconnection Service SERVICE COSTS andaccessories. costsofhandsets costsandthe service to endedDecember31, ourrevenues: years attributable directly three ofexpenses the categories During wehadtwo 2008 Expenses • rent, including • rent, • repair andmaintenanceexpenses; expenses; andadvertising • marketing l ease payments sites; forbasestation . We included in our operating expenses written off written . We expenses included inouroperating . We included in our operating expenses an estimate of the amount of our accounts amountofouraccounts ofthe anestimate . We expenses included inouroperating l icenses and frequency allocations,icenses andfrequency telephone . We depreciated the capitalized costsofourtangible assets,. We capitalized whichconsisted the depreciated l ines foremergencies. l icense fees, and audit and accounting, l l ong ine capacity for ine capacity -l ived assets and goodwill in andgoodwill assets ived l ine rental costs,ine rental roaming l aw; l ocal numbers inRussia numbers ocal l egal fees. with a floating interest rate, the interest rate is rate interest rate, the afloating interest with bearing Ourinterest and other borrowings. a percentage of consolidated net operating revenues. ofconsolidated operating net a percentage The table below indicated, shows, periods forthe following the consolidated data statement ofoperations as expressed ofOperations Results ofapproximately incometax rate 18.0%.that resulted inaneffective The 15.0%. was incometax acomplex statutory andGeorgia regime was inArmenia incometax rate there InUzbekistan changedto 20.0%.The forRussiaandKazakhstan tax rate andTajikistan statutory 25.0%. inUkraine incometax was rate 24.0%. was in Russia2008 The 30.0%. was statutory 2009, inKazakhstan incometax Starting rate statutory the income Income taxexpense bearing amountofouroutstanding andthe interest rates interest ofprevailing a combination Interest expense Operating andFinancialReviewProspects Other revenues Other Sales ofequipmentandaccessories revenues Service revenues: Operating Consolidated statements ofincome Total revenues operating Less basedtaxes revenue Service costs Service expenses: Operating revenues operating Net Cost ofequipmentandaccessories Amortization Depreciation expenses andadministrative Selling, general Impairment prtn noe2.%30.8 25.1% income Interest incomeandexpenses: Other income Operating Total expenses operating fordoubtfulaccounts Provision Net foreign exchange gain(loss) exchange foreign Net Other income(expenses) Other innet Equity expense Interest Total other incomeandexpenses Income tax expense and incometaxes, interest Income before minority Minority interest in earnings (losses) inearnings ofsubsidiaries, interest before Minority cumulative effect of change in accounting principle ofchangeinaccounting effect cumulative cumulative effect of change in accounting principle ofchangeinaccounting effect cumulative l oss l oss ofassociates . We incurred interest expense on our vendor financing agreements, financing onourvendor expense interest . We incurred . Income tax expense included both current and deferred tax expense. The anddeferred included. Incometax statutory expense incometax both current rate l iabilities carry both fixed and floating interest rates. On our borrowings Onourborrowings rates. andfloating both interest fixed carry iabilities l inked either to LIBOR or to EURIBOR. Our interest expense dependson to expense LIBORortoinked EURIBOR.Ourinterest either (16.3)% (11.3)% 100.0% 100.1% (0.2)% (0.6)% (4.9)% (0.1)% 98.8% 28.0% 22.4% 15.0% 74.9% 0.2% 3.6% 4.4% 0.7% 3.0% 8.8% 0.6% 0.5% 1.0% 1.1% 0820 2006 2007 2008 Year endedDecember31, l oans from banks,oans from capital l 0.%100.0% 100.0% 0.%100.0% 100.1% 01%– (0.1)% 12%(3.8)% (1.2)% 27%(3.8)% (2.7)% iabilities. 08 30.9% 30.8% .4 (0.8)% 0.04% 99 99.6% 99.9% 83 17.9% 18.3% 92 71.3% 69.2% 63 18.0% 16.3% 96 24.9% 29.6% .%0.4% 0.6% .%0.2% 0.9% .%0.3% 0.5% .%0.0% 0.0% .%8.0% 8.3% .%0.5% 1.0% .%0.3% 0.1% .%0.1% 0.1% .%0.4% 0.1% .%3.7% 3.1% % –– l eases 28.7 % 59 ВымпелКом / Годовой отчет 2008 60 VimpelCom / Annual Report 2008 statements annualreport. included inthis elsewhere oursegments, regarding seeNote 16 segments. information consolidated to For more ouraudited financial geographic The indicated, ofour ineach tables periods below results forthe aboutthe show ofoperations information selected Operating andFinancialReviewProspects Russia Fixed Russia Mobile Net income before minority interest minority incomebefore Net Cumulative effect of change in accounting principle - principle ofchangeinaccounting effect Cumulative Operating income/(loss) Operating Impairment andamortization Depreciation revenues Intersegment transaction Total excluding intragroup revenues operating 16.7% 20.4% 5.2% incometaxesIncome before andminority income Operating andamortization Depreciation Total excluding revenues operating income Net ofchangeinaccounting effect cumulative Income before Income/(loss) before income taxes and minority interest Income/(loss) incometaxes before andminority (benefit) Income tax expense/ revenues Intersegment Net income before minority interest minority incomebefore Net (benefit) Income tax expense/ interest transaction intragroup principle l oss $ 7,310.5 1,463.3 1,204.7 1,146.4 2,667.4 1.9 316. 0820 ,cag 0720 %,change 2006 2007 %,change 2007 2008 61.3 ,9. 2. ,9. ,0. 38.4 $4,400.3 $6,090.3 20.0 $ 6,090.3 ,2. 1. ,2. 5. 65.8 857.6 1,422.3 -19.4 1,422.3 ,9. 391918143241.9 1,403.2 1,991.8 33.9 1,991.8 ,0. . ,0. 0. 23.2 900.3 1,109.0 8.6 1,109.0 ,3. 2. ,3. ,3. 57.3 1,231.3 1,937.1 -24.5 1,937.1 1 . 3. 1. 7. 37.8 373.7 514.8 -38.4 514.8 (In millionsofUSdollars,except%change) 3.4nm3.41.5126.7 Years EndedDecember31, 5.2% 0820 2006 2007 2008 – Year endedDecember31, Year endedDecember31, $ 1,286.7 (in millionsofUSdollars) (268.0) (266.1) (191.2) 04 16.7% 20.4% 142.8 315.0 219.4 (1.9) 082007 2008 0.04% – n/a n/a n/a n/a n/a n/a n/a million during 2008, representing an increase of57.0% anincrease 2008, representing during million US$143.4 from in 2007. million US$225.1 eliminations,were inCIS,excluding intersegment operations ourfixed from revenues operating Net in 2008. inRussia, revenues, US$1,286.7 excluding intersegment were operations ourfixed from revenues million operating Net by 38.1% eliminations,increased intersegment to US$1,294.7 US$937.4 from 2008 during million 2007. during million US$6,090.3 inCIS,excluding from 2007. 2008 ourmobileoperations during during from million million revenues operating Net inRussia, revenues, by excluding intersegment 20.0% increased ourmobileoperations from to revenues US$7,310.5 operating Net andimproved ARPU. on ournetwork traffic becauseofincreased inmobileoperations 2008,Telecom, andalsodueto increase inFebruary acquired whichwas 2007. asaresult results primarily during ofthe ofconsolidation in 2008 ofGolden revenues operating ournet We increased Our consolidated net operating revenues increased by 41.1% increased revenues Our consolidated operating net to US$ OPERATING REVENUES Year EndedDecember31, 2008 Compared toYear EndedDecember31, 2007 CIS Fixed CIS Mobile Operating andFinancialReviewProspects Impairment Net income before minority interest minority incomebefore Net incometaxesIncome before andminority income Operating andamortization Depreciation Income tax expense/ (benefit) Income tax expense/ Intersegment revenues Intersegment Total excluding revenues operating Total excluding revenues operating Intersegment revenues Intersegment Income tax expense/ (benefit) Income tax expense/ incometaxesIncome before andminority income Operating Impairment andamortization Depreciation interest intragroup transaction intragroup intragroup transaction intragroup interest l l oss oss $ 1,294.7 (195.2) (196.6) $ 225.1 368.3 (1.4) (5.1) 20.3 88.5 90.1 0820 ,cag 0720 %,change 2006 2007 %,change 2007 2008 23.9 0820 ,cag 0720 %,change 2006 2007 %,change 2007 2008 81.8 47.7 0.3 5.4 4. 70$134$1. 748.5 $16.9 $143.4 57.0 $ 143.4 3. 3. 3. 5. 107.9 $450.8 $937.4 38.1 $ 937.4 2. 7220315951.0 145.9 220.3 67.2 220.3 9. 5. 9. 47 n/a (4.7) 198.6 -58.8 198.6 6. / 6. 1.)n/a (19.0) 169.7 n/a 169.7 (In millionsofUSdollars,except%change) 10,116.9 049. 0436188.9 3.6 10.4 95.2 10.4 (In millionsofUSdollars,except%change) 64na7. 65363.0 16.5 76.4 n/a 76.4 33na9. 3.)n/a (35.5) 93.3 n/a 93.3 08-001. 07 n/a (0.7) 10.8 -50.0 10.8 585. 58(.)n/a (1.3) 15.8 51.3 15.8 36-781. 02 n/a (0.2) 13.6 -97.8 13.6 124. 1282646.3 8.2 61.2 44.6 61.2 . / . . n/a 0.0 0.0 n/a 0.0 . / . . 460.0 0.5 2.8 n/a 2.8 . / . . n/a 0.0 0.0 n/a 0.0 Years EndedDecember31, Years EndedDecember31, million during 2008 from US$7,171.1 from 2008 during million million 61 ВымпелКом / Годовой отчет 2008 62 VimpelCom / Annual Report 2008 consumption ofVASconsumption andUzbekistan. inKazakhstan revenues, compared to US$98.0 and10.6%, million for2007. respectively, to increased The attributable isprimarily increase US$140.2 VASgenerated from revenues inCIS,or10.7% ofourmobileservice million operating ofourCISmobilenet by 43.1% CISincreased inthe value addedservices from compared to in2008 Our revenues 2007. 2008, we During inCIS. onournetwork terminated baseandvolume ofinbound traffic subscriber alsodueto was increased in2008 revenues The inourinterconnect increase inCISmobile, revenues compared to US$161.9operating million, or17.0% inCISmobile2007. revenues operating ofnet revenues, or17.5% US$230.3 interconnect 2008, wegenerated from During revenues ofourservice million ofnet onourmobilenetwork. traffic dueto inKazakhstan, increased andUkraine Uzbekistan growth compared to US$648.2 million, in2007. or69.9% revenues operating ofnet to revenue related The primarily was increase fees, 67.7% andmonthly whichrepresented and prepaid contract subscribers revenues, operating ofourCISmobilenet mobilecontract inCISfrom US$891.7 charges 2008, wegenerated During airtime from revenues ofourservices million charges. androaming value addedservices operators, from charges other mobileandfixed-line feesfrom interconnect fees, andprepaid subscribers, monthly 2007. contract contract from charges These airtime include from revenues revenue by 38.3% inCISincreased revenues toOur mobileservice US$1,316.4 US$951.6 from 2008 during million during million MOBILE SERVICEREVENUESINCIS onournetwork. roaming andpersons by oursubscribers travel to increased due activity roaming 2007. andincreased coverage dueto primarily These improved andexpanded network were increases revenues, comparedsubscribers, or5.8% to operating US$340.2 ofRussiamobilenet and5.6%, for million respectively, to their services roaming forproviding operators other mobileservices from feesreceived and roaming subscribers by ourRussian feesgenerated roaming from revenues US$428.2 2008, wegenerated ofourservice During million Operating andFinancialReviewProspects was primarily dueto primarily was mobile Russia, compared to US$736.4 million, or12.1% in2007. revenues operating ofnet The inourmobileVAS increase revenue VAS, from revenues or12.2% US$898.9 ofourmobileservice 2008, wegenerated million During in revenues oftotal operating net on ournetwork. 2007. inboundtraffic alsodueto was increased in2008 revenues The inourinterconnect increase inmobileRussia,revenues compared to US$851.3 in million, or14.0% inmobileRussiaoperations revenues operating ofnet US$1,074.0 2008, wegenerated revenues, or 14.6%During interconnect from operating revenues ofnet ofourservice million onourmobilenetwork. traffic to increased related US$4,124.0 million, or67.7% in2007. inmobileRussiaoperations revenues operating ofnet The primarily was increase fees, andmonthly or65.7%and prepaid contract inmobileRussia, subscribers revenues compared to operating ofnet US$4,842.7.million 2008, wegenerated mobilecontract During from charges airtime from revenues ofourservices charges. androaming value addedservices operators, from charges other mobileandfixed-line feesfrom interconnect fees, andprepaid subscribers, monthly 2007. contract contract from charges These airtime include from revenues revenue by 19.4% inRussiaincreased revenues Our mobileservice to US$7,264.3 US$6,082.5 from 2008 during during million million MOBILE SERVICEREVENUESINRUSSIA l aunch of Ring Back Tone and traffic sharing and also due to increased revenue from SMS. from revenue andalsodueto increased sharing Tone Back aunch ofRing andtraffic s a percentage of net operating revenues, our service costs increased to 18.3% 22.4% costsincreased from revenues, 2008 2007. ourservice operating during during of net a percentage by 72.8% costsincreased Our service to US$2,262.6 US$1,309.3 from 2008 during 2007. million during million As SERVICE COSTS. Golden Telecom’sThe causedby was integrating inCIScountries. increase operations fixed by CISincreased inthe operations in ourfixed inRussiaamountedto US$1,620.7 operations Total inour fixed expenses expenses operating Operating in2008. million costsin2008. service and increased andcertain ofgoodwill impairment charges ofone-off recognition resultingfrom inUkraine expenses 2007. of38.1% during increase million revenue dueto increased primarily the operating This the ishigherthan increase by 64.6% inCISincreased inourmobileoperations to expenses US$1,233.2Operating US$749.2 from 2008 during million sales in2008, andcostsof3Ghandsets applied andsalesactivities marketing US$4,101.8 2007 in during million by 14.7% inRussiaincreased Total inourmobileoperations expenses operating to US$4,704.4 from 2008 during million 2008. inFebruary ofGoldenTelecom expenses acquired 2007 whichwas ofoperating mainlyduring dueto addition by 52.7%Our consolidated increased expenses total operating to US$7,581.0 US$4,964.9 from 2008 during million million OPERATING EXPENSES and Uzbekistan. US$143.4from in2007. million ofGoldenTelecom companies The dueto was acquisition Kazakhstan inUkraine, increase inCIS,including revenues revenues, by intersegment 90.2% increased to operating US$272.7 net Our fixed in2008 million andUS$154.7 operations. operations residential from million wholesale US$586.6 ourbusinessoperations, from from generated million were revenues US$688.0 offixed million in Russia, revenues including revenues, intersegment amountedto operating net US$1,429.5 fixed In 2008 million. FIXED REVENUES and2007. 2008 CISduring inthe salesofequipmentandaccessories from amountofrevenue asignificant We didnot derive year. secondhalfofthe modems inthe 2007, US$6.5 from during million million andUSB of2008 quarter asaresult primarily fourth ofsalesiPhonesinthe by 1,452.3% increased 2008 during salesofequipmentandaccessories from toIn Russiamobileourrevenues US$100.9 REVENUES FROMSALESOFEQUIPMENTANDACCESSORIES onournetwork. roaming andpersons by oursubscribers travel an increased dueto activity roaming anincrease coverage, dueto primarily These improved andexpanded network were increases revenues, or3.9% compared to operating subscribers US$41.5 ofinCISmobilenet and4.3%, for2007. million respectively, to their services roaming forproviding operators other mobileservices from feesreceived roaming and subscribers by oursubscribers generated US$51.5 2008, revenues wegenerated roaming During from revenues ofourservice million Operating andFinancialReviewProspects l ine with revenue growth. The increase related to growth in service cost, more intensive intensive more cost, inservice to The growth related growth. increase revenue ine with 95.0% to US$248.8 US$127.6 2008, from during million in2007. million l aunched during the fourth quarter. fourth the aunched during l ong-lived assets assets ong-lived 63 ВымпелКом / Годовой отчет 2008 64 VimpelCom / Annual Report 2008 US$9.7 andUS$4.7 spent fortechnicalsupport spentonsalesandmarketing. were were million million US$37.0 compared to million US$33.9 in2007. million expenses, andadministrative US$56.4 In2008 general were million amountedto US$70.9 expenses andadministrative of selling, in2008, general anincrease million operations In CISfixed US$47.7 andUS$28.3 spentontechnical support spentonsalesand marketing. were were million million 14.5% expenses, amountUS$336.5 this ofconsolidated Of in2008. andadministrative SG&Aexpenses general were million US$412.5 were operations inRussiafixed expenses andadministrative Selling, general in2008, whichrepresented million andUS$137.6 spenton technical support were spentonsalesandmarketing. were million US$270.7higher than in2007. million expenses, US$73.7 US$166.1 andadministrative In2008 general were million million US$377.4 were inCISmobileoperations expenses andadministrative Selling, general 39.4% in2008, whichwas million mostly inRussiamobilegrew in expenses administrative US$123.7 compared to gainin2008 US$208.3 million in2007. expense and million selling, general expenses these Without whichresulted expenses in plans mainly basedcompensation instock price isexplained by areversal The2008. reduction to 31.2% 26.8%declined from in2008 by US$176.3 in2007. declined expenses andadministrative General in million US$1,977.6 US$1,903.4 from in2008 million in2007. they million revenues operating ofnet asapercentage However, by US$74.2 increased inRussiamobileoperations expenses orby 3.9% andadministrative million Selling, general to ofGoldenTelecom consolidation the results. tenmonths by US$632.2 orby 28.7% million to US$2,838.5 US$2,206.3 from 2008 during 2007 million mainly during million dueto Selling, general andadministrative expenses segmentin2007 inCISfixed immaterial. The was costofequipmentandaccessories US$0.6 in2008. was million operations inCISfixed Costofequipmentandaccessories andaccessories. costs ofhandsets US$5.5 or5.4% in2008 reached ofconsolidated million operations inRussiafixed Cost ofequipmentandaccessories in2007. andimmaterial 2008 US$0.1 inCISmobilewas in million Costofequipmentandaccessories of consolidated costsofequipmentandaccessories. Operating andFinancialReviewProspects Cost of equipment and accessories in Russia mobile operations reached US reached inRussiamobileoperations Cost ofequipmentandaccessories to compared 1.0 increased to 2008 revenues 0.1% %during 2007. operating ofnet during asapercentage and accessories equipmentdueto ofGoldenTelecom andsalesoffixed consolidation secondhalfof2008 the results. Ourcostofequipment 2007. US$5.8 during from million 2008 during dueto This million primarily salesofiPhonesandUSBmodemsin was increase Cost ofequipment andaccessories in2008. ofGoldenTelecomcaused by operations integration US$55.1 in2008, whichwas million US$32.1 higherthan million in2007. million costswas The inCISservice increase amounted to 29.3% US$87.2 were ofCompany’s operations costsinCISfixed Service costsin2008. consolidated service US$663.0 were operations costsinRussiafixed and million minutesofusage. Service unlimited with sales ofnewtariffs active resultingfrom costsinUkraine of38.3% increase service revenue dueto primarily increased service higher than US$390.6 costsinCISmobilewere 57.3% in2008, whichwas million Service US$248.3 higherthan in2007. million This is traffic. ininternational 2007. costdueto growth ininterconnect The causedby was growth increase by 33.1% increased costsinRussiamobileoperations Service to US$1,385.8 US$1,040.9 from in2008 million in million . Our consolidated cost of equipment and accessories increased by 1,646.6% increased . Ourconsolidated costofequipmentandaccessories to US$101.3 . Our consolidated selling, general and administrative expenses increased increased expenses . Ourconsolidated andadministrative selling, general l ine with revenue growth. revenue ine with $95.2 $95.2 million in 2008, which represented 94.0% in2008, whichrepresented million US$15.8 million in 2007 primarily due to acquisition ofGoldenTelecomUS$15.8 in2007 companies dueto million primarily acquisition inCIS. ofUS$315.0impairment charge US$23.9 was income inCISfixed million. Operating million, of51.3% anincrease from wehadanoperating 2008 During basegrowth. salesandsubscriber active dueto expenses ofadvertising growth significant with associated andexpenses in2008 recorded impairmentthe charges in 2007. The mainly was dueto decline anoperating by 58.8% declined to US$81.8 incomeinCISmobileoperations US$198.6Our operating from in2008 million million costs. to control aswellmanagement’s inrevenues efforts increase the US$1,991.8 2007. during million result partly the inRussiawas andalsowas of helpedby This ESOPreversal growth by 33.9% grew incomeinRussiamobileoperations to 2008, US$2,667.4 ouroperating During compared to million inamountofUS$442.72008 million. ofimpairment effect stayed negative that incomein2008 the ourtotal stable despite operating whichresulted expenses inUS$119.3plans compared to gainin2008 US$208.3 million in2007. expense million than Other US$2,206.2 from 2008 2007. during million basedcompensation instock–price Partly isdueto areversal increase this by asaresultPrimarily 14.9% foregoing, incomeincreased ofthe ourconsolidated operating to US$2,536.0 during million OPERATING INCOME comparedUS$1.6 to in2008 US$0.4 in2007. million million were they US$5.3 were operations fordoubtfulaccounts InCISfixed in2008. segmentprovisions million In Russiafixed 2007 inCISmobileby 31.6% andalsodeclined to US$6.7 US$9.8 from in2007. million million by 4.0% inRussiamobiledeclined to fordoubtfulaccounts US$41.1 provisions In 2008 US$42.8 in from million million to 0.5% ofprepaiddecreased compared balances to subscribers. in2008 0.6% innegative in2007 dueto reduction the US$52.9 2007. from 2008 during revenues, fordoubtfulaccounts during provision million operating ofnet Asapercentage Provision fordoubtfulaccounts impairment and a US$90.1 mobilegoodwill million impairment assets long-lived andimpairments offs Write 44.6% in2008, whichwas US$61.2 higherthan operations in CISfixed in2007. million US$219.4 inRussiawas operations infixed expense andamortization Depreciation US$88.5 Itwas in2008. million million inKaR-Tel share inJulyadditional 2008. of onacquisition allocation asaresultprice inKazakhstan ofpurchase revaluation ofassets of 2007 andrecognition US$220.3than andsecondhalf in2008 in2007. million expenditures capital significant with The connected was increase US$1,109.0from in2007. million US$368.3 were they 67.2% in2008, whichwas InCISmobileoperations million higher by 8.6% increased to US$1,204.7 inRussiamobileoperations expense andamortization in2008 Depreciation million ofGoldenTelecom. consolidation the inRussiaandCIScoupledwith expenditures capital to dueprimarily continuing was US$1,881.2 US$1,390.6 from 2007. expense in2008 during million million andamortization indepreciation The increase overall Depreciation expense andamortization Operating andFinancialReviewProspects l oss forRussia. . In 2008 we wrote down US$37.6 down wewrote . In2008 to DVB-H related andDVB-T million . Our consolidated provision for doubtful accounts increased by 3.4% increased . Ourconsolidated fordoubtful accounts provision to US$54.7 million l oss in our fixed operations inRussiawhichamountedto US$191.2 operations oss inourfixed dueto million . Our consolidated depreciation and amortization expense increased by 35.3% increased expense to andamortization . Ourconsolidated depreciation l oss ofUS$176.0 by in2008, causedprimarily inUkraine million l oss for Ukraine, andUS$315.0oss forUkraine, goodwill fixed million l l icenses and recognized icenses andrecognized oss in the fourth quarter quarter fourth oss inthe 65 ВымпелКом / Годовой отчет 2008 66 VimpelCom / Annual Report 2008 US$972.7 denominated to hedgeourUSdollar inRussianrubles million to acquire agreements 2006, offorward inNovember into aseries weentered risk, currency ourforeign to reduce In order denominated financial ofourUSdollar revaluation exchange resulted foreign 2008 inasignificant during USdollar the against ruble ascompared to2008 aUS$73.0 2007. gainduring exchange currency Russian The foreign ofthe million depreciation Operating andFinancialReviewProspects hedge our short-term US dollar denominated USdollar hedge ourshort-term andAugust 2007, US$173.6In March to acquire agreements offorward into aseries to weentered inRussianrubles million amountofUS$236.1 principal inthe (including agreement aswap million). Consolidated gain/loss exchange Foreign currency US$2,766.6 from 2008 amountofourdebt during overall the to US$8,442.9 million million. in to anincrease 2007. attributable primarily was during period million this during expense The inourinterest increase Consolidated interestexpense OTHER INCOMEANDEXPENSES In March and October 2008 we entered into a series of zero-cost collar agreements to acquire US$1,4 to acquire agreements collar ofzero-cost into aseries we entered 2008 andOctober In March dueto terminated changesinKartel-EBRD were agreements swap these 2008 million. InMarch December 31, amountofUS$90.3 2007, principal tengewith forKazakh USdollars to purchase agreement wehadaswap rate interest ourfloating USdollar and transfer of122.64 rate tengeat fixed the forKazakh amount ofUS$100.0 USdollars to purchase tengeperUSdollar million Kazakh l US$110.0 to acquire agreement In August 2006, into aforward weentered tengeto hedgefinancial inKazakh million amountofUS$120.6 principal inthe agreement collar million). rubles to hedge our US dollar denominated to hedgeourUSdollar rubles short-term US dollar denominated USdollar short-term US$166.7 to acquire agreements to hedgeour inRussianrubles million 2009,offorward intoIn March aseries weentered respectively, net other net respectively, gainsofUS$120.1The exchange foreign net andUS$39.3 million million, endedDecember31, years forthe and2007, 2008 deductible impairment deductible of28.0% incometax rate in2007 dueto primarily tax non- oureffective of34.1%tax higherthan rate was 2008 during income incometaxes. to Oureffective deferred relates asit incometax rates RussianandKazakh changeinthe of the 2007. during million The inincometaxes dueto primarily decrease was Consolidated Incometaxexpense included accompanyingwere inthe consolidated statements to changeinfair the value ofincomeandrelated ofderivatives. US$28.78 (US$1.44 percommonshare 2007. perADS)during diluted incomeofUS$10.34 net we reported (US$0.52 percommonshare perADS),compared to diluted incomeof net (US$0.52 perADS),compared to US$1,462.7 orUS$28.78 million (US$1.44 percommonshare 2007. perADS)during In2008, US$524.3 incomewas incomepershare.In2008, ournet incomeandnet Net million, orUS$10.34 percommon share iabilities of KaR-Tel. In October 2006, the forward agreement was restructured into a swap agreement in a principal inaprincipal into agreement aswap restructured was ofKaR-Tel. agreement 2006, InOctober forward iabilities the l osses ofUS$5.5 andUS$2.2 million endedDecember31, years forthe million and2007, 2008 respectively, l oss and . Our interest expense increased 154.4% increased expense . Ourinterest to US$495.6 US$194.8 from 2008 during million l . Our income tax expense decreased 48.8% to decreased . Ourincometax US$303.9 expense US$593.9 from 2008 during million oss from associates. oss from l iabilities due in the fourth quarter of2009. quarter fourth dueinthe iabilities l iabilities due in 2008 and the first, second and third quarters of2009. quarters secondandthird first, andthe duein2008 iabilities l iabilities due in the first and second quarters of 2008 (including of2008 azero-cost andsecondquarters first dueinthe iabilities l . We recorded aUS$1,142.3. We recorded exchange currency foreign million oans to a fixed Kazakh tenge oans to Kazakh afixed l iabilities underour iabilities l l l ower income before taxes in 2008 and the benefit benefit taxes and the income before in2008 ower iabilities due in 2007 and the first quarter of 2008 of2008 quarter duein2007 first andthe iabilities oan agreements. l oan with an interest rate of9.9%. rate aninterest oan with Asof l oss during 2008 from a corresponding acorresponding from 2008 oss during l oan agreement. 95.4 95.4 million inRussian million l oss during oss during and an increased roaming activity due to an increased travel by our subscribers and persons roaming onournetwork. roaming andpersons by oursubscribers travel dueto anincreased activity roaming and anincreased coverage in2006. dueto primarily revenues These improved andexpanded2.6% network were increases operating ofnet revenues, to subscribers, or1.9% their compared to operating services US$126.8 ofnet roaming for providing million, or operators other mobileservices from received revenues US$133.8generated roaming from revenues ofourservice million revenues,3.4% compared to operating US$149.5 ofnet 2007, in2006. million, revenues During or3.0% operating ofnet we 2007,During US$241.4 wegenerated by our subscribers, or generated revenues roaming from revenues ofourservice million campaigns.2006 asaresult andmarketing ofourpromotional 2007 compared inRussiaduring to ofvalue addedservices consumption dueto primarily increased was revenues services CIS.The inthe inourvalue value added increase addedservices from amountofrevenue asignificant We didnot derive US$603.3 value addedservices,or94.1% from value ofrevenues addedservices,in2006. from million ofourrevenues value value addedservices,in2007, added services,or88.3% from from ofourrevenues ofrevenues million compared with revenues, compared to US$641.2 million, or13.2% in2006. revenues InRussia, US$736.4 wegenerated operating ofnet 2007,During value addedservices,or11.6% from US$834.3 wegenerated revenues ofourservice million operating ofnet onournetwork. in2007 traffic alsodueto revenues was increased our interconnect plans.The in increase onsometariff pricing andweincreased other mobileoperators feeswith interconnect we increased forincomingcalls, oursubscribers than rather operators fixed-line ofCPPinRussiawebeganto charge introduction the ofCPPinRussiaJuly 2006. to Specifically, inresponse to introduction the related This primarily was increase revenues, compared tooperating US$503.9 million, or10.3% in2006. revenues operating ofnet 2007,During revenues, or14.7% US$1,053.5 interconnect wegenerated from revenues ofourservice ofnet million onournetwork. traffic to in2006. increased related revenues The primarily was increase operating fees, and monthly or68.1% revenues, contract comparedsubscribers to operating US$3,415.4 ofnet million, or70.1% ofnet andprepaid contract from 2007, charges During airtime from revenues US$4,886.8 ofourservices wegenerated million charges. androaming value addedservices operators, from charges other mobileandfixed-line fees,feesfrom prepaid subscribers, monthly interconnect contract and contract December 31, from charges airtime include from 2007 revenues revenue and2006, Ourservice respectively. approximately constituted 99.9% revenues 2006. ended years Service forthe and99.6% revenues operating ofournet revenues Service 2006. inNovember whichweacquired operations, results ofthe andafullyearofconsolidation mobileoperators ofourArmenian feesbetween ininterconnect an increase improved ARPU, onournetwork, in2007 asaresult revenues traffic primarily ofincreased operating ournet We increased 2007 84.9% compared during to revenues 90.4% ofourtotalconstituted in2006. operating net inRussia ouroperations from 2007 US$4,400.3 revenues from during 2006. operating million Net during million by 38.4% increased to transactions, US$6,090.3 inRussia, excluding intragroup ouroperations from revenues operating by 47.3% increased revenues operating Our net to US$7,171.1 2007 US$4,868.0 2006. from during Net during million million OPERATING REVENUES Year EndedDecember31, 2007 Compared toYear EndedDecember31, 2006 Operating andFinancialReviewProspects . Our service revenues increased by 47.7% increased revenues . Ourservice to US$7,161.8 2007 US$4,847.7 from during million during million 67 ВымпелКом / Годовой отчет 2008 68 VimpelCom / Annual Report 2008 Operating andFinancialReviewProspects year consolidation of the amortization expenses of Unitel, Mobitel andArmenTel, in2006. Mobitel ofUnitel, allofwhich weacquired expenses amortization ofthe year consolidation inRussia, andTajikistan, Kazakhstan, full Ukraine expenditures first capital the todue primarily continuing coupledwith was expense in2007 US$1,054.5million from and amortization 2006. indepreciation The during increase million overall Depreciation expense andamortization 2007 comparedduring to 30.9% 2006. during remained expenses revenues, andadministrative ourselling, general operating ofnet As apercentage CIS. inboth Russiaandthe activity payments fund”; to and(10) “universal the services business dueto aUS$50.8inother increase expenses increase million (9)aUS$17.5 subscribers; to and payment existing cards commissionsrelating subscriber inrequired increase million in2007; (8)aUS$22.9other taxes growth saleofprepaid dueto indealercommissionsforthe ouroverall increase million (6)anapproximately US$27.9offices; (7)aUS$23.4 support; and inproperty insoftware increase increase million million andopeningofnew infeesforservices dueto annualincrease andrepair ofoffices utilities inrent, increase million costsandpayments equipment-related for increased dueto andmaintenanceexpenses intechnicalsupport increase (4)aUS$88.4 million ofnewsubscribers; acquisition the forouremployees; (3)aUS$127.3programs to relating expenses indealers’ commissionsandadvertising increase million VimpelCom’s in2007; price (2)aUS$144.3 share andbonusesdueto the insalaries increase million ofnewbonus launch of in2007 appreciation plans underourstock basedcompensation andrapid granted dueto newoptions expenses 2007 (1)aUS$159.1 resulted during from: expenses primarily basedcompensation instock price increase million US$2,206.3 2007 US$1,503.6 from during million 2006. The andadministrative during inselling, general million increase Selling, general andadministrative expenses to 0.1% declined 2007 revenues compared during to operating 0.4% 2006. ofnet during asapercentage and accessories US$18.3 2006. volume dueto This decreased primarily ofsaleshandsets. during the Ourcostofhandsets was million decrease Cost ofhandsetsandaccessories 17.9% 2006. during to 18.3% costsincreased revenues, ourservice 2007 operating from ofnet during operators. Asapercentage and fixed-line to other mobile payment ourcompany feesperminutecharged dueto with revised increased terms interconnect as the ofCPP dueto introduction primarily the revenues inoperating to growth the slightly relative costsincreased Our service revenues operating stable at remained 81.7% percentage margin Our gross 2007, during asnet isdefined sameasin2006. margin the Gross to 26.4% costsincreased expenses, oftotal 2007 25.1% ourservice As apercentage from during operating 2006. during costs Service 2007 compared during to expenses 86.4% in2006.operating 82.6%US$2,998.6 ofourtotal inRussiaconstituted 2006. ouroperations Total from during expenses million operating by 36.8% inRussiaincreased to US$4,101.8 ouroperations Total from expenses operating 2007 from during million by 43.0% increased expenses Our total operating to US$4,964.9 2007 US$3,470.7 from during million 2006. during million OPERATING EXPENSES saleofhandsets. the away from ourcompany). indealersales(asopposedto salesfrom an increase shifting We are 66.3% to US$6.5 US$19.3 from million 2006, and ofhandsets price asaresult during inthe primarily ofadecrease million Revenues fromsalesofhandsetsandaccessories . Our service costs increased by 50.1% costsincreased . Ourservice to US$1,309.3 2007 US$872.4 from during million 2006. during million l ess selected operating costs (specifically, service costs and costs of handsets andaccessories). costsandofhandsets costs(specifically, service operating ess selected . Our cost of handsets and accessories decreased by 68.3% decreased 2007 to andaccessories US$5.8. Ourcostofhandsets from during million . Our depreciation and amortization expense increased by 31.9% increased expense andamortization . Ourdepreciation to US$1,390.6 . Our selling, general and administrative expenses increased by 46.7% increased expenses to andadministrative . Ourselling, general . Revenues from sales of handsets and accessories during 2007 by decreased during andaccessories salesofhandsets . Revenues from l icenses, frequencies and permissions; (5)anapproximatelyicenses, andpermissions; US$41.1 frequencies l evel at 30.8%

in Ukraine compared with US$61.7 compared with in Ukraine operating million base, astable along ARPU. inoursubscriber due to In2007, with anincrease wehadanoperating by 355.5% grew incomeinKazakhstan our operating to US$216.8 compared to million US$47.6 in2006 primarily million costs. to In2007, mobileoperators, control aswellmanagement’s between efforts charges ininterconnect an increase onournetworks, to US$1,403.2 traffic to increased attributable primarily inRussiawas 2006. This during million growth US$1,397.3 2007, 2006. During during million by 41.9% incomeinRussiagrew ouroperating to US$1,991.8 compared million by 57.9% incomeincreased asaresultPrimarily foregoing, ofthe ouroperating to US$2,206.2 2007 from during million OPERATING INCOME CIS. inthe acquisitions andrecent plans post-paid tariff 0.6% in2007 compared ofprepaid of to balances extension 0.4% subscribers, the innegative in2006 dueto increase the to US$21.8 increased from revenues, fordoubtfulaccounts provision operating ofnet 2006. Asapercentage during million Provision fordoubtfulaccounts Operating andFinancialReviewProspects of our US dollar denominated financial of ourUSdollar revaluation 2007 acorresponding from gainduring 2007 exchange resulted during foreign inasignificant USdollar the against 2006.compared Russianruble The to ofthe gainduring aUS$24.6 exchange appreciation currency foreign million gain/loss exchange Foreign currency 2007.our debt during amountof overall inthe to anincrease attributable primarily was period this during expense The inourinterest increase Interest expense OTHER INCOMEANDEXPENSES 2007. incomeduring to resulted growth, inouroperating inanincrease costsrelative to control efforts ARPU, andincreasing which, our growth whencombinedwith to onrevenue ourfocus 2007 attributable primarily was base which 114.3% to US$25.5 compared to million US$11.9 inoursubscriber growth dueto 2006 primarily significant during million in2006. In2007, growth expense resulted by grew incomeinUzbekistan intechnicalandadministrative ouroperating countrywide,which openingofbranches andthe basegrowth salesandsubscriber dueto active expenses of advertising with due to costsassociated the per US dollar and transfer our floating US dollar interest rate interest ourfloating USdollar andtransfer per USdollar of122.64 rate tengeat fixed the forKazakh amountofUS$100.0a principal USdollars to purchase tenge million Kazakh hedge financial of US$220.8 US$110.0 to acquire agreement million. InAugust 2006, into aforward weentered tengeto inKazakh million December 31, amount inanaggregate 2007, forRussianrubles USdollars to purchase agreements andforward wehadswap amountofUS$120.6 principal inthe agreement (including collar of2008 Asof azero-cost and secondquarters million). US$173.6to acquire denominated USdollar to hedgeourshort-term inRussianrubles million amountofUS$236.1 principal the andAugust 2007, InMarch million). agreements offorward into aseries weentered denominated hedge ourUSdollar US$972.7 to acquire agreements 2006, offorward inNovember into aseries weentered risk, to inRussianrubles million during 2006. This income tax expense consisted of current and deferred taxes. 2006. dueto The anddeferred This primarily during was increase consistedofcurrent incometax expense Income taxexpense US$90.3 million. 9.9%. AsofDecember31, amountof 2007, principal tengewith forKazakh USdollars to purchase agreement wehadaswap l ead to an increase of net operating revenues. We believe that the increase in our total operating incomein inourtotal increase that the We operating revenues. believe operating ofnet ead to anincrease l . Our interest expense increased 4.5% increased to expense US$194.8. Ourinterest 2006. 2007 US$186.4 during from during million million iabilities of KaR-Tel. In October 2006, the forward agreement was restructured into a swap agreement in into agreement aswap restructured was ofKaR-Tel. agreement 2006, InOctober forward iabilities the . Our income tax expense increased 52.0% increased . Ourincometax expense to US$593.9 2007 US$390.7 from during million million . Our provision for doubtful accounts increased by 142.2% increased fordoubtfulaccounts . Ourprovision to US$52.9 2007 during million l l aunching our rebranded commercial operations in April 2006 and significant growth growth 2006 andsignificant inApril operations commercial aunching ourrebranded iabilities due in 2007 and the first quarter of 2008 (including a swap agreement in (including of2008 agreement aswap quarter duein2007 first andthe iabilities . We recorded aUS$73.0 2007. We recorded as gainduring exchange currency foreign million l iabilities underour iabilities l oss in2006. The improvement inouroperating l l oan agreements. In order to reduce our foreign currency currency ourforeign to reduce Inorder oan agreements. oans to a fixed Kazakh tenge oans to Kazakh afixed l oan with an interest rate of rate aninterest oan with l iabilities due in the first first dueinthe iabilities l oss ofUS$43.2 million l oss was primarily primarily oss was 69 ВымпелКом / Годовой отчет 2008 70 VimpelCom / Annual Report 2008 participation notes usedto was exchange participation 8.25% million yearended31, Decemberthe during aUS$367.2 from mostly 2006 was ofproceeds dueto receipt the activities financing of ourpayment ofUS$587.3 ofcashdividends cashflow tax). from The (including withholding million related positive yearendedDecember31, the during result 2007 the primarily was activities financing The2008. cashflow from negative asyndicated from of proceeds 2008, US$750.0 into on8February entered million l facility entered into on 8 February 2008 and further refinanced by the issuanceofUS$2,000.0 by the refinanced andfurther 2008 million into on8February entered facility yearendedDecember31,the aUS$1,500.0 from mostly term was ofproceeds 2008 dueto receipt bridge the million during 31, yearendedDecember31, the during activities 2007 financing andpositive cashflow 2006. from The positive year endedDecember31, the during yearendedDecember the during positive was 2008, negative activities financing to maintain orexpand base. ourasset required Cashflow from accruals cashafter to generate ourability and represents to isanindicator investors becauseit performance ofourcompany’s usefulinformation provides andfinancial operational l amountofUS$3,421.9 (inthe activities by ouroperating cashprovided million), asnet andwecalculate it measure ofUS$851.1 acquisitions) cash flow (before isanon-U.S. GAAPfinancial acquisitions) million. cashflow Free (before yearendedDecember31, the free During apositive 2008, werecorded activities. investing cashflows from and negative endedDecember31, years the During activities ouroperating cash flows 2008, 2007 from and2006, positive wegenerated Operating andFinancialReviewProspects the increase in our taxable income. Our effective income tax rate of28.0% incometax 2007 rate was during inourtaxable income. increase Oureffective the The following endedDecember31, table ourcashflows years shows forthe 2008, 2007 ofUSdollarss): and2006 (inmillions CONSOLIDATED CASHFLOWSUMMARY Resources Liquidity andCapital US$15.93 (US$0.79 percommonshare 2006. perADS)during diluted incomeofUS$28.78 net we reported (US$1.44 percommonshare perADS),compared to diluted incomeof net (US$1.44 perADS),compared to US$811.5 orUS$15.94 million 2006. In2007, perADS)during (US$0.80 percommonshare Net incomeandnetpershare of32.2%income tax rate in2006. Effect of exchange rate changesoncashand rate ofexchange Effect Net cash flow (used in) provided by financing activities by cashflow financing Net (usedin)provided Net cashflowNet activities cashflowNet usedininvesting activities by cashflow operating Net provided Flow Consolidated Cash oan participation notes by VIP Finance Ireland Limited on April 30, onApril 2008, US$2,000.0 Limited notes Ireland by VIPFinance oan participation syndicated term million ess capital expenditures (excluding acquisitions) (in the amountofUS$2,570.8 (inthe (excluding acquisitions) expenditures ess capital cashflow that free We believe million). equivalents l l oan participation notes issued by, but without recourse to, notes issuedby, recourse oan participation butwithout UBS(Luxembourg) S.A.(US$232.8 ofthese million oan to our company by UBS (Luxembourg) S.A. in connection with the sale of an aggregate ofUS$600.0 saleofanaggregate oan to the million ourcompany with by UBS(Luxembourg) S.A.inconnection l oan facility in the aggregate amountofEUR551.0 aggregate inthe intooan facility on15 entered million October . In2007, US$1,462.7 incomewas ournet million, orUS$28.78 percommonshare l oan participation notes issuedinJuneand Julyoan participation 2004). l oan facility signed with Sberbank on 14 February 2008 and the receipt receipt on14 andthe Sberbank 2008 signedwith February oan facility (8,170.0) $ 3,421.9 4,743.7 (84.6) (89.0) 0820 2006 2007 2008 Year endedDecember31, l 2246 (2,287.0) (2,234.6) ower than our effective oureffective than ower ,3. $1,971.3 $ 3,037.7 137 292.9 (193.7) 5. (19.2) 659.2 983.7 49.8 l imited-recourse l oan facility oan facility l

oan l oan

of US$272.8 asofDecember31, million 2007. assets ascurrent isdefined capital Working As ofDecember31, ofUS$1,407.8 capital working 2008, wehadnegative capital million, compared working to negative Operating andFinancialReviewProspects in total debt term was debt aswellshort debt amountedto2008, US$1,909.2 short-term compared to million US$526.5 asofDecember31, million 2007. The growth asofDecember31, debt. deficit AsofDecember31, capital to short-term mainly was 2008 attributed inworking increase subsequent to December31, 2008, see “–2009” below. of ouroutstanding changesincertain indebtedness regarding For information annual report. inthis contained elsewhere indebtedness, on this to notes information the to pleaserefer VimpelCom’sadditional statements consolidated financial to pay orrepay debts dividends ability to ontheir VimpelCom. For to restrictions oursubsidiaries subject agreements covenants. ofthese Inaddition,certain andfinancial covenants, including restrictions changeofcontrol restrictive US$10.0exceeding asofDecember31, to indebtedness million this contain various relating agreements Manyofthe 2008. The ofVimpelCom’s following asummary table provides anoutstanding outstanding balance principal indebtedness with FINANCING ACTIVITIES exchange foreign andamortization, result the primarily ofdepreciation incomewas innet cashflows decrease asthe ouroperating affect ascompared The to incomein2008 periods. inournet 2007 ofthese decrease each didnot during subscribers by existing ofourservices usage inthe andanincrease numberofsubscribers in turn, result inthe the primarily ofanincrease was ascompared volume to 2008 inthe 2007 dueto which, ofoperations, increase during primarily the and2006 was activities 2006. The during by operating cashprovided improvement innet activities by operating cashprovided ofnet million 2007, during which, activities by operating cashprovided ofnet inturn,million a54.1% was US$1,971.3 overthe increase US$3,421.9 was activities million, by operating a12.6% cashprovided 2008, net During US$3,037.7 overthe increase OPERATING ACTIVITIES obligations. our present andfuture adequate fundsfor uswith andwillprovide to our present requirements meet issufficient capital that ourworking believe payment amountedUS$571.0 payments to becomedue. remaining make million, the made andweexpect asthey We was 2009. quarter quarters first the Asofnow andthird first becomedueinthe borrowings term majorpart ofshort the year, the during payments split are borrowing term Short borrowings. additional cashflows orthrough ouroperating from to We repay management. basisby becomesdue expect ourdebt the asit onregular ismonitored capital The working movementsintotalsignificant amountofUS$40.1 million. of incometax inamountofUS$154.8 asofDecember31, million ofUS$109.8 andforwards 2008 million, andother million mainly attributable to advance for future services; increase in other current assets inother current increase services; forfuture to mainly advance million attributable by US$162.8 parties related duefrom inreceivables increase were: decrease capital that impacted factors working Other asofDecember31, totaladvances baseandthe volume insubscriber dueto primarily anincrease was ofoperations. 2008 December 31, 2007. The isapproximately ofcustomer inourcustomer turnover advances onemonth, growth andthe As ofDecember31, amountedto 2008, ourcustomer US$454.7 advances compared to million US$386.9 asof million compared to andRussianrubles), US$1,003.7 heldinUSdollars (primarily million asofDecember31, million 2007. changedinsignificantly yearonyear.AsofDecember31, balance Our cashandequivalents US$914.7 was 2008, it asofDecember31,million 2008. payable interests US$24.7 inaccrued from consequentincrease the derived asofDecember31, million 2007 to US$84.6 l osses and write offs andimpairments, non-cashinnature. offs allofwhichare osses andwrite l inked primary to significant acquisitions done in 2008. Increase intotal Increase in2008. done debt acquisitions to significant inked primary l ess current l inked to advance paymentinked to advance l iabilities. Further Further iabilities. l ess 71 ВымпелКом / Годовой отчет 2008 72 VimpelCom / Annual Report 2008 Operating andFinancialReviewProspects VimpelCom VimpelCom VimpelCom VimpelCom VimpelCom VimpelCom Typeofdebt/lender Borrower VimpelCom VimpelCom URS KaR-Tel VimpelCom VimpelCom VimpelCom VimpelCom VimpelCom onfo brak9.75% None 300.0 $ None 8.0% 1,000.0 $ 9.125% 300.0 $ 2013 30, April 1,000.0 $ Loan fromSberbank 8.375% 8.375% 600.0 $ notes byVIPFinanceIreland) by theissuanceofloanparticipation 8.25% Loan fromVIPFinanceIreland(funded notes byVIPFinanceIreland) by theissuanceofloanparticipation Loan fromVIPFinanceIreland(funded S.A.) ticipation notesbyUBS(Luxembourg) (funded bytheissuanceofloanpar- Loan fromUBS(Luxembourg)S.A. S.A.) ticipation notesbyUBS(Luxembourg) (funded bytheissuanceofloanpar- Loan fromUBS(Luxembourg)S.A. S.A.) ticipation notesbyUBS(Luxembourg) (funded bytheissuanceofloanpar- Loan fromUBS(Luxembourg)S.A. VC-Invest) 9.05% $ 340.4 $ 9.05% VC-Invest) the RURdenominatedbondsby Loan fromVC-Invest(fundedby (Luxembourg) S.A.) 10.0% $ 217.2 $ 10.0% (Luxembourg) S.A.) participation notesbyUBS (funded bytheissuanceofloan Loan fromUBS(Luxembourg)S.A. SMBCE andVTBBankEuropeplc Loan arrangedbyStandardBankPlc, of ReconstructionandDevelopment Loan fromEuropeanBank Loan fromSvenskaHandelsbanken Loan from Sberbank 13.0% $ 608.8 $ 13.0% Loan fromSberbank Loan fromHSBCBankplc Loan from Sberbank 9.25% $ 16.2 $ 9.25% Loan fromSberbank Loan arrangedbyCitibank,N.A. ls00%$58.4 plus 0.08% LIBOR plus LIBOR plus LIBOR plus LIBOR plus MOSPRIME and 1.85% 2.05% (A) 6 month 6 month .2%$57.0 0.325% Interest 1.15% $ 100.0 $ 1.15% .%$61.2 0.1% rate B $128.0 (B) (In millions) Outstanding 6,000.0) $ 204.2 (RUR debt (1) ue1,20 oeNone None June 16, 2009 November 30,November December 18, December 18, 2014 (A)and February 13,February November 7,November February 11,February October 22,October August 30, March 28, March March 26,March April 14,April 2012(B) Maturity July 19, July 19, May 22, 09None 2009 09None 2009 08Nn None None 2018 06Nn None None 2016 00VmeCmNone VimpelCom 2010 00Nn None None 2010 04ENNone EKN 2014 2012 2012 03Nn None None 2013 03VmeCmNone VimpelCom 2013 01Nn None None 2011 aeGaatrSecurity Guarantor date Export Credits Export Credits Euler Hermes Euler Hermes or EN None (EKN) Board VimpelCom VimpelCom sicherungs sicherungs Guarantee Guarantee Kreditver- Kreditver- Hre)None (Hermes) for upto US$20.0 Swedish ilo None million and promis- stock of RTI stock ofRTI Promissory Promissory sory notes sory Common Common notes * * date (Ma AmendmentAgreements, ofthe by effective 1.00% increased from was p.a.for12 rate starting Interest period months Operating andFinancialReviewProspects orwrTypeof debt/lender Borrower VimpelCom VimpelCom VimpelCom Sovintel VimpelCom Promissory Notes Promissory VimpelCom URS URS Loan from Bayerische Landesbank Loan Bayerische from URS VimpelCom Loan from Svenska Handelsbanken Loan Svenska from VimpelCom 5, 2009 respectively). ZAO Citibank Bank AB, WestLB AG, London Branch, EDC,Nordea Limited, Europe Corporation Banking Standard BankPLC, Mitsui Sumitomo Aktiengesellschaft, Commerzbank LTD.,UFJ, BNPParibas, Capital, Barclays l ING BankN.V. andUBSLimited CALYON, N.A., HSBCBankplc, Citibank, BNPParibas, Capital, N.V., Barclays Syndicated Loan Syndicate Syndicated ofBanks from Vereinsbank and Nordea BankAG Vereinsbank andNordea Hypo-und Loans Bayerische from AG Bank(Deutschland) VTB Bank Moscow Closed JointStock Company International AG IKB DeutscheIndustriebank BNP Paribas Bank WestLB Vostok (ZAO) Enskilda BanlenABSkandinaviska KfW, Frankfurt CreditanstaltBank Austria AG Anonyme HVB BanqueLuxembourg Socie HSBC BankPlc Export Development Canada SAO (Eurasija) Commerzbank Landesbank Bayerische ZAO BancaIntesa ING BANK (EURASIA) ZAO N.A., Bahrain Citibank Syndicated O Zentralbank Loan Raiffeisen from ¨sterreich AG ¨sterreich oan from the Bank of Tokyo-Mitsubishi BankofTokyo-Mitsubishi the oan from l l oan from ABNoan from AMROBank oan from (2) ´te ´

LIBOR plus LIBOR plus LIBOR plus LIBOR plus LIBOR plus LIBOR plus EURIBOR .2%$2. a 0 01ENNone EKN May 20, 2011 $24.9 0.325% Interest .% $777.2 2.3%* 0.35% $ 25.0 $ 0.35% 1.25% $ 32.0 $ 1.25% ,% $2,000.0 1,5%* .%$32.0 1.0% .%$275.0 2.0% plus rate –$ 72.1 I ilos auiydt urno Security Guarantor Maturitydate (In millions) Outstanding debt December 12, January 25,January May 6, 2010 October 15,October October 19,October and May 17, February 8, February November, November, 09Nn None None 2009 09VmeCmNone VimpelCom 2009 09VmeCmNone VimpelCom 2009 00Hre None Hermes 2010 02Nn None None 2012 01Nn None None 2011 01Nn None None 2011 y 6, 2009 andMay 73 ВымпелКом / Годовой отчет 2008 74 VimpelCom / Annual Report 2008 Operating andFinancialReviewProspects (3) (2) (1) KaR-Tel biain 30––– – – $23.0 obligations l and capital financing Loan OTPBank from equipment Other URS Inc Enterprises Freevale Unitel KaR-Tel orwrTp fdb/edrInterestrate KaR-Tel Typeof debt/lender Borrower retlLoan BNPParibas from Armentel KaR-Tel Armentel ease 2007,In April to sella33.3% fora into anagreement subsidiary, weentered Freevale wholly-owned inits interest ownership to US$81.6 notes amountequivalent inthe andDecember2008,issuedpromissory VimpelCom In November asofDecember3 million by ourcompany inMay completed offer 2006, exchange the outstanding amountdueunderthis the principal with In connection As ofDecember31, US$41.9 was 2008, amountofdebt principal outstanding agreement underthis million. upto August 31, putandcallarrangement ofthe price purchase 2009, date whichisthe first at putandcalloptions whichthe ofUS$20.0 borrowing forasasecured willbeaccreted million. accounted The was borrowing saleconsideration Subsidiary, the to Minori Indexed the ofaConsolidated andaDerivative Subsidiary Shares inthe foraTransaction Owner’s Accounting Majority be price future innoeventwillthe however The isbasedon price purchaser. heldby the future interest remaining to sellto entire anoption usthe purchaser the granted and, purchaser heldby the interest remaining sim entire the to acquire usanoption granted purchaser the agreement, this with 21.0% owns million. Freevale onJune1 7.0% represents finalized The was ofUnitel. saleeffectively The ofUnitel. transaction reduced from US$450.0 from reduced to US$217.2 million million. promissory notes US$72.1 was promissory million. upto 2009. November, period the Theyno interest. AsofDecember31, at within mature weekly intervals outstanding the de 2008 The an ruble-denominated payment notes services. are The promissory issuedasanadvance notes future to were secure promissory (3) l oans,

N.A. by Citibank, Loan arranged gemn ihHae .%$30.8 8.0% Huawei with agreement Equipment financing plc International Loan Citibank from und Vereinsbank AG Hypo- Loan Bayerische from Landesbank Loan Bayerische from Telecom Solutions Various rates Various Telecom Solutions S.A. Intracom with agreement Equipment financing l ess than US$57.5ess than US$60.0 than ormore million. ofEITFNo. million Following provisions 00-4, the LIBOR plus LIBOR plus LIBOR plus LIBOR plus LIBOR plus plus 0.9% EURIBOR 6 month 6 month 0.38% $ 37.8 $ 0.38% 0.25% $ 10.2 $ 0.25% 61.0% $ 41.9 $ 61.0% .%$1. May 4, 2011 $15.6 0.4% .%$19.3 0.3% .%$10.0 3.0% I ilos auiydt Guarantor Maturitydate (In millions) Outstanding (€10.4) (€9.5) $ 10.0 14.7 $ debt hog 09None 2009 through hog 02Nn None None 2012 through hog 02Nn None None 2012 through Various datesVarious datesVarious Various datesVarious December 27, July 24, 2010 November 9,November January 24,January August 28, August 31, 2010 and 09VmeCmNone None VimpelCom None 2009 2009 2012 01BiihEpr rdt None Export Credits British 2011 Guarantee Department Guarantee Department Hermes andATF Bank Hermes US$30.0 million (for US$30.0 million(for (for upto US$20.0 VimpelCom up to VimpelCom upto an aggregate of an aggregateof Hermes Export Hermes rdtAec None Agency Credit ohlas None both loans) (ECGD) and (ECGD) and million) sale price ofUS$20.0 saleprice become exercisable. becomeexercisable. a prescribed formula; formula; aprescribed 4, 2007. Inconnection to the minimum to minimum the ultaneously, we ty Interest inThat Interest ty bt under equipment equipment secured by secured d bear guarantee guarantee 1, 2008. ATF Bank l Network Network Security network network oan was oan was signing of the amendmentisnotsigning ofthe possible. statementsconsolidated ofGoldenTelecom, financial incase Inc.ormake prepayment facility fullamountofthe ofthe 29, 2009. The Company intendsto signanamendmentto the to submit to requirement exclude the inorder loan facility short-term US dollar denominated USdollar short-term US$166.0 to to acquire hedgeour inRussianrubles agreements million 2009, offorward intoIn March a series weentered plus equal to LIBORplus 6-month interest 1.95% perannum. date The maturity ofthe loan is2016. basis. The on areimbursement by amountwillberepaid principal VimpelCom in14 Ericsson equalsemi-annualpayments to provided equipmentandservices isto finance agency. The credit facility by EKNexport isguaranteed The facility 30, 2009 we have received a waiver from 30, awaiver 2009 wehavereceived 21 within isnot remedied 120 breach yearandthis subsequentbusinessdays. financial days endofthe OnApril the after statements. Aneventofdefaultfinancial within statements not provided incaseannualconsolidated are financial occurs LLC,EDN Sovintel GTS Finance, Inc.andsyndicate ofbanks, GoldenTelecom, consolidated audited its Inc.mustprovide US$275.0 ofthe terms datedIn accordance with agreement 25 2007 January amongGoldenTelecom, facility million Inc., On March 24,On March 2009, signedasevenyear VimpelCom million. under this The of13.0% at arate annualmaximuminterest bears loan agreement onDecember27, andmatures 2012. The indebtedness 10,On March 2009, signedafouryear VimpelCom to US$235.5equivalent 10, asofMarch million 2009. under this The of19.0% at arate annualmaximuminterest bears loan agreement onDecember27, andmatures 2011. The indebtedness 10,On March 2009, year signedathree VimpelCom bonds, issuethe willbeableto does fullamountintended. issuebondsforthe that it bondsorthat ifit these development andthe ofVimpelCom’scurrency business. willbeableto that VimpelCom There issue core isnoassurance indebtedness denominated inforeign existing ofits bondsforrefinancing the from intendsto proceeds VimpelCom usethe result placement. asthe ofapublic The willbedefined rate annualinterest conditions. orredemption, dependingon market put-option ofthe to prior exercise period forthe will bedetermined values face foreach, of10 series rubles with foreach The couponrate billion series andthe bondsmay beissuedinthree placement. to public prior the whichwillbedetermined underconditions bondsto earlier sell their VimpelCom-Invest years. The to isfive bepaid couponsare to semiannually. period The right willhavethe Bondholders maturity proposed asof11 rate Russia exchange 2009. February The by VimpelCom. bondswillbeguaranteed ofapproximately issueisupto Russianrubles,the equivalent 30 whichisthe billion US$834.9 Bankof at Central million documentation. The amountof submitted proposed the registers Service Markets Financial RussianFederal on whichthe VimpelCom. The date bondsmay the beissueddependingonVimpelCom’s ofoneyearfrom aperiod fundingneedswithin LLC of awholly subsidiary VimpelCom-Invest, bondsthrough owned issuanceofRussianruble-denominated potential the for required documentation Service On 11 Markets Financial to RussianFederal the submitted 2009 VimpelCom February, 2009 Operating andFinancialReviewProspects l l oan agreement will be secured by the pledge of the telecommunication equipment in the amountofUS$257.5 equipmentinthe telecommunication pledgeofthe by the willbesecured oan agreement amount ruble equipmentinthe telecommunication pledgeofthe by the willbesecured oan agreement l iabilities due in the fourth quarter of2009. quarter fourth dueinthe iabilities l enders with an extension of financial statements delivery period until May until period statements delivery offinancial anextension with enders l oan agreement with Sberbank in the amountofUS$250.0 inthe Sberbank with oan agreement million. l l oan agreement with Sberbank in the amountofRUR 8,000.0 inthe Sberbank million. with oan agreement oan agreement with HVB in the amountofUS$160.2 HVBinthe with million.oan agreement 75 ВымпелКом / Годовой отчет 2008 76 VimpelCom / Annual Report 2008 Operating andFinancialReviewProspects among others, decrease of the required minimum among others, required ofthe decrease changed, were undertakings covenantsandgeneral including, financial certain AmendmentAgreement ofthe terms the Inaccordance with asAgent. plc acting International Citibank with asMandated andBookrunners Limited Lead Arrangers Bank N.V., London BNP Paribas, Branch, Capital, CALYON, Barclays N.A., HSBCBankplc., INGBankN.V. Citibank, andUBS by ABN dated 28, AMRO arranged agreement 2008 March 8, andasamendedby anamendmentandtransfer 2008 February dated to aUS$3,500.0 Agreement inrelation 28,On April 2009 wesignedanAmendmentAgreement Facility million respectively). approximatelywere US$4,134.6 (compared to million US$301.3 andUS$679.8 million 2007 and2006, during million companies) ofcashholdingsacquired (net In2008,2006, ourtotal respectively). payments ofacquisitions inrespect approximately were assets US$2,444.6 (compared to million US$1,690.7 andUS$1,607.2 million 2007 and during million businesses. In2008, andother ourtotal non-current intangible payments assets, ofequipment, software forpurchases of andacquisitions allocations, ongoingdevelopment asapart buildingsandother ofthe assets ofourmobilenetworks telephone ofequipment, purchase onthe included expenditures capital activities Our investing INVESTING ACTIVITIES other factors. The amounts involved may bematerial. our conditions, market exchanges, ifany, willdependonprevailing or Suchrepurchases orotherwise. purchases, privately negotiatedtransactions inopenmarket for newdebt securities and/orexchanges cashpurchases ouroutstanding debt through orpurchase seekto to retire time We time may from l The ofMenacrest. capital issuedshare entire overthe calloptions Companythe two in loan hasbeenrecorded inKyrgyzstan. amobileoperator Mobile”), granted parent company Crowell which isthe (“Sky Mobile ofLLC Sky (“Menacrest”), Limited ofMenacrest capital issuedshare entire the acquired Crowell into after entered was agreement 10.0%. The loan by 25.0% Developments issecured Ltd., ofLimnotex shares ofthe parent company the ofKaR-Tel. The loan 11,February a “Loan 2008, (the Agreement”), loan amountofUS$350.0 principal inthe of rate andat interest the million 13, (“Crowell”), undera On February InvestmentsLimited to Crowell 2008,advanced VimpelCom asof loan agreement becomeseffective. Agreement by May 1.00% 5, increased The Amendment from was 2009 whenthe p.a.for12 rate starting interest period months minimum required the thereafter of2010 quarter statements first forthe financial the and from year.Starting 2009 financial of2009 andforthe quarters US$3,000.0 from three toEquity US$2,000.0 statements million first forthe to financial the whichwillbeapplicable million changed, were undertakings including, minimum amongothers, required ofthe decrease covenantsandgeneral financial certain AmendmentAgreement ofthe terms the Inaccordance with asAgent. acting Standard andWestlb with BankPlc AG, asMandated London andBookrunners Limited Branch LeadEurope Arrangers Standard Corporation Banking BankPlc., Mitsui Sumitomo BNPParibas, Capital, Aktiengesellschaft, Commerzbank Barclays dated 11,amended by asecondamendmentagreement February Ltd., UFJ, BankofTokyo-Mitsubishi by the 2009 arranged dated 15, dated October amendmentagreement 12, 2008, November asamendedandrestated by afirst andfurther 2008 Agreement to Term aEUR600.0 Loan million relating Facility 28,On April 2009 wesignedanAmendmentAgreement May becomeseffective. 1.00% 6, from p.a.for12 AmendmentAgreement 2009 whenthe starting period months l of2010 quarter statements first minimumrequired forthe the financial the andthereafter, from year.Starting financial 2009 of2009 andforthe quarters three US$2,000.0 statements first forthe to financial the whichwillbeapplicable million oans receivable and related accrued interest ofUS$26.7 interest accrued assets. andrelated inother current oans receivable million evel of the Total Shareholders Equity will be returned to the willbereturned Totalevel ofthe Equity Shareholders level ofUS$3,000.0 by million. increased The was rate interest l evel of the Total Shareholders Equity will be returned to the willbereturned Totalevel ofthe Equity Shareholders level ofUS$3,000.0 million. l evel of the Total Shareholders Equity from US$3,000.0 from Totalevel ofthe Equity to million Shareholders l iquidity requirements, contractual restrictions and restrictions requirements, contractual iquidity l evel of the Totalevel ofthe Shareholders l ine capacity, frequency frequency ine capacity, l ong-term

acquisition, CSKhadapproximatelyacquisition, 571,000 subscribers. Region. Irkutsk the 100.0% We ofCSKfor approximately acquired shares ofthe US$235.5 million. ofits At time the On August 13, 2007, Closed JointStock weacquired Company CSK,whichholdsGSM 900/1800 andD-AMPS December1, ofArmenTel 31, from 2006 to March profit period forthe 2007. 2007 adjustment wepaidprice ofapproximately apurchase 10.0% US$0.7 net representing undistributed ofthe million ofArmenTel 90.0% shares ArmenTelthe ofthe of quarter whenweacquired 2006. third inNovember Inaddition, inthe 10.0% additional ofthe US$55.9price was paid approximately price by final million, usfor ofthe whichconstitutes 1/9th 18,On April 2007, 10.0% remaining the weacquired ofArmenTel hadowned. ofArmenia Government that the The purchase purchaser. heldby the interest remaining to entire usthe and, purchaser heldby the interest remaining simultaneously, to sell entire anoption the purchaser acquire the wegranted to usanoption onJune14, granted purchaser finalized the was 2007.The agreement, this transaction with Inconnection ofUS$20.0a saleprice 21.0% owns Enterprises million. Freevale 7.0% represents The ofUnitel. saleeffectively ofUnitel. 2007,In April to sella 33.3% for into anagreement subsidiary, weentered Freevale wholly-owned inits interest ownership to 51.0%) uponachangeinKazakh 2.0% totalmillion. its inTNS-Plus Teta anadditional shareholding interest (bringing to Telecom acquire right alsohasthe Teta stake Telecom its inTNS-Plus 2.0% increased from to 49.0%, ofapproximately consideration US$4.5 foranaggregate Plus,” whichholdsa for license Partnership “TNS- 100.0% Liability of“KZ-Trans,” inLimited interest inKazakhstan, operator andaminority afiber-optic September2007, December2006 through From KaR-Tel 100.0% acquired of“Teta Telecom,” aholdingcompany whichholds procedure. basedonaprescribed to foraprice bedetermined circumstances undercertain interest to entire sellto selleranoption usits the sellerandwegranted heldby the interest entire the to acquire usanoption sellergranted the transaction, this with Inconnection Dominanta hadnosubscribers. acquisition, ofapproximately region,price forapurchase Moscow US$10.5 andthe standard inMoscow million. ofits At time the On December14, 2006, 75.0% weacquired company of“Dominanta,” DVB-H inthe services television amobiledigital and600,000400,000 fixed mobilesubscribers ofapproximately price Armenia, forapurchase US$445.0 ArmenTel acquisition, million. ofits At time hadapproximately the GSM-1800 plusofapproximately assumption million the US$7.7 and GSM-900 indebt. heldnational BuztelandUnitel million approximately US$2.4 9, indebt. OnFebruary 2006, 100.0% million ofUS$200.0 price weacquired forapurchase ofUnitel 18,On January 2006, 100.0% ofUS$60.0 price weacquired plusof ofBuztelforapurchase assumption million the 2006, below. anddisposalsfrom described 2007 are and2008 acquisitions Our significant ACQUISITIONS ANDDISPOSITIONS Operating andFinancialReviewProspects On November 16,On November 90.0% ofArmenTel, 2006 weacquired whichheldaGSM-900 l GSM-1800 heldanational plusofapproximately assumption Mobitel million the US$0.2 debt innet ofMobitel. million On July 11, 2006, 51.0% weacquired 49.0% remaining forthe andacall option ofUS$12.6 price ofMobitel forapurchase InJulyrespectively. 2006, Buztelinto Unitel. wemerged icense that covers the entire territory of Georgia. At the time of its acquisition, Mobitel hadnosubscribers. Mobitel acquisition, ofits At time the ofGeorgia. territory entire the icense that covers l icenses. At the time of their acquisitions, Buztel and Unitel hadapproximately BuztelandUnitel acquisitions, icenses. oftheir 2,500 At time the and364,000 subscribers, l ong-distance operations, for an aggregate purchase price ofapproximately price purchase US$10.1ong-distance foranaggregate operations, million. l egislation allowing foreign entities to control entities allowing foreign egislation l ine subscribers. l icense andhadfixed l ong-distance operators. l ine operations in ine operations l icenses covering icenses covering

77 ВымпелКом / Годовой отчет 2008 78 VimpelCom / Annual Report 2008 investment Vietnamese the andinaccordance with contained Agreement inthe to conditions Subject the TSC, ofGTEL. asubsidiary Venture (“GTEL”), Company Global andGTEL are Telecommunications state-owned enterprise Corporation aVietnamese nameofGTEL-Mobile underthe in Vietnam JointStock Company “GTEL-Mobile”). (the The Joint inthe other participants jointventure to amobiletelecommunications establish “Agreement”) (the Agreement a JointVenture andShareholders (Cyprus) (“Ararima”) signed Limited Enterprises Ararima subsidiary On July 100% direct 8,andits VimpelCom owned 2008 Telecom ofCorbina assets amountedto US$312.9 unit. andassignedto reporting Russiafixed million assets acquired amountedto US acquired assets amountofUS$17.3the by US$40.4 interest andadjusted minority million. million The total net fair value ofidentifiable ofapproximately period 12 tax overaweightedaverage ofadeferred years,which willbeamortized recording and acquired assets the The basedonafair price value Company’s assessment purchase ofthe allocation of the statements reflect financial ofaccounting. method underpurchase Telecom. ofCorbina 100% recorded own shares was ofthe The stepacquisition now together subsidiary andits VimpelCom Asaresult toUS$4.2 transaction, acquisition. ofthis ofcostsrelated million 51.0% Ltd. Enterprises Inure 49% remaining from the ofGoldenTelecom forUS$404.0 subsidiary by and acquiring million On June11, inClosed ofownership JointStock Telecom”), Company share (“Corbina its Cortec increased VimpelCom 2008 respectively. andrights schedulesforsuchoptions vesting original the suchpayments toto vestinaccordance with receive continues andUS$53.8 to suchoptions relating incash price the Agreement, including the registration of the GTEL-Mobile, ofthe including GSM registration the Agreement, the Venture Company of51.0% under required and9.0%, approvals regulatory GTEL-Mobile allofthe respectively. hasreceived investmentofUS$266.6an equity Joint inthe that interests hasbeenpaid TSC andGTEL million infull.GTEL haveequity company Sotelco Ltd. (“Sotelco”), whichholds aGSM900/1800 Cambodian in the 90.0% andeconomicinterest voting anindirect On July acquired 16, Ararima 2008,through VimpelCom Operating andFinancialReviewProspects relating to GoldenTelecom’s US$105.0relating to receive into right the converted incash commonstock were rights outstanding the andunvestedemployee andstock appreciation merger, the stock options with In connection wholly The subsidiary. owned total for100.0% price ofGoldenTelecom purchase shares US$4,316.2 ofthe was million. andinto GoldenTelecom with andGoldenTelecom merged was wholly becameourindirect subsidiary owned our indirect 26, 94.4% with ofGoldenTelecom’s outstanding 2008 ofthe shares commonstock beingtendered. 28, 2008, OnFebruary closed onFebruary period ofUS$105.0a price andsubsequenttenderoffer period incash. pershare tenderoffer The initial 18, onJanuary 100.0% 2008, toa tenderoffer acquire ofGoldenTelecom’s outstanding ofthe shares commonstock at ofourcompany subsidiary wholly-owned commenced to pursuant whichanindirect agreement merger signed adefinitive CIS, inthe Russiaandother countries throughout centers inmajorpopulation services andInternet telecommunications Golden Telecom US$41.6 to million telecom ofthe purchase 10.0% the to purchase a calloption ofthe interest forasanasset ofSotelcolocal accounted partner. was The acquisition The 10.0% remaining by a owned ofAtlas are local hasalsoacquired VimpelCom partner, aCambodianentrepreneur. (“Atlas”), (“Altimo”), forUS$28.0 Altimo HoldingsandInvestmentsLimited partyofVimpelCom. from arelated million of90.0% ofSotelco’s purchase the madethrough was parent company,Cambodia. The (BVI) transaction Atlas Trade Limited l aws, Ararima received a40.0% for JointVenture Company inthe received andeconomicinterest aws, inconsideration voting Ararima . OnDecember21, 2007, andGoldenTelecom, ofoursubsidiaries two a offixed-line leading provider l icense, tax US$8.3 to deferred million l l iabilities assumed,iabilities andassuch, Company the hasassignedUS$68.1 to intangible million assets icense through a variable interest entity. On acquisition, the Company the Onacquisition, allocated approximately entity. interest avariable icense through $95.3 $95.3 million. The excess of the acquisition cost over the fair value of identifiable net net fair costoverthe value ofidentifiable million. The acquisition ofthe excess l ess the exercise price relating to such rights, respectively. The to suchrights, respectively. right relating price exercise ess the l iability andUS$5.1 interest. toiability noncontrolling million l icense and related frequencies for the territory of territory forthe frequencies icense andrelated l icense and related frequencies. icense andrelated l ess the exercise exercise ess the l iability in iability • debt financings from Russian and international capital markets. capital Russianandinternational from • debt financings • syndicated and loan facilities; including underbankfinancings, credit • borrowings financing; guaranteed Agency • Export Credit cashflows; • operating heldby ourcompany;• cashcurrently willcomefrom: to anypossibleacquisitions) respect (including future with foreseeable the in to andthose beincurred requirements capital to ourcurrent meet We fundsnecessary that the anticipate Company that the results. not commonstock basedon2008 meeting pay onits Shareholders dividends 24,On April Company ofthe unanimously 2009, hasdecided ofDirectors to AnnualGeneral to the Board recommend the development andourperformance. 3G investmentsto meet inCambodiaandnecessary ofnetwork ofrollover exception the with maintenance expenditures, andfor2007 approximately assets were lived US$1,772.8 in 2009 willmainly consistof million. expenditures Ourcapital approximately were for2008 US$2,570.8 expenditures Our capital andother ofproperty purchase forthe million ofother companies. ofequipmentandpossibly acquisition the acquisition the including investmentactivity, significant expansion willrequire future,ourfurther foreseeable Inthe subscribers. andattract networks to amountsofcapital construct significant require providers Telecommunications service FUTURE LIQUIDITYANDCAPITALREQUIREMENTS to andissubject annualimpairment unit tests. reporting assigned to Russiafixed the amountedto assets US$10.3 net mainly value was identifiable ofthe market million. asgoodwill, This recorded amountwas to US$21.9 by US$11.7 interest andadjusted minority million fair costoverthe million. The acquisition ofthe excess companies acquired amounted ofthe assets net The ofaccounting. identifiable fair method value purchase ofacquired the ofUS$32.2 total the under consideration ofRussiawith regions recorded were million. Thein different acquisitions offixed Company small the year2008 acquisitions several completed the During InvestmentsLimited. which isheldby Crowell Limnotex 25.0% to remaining the in respect share with arrangements KaR-Tel, onputandcalloption hasagreed VimpelCom to andissubject annualimpairment unit tests. To apath ensure over to reporting ownership complete Kazakhstan the amountedto assets US$309.4 net value identifiable ofthe assignedto was million. asgoodwill, This recorded amountwas amountedto assets US$99.9 net fair costoverthe market identifiable million.acquired The acquisition ofthe excess tax ofapproximately period ofadeferred 7years, overaweightedaverage recording intangible whichwillbeamortized assets and assessment acquired assets ofthe The basedonafair price of accounting. value Company’s purchase ofthe allocation the statements reflect financial method 50.0% purchase underthe from plus to 75.0%. oneshare asstepacquisition recorded was The acquisition increased stake share inLimnotex in Kazakhstan. VimpelCom’s Asaresult andindirect exercise, ofthe direct overall forUS$561.8 (“Limnotex”) Limited parent company isthe million. Limnotex ofKaR-Tel, VimpelCom’s subsidiary operating 25.0% anadditional to acquire option its On July 1, exercised VimpelCom 2008 OTHER ACQUISITIONS Operating andFinancialReviewProspects l l icense capital requirements in Russia. The actual amount of our capital expenditures for 2009 will depend on market for2009 willdependonmarket inRussia.The expenditures amountofourcapital actual requirements icense capital iability in the amount of US$42.8 million and adjusted minority interest by US$153.9 interest amountofUS$42.8 inthe andadjusted minority million iability million. The fair value of l iabilities assumed,iabilities andassuch, Company the hasassignedUS$147.7 to million l ines currently available to us; available ines currently l ess one share of Limnotex Developments ofLimnotex ess oneshare l ine telecommunication operators operators ine telecommunication l ong- 79 ВымпелКом / Годовой отчет 2008 80 VimpelCom / Annual Report 2008 Operating andFinancialReviewProspects certain of our outstanding indebtedness. For more information regarding these changes, activities–2009.” these see“–Financing ofouroutstandingregarding certain indebtedness. information For more Subsequentto December31, arrangements. changesin and other financing havebeenanumberofadditional 2008, there ouroperations cashflows from with obligations to underthese ourpayment We meet expect obligations. requirements capital financing, As ofDecember31, obligations, including following 2008, wehadthe contractual CONTRACTUAL OBLIGATIONS ARPU. andstabilize growth revenue to continue ability andour plans ouracquisition construction, period, overthe network growth influenced pace ofsubscriber actual by the willbe that wewillneedto raise The markets. amountofdebt andRussiancapital financing actual of international to banks ofinternational andRussianbanks, willingness international the of agencies, orECAs, position credit financial the export from ofguarantees availability restrictions, contractual dependsonmanyfactors, to becauseit including predict isdifficult successofouroperations, the financing of external offunds. The sources internal availability uswith to provide willcontinue operations cashflows from positive We expect 12 next forthe months. requirements capital to ourprojected cashonhand, meet sources, anumberofthese coupledwith that fundsfrom We believe willbesufficient (4) (3) (2) (1) oa ,2. ,8. ,1. ,4. $1,683.3 $1,444.3 $3,613.5 $2,083.0 $8,824.1 Total qimn iacn 1. 879. 075.2 30.7 91.9 88.7 216.5 obligations Purchase Non-cancelable Capital Equipment financing Long-term debt (including Contractual Obligations Contractual Other include contractual primarily ourmaterial obligations Purchase Includes ofdebt covenants. Debt payments uponviolation couldbeaccelerated Amountsinclude interest. such obligation. a unabletothe estimate Appleasweare with The iPhonesunderouragreement not to amountsdo include purchase ourobligation quarter first inthe iPhonehandsets the butdidnot installmentmade 12% purchase ofiPhonesin2008 purchase quarterly ofits commercial beginningwith yearperiod installments overatwo purchase quarterly under the August 13, (“Apple”) 1.5 AppleSalesInternational to iPhoneh purchase with Company million the into 2008 anagreement entered (Luxembourg) S.A. and VIP Finance Ireland Ltd., Ireland (Luxembourg) S.A.andVIPFinance respectively). UBS notes by UBS(Luxembourg) S.A.) issuanceof the l (3) ong-term l aeolgtos120804–– – 0.4 0.8 1.2 ease obligations (Luxembourg) S.A.(fundedby l oans from UBS (Luxembourg) S.A. and VIP Finance Ireland Ltd. Ireland UBS(Luxembourg) S.A.andVIPFinance oans from issuanceof (fundedby the l l aeolgtos2118. 822. 65.3 21.5 28.2 86.0 201.1 ease obligations l aiiis684127–– – 2.7 4.1 6.8 iabilities l eases, payments for future undernon-cancelable andcommitments oan participation oan participation (4) (2) l oans from oans from (3) $ 8,225.4 $ 1,819.8 $ 3,401.8 $ 1,391.9 $ 1,611.9 $ 1,391.9 $ 3,401.8 $ 1,819.8 $ 8,225.4 $ 7. 368. . 0.9 0.2 88.5 83.6 173.1 oa esta er13yas3-5years 1-3years Lessthan1year Total l egal obligations for the future purchase of equipment and services. On ofequipmentandservices. purchase future forthe egal obligations

Payments duebyperiod(inmillionsofUSdollars) l end to Russiancompanies andthe liquidity l l aunch in the fourth quarter 2008. The 2008. quarter Company fourth aunch inthe ong-term debt equipment ong-term arrangements, l l ease arrangements and purchase andpurchase ease arrangements oan participation notes by UBS oan participation (1) of2009. andsets andsets mount of More than 5 years l statements under prepared not underU.S. financial tax GAAPare inthe deductible reported expenses numerous under recognized under U.S. GAAPare computation on paidWe for taxes andoursubsidiaries computed onincomereported ofat stock ownership forcompanies inwhichourcompany ofaccounting influence.method hassignificant voting Generally, represents this havebeeneliminated. our consolidated We Allinter-company equity subsidiaries. haveusedthe andtransactions accounts includeOur company’s ofourcompany accounts the annualreport and inthis statements forth consolidated set financial forsubsidiaries. andaccounting • consolidation and • businesscombinations; • stock basedcompensations; assets; • valuation allowances forunrecoverable oftelephone andamortization • capitalization incometaxes; • deferred translation; currency • foreign andequipment; ofproperty • valuation anddepreciation expenses; andother operating expense ofinterest • recognition recognition; • revenue to:statements relate issuedforstatutory The purposes. differences principal statements U.S. GAAP.Our consolidated havebeenprepared ourfinancial inaccordance with financial from They differ financial statements inaccordance with financial and tax principles Russianaccounting statements andprepare ourstatutory inaccordanceWe with financial maintain ourrecords Results ofFinancial Basis ofPresentation Operating andFinancialReviewProspects the majority ofourrevenues, costs, andequipmentpurchased, majority property the debt andtrade because USdollar the was ofouroperations majority ofasubstantial June30,Russia. Until currency 2006, functional the FOREIGN CURRENCYTRANSLATION 22.3%, were andArmenia Uzbekistan 9.5%, 7.8% and5.5% respectively. 13.3%, were rates inflation 11.9% and9.0%. yearendedDecember31, For the Kazakhstan, inUkraine, rates 2008, inflation endedDecember31, years For the subscribers. ofourmassmarket power purchasing the 2008, 2007 and2006, Russia’s affects Inflation risk. inflationary plans, usto additional whichcouldexpose denominated tariff of Russianruble ofhigh periods Russia hasexperienced INFLATION factors: havebeeninfluenced following by annualreport the additional this statements inourconsolidated included in financial elsewhere asreflected andresults ofoperations position Our financial ofOperations Position andResults ourFinancial Factors Affecting Certain egislation. As a consequence, our effective tax charge was different under different was tax charge egislation. Asaconsequence, oureffective l egislation and in accordance with U.S. GAAP. Our subsidiaries outside of Russia record and prepare their statutory andprepare U.S. their GAAP. andinaccordance with outsideofRussiarecord egislation Oursubsidiaries l ocal statutory tax rules, which differ substantially from U.S. GAAP. Certain items that are capitalized U.S. statutory substantially GAAP.ocal capitalized tax from rules, that are whichdiffer items Certain l east 20.0% 50.0%. than andnot more l l ocal statutory accounting principles as an expense in the yearpaid. inthe asanexpense principles statutory Incontrast, ocal accounting l evels of inflation since the early 1990s. sincethe evels ofinflation In2006, anumber weintroduced ocal accounting principles andtax principles accounting ocal l ine capacity; l ocal statutoryocal tax We purposes. basedthis l l ocal tax rules andunderU.S. tax GAAP. rules ocal egislation and in accordance with U.S. GAAP. andinaccordance with egislation l iabilities were either priced, either were iabilities l ocal

81 ВымпелКом / Годовой отчет 2008 82 VimpelCom / Annual Report 2008 Operating andFinancialReviewProspects assets and assets values following ofthe non-monetary carrying openingtranslated inthe statements anincrease was financial on the currency The prospectively. changeinfunctional impact ofthe shouldbereported currency changeinfunctional and the Standards, orSFAS, No. Translation,” 52, statements Currency shouldnot previously “Foreign berestated, issuedfinancial beginningJuly to Russianrubles 1,US dollars 2006. ofU.S. Pursuant to provisions the from currency of2006. quarter Accordingly, wechangedourfunctional third inthe realized changewas policy this from economicimpact of2006, secondquarter the primary the partially changewas implemented during Whilethis discretion. at July our rate June1, from 1, exchange to fixed from amendthe 2006 andforother2006. subscribers right We the retain forprepaid subscribers at 28.7 fixed was rate effective was The to rate 1unit. Russianrubles changeto exchange afixed forsubscriber’s The equivalents. rate orunit payments exchange exchange of afixed denominated inUSdollars whichare of2006, secondquarter the introduction incurred, weannouncedthe During payable inUSdollars. measured orotherwise This increase in the opening carrying amount of non-monetary assets and assets amountofnon-monetary This openingcarrying inthe increase currency to be the US dollar as it reflects the economic substance of the underlying events and circumstances of economicsubstance underlying eventsand circumstances the ofthe reflects asit to USdollar bethe currency Tajikistan 7.70 was rate exchange 2007, dollar hryvnia-US Ukrainian and5.05 respectively. official the perUSdollar, At outsideUkraine. December31, company.the currency isnot The aconvertible hryvnia andDecember31, Ukrainian 2008 of economicsubstance underlying eventsandcircumstances the ofthe reflects asit hryvnia to Ukrainian bethe currency Ukraine 120.77 was rate exchange and120.55 tenges, perUSdollar. respectively, 25.0% than has devalued At more tenge-USdollar crisis. December 31, due to Kazakh financial and2007 2008 official the tenge Kazakh of2009 the quarter since2003, first the USdollar the butduring against has seenasteady appreciation outsideKazakhstan. company. The ofthe tenge currency circumstances Kazakh The tengeisnot aconvertible Kazakh KaR-Tel’s economicsubstance underlying eventsand the ofthe reflects tengeasit to Kazakh bethe currency functional Kazakhstan inwhichweoperate. other countries ofthe certain inRussiaand andexposure risk to minimizecurrency activities management We haveimplemented anumberofrisk 15.0% crisis. than hasdevalued of2009 more Russianruble dueto quarter financial USdollar against first the 24.5462 perUSdollar, rubles and26.3311 perUSdollar Russianrubles During respectively. perUSdollar, Russianrubles method.rate 29.3804 was OnDecember31, rate exchange dollar Russianruble-US Russian 2008, 2007 and2006, official the SFAS inaccordance with No. currency 52 current usingthe date, into reporting the currency translated were functional the statements, changeof Therefore, the financial the currency. after asourreporting USdollar We the haveretained aspart income. ofother comprehensive equity Telecommunications net Software, net andequipment, Property Total taxes Deferred Other assets non-current Other Goodwill . The national currency of the Ukraine is the Ukrainian hryvnia. Management has determined URS’s hasdetermined Management hryvnia. functional Ukrainian isthe Ukraine ofthe . The currency national . The national currency of the Tajikistan ofthe Tacom’s Tajik. The isthe hasdetermined currency somoni.Management national functional l . The national currency of the Republic of Kazakhstan is the Kazakh tenge. Management has determined tenge. hasdetermined Management Kazakh isthe ofKazakhstan Republic ofthe . The currency national iabilities asofJuly 1, ofUSdollars): 2006 (inthousands iabilities l cne n loain ffeunis e 21,206 offrequencies, net icenses andallocations l iabilities has been reflected inshareholder’s hasbeenreflected iabilities Statement of Financial Accounting Statement Accounting ofFinancial $ 305,700 $ 242,169 $ (12,529) 30,350 11,856 4,862 ,86 7,78 Georgia crisis. dueto financial 20%has devaluated USdollar than against more dram of2009 Armenian quarter 304.57 was first rate the exchange During dollar per USdollar. dram-US drams Armenian 306.73 was rate exchange dollar dram-US At Armenian December31, perUSdollar. drams official the 2007 official the At outsideArmenia. December31, company. ofthe currency circumstances isnot The aconvertible dram Armenian 2008 economicsubstance underlying eventsand the ofthe reflects asit dram to Armenian bethe currency functional Armenia 1,290.00 was rate perUSdollar. 1,393.00 was rate exchange sum-US dollar At December31, perUSdollar. exchange Uzbeksum-USdollar 2007 official the company.the outsideUzbekistan. The At currency Uzbek December31, Uzbeksumisnot aconvertible official the 2008 of economicsubstance underlying eventsandcircumstances the ofthe reflects asit to USdollars bethe currency Uzbekistan 3.4645 was rate exchange perUSdollar. 3.4519 was rate exchange somoni-US dollar At December31, perUSdollar. 2007, Tajik somoni-USdollar official the company.the The outsideTajikistan. Tajik currency somoniisnot At aconvertible December31, Tajik official 2008, the Operating andFinancialReviewProspects that affect the reported amountsofassets, reported the that affect andassumptions estimates U.S. GAAPrequires with The statements ofconsolidated inconformity preparation financial CRITICAL ACCOUNTINGPOLICIES shown, rate rates. orat at exchange anyother exchange the currency orother foreign into USdollars convertible amountshavebeen, that suchcurrency couldbe, future, asarepresentation shouldnot orwillbeinthe beconstrued currency orother foreign to USdollars country applicable outsidethe not convertible whichare currencies offoreign Conversion 1.5916 was rate exchange US dollar perUSdollar. the official Georgian official the company. ofthe circumstances The Georgian to Georgian bethe currency functional their customers on our network. Value added services include SMS, MMS, caller number identification, voice mail, call waiting, Value include voicemail,call waiting, SMS,MMS,callernumberidentification, added services customers on ournetwork. their by for roaming other mobilecarriers from andrevenues area homecoverage selected outsidetheir our customers whoroam include other operators. from Roaming revenues revenues from termination fortraffic rendered services the from earned that was operators mobile and fixed-line include from revenue revenues Interconnect forvalue addedservices. charges and operators, charges roaming other mobile andfixed-line fees,fees from subscribers, monthly interconnect contract andprepaid contract ofourcellular from forusage system, charges revenues whichincludeWe airtime service earn REVENUE RECOGNITION of2009. quarter first the from starting become effective The operations. changes market ofcore currency functional to Russianruble, whichisthe the currency reporting the Company the to change decided performance underlying operational the reflect accurately to more In aneffort annualreport. included inthis elsewhere statements ourconsolidated financial with inconjunction judgments, andshouldberead andestimates assumptions l iabilities. Actual amounts may differ from these estimates. The following critical accounting policies require significant significant require policies accounting The estimates. these from following critical amountsmay differ Actual iabilities. . The national currency of the Republic of Georgia is the Georgian isthe ofGeorgia Republic ofthe . The currency national . The national currency of the Republic of Armenia is the Armenian dram. Management has determined Armentel’s hasdetermined dram. Management Armenian isthe ofArmenia Republic ofthe . The currency national . The national currency of the Uzbekistan is the Uzbek sum. Management has determined Unitel’s Uzbeksum. isthe Uzbekistan hasdetermined ofthe Management . The currency national functional l ari-US dollar exchange rate was 1.6670 was rate exchange dollar ari-US At December31, perUSdollar. Georgian 2007 official the l ari as it reflects the economicsubstance underlying eventsand the ofthe reflects asit ari l iabilities, revenues and expenses and the disclosure of contingent assets and assets disclosure ofcontingent andthe andexpenses revenues iabilities, l ari is not a convertible currency outside Georgia. At December31, outsideGeorgia. currency isnot aconvertible ari 2008 l ari. Management has determined Mobitel’s hasdetermined Management ari. l ari-

83 ВымпелКом / Годовой отчет 2008 84 VimpelCom / Annual Report 2008 over estimated useful over estimated method straightline usingthe depreciated are vehicles andfurniture equipment, andmeasuring years. Office of twenty the useful overestimated method lease term, We straight-line buildingsusingthe whicheverisshorter. depreciate useful estimated overits method line or the years straight- usingthe equipmentisdepreciated telecommunication lease term, Fixed-line whicheverisshorter. expenses for base station positions using the straight-line method over the estimated useful estimated overthe method straight-line usingthe positions forbasestation expenses useful a change in the depreciable a changeinthe usefuleconomic estimated ofthe appropriateness the useful estimated cause the dueto inanarea to operate to ourability andequipmentorissuesrelated intended useofproperty undercapital equipment acquired includingWe equipment, cost.We andequipmentat ourtelecommunications state historical depreciate ourproperty LONG-LIVED ASSETSANDIMPAIRMENTS results. reassessment operating may impact ourfuture l customer average estimated overthe subsequently are recognized revenues fees. Deferred connection telecommunications In been material. havenot that historically they days. andbelieve We indifferent haveanalyzed differences potential the ofairtime usage or couldbegreater revenues service factors. Actual other relevant numberofdays based onthe by invoicesand covered period accounting to previous the amountsrelating the estimating amountssubsequently the billedand by reviewing revenue period. We our unbilled service estimate accounting of each butnot billedat end earned yet the revenue amountofservice ustothe estimate require times cycles’ cut-off Our billing stated Revenues ofvalue-added are net to tax risk. andsalestaxcustomers. charged credit payments to these operators for interconnection and agency feeswhen andagency payments forinterconnection to operators these Operating andFinancialReviewProspects the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by to ofassets beheldand used ismeasured Recoverability may amountofanasset not berecoverable. carrying the indicate that forimpairment intangibles whenevereventsorchangesincircumstances bereviewed identifiable certain Impairment Assets.” forthe “Accounting orDisposalofLong-Lived SFAS No. 144 that requires We forimpairment account of andagent systems, offices AlsoweuseE-commerce retail expire. whencards revenue addedto service are periods, andunusedbalances dates to subject statutory not butare expiration do haveexpiration Prepaid services. cards forfuture Prepaid ascustomer accounted advances ofcashcollection, cards, are usedasamethod rendered. are revenue) (including androaming value services addedservices whenthe isgenerally recognized revenue features. Service ofthe utilization through mobileusage feesorincreased monthly subscription through revenues additional Generally, generate features contentproviders. these ofthe Company asanagent costswhenthe ofrelated acts presented net todata VAS The relating musicdownloadsandother services. transmission, costofcontentrevenue is mobileInternet, on the contractual arrangements with the end-users. We recognize DLD/ILD and zonal revenues from DLD/ILDandzonalrevenues end-users. We the recognize with arrangements contractual on the depending ornet gross Long Long recorded Domestic Distance/International are Distance (“DLD/ILD”)andzonalrevenues customer. by the andaccepted completed are andtesting installation until asrevenue not recognized for equipmentare provided. are Payments customers services forwhenthe from isaccounted contracts service Revenue from services. Internet using online spentby subscribers time by the primarily ismeasured customer payments. services Internet Revenue from ives under tariff plans, which provide for payment of connection fees and which are periodically reassessed by us, reassessed periodically plans, feesandwhichare forpayment andsuch whichprovide ofconnection undertariff ives l ine with SEC Staff Accounting Bulletin No. 104, Bulletin inFinancial “Revenue Accounting Recognition SECStaff ine with l ives, thereby resulting in different carrying value of our property andequipment.Changes intechnology, value ofourproperty our carrying ives, resultingindifferent thereby l ives ranging from five to tenyears. The economic five actual from ranging ives l l ives or the value of these assets to change. We perform periodic internal studies to confirm studiesto internal confirm to value assets change. orthe periodic ofthese ives We perform ives of our property and equipment and, therefore, our depreciation expense in future periods. andequipmentand, infuture expense ofourproperty ives ourdepreciation therefore, l ong-lived assets, except for goodwill, in accordance with the provisions ofSFAS provisions the No. inaccordance with 144, assets, forgoodwill, except ong-lived l eases, using the straight-line method over its estimated useful estimated overits method eases, straight-line usingthe l ife from three to years. twelve We capitalized three depreciate ife from l ives of our property andequipment.These ofourproperty studiescouldresultives in l ower than the amounts estimated due to the different dueto different amountsestimated the the than ower l ocal operators establish end-user tariffs and assume andassume end-usertariffs establish operators ocal l ives may be different than our estimated ourestimated than may bedifferent ives l ocations as channels for receiving aschannelsforreceiving ocations Statements,” wedefer l l ife ofsevenyears, or ong-lived assets and assets ong-lived l easehold improvement l l ife ofsevento nine l ocal operators net of of net operators ocal icensing problems mayicensing problems l ives ives

l of grouping ofthe inrespect fair estimates the value assets. Impairment ofthe exceeds testsrequire assets amount ofthe to beimpaired, considered are assets carrying amountby by whichthe the impairment ismeasured the to berecognized Ifsuch asset. by to the begenerated cashflows net expected to amountofanasset future carrying a comparison ofthe Operating andFinancialReviewProspects decrease in the market prices of prices market inthe decrease the Company’sthe The rates. DCFanalyses usedinthe are discountrates estimates, basedonassumed growth which are flows employed Company’s basedonthe DCFanalyses inthe are and, budget most recent budget, the beyond foryears cashflows,future comparable company approach. multiples aswellrelevant market-based earnings The forthe cash ofexpected rates, amountandtiming the including growth discountrates, judgmentaboutappropriate perpetual judgment, ofsignificant exercise the approach. fair(“DCF”) analysis value andamarket-based Determining requires step, first the ofadiscountedcashflow usingacombination unit Company fair the the value ofareporting determines including Inperforming amount, goodwill. carrying to its units Company’svalue ofthe ofeach reporting eight geographic The process. stepinvolves fair estimated acomparison ofthe first usingatwo-step impairment isdetermined Goodwill ofourbusinessorother factors. portion useful basisovertenyears. Telecommunication a straight-line of telephone to access andforuse to payments acquire and other intangible partysuppliers capitalizes assets. VimpelCom madeto third oftelecommunication Intangible consistprimarily assets GOODWILL ANDINTANGIBLEASSETS impairment charge. impaired may are result assets the inadditional whether cashflows whendetermining future inourestimated assumptions impairment judgmentonourbehalf. are indicators requires there The ofwhether The determination useofdifferent value the ofa that couldaffect climate orassessment assets, by aregulator,long-lived etc. including action anadverse lived assets are being used or in their physical condition, significant adverse changein adverse condition,significant physical beingusedorintheir are assets lived a different carrying value of our intangible assets with finite value ofourintangible with assets carrying a different The economic actual asgoodwill. isrecorded assets amount assignedto total overthe identifiable ofthe price excess purchase and the assets isallocated at date to the identifiable ofacquisition The entities enterprises. costofacquired invarious interests of acquisition its intangible through assets identifiable andisnotcombinations amortized. hasacquired VimpelCom business inpurchase paid fair acquired overthe value assets ofconsideration ofnet excess the represents Goodwill useful estimated basisovertheir onastraight-line amortized are them. intangible Other assets with associated ofeconomicbenefit usingpattern ofconsumption amortized are relationships in the businessclimate, in the value. include change These carrying would below asignificant its fair eventsorcircumstances the value ofanentity more changethat would orcircumstances annualtestsifaneventoccurs impairment between SFASIn accordance with No. 142, forimpairment onanannualbasis. istestedfor wetestgoodwill Additionally, goodwill useful changesinestimated Historically wehavehadnomaterial amortizable the These periods. evaluations couldresult inachange amortization revised warrant eventsorcircumstances whether finite forintangible with assets Intangible period Assets,” to evaluate wecontinue amortization the ong-lived assets. We test ong-lived l ives determined based on the management estimation of future economic benefits from these from economicbenefits offuture estimation management basedonthe determined ives l ines (telephone l ives of our intangible assets with finite ofourintangible with assets ives l ives of intangible assets may be different than our estimated useful ourestimated than ofintangible may assets ives bedifferent l egal factors, operating performance indicators, competition, sale or disposition of a significant ofasignificant indicators, saleordisposition performance egal factors, competition, operating l ong-lived assets for impairment when there are indicators of impairment, such as: significant indicators ofimpairment, are suchas:significant forimpairment assets whenthere ong-lived l ine capacity). These payments are accounted for as intangible assets and are amortized on on These amortized ine capacity). payments forasintangible andare assets accounted are l ong-lived assets, significant adverse change in the extent ormannerinwhich extent changeinthe assets, adverse significant ong-lived l icenses are amortized on a straight-line basis within the estimated estimated the basiswithin onastraight-line amortized icenses are l l icenses, customer telephone relationships, ives and, therefore, our amortization expense in future periods. periods. infuture expense and,ives ouramortization therefore, l ives. In accordance with SFASives. Inaccordance with No. 142, andOther “Goodwill l ives, fourto tenyears. generally from l ives ofourintangible assets.ives l egal factors or in the business orinthe egal factors l ives, resultingin thereby l ikely not than reduce l ine capacity, goodwill goodwill ine capacity, l l icenses. Customer ives to determine toives determine l ong-

85 ВымпелКом / Годовой отчет 2008 86 VimpelCom / Annual Report 2008 Operating andFinancialReviewProspects it ismore it and differences temporary ofdeductible to tax valuation allowances related effects We record VALUATION ALLOWANCEFORDEFERREDTAXASSETS experience. historical from patterns that differ resultingincollection thereby standards orifweadjust fornewcustomers, ourcredit ofourcustomers improves ordeteriorates condition financial if the Changestoto allowances periods. may make payments berequired infuture to allowances mightberequired us, additional and to impair ability to their deteriorate were ofoursubscribers our customer payment condition patterns. financial Ifthe assessed andvalued. judgmenton ourpart asto and what significant assets those This requires process l isestablished, price purchase the we haveto and After allocate acquired that to underlying assets acquisitions. the forour not wedo issuesecurities Ingeneral, consideration. issuedandanycontingent fairthe value ofsecurities paid, allocation, price to price develop isnecessary As part purchase appropriate ofourpurchase the it whichincludes isnoincomestatement impact. there nature, therefore of anon-amortizing results, other intangible andcertain are assets operating goodwill future whereas will reduce to bewasting considered are inabusinesscombination, price statements impacted that mannerinwhichweallocate by asassets the purchase are the future.Ourfinancial inthe past acquisitions inthe andmay make additional intoWe acquisitions certain haveentered BUSINESS COMBINATIONS strategy. AsofDecember31, tax amountedto asset US$98.8ofallowance of US$74.7 net 2008, ourdeferred million million. to actually implement atax planning andourabilities taxable differences future pattern ofreversing timing the profits, to, related includes judgmentandassumptions substantial amongother things, ourexpected taxable income future to estimating approaches ofthese Each strategies. tax planning ofanyavailable consideration the and differences taxable temporary various ofthe taxable income, offuture reversals basedonexpectations are appropriate tothe us. estimate owe Inorder they We maintain forestimated allowances fordoubtfulaccounts history. collection payment maintained andactual basedonhistorical are patterns, receivable ofaccounts receivable aging factors. Allowances fordoubtfulaccounts andother relevant environment, economicandcompetitive expectations, the results, to basedonhistorical management make assumptions requires future The process allowance estimation ALLOWANCE FORDOUBTFULACCOUNTS inanamountequaltofair an impairment that excess. value isrecognized ofthat goodwill, implied the exceeds unit’s goodwill paid. price reporting amountofthe purchase the was carrying unit Ifthe reporting the fair andthe value inabusinesscombination of hadbeenacquired unit reporting intangible asifthe assets) unrecognized the estimated fair value of the reporting unit isallocated and unit to assets allofthe fair value estimated reporting the ofthe inabusinesscombination. Inother words, recognized amountofgoodwill samemannerasthe inthe is determined amountofimpairment, ifany. the amountto The measure fair carrying value implied ofgoodwill goodwill its with goodwill unit’s be performed. The impairment fair testcompares value implied goodwill reporting the secondstepofthe ofthe impairment fair testmust value, estimated goodwill secondstepofthe its the then exceeds unit amount ofareporting isnot impairment impaired secondstepofthe unit and the testisnot carrying Ifthe necessary. reporting ofthe goodwill amount, carrying its exceeds unit fair value estimated Ifthe ofareporting transactions. market inprivate observed values, analyst comparable and, company trading estimates public research utilizes values available, based approach where market- Inaddition,the units. reporting cashflows respective of the future inthe inherent risks the intended to reflect iabilities assumed, and assets iabilities therefore l ikely than not that some or all of the deferred tax assets will not be realized in the future.These inthe evaluations tax willnotikely assets berealized not deferred than that someorallofthe l iabilities that are not originally reflected in the acquired entity needto be entity acquired inthe not reflected originally that are iabilities l evel of this allowance,evel ofthis weanalyze baddebts andchangesin historical l osses from our subscribers’ inability to make payments inability that oursubscribers’ osses from l iabilities of that unit (including ofthat unit any iabilities l evels of future taxable evels offuture l oss carry forwards when forwards oss carry l iabilities are and are iabilities

the modification date amountofUS$12.0 modification inthe the from reclassified was million proposed. at were no changesto amountofaward accrued The the provision stock basedcompensation historical data historical considered onestimated date. outstanding offair asofmodification value to options we allthe Indetermination applied The was modification requirements. classification equity On December24, to satisfy ourstock-based program compensation wemodified 2008 andourestimated stock-based expense compensation changeourreported would turn fair inputs couldchangethe ofthese value to option, yield. ofthe oneormore whichin dividend Modifications expected financial assets and assets financial SFAS 15,new circumstances. November No. beginningafter years 2007. 157 forfiscal iseffective We SFAS adopted 157 for or assets (or permit) guidance forusingfair value and assets to measure date. modification asofthe recognized volatility, expected ustothe estimate modelrequires model. The Scholes Black pricing option Scholes valuation model.Historically, usedinthe Black wehaveusedthe to variables the relates as it The amountofjudgment usto assessment useasignificant fair ofthe value requires ofastock-based award compensation instruments. equity forthe inexchange services to provide employees whichthe required are during period over the to berecognized andisrequired exceptions) certain (with date granted fair onthe the value are instruments ofthe they or financial position. or financial ofSFAS Theallowed conditions. undercertain adoption No. 159 impact did not onourresults have amaterial ofoperations is 15, November adoption yearthat beginsafter 2007 fiscal butearlier first entity’s reporting beginningofeach as ofthe at fairitems value. The to statement expand useoffair SFAS the isexpected value measurement. No. 159 shall beeffective Financial Liabilities 2007,In February FASB the issuedFASB statement No. 159, orSFAS No. 159, The position. orfinancial results ofoperations In September2006, FASB the issuedFASB statement No. 157, orSFAS No. 157, Pronouncements Recent Accounting statement; disclosure isno forma pro income inthe to received employees stock, awarded forservices orrestricted instruments, suchasstock options of equity SFAS No. 123 andSFAS No. 95, 1,As ofJanuary SFAS 2006 weadopted No. 123 BasedPayment, orSFAS 2004) Share (revised No. 123R, of whichisarevision STOCK-BASED COMPENSATION allocated, to as“goodwill.” referred or asset to anon-goodwill toor asset price beallocated purchase to particular the the amountof orjudgmentscouldchangethe estimates Achangeinanyofthese judgmentandestimates. require specialists, guidance the andinput valuation with factors, ofprofessional of these generally developed whichare inconjunction customer All rates. cashflows, churn to future value rate future cashflows those andexpected interest appropriate the as customer intangibles, assumptions, usto make including, significant brands, require etc., amongothers, expected the shouldbevalued. they how to such assets The intangible assets, related assets individual inparticular valuation ofthe Operating andFinancialReviewProspects . The standard permits entities to choose to measure many financial instruments and certain other andcertain instruments manyfinancial to to choose measure . The entities standard permits l l iabilities on January 1, 2008 and the adoption ofSFAS 1, adoption No. andthe onJanuary 2008 157iabilities impact didnot onour haveamaterial iabilities to be measured at to fair bemeasured value. Theiabilities standard not does expand useoffair the value inany l iability has a direct impact on the residual amount of the purchase price that cannot price be purchase amountofthe residual impact onthe hasadirect iability Statement ofCashFlows. Under SFAS No. 123R cost companies the mustcalculate andrecord l onger permitted. The cost of the equity instruments is to be measured basedon isto bemeasured The instruments onger permitted. equity costofthe l ife of the options, forfeiture rates and volatility since from employee’s sincefrom standpoint andvolatility rates options,ife ofthe forfeiture l iabilities. The standard wheneverother standardsiabilities. applies require l iability. The resulting change in the purchase price allocation allocation The price purchase iability. resultingchangeinthe Fair Value Measurements l iability to equity andnogainor to equity iability Fair Value Option forFinancialAssetsor l ife of the options, risk free rate andour rate free options,ife ofthe risk l iability to settle these options. these to settle iability . The standard provides l oss was oss was 87 ВымпелКом / Годовой отчет 2008 88 VimpelCom / Annual Report 2008 Operating andFinancialReviewProspects In December4, 2007, FASB the issuedSFAS No. 141(R), orSFAS No. 141(R), “ expenditures or capital resources that is material to investors. that ismaterial resources orcapital expenditures orexpenses, condition,revenues results ofoperations, condition,changesinfinancial on ourfinancial reasonably that haveorare arrangements sheet We didnot haveanyoff-balance Arrangements Sheet Off-Balance andaffiliates. parties related with intoWe transactions haveentered Transactions Party Related ofSFAS adoption No. the 161 effect the We havesnot determined statements. yet consolidated willhaveonits financial l disclosures aboutfair value amountsofandgains quantitative forusingderivatives, andstrategies about objectives 161”). This ofSFAS standard amendsandexpands disclosure requirements the No. 133 disclosures qualitative andrequires (“SFAS No. 133”)Activities (“SFAS SFAS No. No. 161 andHedgingActivities Instruments Disclosures aboutDerivative FASB the 2008 issuesanamendmenttoIn March SFAS andHedging No. Instruments 133 forDerivative Accounting Issue No. 06-11 position. orfinancial impact to onourresults isnothaveamaterial expected ofoperations December15, beginningafter years 2007. infiscal declared fordividends The EITF The impact ofadopting Issueiseffective (orisno isforfeited paid-in award to incomestatement capital the related additional whenthe from tax those benefits payments andreclassify onunvestedshare-based inequity ofdividends tax the benefits recognize Income Tax ofDividendsonShare-BasedPayment Awards Benefits In June2007, aconsensusonEITFIssueNo. IssuesTask 06-11, reached Emerging Force the orEITFNo. 06-11, million. amountofUS$17.7 inthe to acquisitions potential related suchexpenses December31,of the off wehavewritten 2008 prohibited. Under SFAS 141(R) any costsshouldnot becapitalized related acquisition to SFAS adopt be required No. 141(R) are application and160 1, onJanuary 2009, andretroactive andearly adoption statements. inconsolidated We interests financial will (orminority) andnoncontrolling transactions combination of ARBNo. 51 SFAS No. 160, “ osses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. agreements. inderivative features contingent instruments, anddisclosures aboutcredit-risk-related osses onderivative ”. These new standards will significantly change the financial accounting and reporting ofbusiness andreporting ”. These accounting newstandards financial willsignificantly changethe Accounting and Reporting ofNoncontrolling interestinConsolidatedAccounting andReporting FinancialStatements, anamendment . EITFNo. 06-11 to that companies required provides are Business Combinations l ikely to have a current or future effect effect ikely orfuture to haveacurrent l onger but expensed asincurred. As onger butexpensed l ”, andSFAS No. 160, or onger expected to vest). onger expected l iquidity, capital capital iquidity, Accounting for

Moscow, Russia Moscow, May 6, 2009 datedreport May 6, opinionthereon. 2009, anunqualified expressed Treadway Commissionandour ofthe Organizations ofSponsoring Committee issuedby the Framework –Integrated Control asofDecember 31, inInternal established reporting VimpelCom’s criteria overfinancial 2008, basedonthe control internal (United We Board alsohaveaudited, Oversight standards Company the Public ofthe inaccordance with Accounting Statement No. 109. No.48, Standards inIncomeTaxes, forUncertainty Interpretation Board Accounting Accounting ofFASB anInterpretation 1, January 2007, statements,As discussedinNote 2to consolidated the financial effective Financial adopted VimpelCom principles. accounting accepted endedDecember31, period inthe U.S. years generally with three ofthe cashflows foreach and its 2008, inconformity at ofVimpelCom December31, position consolidated financial and2007, 2008 consolidated andthe results operations ofits to abovepresent fairly,In ouropinion, respects, statements the inallmaterial consolidated referred the financial basisforouropinion. areasonable provide that ouraudits believe statement madeby presentation. management, estimates financial and significant We overall aswellevaluating the used principles statements. alsoincludes accounting Anaudit financial assessingthe amountsanddisclosures inthe the misstatement. ofmaterial statements free are financial includes Anaudit examining, onatestbasis, supporting evidence the aboutwhether toStates). obtain audit assurance the reasonable Those andperform that weplan standards require (United Board Oversight standards Company the Public ofthe inaccordance with Accounting We ouraudits conducted statements consolidated basedonouraudits. opinion onthese financial of VimpelCom’s These istoan responsibility management. statements express the consolidated are financial Ourresponsibility endedDecember31, period inthe years three ofthe incomeandcashflows other comprehensive foreach accumulated 2008. asofDecember31,(“VimpelCom”) and2007, 2008 consolidated related statements and andthe ofincome, equity shareholders’ accompanying the We ofOpenJointStock consolidated sheets haveaudited Company balance “Vimpel-Communications” Open JointStock Company “Vimpel-Communications” andShareholders The ofDirectors Board ACCOUNTING FIRM REPORT OFINDEPENDENT REGISTERED PUBLIC States), 89 ВымпелКом / Годовой отчет 2008 90 VimpelCom / Annual Report 2008 CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE Open JointStockCompany“Vimpel-Communications” The statements. consolidated part ofthese accompanying financial anintegral notes are Accounts payableAccounts Current liabilities: equity andshareholders’ Liabilities Customer deposits parties Due to related Due to employees Customer advances, ofVAT net Taxes payable Accrued liabilities Total assets Other assets assets Other Other intangibleOther assets, net Goodwill Goodwill Deferred incometaxes Deferred Total current liabilities debt Short-term Long-term debt Investments in associates Investments inassociates net Software, Other current assets assets current Other parties related Due from Inventory Telecommunications licenses, net Input value addedtax incometaxes Deferred Property andequipment,Property net Total assets current ofallowance fordoubtfulaccounts net Trade receivable, accounts Other non-current non-current Other liabilities Cash andcashequivalents assets: Current Assets Total equity andshareholders’ liabilities Total equity shareholders’ Treasury stock, at cost, 663,614 ofcommon stock (December31, shares 2007: 504,182) income(loss) other comprehensive Accumulated Retained earnings paid-in capital Additional 90,000,000 nominalvalueCommon stock (.005 pershare), rubles shares nominalvalue stock (.005 pershare), rubles preferred voting Convertible equity Shareholders’ Minority interest Minority anduncertainties Commitments, contingencies 50,617,408 outstanding (December31, shares 2007: 50,776,840) authorized;51,281 10,000,000 6,426,600 authorized; shares issuedandoutstanding shares (Note 8) (Note 11) (Note 12) (Note 9) (Note 13) (Note 13) (Note 12) ,022 ,022 (Note 12) (Note 14) (Note 17) (Note 15) (Note 15) shares issued(December 31,shares 2007: 51,281 (Note 17) (Note 10) (Note 4) (Note 7) (Note 6) (Note 12) : (Note 7) (Note 21) ,022); (Note 16) 20 2007 2008 (In thousandsofUSdollars,exceptshareamounts)

$ 15,725,153 $15,725,153 4,388,806 2,406,507 (239,649) 1,445,426 $ 914,683 6,533,705 3,814,302 6,425,873 1,909,221 3,476,942 $ 896,112 3,271,878 (88,941) 882,830 493,550 288,755 725,502 142,649 105,795 122,825 182,045 440,479 168,196 764,783 549,166 644,475 221,040 475,667 152,189 425,181 82,788 29,557 December 31, ,492 4 7, 92 – – $ 10,568,884 $ $ 10,568,884 $ 1003,711 1,0 $ (130,668) 1,039,816 2,240,097 1,999,701 $ 697,816 1,413,403 5,411,786 5,497,819 1,726,917 3,327,716 386,883 166,887 288,410 262,502 281,396 801,243 622,815 497,896 186,114 526,512 576,276 915,211 112,273 98,407 58,838 36,728 52,614 81,757 81,118 5,908 5,405 2,773 92 – – CONSOLIDATED STATEMENTS OFINCOME Open JointStockCompany“Vimpel-Communications” The statements. consolidated part ofthese accompanying financial anintegral notes are Other (expenses)/income, net Other costs Service expenses: Operating revenues operating Net Revenue basedtax revenues Service revenues: Operating Minority interest in earnings of subsidiaries, before ofsubsidiaries, before inearnings interest Minority Income tax expense interestand Income beforeincometaxes, minority Total other incomeandexpenses innet Equity loss ofassociates expense Interest (loss)/gain exchange foreign Net expenses andadministrative Selling, general Cost ofequipmentandaccessories e noe$524,334 income Net Total expenses operating fordoubtfulaccounts Provision Impairment loss Depreciation Total revenues operating revenues Other Sales ofequipmentandaccessories Cumulative effect of change in accounting principle principle ofchangeinaccounting effect Cumulative ofchangein effect Income beforecumulative 2,535,950 income Interest Other incomeandexpenses: income Operating Amortization uuaieefc fcag nacutn rnil 891,234 principle ofchangeinaccounting effect cumulative principle ofchangeinaccounting effect cumulative conigpicpe524,334 principle accounting (Note 8) (Note 15) (Note 2)

(In thousandsofUSdollars,exceptpershare(ADS)amounts) $ 9,999,850 (1,142,276) (1,644,716) 10,124,986 10,116,932 2,838,508 (495,634) 7,580,982 2,262,570 1,520,184 (61,020) (17,404) 360,980 107,946 303,934 101,282 (8,054) 442,747 62,966 54,711 1 618 71, 17,190 0820 2006 2007 2008 YearsendedDecember31, (1,882) – – ,6,0 $811,489 $ 1,462,706 ,6,3 $4,847,661 $ 7,161,833 (194,839) ,6,0 3,470,659 4,964,908 1,309,287 ,0,2 1,503,615 2,206,322 ,0,9 1,397,319 2,206,190 ,6,0 813,371 1,462,706 ,2,5 1,212,138 2,120,356 ,7 ,8 4,869,857 7,174,880 ,7,3 874,618 1,171,834 ,7,0984,867,978 8 , 4 8 9 0 7,171, 8,3)(185,181) (85,834) 593,928 372 (1,879) (3,782) 1,1 179,846 218,719 33,021 29524,596 72,955 3728,104 63,722 29921,848 52,919 ,2 2,931 6,528 5,827 3,240 21 – (211) ,1 19,265 6,519 –– (186,404) (38,844) 390,663 872,388 18,344 15,471 91 ВымпелКом / Годовой отчет 2008 92 VimpelCom / Annual Report 2008 CONSOLIDATED STATEMENTS ( OFINCOME Open JointStockCompany“Vimpel-Communications” uuaieefc fcagsi conigpicpe––0.04 – $10.34 – ofchangeinaccounting effect cumulative Income before Weighted average commonsharesoutstanding incomepercommonshare Net principle ofchangesinaccounting effect Cumulative ofchangeinaccounting effect cumulative Income before Basic EPS: uuaieefc fcagsi conigpicpe––– – – incomeperADSequivalent Net principle ofchanges inaccounting effect Cumulative uuaieefc fcagsi conigpicpe––0.04 – $10.34 – ofchangeinaccounting effect cumulative Income before Weighted average diluted shares(thousands) incomepercommonshare Net principle ofchanges inaccounting effect Cumulative ofchangeinaccounting effect cumulative Income before Diluted EPS: uuaieefc fcagsi conigpicpe––– – – incomeperADSequivalent Net principle ofchanges inaccounting effect Cumulative Dividends per ADS equivalent perADSequivalent Dividends Dividends pershare Dividends tosns 50,700 perADSequivalent principle (thousands) principle principle perADSequivalent principle principle (Note 14) (Note 18) (Note 18) (Note 18) (Note 18) (Note 18) 20 072006 2007 2008 (In thousandsofUSdollars,exceptpershare(ADS)amounts) $ 10.34 $ 10.34 $ 11.46 50,703 $ 0.52 $ 0.52 $ 0.52 $ 0.52 $ 0.57 YearsendedDecember31, continued 87 $15.94 $ 28.78 87 $15.98 $ 28.78 87 $15.93 $ 28.78 87 $15.97 $ 28.78 08850,911 50,818 08850,947 50,818 .4$0.80 $ 1.44 .4$0.80 $ 1.44 .4$0.79 $ 1.44 .4$0.79 $ 1.44 .2$– $ 0.32 .7$– $ 6.47 ) Years ended December 31, 2008, 2007 and 2006 Years endedDecember31,2008,2007and2006 OTHERCOMPREHENSIVEINCOME AND ACCUMULATED EQUITY CONSOLIDATED STATEMENTS OFSHAREHOLDERS’ Open JointStockCompany“Vimpel-Communications” The statements. consolidated part ofthese accompanying financial anintegral notes are Balances at December31, Purchase of treasury stock – oftreasury Purchase stock – Sale oftreasury Change in functional currency currency Change infunctional translation currency Foreign income: Comprehensive Balances at December31, Total accumulated income Net Purchase of treasury stock – oftreasury Purchase stock – Sale oftreasury iied elrd–––(2,9)––(326,595) – – (326,595) – stock – oftreasury Purchase stock – Sale oftreasury – Balances at December31, – Total accumulated income Net translation currency Foreign income: Comprehensive ofFIN48( Adoption declared Dividends Adoption of equity method of method ofequity Adoption e noe 2,3 524,334 – – 524,334 – – – Balances at December 31, Total accumulated compre- income Net translation currency Foreign income: Comprehensive declared Dividends 2005 947sae 188––9712 987 – – 11,868 – – 200,000 shares 49,407 shares dutet––––110 – – – – ( adjustment 2006 income comprehensive 0,1 hrs––3,8 ,0 39,787 8,906 – – 30,881 – – 200,000 shares 100,113 shares dutet––––3815–378,155 – 378,155 5,411,786 – (130,668) 801,243 3,327,716 1,413,403 – 92 51,281,022 – 200,000 shares – 40,568 shares 2007 income comprehensive adjustment stock option plan accounting accounting plan stock option esv noe(os 2,3 8014 (365,850) – $ 4,388,806 (890,184) (239,649) $ (88,941) $ 524,334 3,271,878 $ 1,445,426 $ 92 $ – 51,281,022 – – 2008 income(loss) hensive adjustment Note 2 0,0 305,700 – 305,700 – – – – ) (Note 14) (Note 14) (Note 14) Note 15 418 (4,108) – – (4,108) – – – ) 51,281,022 $ 92 $ 1,370,654 $ 1,384,224 $ 6,536 $ (20,957) $ 2,740,549 $ (20,957) $ 6,536 $ 1,384,224 $ 1,370,654 $ 92 $ 51,281,022 121029 ,8,2 ,9,1 2,8 5,0)3,942,910 (58,505) 423,088 2,195,713 1,382,522 92 51,281,022 Common Stock hrsAmount Shares 3,3)(38,535) (38,535) – – – – – 1,8 811,489 1,228,041 – – 416,552 – 811,489 – 811,489 – – – – – 993––54525,488 5,495 – 1,840,861 1,462,706 – – – 378,155 – (81,069) 19,993 1,462,706 (81,069) – – – 1,462,706 – – – – – – – – – – 1446 (114,476) (114,476) – – – – – 8014 (890,184) – 12,030 (580,172) – – (890,184) – – – – (580,172) – – – 12,030 – – – – – Additional (In thousands of US dollars, except shares) (In thousandsofUSdollars,except paid-in capital Retained earnings income (loss) Accumulated prehensive other com- 82–110,852 – ,852 Treasury tc Total stock ,855 93 ВымпелКом / Годовой отчет 2008 94 VimpelCom / Annual Report 2008 CONSOLIDATED FLOWS STATEMENTS OFCASH Open JointStockCompany“Vimpel-Communications” ahadcs qiaet tedo er$914,683 1,003,711 (89,028) at andcashequivalents endofyear Cash at andcashequivalents beginningofyear Cash (decrease)/increaseincashand equivalents Net changesoncashand rate ofexchange Effect activities by/(used in)financing cashprovided Net Purchase of treasury stock oftreasury Purchase Payment ofdividends Repayment obligations ofequipmentfinancing Payments ofdebt issues offeesinrespect Repayments ofbankandother loans Proceeds from sale of treasury stock saleoftreasury from Proceeds Loan granted cashdeposit ofescrow Exercise ofsoftware Purchases Investments inassociates ofcashacquired ofsubsidiaries, net Acquisition prtn ciiis income Net activities Operating e ahue nivsigatvte (8,170,041) bankandother from Proceeds loans activities Financing activities cash usedininvesting Net deposits Short-term 3,421,858 ofintangiblePurchases assets andequipment ofproperty Purchases activities Investing activities by operating cashprovided Net Purchases ofother assets,Purchases net inconsolidated interest subsidiaries ofminority Purchase incometo cashprovided Adjustments net net to reconcile Changes in operating assets and assets Changes inoperating liabilities: equivalents Other current assets current Other Input value addedtax Inventory Customer advances anddeposits Customer advances payableAccounts Taxes payable andaccrued liabilities Loss assosiates from Impairment loss Amortization Depreciation activities: by operating Trade receivable accounts Other adjustmentsOther ofsubsidiaries inearnings interest Minority Stock-based (gain)/expense compensation fordoubtfulaccounts Provision Loss (gain) on foreign currency translation Loss currency (gain)onforeign Provision for deferred taxes fordeferred Provision (Note 15) (4,134,609) (2,002,452) (350,000) (992,825) (240,629) 6,209,392 (491,265) (587,302) $ 524,334 (313,652) (103,941) (121,890) 1,520,184 (721,222) (114,476) (415,735) 1,142,276 4,743,721 (84,566) (92,654) (34,035) (68,159) (90,221) (53,575) (75,012) 360,980 200,170 (5,078) 442,747 281,725 25,488 62,966 75,098 61,020 43,179 54,711 (InthousandsofUSdollars) 0820 2006 2007 2008 YearsendedDecember31, – 12835 (1,265,549) (1,238,305) ,6,0 $811,489 $ 1,462,706 22452 (2,286,991) (2,234,552) ,0,1 $344,494 $ 1,003,711 1688 (72,874) (106,888) 3185 – (331,885) 2396 (249,729) (293,956) 3135 (679,765) (301,355) 3567 (374,789) (365,657) 2010 – (200,170) 1374 292,882 (193,744) ,3,9 1,971,268 3,037,690 1791 211,735 (157,901) ,7,3 874,618 1,171,834 1,8)(48,175) (14,380) 8,9)(60,540) (84,596) 4,5)– (42,356) 8,6)(38,535) (81,069) 3,6)(27,008) (32,267) 7,5)(24,596) (72,955) 7,1)(31,408) (73,814) 6,4 925,183 666,348 4,9 363,646 344,494 5,1 (19,152) 659,217 7,4 44,317 171,242 1,1 179,846 218,719 301 15,432 (3,021) 28860,143 32,858 53367,337 45,383 9833,689 49,823 97712,855 39,787 515(21,236) 85,135 3728,104 63,722 29921,848 52,919 33 (148,321) (333) 31 (103,377) (351) –– –– –– –– –937 ––

CONSOLIDATED FLOWS STATEMENTS OFCASH Open JointStockCompany“Vimpel-Communications” The statements. consolidated part ofthese accompanying financial anintegral notes are Equipment acquired under financing agreements underfinancing Equipment acquired Non-cash activities: hnei arvleo laiiisasmd$1,020,666 assumed infairChange value ofliabilities Interest Income tax paid theperiod: Cash during Supplemental cashflow information Consideration for the acquisition ofsubsidiaries acquisition forthe Consideration amountpaid the fair andthe value of between Difference acquired interest Fair value ofminority Fair value acquired ofassets Acquisitions notes Issue ofpromissory ofequipment suppliers discountsfrom Non–cash of2009 Tendered Notes Offset payableAccounts forequipmentandother long-lived

net assets acquired assets net assets (Note 3): (5,348,180) 2,645,655 $ 647,597 3,517,062 406,020 206,129 448,218 81,660 (InthousandsofUSdollars) 2,464 2,726 0820 2006 2007 2008 YearsendedDecember31, – (continued) 0,3 $354,566 $ 601,939 2198 (735,500) (291,928) 587$204,812 $ 15,867 8,3 268,315 182,034 0,5 188,991 201,259 541 14,542 (5,441) 1,7 249,020 417,478 415671,997 84,125 85423,458 48,514 166– 41,636 –– –232,766 95 ВымпелКом / Годовой отчет 2008 96 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) AND2006 YEARS ENDEDDECEMBER31, 2007 2008, NOTES TO CONSOLIDATED STATEMENTS FINANCIAL Open JointStockCompany“Vimpel-Communications” the operations have not been started there asofDecember31, havenot there beenstarted operations the 2008. name. alsohasinvestmentsincompanies VimpelCom brand andCambodia, however inVietnam “Beeline” under the inRussia, Kazakhstan, Armenia, services Tajikistan, Ukraine, telecommunications primarily andGeorgia Uzbekistan The equipmentandaccessories. Company services,aswellselling operates internet wireless, andbroadband fixed of arange voice, by providing data through revenues earns VimpelCom services andother telecommunication Telecom, to Eco Telecom’s according and1.8% by others. filings; public ADSs; 29.9% by Telenor, 3.3% by ADSs, to represented Telenor’s ofwhichwere according 44.0% by Eco filings; public others. AsofDecember31, 2008, 24.3% ofVimpelCom’s ofVimpelCom’s holders by the owned stock were ofvoting shares 37.0% filings; public by (“ Eco Telecom Limited the ADSs;33.6%the by Telenor EastInvestAS (“ As ofDecember31, 2008, 27.3% ofVimpelCom’s of holders by the owned ofoutstanding commonstock were shares ( Depositary Shares (“ Shares Depositary NewYork commonstock onthe Stock Exchange ofits ( offering public 28, 1993 inJune1994. operations 20, andbeganfull-scalecommercial OnNovember 1996, aninitial completed VimpelCom onSeptember15,Federation 1992 asaclosed asanopenjointstock company jointstock company, onJuly re-registered Open JointStock Company(“ “Vimpel-Communications” 1. ofBusiness Description share and per share (ADS) amounts or unless otherwise indicated. (ADS)amountsorunlessotherwise andpershare share The presented inthousands, for statements Amountsare except accompanying havebeenpresented inUSdollars. financial (10) stock basedcompensation. forsubsidiaries, and (8)businesscombinations, assets; andaccounting (9)consolidation allowances forunrecoverable oftelephone andamortization incometaxes; (6)capitalization (5)deferred (7)valuation capacity; translation; line currency andequipment; (4)foreign ofproperty (3)valuation and depreciation expenses; andother operating expense ofinterest (2)recognition recognition; to:companies (1)revenue relate forstatutory The purposes. differences principal statementsGAAP. individual issuedby the financial the The from statements accompanying consolidated differ financial inaccordance with records maintain accounting their subsidiaries andtaxforeign local accounting andUS legislation United inthe generally accepted principles andaccounting legislation andtax Russianaccounting statements inaccordance with financial andprepares its records maintainsVimpelCom its BASIS OFPRESENTATION Policies Accounting and Significant 2. BasisofPresentation Note 14 ). ADS ”). Each ADS currently represents one-twentieth of one share ofVimpelCom’s ofoneshare commonstock one-twentieth represents ADScurrently ”). Each Telenor Eco Telecom ”), 3.7% by ADSs, to represented Telenor’s ofwhichwere according VimpelCom ”), according to Eco Telecom’s”), according and2.1% filings; by public ” or the “ ” orthe “NYSE” States (“ ofAmerica Company ) through the issuance of American issuanceofAmerican the ) through ”) was registered in the Russian inthe registered ”) was US GAAP ”). VimpelCom’s rubles beginningJulyrubles 1, 2006. ofUS Pursuant to provisions the to Russian USDollars from currency of2006. functional quarter Accordingly, changedits VimpelCom third inthe realized changewas policy this economicimpact of2006, from secondquarter the primary the partiallywas implemented during change Whilethis discretion. at its rate July exchange to fixed from 1, amendthe right the 2006. retained VimpelCom forprepaid June1, customers from 2006 andforother customers effective was The rate 1 unit. changeto exchange afixed at 28.7 fixed was The equivalents. rate payments orunit exchange denominated to inUSDollars Russianrubles whichare forcustomers’ rate exchange ofafixed introduction announcedthe of2006 VimpelCom secondquarter the During incurred, payable inUSdollars. measured orotherwise ofrevenues, costs, and equipment purchased, majority property because the debt andtrade priced, either were liabilities ofVimpelCom’s USdollar the was majority substantial operations ofthe June30, currency Until functional 2006 the FOREIGN CURRENCYTRANSLATION companies included Consolidated are inthe Financial discount rates, andother asset license multiples, andmarket The amongotherlives items. ofacquired results ofoperations cashinflows to andoutflows, future andassumptions, respect estimates including with useofsignificant the assumptions and fairvalues. the value acquired involve management’s ofassets Determining judgmentandoften assumedrequires liabilities allocated to underlying assets, the including intangible assets, f estimated and respective assumedbasedontheir liabilities The is of accounting. total method purchase underthe costofanacquisition businessacquisitions forits accounts VimpelCom BUSINESS COMBINATIONS 20 ofsuchinvestments. Company and50the percent between owns Generally, ofaccounting. method to equity the according reported are not butdoes control, policies, and financial influence companies operations significant overthe Investments inassociated Company inwhichthe exercises INVESTMENTS INASSOCIATES statements. consolidated the Company financial the from havebeeneliminated within andtransactions All intercompany accounts activi entity’s interest avariable of orboth from risk the returns residual ofthe amajority to receive loss orisentitled of Company company. whenthe inthe to issubject amajority rights 50% isalsorequired Consolidation voting than ofthe more owns whichgenerally meansthat VimpelCom control, companies exercises orindirectly directly inwhichVimpelCom The statements USGAAPandinclude consolidated havebeenprepared andall VimpelCom inaccordance with financial PRINCIPLES OFCONSOLIDATION Policies Accounting andSignificant 2. BasisofPresentation (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” No. 52, as ofJuly 1, 2006: and values assets following ofthe non-monetary carrying opening translated inthe statements anincrease was liabilities financial onthe currency The prospectively. changeinfunctional impact ofthe shouldbereported currency functional Foreign Currency TranslationForeign Currency , previously issued financial statements shouldnot, previously berestated, issuedfinancial changein andthe Statements from the dateStatements the from ofacquisition. (CONTINUED) Statement of Financial Accounting Standards (“ Statement Accounting ofFinancial (continued) SFAS ties. ”) air air

s 97 ВымпелКом / Годовой отчет 2008 98 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” FOREIGN CURRENCYTRANSLATION Policies Accounting andSignificant 2. BasisofPresentation VimpelCom could return or distribute the reported US dollar value of capital to its shareholders. value shareholders. to ofcapital its USdollar reported the ordistribute couldreturn VimpelCom and values assets ofthese not does reported indicate the that Likewise, it inUSdollars. orsettle could realize liabilities statements not and does indicateassets that VimpelCom financial ofthese purposes forthe into USdollars liabilities and somoni-, sum-,dram- tenge-,hryvnia-, ofruble-, The operations. oftheir translation of countries lari-denominated territories outsidethe ofVimpelCom’s ofcertain currencies not fully are Local convertible subsidiaries currencies foreign bank. central countries’ respective by the monitored parameters narrow are, generally, within differences butthe rates official the from may differ rates bank. Market central countries’ daily determined are rates respective by the exchange operates, that VimpelCom official countries the Within a separate equity. component ofshareholders’ income, other comprehensive inaccumulated reported statements are into USdollars financial oftranslating process the period. adjustments forthe Translation resultingfrom rates exchange income statement average amountsusingthe dates. translates VimpelCom transaction onthe prevailing rates exchange at historical into USdollars losses translated are date; sheet balance onthe revenues, prevailing whereas expenses, rates gainsand at exchange into USdollars translated are Under and SFAS assumesthat assets currency method rate functional No. inthe 52 measured current the liabilities statements to USdollars. financial their fortranslating method rate current andusethe currency, functional havetheir ofVimpelCom subsidiaries method.foreign andcertain rate Domestic current using the astheir local currencies SFAS inaccordance with No. currency 52 date, into reporting the currency translated were functional changeofthe the statements, Therefore, accompanying the currency. financial after reporting asits USdollar the hasretained VimpelCom income. other comprehensive aspart ofaccumulated equity and assets amountofnon-monetary inshareholder’sThis openingcarrying inthe hasbeenreflected increase liabilities eeomnctos iessadalctoso rqece,nt21,206 Total taxes Deferred Other assets non-current Other Goodwill Telecommunications offrequencies, net andallocations licenses net Software, andequipment,net Property (continued)

(CONTINUED) (continued) $ 305,700 $ 242,169 $ (12,529) 30,350 11,856 4,862 ,86 7,78

identification method. identification others, andisstated at the forsale, cards, SIMandscratch equipmentforsaleand andaccessories consistsoftelephone handsets Inventory INVENTORY pre-paid from to plans post-paid. datahistorical factors, andother suchasachangeintariff relevant onamonthly basis. The receivable basedon valuation ofaccounts isestimated the allowance fordoubtfulaccounts value whichapproximates fair their value. realizable at net shown their reviews VimpelCom are receivable Accounts TRADE ACCOUNTSRECEIVABLEANDDOUBTFUL to future. assumeinthe agreed Company that payment the ofcertain has obligations collateralization forthe institution at afinancial cash heldinescrow at to costwhichapproximates related fair cashisprimarily value. carried are Escrow Cashequivalents be cashequivalents. allhighly considers VimpelCom days of90 or maturity anoriginal investmentswith liquid to ofpurchase less at time the CASH ANDEQUIVALENTS statements. financial impact that may onthe haveamaterial and assumptions business combinations, include assessingtangible estimates andintangible impairments, asset recognition andrevenue suchasvaluation ofstock basedcompensation, polices Accounting estimates. those from results mayActual differ statements consolidated andaccompanying inthe financial notes. amountsreported the that affect and assumptions to management make estimates USGAAPrequires with The statements ofconsolidated inconformity preparation financial USE OFESTIMATES the table:the balances, presented below mainly oftotal in are costisted debt Company, transaction, ofthe currency to pertaining foreign unsettled onsignificant statements. date the The after effect financial ofthe change that changeandits occurs rate ofSFAS to provisions the No. According 52, statementsUS dollar. shallnot beadjusted financial VimpelCom forarate crisis, the Due to global the credit FOREIGN CURRENCYTRANSLATION Policies Accounting andSignificant 2. BasisofPresentation (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” retlAmna rm2.%1.%4,124 48,461 $666,773 14.1% 17.9% 5.8% 21.5% 24.7% 11.7% dram Armenian tenge Kazakhstan Russianrubles Armentel KaR-Tel VimpelCom

l ower of cost or market. Cost is computed using either the average cost method or a specific oraspecific costmethod average the Costiscomputed usingeither of costormarket. ower l ocal currencies of countries ofCompany’s ofcountries significantly devaluated against operations currencies ocal (continued)

(CONTINUED) 2009 comparedtoDecember31,2008 ExchangeratechangeasofMay6, S U EUR USD (continued) on unsettledbalances Effect ofratechange

99 ВымпелКом / Годовой отчет 2008 100 VimpelCom / Annual Report 2008 are underway and interest costisbeingincurred andinterest underway are made, are development activities beginswhen“qualifying expenditures” period projects, capitalization the construction to qualifying respect with capitalized costsare Repair as incurred. Interest expensed andmaintenancecostsare useful estimated overthe method straight-line using the orthe ofsevenyears life the undercapital Equipment acquired useful estimated overits method straight-line usingthe leases isdepreciated or life (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Value Added Tax (“ INPUT VALUEADDEDTAX Policies Accounting andSignificant 2. BasisofPresentation The following categories with the associated useful associated The the with following categories used: are lives ratably useful estimated method, overthe isrecognized expense straight-line depreciation the asset. ofthe life andequipmentisstated cost.TheProperty at historical using andequipmentassets Company property depreciates PROPERTY ANDEQUIPMENT but months. twelve These foratless than cost. accounted investmentsare months ofthree inexcess maturities deposits, whichhaveoriginal investmentsintime investmentsrepresent Short-term SHORT TERMINVESTMENTS 13%,was Tajikistan, andinUkraine, Uzbekistan, 20%. was it andArmenia basis. AsofDecember31, onagross sheets balance the 18%, VAT was it 2008, the inKazakhstan inRussiaandGeorgia rate on following the year, isrecognized VAT against within to revenues related whichwillbeoffset transactions, purchase VAT circumstances. to undercertain related tax the authorities VAT to incashfrom revenues, related orcanbereclaimed against to restrictions, subject certain issued to customers may orcashreceived. beoffset, VAT onpurchases incurred fieadmauigeupet eilsadfriue5–10 years 7–9years 3–12 years equipment,vehiclesandfurniture andmeasuring Office devices exchange Electronic Buildings andconstructions equipment Fiber-optic Fixed equipment telecommunication line equipment telecommunications Mobile l ease term, whichever is shorter. Capitalized ease term, Capitalized whicheverisshorter. isdepreciated positions forbasestation leasehold improvement expenses VAT ”) related to revenues is payable to the tax authorities on an accrual basisbaseduponinvoices onanaccrual ispayable to revenues ”) related to tax the authorities . (CONTINUED) l ease term, whicheverisshorter. (continued) 9–10 years 20 years 7 years sale or disposition of a significant portion of the business orother factors. ofthe portion ofasignificant sale ordisposition not to, businessclimate, change inthe limited asignificant indicators, performance legal factors, competition, operating value. include, These carrying would below its fair eventsorcircumstances butare the value notthan ofanentity reduce more changethat would orcircumstances annualtestsifaneventoccurs istestedforimpairment between goodwill likely SFAS Inaccordance with periods. No. 142, forimpairment onanannualbasis. testsgoodwill VimpelCom Additionally, amortization revised finite forintangible with warrant assets period eventsorcircumstances whether to determine lives SFASIn accordance with No. 142, asgoodwill. isrecorded assets amount assignedto total overthe identifiable ofthe price excess purchase and the assets isallocated at date to the identifiable ofacquisition The entities enterprises. costofacquired invarious interests of acquisition its intangible through assets identifiable andisnotcombinations amortized. hasacquired VimpelCom business inpurchase paid fair acquired overthe value assets ofconsideration ofnet excess the represents Goodwill useful estimated basisovertheir onastraight-line amortized are assets fourto tenyears. lives, generally from them. intangible Other with associated ofeconomicbenefit usingpattern ofconsumption amortized are relationships these from useful economicbenefits offuture estimation management basedonthe Customerlicenses. determined lives basisovertenyears. Telecommunication estimated the a straight-line basiswithin onastraight-line amortized are licenses of telephone (telephone lines on These amortized capacity). payments forasintangible andare assets accounted line are to access andforuse to payments acquire and other intangible party suppliers capitalizes assets. VimpelCom madeto third oftelecommunication Intangible consistprimarily assets licenses, customer telephone relationships, goodwill capacity, line TELECOMMUNICATION LICENSES,GOODWILLANDOTHERINTANGIBLEASSETS Policies Accounting andSignificant 2. BasisofPresentation (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Goodwill andOtherIntangibleAssets (CONTINUED) , VimpelCom continues to evaluate the amortization to evaluate continues , VimpelCom amortization the (continued)

101 ВымпелКом / Годовой отчет 2008 102 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” respectively. respectively. expected the anddevelopment Research costsin2008, asset. 2007 ofthe US$857, and2006 were life US$382 andUS$3,046, over method straight-line usingthe development amortized costsare software asincurred. Capitalized expensed are development to software maintenance costsrelated anddevelopmentResearch costsandother computer software no intendedpurpose. issubstantially forits andready complete pointat project the whichthe than later intended. ofsuchcostsceases function the Capitalization andusedto willbecompleted deemsprobable perform which it project fundingofthe further hasauthorized management andVimpelCom iscompleted stage project preliminary the Use for Internal of Under provision the SOFTWARE inanamountequalto animpairment that excess. isrecognized goodwill, fair value implied the ofthat exceeds unit’s goodwill paid. price reporting amountofthe purchase the carrying Ifthe was unit fair andthe value reporting inabusinesscombination ofthe hadbeenacquired unit reporting asifthe assets) isallocated and unit to assets allofthe intangible (including reporting of the ofthat unit anyunrecognized liabilities inabusinesscombination. fair Inother value estimated words, recognized the amountofgoodwill samemannerasthe the amountofimpairment, the amountto ifany. measure The in carrying fair isdetermined value implied goodwill ofgoodwill its with unit’s goodwill The impairment fair testcompares value implied goodwill reporting the secondstepofthe ofthe impairment fair testmustbeperformed. value, estimated goodwill secondstepofthe its the then exceeds unit a reporting amountof isnot impairment impaired secondstepofthe unit andthe testisnot carrying Ifthe necessary. reporting the of amount,t,goodwill carrying its exceeds unit fair value estimated Ifthe ofareporting transactions. market private values, analyst comparable and, company trading estimates public research in utilizes values available, observed where approach market-based Inaddition,the units. reporting cashflows respective ofthe future inthe inherent risks the The rates. intendedto DCFanalyses usedinthe reflect are discountrates estimates, basedonassumedgrowth whichare Company’s basedonthe DCFanalysesin the are and, budget mostrecent Company’s the budget, the beyond foryears comparable company approach. multiplesas wellrelevant market-based earnings The forthe cashflows employed cashflows, future ofexpected rates, amountandtiming the growth discountrates,judgment aboutappropriate perpetual judgment,including ofsignificant exercise the approach. fairanalysis value andamarket-based Determining requires step, ofadiscountedcashflow (“DCF”) usingacombination unit Company fair the the value ofareporting determines first the amount,including Inperforming goodwill. carrying to Company’svalue ofthe its units ofeach eightreporting The process. stepinvolves fair estimated acomparison ofthe first usingatwo-step impairment isdetermined Goodwill TELECOMMUNICATION LICENSES,GOODWILLANDOTHERINTANGIBLEASSETS Policies Accounting andSignificant 2. BasisofPresentation , VimpelCom capitalizes costs associated with software developed orobtained usewhenboth forinternal software with costsassociated capitalizes , VimpelCom Statement of Position No.Statement 98-1, ofPosition (CONTINUED) Accounting for the Costs of Computer Software Developed orObtained Accounting fortheCostsofComputer Software (continued)

(continued)

and December31, 2007: ended December31, periods forthe obligations 2008 The retirement movementinasset the following table summarises are base stations located. Accounting forAssetRetirement Obligations hascertain VimpelCom forbasestations, scopeofSFAS sites the to whichfall rented related within 143legal obligations ACCOUNTING FORASSETSRETIREMENTOBLIGATIONS impairment may, usefuleconomic asset ofthe ofthe result however, inmodification period. to ashorter life the at fair reported the to value assets. Assets bedisposedofare ofthe exceeds assets amountofthe carrying which the to beimpaired, considered are Ifsuchassets asset. the amountby by the impairment ismeasured the to berecognized by to begenerated undiscountedcashflows net expected to asset future amountofthe carrying a comparison ofthe by to ofassets beheldand usedismeasured Recoverability may amountofanasset not berecoverable. carrying the indicate that forimpairment intangibles whenevereventsorchangesincircumstances bereviewed identifiable certain these items due to the short term nature of these amounts. ofthese nature term dueto short the items these and assets includedare payable incurrent andaccounts value of approximates receivable carrying accounts the liabilities, instruments, which financial The instruments, including value fair offinancial market cashandequivalents, derivative FAIR VALUEOFFINANCIALINSTRUMENTS accompanying inthe included consolidated was expense statement indepreciation ofincome.The accretion No. 144, forimpairment accounts VimpelCom of ofSFAS provisions the inaccordance with assets, forgoodwill, long-lived except LONG-LIVED ASSETS Policies Accounting andSignificant 2. BasisofPresentation (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Liabilities incurred in the current period current inthe incurred Liabilities Asset retirement obligations at the beginning of the reporting period reporting at beginningofthe the obligations retirement Asset Increase asaresultIncrease ofchangesinestimates expense Accretion Asset retirement obligations at the end of the reporting period reporting at endofthe the obligations retirement Asset adjustment translation currency Foreign l ower of the carrying amountorfair value carrying ofthe ower less coststo sell.Impairment indicators not that do result actual inthe Accounting fortheImpairment orDisposalofLong-Lived Assets . These to include remediate obligations legal obligations leased onwhich land (CONTINUED) . SFAS No. 144 that requires and assets long-lived

$ 21,095 $ 29,717 (5,227) 6,009 5,892 1,948 (continued) 082007 2008 $ 21,095$ $ 16,774$ 2,887 1,071 363

– 103 ВымпелКом / Годовой отчет 2008 104 VimpelCom / Annual Report 2008 prepaid subscribers, monthly contract fees, roaming charges and charges for value added services (“ forvalue added services andcharges fees,prepaid charges subscribers, monthly roaming contract and contract cellular from system, ofits charges forusage whichincludes revenues airtime service earns VimpelCom REVENUE RECOGNITION accompanying inthe fair statements values reflected ofincome. at fair value havebeenrecorded andchangesinthese allhedginginstruments ashedges, therefore contracts derivative ofhedgingrelationship. type onthe andfurther, Theof ahedgingrelationship Company hasnot designated anyofits aspart hasbeendesignated andqualifies it dependsonwhether instrument fairchanges inthe value ofaderivative or assets aseither instruments at consolidated sheet fair inthe balance value. for Thederivative accounting liabilities SFAS No. 133, DERIVATIVE INSTRUMENTSANDHEDGINGACTIVITIES value ( not included table inthe aboveapproximates contracts carrying The andequipmentfinancing fair value ofbankfinancing (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” FAIR VALUEOFFINANCIALINSTRUMENTS Policies Accounting andSignificant 2. BasisofPresentation long bank term asfollows was at rates) December31: market loans cashflows discountedat (basedonfuture current As ofDecember31, value. debt The carrying approximates rate fair its 2008, the value fair ofvariable value rate offixed the respective month. respective the in asrevenue whichisrecognized service, monthly useofthe afixed feeforthe subscribers charges VimpelCom to VAS contentproviders. ofthe Company asanagent costswhenthe relating ofrelated revenue acts ispresented net anddata Thevoice mail,callwaiting transmission, musicdownloadsandother services. costofcontent mobileInternet, VimpelCom’s VAS (“ network. includes messages short customers by on their forroaming carriers other wireless from andrevenues area homecoverage selected outside their customers VimpelCom whoroam include from Roaming revenues revenues network. VimpelCom onthe terminates traffic andthat ofother operators subscribers mobileorfixed the from Company traffic whenthe isgenerated receives revenue Eurobonds UBS (Luxemburg) S. A. Ruble Bonds Sberbank Note 13 Accounting for Derivative InstrumentsandHedgingActivities Accounting forDerivative ). (continued) SMS (CONTINUED) ”), multimedia (“ messages ,0,0 $ 1,262,770 $ 2,000,000 arigvle arvle arigvle Fairvalue Carryingvalue Fairvalue Carrying value

,1,3 1,079,265 1,417,234 4,6 320,337 340,363 2,3 836,340 829,230 082007 2008 , requires companies alloftheir to, requires recognize MMS ”), caller number identification, ”), callernumberidentification, ,1,3 1,452,926 1,417,234 0,3 309,880 309,337 VAS (continued) $– $ – ”). Interconnect ”). Interconnect ––

REVENUE RECOGNITION Policies Accounting andSignificant 2. BasisofPresentation (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” US$156,451, respectively. underalloperating Rent expense in2008, 2007 US$370,533, and2006 was contracts leases andrental US$240,968 and based onoperations. clauses not do include orescalation of99%.Rental contingent agreements inexcess are rates indicates that renewal to date partyindicates ourexperience otherwise, that neither to extent the renewal whichstipulate provisions renewal equipmentisinstalled typically telecommunications contain forpremises where automaticyear-by-year agreements or2007. operating 2008 no non-cancelable either ofoneyearduring inexcess Operating periods leases forthe lease VimpelCom space andthe leases office RENT US$345,888,and 2006 was US$276,837 andUS$215,103, respectively. endedDecember31, years forthe expense asincurred. Advertising 2008, 2007 costofadvertising the expenses VimpelCom ADVERTISING fees forfixed deferred. revenue the amount not subscribers, inthe exceeding line 5to 29 and from forfixed years subscribers to connection costsrelated incremental We alsodeferdirect subscribers. line subscriber average estimated overthe isrecognized ofrevenue The whichisgenerally 32life, formobile months deferral No. 104, In accordance with the provisions of the Security Exchange Commission (“ Security ofthe provisions the In accordance with stated Revenues ofvalue-added are net to tax risk. andsalestaxcustomers. charged andassumecredit tariffs feeswhen andagency ofpayments net operators forinterconnection to operators these end-user local establish operators end-users. The the from with Company DLD/ILDandzonalrevenues recognizes arrangements contractual the local Long Long Distance/International Distance (“ customer. by the Domestic andaccepted completed are andtesting installation until asrevenue not recognized are provided. are Payments customers forequipment services forwhenthe from isaccounted contracts service Revenue from services. usingInternet online spentby subscribers time by the primarily ismeasured services Internet Revenue from equipmentissold.the customer payments. inwhich receiving equipmentsales, period Revenues inthe from suchashandsets, recognized are andagent systems, offices usesE-commerce retail AlsoVimpelCom expire. whencards revenue aschannelsfor locations addedto service are periods, andunusedbalances dates to subject statutory not butare expiration do haveexpiration Prepaid services. cards forfuture forascustomer accounted advances ofcashcollection,cards, are usedasamethod (including rendered. VAS Prepaid services are whenthe revenue) isgenerally recognized androaming revenue Service Revenue Recognition inFinancialStatements (continued) l

and and premises where telecommunications equipmentisinstalled. telecommunications and premises where There were DLD/ILD , VimpelCom defers upfront telecommunications connection fees. connection telecommunications upfront defers , VimpelCom (CONTINUED) ”) and zonal revenues are recorded gross or net dependingon ornet gross recorded are ”) andzonalrevenues SEC ”) Staff Accounting Bulletin (“ Bulletin Accounting ”) Staff (continued) SAB” )

105 ВымпелКом / Годовой отчет 2008 106 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” related to inincometax incometax expense.related matters and penalties (interest) fines isto VimpelCom’s recognize shareholder. practice that continuing hasaminority a subsidiary by US$6,870. ofgoodwill balance in the contingency adjustment to pertains apre-acquisition The cumulative-effect 1, January the 2007, by by US$4,108 earnings US$4,091 interest ofretained balance minority andsubsidiary andincreased adjustment its to increase andpenalties taxeffect interest, by benefits, US$15,069 forunrecognized andreduced liability year 2007. statements consolidated acumulative- Company inits financial the Asaresult recognized adoption ofthe ofSFAS provisions the No. 5, Inaddition,FIN48states periods, that incometaxes disclosure andtransition. shouldnotforunder interim beaccounted andpenalties, in interest classification, guidance measurement, accounting FIN 48alsoprovides onderecognition, statements. financial inthe beingrecognized to before meet isrequired atax position threshold minimumrecognition the of FASB Statement No. 109,Accounting forIncomeTaxes In July 2006, FASB the No. 48(“ issued Interpretation more willnotlikely not asset berecovered. than that the isconsidered tax whenit assets fordeferred tax bases. Avaluation allowance isrecognized respective andtheir liabilities and assets amountsofexisting statement carrying financial the between to differences consequences attributable and asset the ofSFAS method No. 109,liability tax tax and assets future forthe deferred recognized are liabilities SFAS incometax inaccordance with computes No.VimpelCom andrecords 109, INCOME TAXES amountofUS$43,939,in the US$36,659 andUS$12,253 in2008, 2007 and2006, respectively. US$495,634,was US$194,839 andUS$186,404, costof inthe interest capitalized VimpelCom respectively. long assets lived endedDecember 31, years forthe method. expense interest Interest 2008, 2007 effective and2006, usingthe borrowings useful assets’ estimated respective ofthe term overthe andamortized capitalized Debt issuancecostsare lives. related overthe andamortized capitalized intendeduseare fortheir ready to them get oftime aperiod that require assets with indebtedness anddebt costsassociated issuance costs. Interest onexisting costsinclude incurred interest Borrowing BORROWING COSTS ended December31, 2008, 2007 US$ and2006 were asincurred. years Total expensed employees, forthe are onbehalfofits andArmenia Georgia, contributions contributions to state the RussianFederation, pensionfundsinthe Kazakhstan, contributes VimpelCom Tajikistan, Ukraine, Uzbekistan, GOVERNMENT PENSIONFUND Policies Accounting andSignificant 2. BasisofPresentation Accounting forContingencies 58,010, US$38,439 (CONTINUED) FIN 48 . FIN 48 clarifies accounting forincometaxes by prescribing accounting . FIN48clarifies . The Company fiscal FIN48at beginningofthe the adopted ”) Accounting for Uncertainty inIncomeTaxesAccounting forUncertainty and US$30,360, respectively. Accounting forIncomeTaxes (continued) , an . Under interpretation

local affiliates of international banks within the within banks ofinternational local affiliates of suchcashholdings, cashto avariety with allocates VimpelCom available associated its risk credit local and banks To operations. manage ofits incountries institutions financial with cashinbank accounts holdsavailable VimpelCom to customers. their provided services androaming interconnect dealers. The other ofthe from Company worthiness alsohasreceivables credit from operators local andinternational deliveries ofequipment ( deliveries ofcertain inrespect forequipmentfinancing provide vendors mostsignificant the with arrangements The contractual development. network andequipmentforits ofproperty ofvendors to avariety issuesadvances VimpelCom isfullyvalue it recoverable. addedtax andbelieves ofinput balance ofthe recoverability the reviews periodically Management tax the authorities. from cashreceipts direct VAT against onVimpelCom’s payable offset via or to tax revenue the authorities tax the authorities from VAT isrecoverable cash. deposits in whichit banks ofthe worthiness credit the dueto the is mitigated dealers from receivable accounts trade its from and, VimpelCom’s arising risk. risk to credit accordingly, not credit rise do give ofwhichapproximately period), 95.9% reported endofthe the baseat inthe andremain months past inthe three activity generating apartyto arevenue basewhowere subscriber dueto the ismitigated subscribers from receivable accounts trade its from terms.VimpelCom’s arising forequipmentsoldto risk oncredit dealers except credit delivery, typically Equipmentsalesare paidof inadvance GSMnetwork. aprepaid hasintroduced service In addition,VimpelCom usage. forairtime ascollateral deposits forequipmentsales. circumstances, requires Incertain VimpelCom subscribers and dealers andamountsduefrom usage forairtime subscribers consistofamountsduefrom Trade receivable accounts CONCENTRATION OFCREDITRISK Policies Accounting andSignificant 2. BasisofPresentation (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” SFAS No. 130, ACCUMULATED OTHERCOMPREHENSIVEINCOME terms. contract the with shareholder changes in net assets. changes innet shareholder ofallother non– that includes methodology effects the reporting inclusive financial incomeisamore Comprehensive Reporting ComprehensiveReporting Income Note 13 l arge number of dealers. Management periodically reviews the history ofpayments history the and reviews periodically numberofdealers. Management arge ). VimpelCom periodically reviews the financial position of vendors and their compliance compliance andtheir ofvendors position financial the reviews periodically ). VimpelCom , requires the reporting of comprehensive income in addition to income. net income inaddition ofcomprehensive reporting the , requires l imits set forth by its treasury policy. Management periodically reviews reviews periodically Management policy. treasury by its forth set imits l arge number of its active subscribers (subscribers in the registered registered inthe (subscribers subscribers active numberofits arge (CONTINUED)

subscribed to asofDecember31, a prepaidsubscribed service 2008 (continued)

107 ВымпелКом / Годовой отчет 2008 108 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” liabilities, asallowed underSFASliabilities, No. 71, or assets ofpossibleregulatory effects statements the accompanying to inthe recognize financial have beenrecorded or assets No underGovernmentalcontrol. that are adjustments services isonly forthose necessary of tariff liabilities andwholesale adjustments at retail the to seektariff right the level basedon costsincurred. Governmentalauthorization fixed Armenian inits The oftariffs Company to business. issubject governmental regulation Theline Company has GOVERNMENT REGULATIONS or date. modification asofthe loss recognized was date at amountofUS$12,030 modification inthe the accrued provision from reclassified andnogain was to equity liability employee’sfrom proposed. were standpoint nochangesto amountofaward The the basedstock compensation historical dataof fair historical value considered VimpelCom since onestimated andvolatility rates options, ofthe forfeiture life date. outstanding asofmodification to options allthe Indetermination applied The was requirements. modification classification equity to satisfy On December24, stock-based program compensation its modified VimpelCom 2008 taxnet effect. yearendedDecember31,for the 2006, to US$0.16 equivalent onboth abasicanddiluted percommonshare basis, no with SFAS No. 123R incomeofapproximately innet adecrease andphantom was US$8,348 stock plans stock option forboth the 1, andphantom value at stock-option January stock plans of the 2006. intrinsic and the The of total adoption impact ofthe fair the value between ofUS$1,882, difference the principle representing ofa changeinaccounting effect a cumulative ofapproximately expense US$6,466administrative yearendedDecember31, forthe 2006. Additionally, recorded VimpelCom FAS ofadopting 123RThe and inselling, general effect anincrease andphantom was stock plans stock option forboth the include, impact ofSFAS the No. 123R. not method, have not anddo been restated statements to periods reflect, consolidated forprior the prospective financial and expense compensation adjusted related the modified value. the changeinintrinsic Inaccordance with forthe liability and period reporting at each value shares ofthe intrinsic the by remeasuring forstock options accounted VimpelCom SFAS adopted VimpelCom No. ofSFAS method. 123R to Prior adoption No. the prospective 123R, modified usingthe instruments. equity forthe inexchange services to provide employees whichthe required are during period overthe to berecognized andisrequired exceptions) certain (with date granted fair onthe basedonthe value are instruments ofthe measured they incomestatement; inthe disclosure isno forma pro received longer isto be The instruments permitted. equity costofthe to employees stock, awarded forservices orrestricted instruments, suchasstock options costofequity the and record ofSFASis arevision No. 123 andSFAS No. 95, As of January 1, SFASAs ofJanuary adopted 2006 VimpelCom No. 123 2004) (revised STOCK-BASED COMPENSATION Policies Accounting andSignificant 2. BasisofPresentation Accounting for the Effects of Certain Types ofCertain ofRegulation. Accounting fortheEffects Statement ofCashFlows (CONTINUED) . Under SFAS No. 123R companies mustcalculate Share BasedPayment (“ SFAS No.123R (continued) ”), which written off such expenses related to potential acquisitions in the amountofUS$17,727. inthe to acquisitions potential related suchexpenses off written any costsshouldnot becapitalized related longer asincurred. December31, Asofthe butexpensed Company the 2008 has prohibited. are Under SFAS application No.160 141(R) 1, onJanuary 2009, andretroactive andearly adoption acquisition statements. inconsolidated The interests financial to SFAS Company adopt minority) willberequired No.141(R) andSFAS (or andnoncontrolling transactions ofbusinesscombination andreporting accounting financial significantly changethe of Noncontrolling interestinConsolidated FinancialStatements, anamendmentof ARBNo. 51 In December4, 2007, FASB the issuedSFAS No. 141(R), position. ofSFAS Theconditions. adoption No. 159 impact didnot onVimpelCom’s haveamaterial orfinancial results ofoperations 15, November yearthat beginsafter 2007, fiscal first entity’s isallowed undercertain reporting adoption of each butearlier The to statement expand useoffair SFAS the isexpected value beginning measurement. asofthe No. 159 shallbeeffective at fair other items andcertain value. instruments manyfinancial to to choose measure The entities standard permits 2007,In February FASB the issuedSFAS No. 159, The and assets statements.non-financial consolidated willhaveonits financial liaibilities ofSFAS adoption No. the 157 effect the hasnot VimpelCom determined position. yet for orfinancial results ofoperations and assets ofSFAS 1, adoption No. andthe onJanuary 2008 157liabilities impact didnot onVimpelCom’s haveamaterial 15, November No. beginningafter years 2007. 157 forfiscal SFAS adopted iseffective VimpelCom No. 157 forfinancial at to fair bemeasured value. The standardliabilities not does expand useoffair SFAS the value inanynewcircumstances. fair value and assets to measure or assets The (orpermit) standard wheneverother standards applies require liabilities. Accounting forContingencies In September2006, FASB the issuedSFAS No. 157, RECENT ACCOUNTINGPRONOUNCEMENTS Company’s the from may judgments. differ legal counsel.The proceedings outcomesofthese actual outcomeofthe an unfavorable in Exceptmatters. asdescribed ispartytoVimpelCom to various certain respect ofbusinesswith course normal inthe proceedings legal andregulatory LITIGATION ACCRUAL Policies Accounting andSignificant 2. BasisofPresentation (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” on the statuson the ofthe evaluates VimpelCom businessorprospects. impact the onits adverse isapartycouldhavematerial it l egal or regulatory proceedings, the merits of its defenses and consultation with in-house and external defensesandconsultation in-houseandexternal ofits with proceedings, merits the egal orregulatory , andEITFTopic D-86 l Note 21 egal or regulatory proceedings to which it is a party in accordance with SFAS isapartyinaccordance with to No. whichit proceedings 5,egal orregulatory VimpelCom does not believe that any not does believe VimpelCom to which proceedings legal orregulatory , IssuanceofFinancialStatements. Fair Value Measurements Fair Value Option forFinancialAssetsorLiabilities (CONTINUED) Business Combinations . The standard guidance provides forusing , andSFAS No. 160, These judgments are subjective based These subjective judgmentsare . These newstandards will Accounting and Reporting Accounting andReporting (continued) l ikelihood of ikelihood .

109 ВымпелКом / Годовой отчет 2008 110 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” the effect the adoption ofSFAS adoption No. the 161 effect the statements. consolidated willhaveonits financial hasnot VimpelCom determined yet agreements. inderivative features contingent disclosures aboutcredit-risk-related disclosures aboutfair value amountsofandgains quantitative derivatives, instruments, and losses onderivative ofSFAS forusing andstrategies disclosure requirements the No. 133 disclosures aboutobjectives qualitative andrequires and FASB the 2008 issuesanamendmenttoIn March SFAS No. 133, ofSAB 110 effect adoption 1, immaterial. was asofJanuary 2008 situations.The to Although incertain “plain the itself situations. vanilla” awards incertain hasavailed VimpelCom awards SFAS inaccordance with No. options 123(R).share SAB 110 “simplified” for“plain useofthe the vanilla” method extends of“plain term vanilla” useofa“simplified” indeveloping the ofexpected method anestimate regarding SECstaff of the 1, 2008, amends and replaces Question 6 of Section D.2 ofSAB 6ofSection Topic Question 1, 14, 2008, amendsandreplaces of the voting shares ofVimpelCom. shares voting of the 32.9% toowned havebeneficially reported were based telecominvestmentcompany, acquisition ofthe whichat time the No.In December21, 110, Bulletin Accounting issuedStaff 2007 SECstaff the Buztel was previously owned by an affiliate of Altimo Holdings and Investments Limited (“ ofAltimo HoldingsandInvestmentsLimited previously byBuztel was anaffiliate owned into Unitel. to andissubject annualimpairment unit tests. OnJuly 24,assigned to reporting Uzbekistan the 2006, merged Buztelwas andBuztelamountedto ofUnitel US$154,061. assets net identifiable the was asgoodwill, This recorded amountwas ofboth companiesassets amountedto US$106,913. value fair of costoverthe market The acquisition ofthe excess net The ofaccounting. identifiable fair method value purchase ofacquired underthe recorded were The acquisitions and1800 GSM-900 holdsnational that Unitel was ofUnitel acquisition forthe licenses. reason ofapproximately assumption the US$7,700 US$974. were to both acquisitions costsrelated indebt. Direct The primary RECENT ACCOUNTINGPRONOUNCEMENTS Policies Accounting andSignificant 2. BasisofPresentation On February 9,On February 2006, 100% LLC ofUnitel acquired VimpelCom (“ and1800 GSM-900 that Buztelholdsnational ofBuztelwas ofUzbekistan. acquisition Republic the inthe licenses ofUS$60,000 price purchase the plus ofapproximately assumption the US$2,400 indebt. for The reason primary 18, Telecom Uzbekistan On January LLC ofBakarie 2006, 100% (“ shares ofthe acquired VimpelCom UNITEL ANDBUZTEL 3. BusinessCombinationsandDisposals

SFAS No. 161, Disclosures about Derivative InstrumentsandHedgingActivities Disclosures aboutDerivative (continued) (CONTINUED)

Accounting for Derivative InstrumentsandHedgingActivities, Accounting forDerivative Unitel ”) for the purchase price ofUS$200,000 price purchase ”) forthe plus Share-Based Payment Share-Based Payment . This standard amendsandexpands Altimo . SAB 110 views the expresses , which, effective January January , which, effective ”), a Buztel (continued) l eading Moscow- ”) for

annual impairment tests. to US$177,049. to andissubject unit assignedto Russianmobilereporting was the asgoodwill, This recorded amountwas ofCSKamounted assets net US$58,460. value identifiable fair of the costoverthe market The acquisition ofthe excess ofCSKamounted to assets net The ofaccounting. identifiable fair method value purchase ofacquired underthe recorded CSK’s GSM-900/1800andD-AMPS ofabout2.5 apopulation was million. with The acquisition coveraterritory licenses VimpelCom’s region. was Irkutsk inthe into mobiletelephonymarket acquisition the entry forthe The reason primary approximately US$235,509, including US$1,274 costs. related ofacquisition GSM 900/1800 andD-AMPS Region. Irkutsk the The covering ofCSKfor licenses Company 100% shares ofthe acquired On August 13, 2007, Closed Severnaya JointStock Korona” acquired VimpelCom Company (“ “Corporation SEVERNAYA KORONA ArmenTel ArmenTel costs. acquired whenVimpelCom 2006, inNovember transaction including direct US$55,924, of shares paid ofthe approximately price 90% by forthe final VimpelCom ofthe whichconstitutes 1/9th 18,On April 10% remaining the ofArmenTel. 2007 10% acquired VimpelCom was additional The ofthe price purchase unit. reporting Armenia the ofArmenTel assets net amountedtovalue identifiable US$109,550, ofthe andassignedto asgoodwill recorded which was of ArmenTel amountedto US$347,090. at date the acquisition ofthe fair costoverthe market The acquisition ofthe excess assets net The ofaccounting. identifiable fair method value purchase ofacquired underthe recorded was The acquisition VimpelCom’s was into mobileandfixed acquisition the entry forthe The reason primary ofArmenia. telephonymarkets line ofUS$11,610. to acquisition the costsrelated including direct monopolyprevious fixed adjustments ofapproximately after price inArmenia, foracashpurchase US$456,640, provider line 16,On November issuedandoutstanding ofthe stock ofArmenTel, 2006, 90% and mobileprovider acquired VimpelCom the ARMENTEL capacity. numbering alsopossessessignificant Mobitel GSM-1800owns cellular ofGeorgia. mid-2013 territory through entire valid the that are covering licenses andfrequencies 51% costsforthe US$12,742. was interest transaction that Mobitel are ofMobitel acquisition forthe The reasons primary ofFIN46R, provisions under the andconsolidated entity interest asavariable considered Itwas operations. didnot anycommercial conduct of acquisition holds GSM-1800 cellular mid-2013. through valid that are licenses 2003 foundedinNovember was andat date the Mobitel LLC ( On July 12, 2006, 51% acquired VimpelCom cellular Mobitel operator ofGeorgian outstanding interests ofthe participatory MOBITEL 3. BusinessCombinationsandDisposals (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” “Mobitel” ) and a call option for the remaining 49% of the outstanding participatory interests of Mobitel. Mobitel Mobitel 49% ofMobitel. outstanding remaining interests ofthe participatory forthe ) andacalloption Consolidation InterestEntities ofVariable (CONTINUED) (continued) . The total price, including cashpurchase CSK ”), whichholds 111 ВымпелКом / Годовой отчет 2008 112 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” On December21, 2007, andGoldenTelecom ofVimpelCom Inc.(“ subsidiaries GOLDEN TELECOM 3. BusinessCombinationsandDisposals( the datethe ofacquisition: The Company’s the following table and summarizes fair acquired ofthe values assets estimate ofthe assumedat liabilities fortax purposes. is not deductible amountsofUS$2,430,657 inthe units andRussiamobilereporting Russia fixed andUS$453,684, This respectively. goodwill ofGoldenTelecom assets net amountedto US$2,884,341, identifiable the andassignedto asgoodwill recorded whichwas Telecom amountedto US$1,431,818. at date the acquisition ofthe fair costoverthe value of The acquisition ofthe excess tostarted beconsolidated inVimpelCom’s statements. ofGolden assets net The financial identifiable fair value ofacquired and 28, ofVimpelCom 2008, subsidiary GoldenTelecomwholly-owned asofFebruary merger becameanindirect of the $105.00 to receive incash. right the pershare Following received completion the dissenters’ rights) perfecting properly those, (other ifany, than ofGoldenTelecom tenderoffer stockholders inthe all remaining whodidnot shares tendertheir andinto GoldenTelecom with and merged was 28, 2008, consummatedFebruary a“short-form” inwhichLillian merger, of GoldenTelecom. on ofVimpelCom, subsidiary Asaresult, wholly-owned B.V., andLillian Finance VimpelCom adirect Delaware underapplicable ofa“short-form” merger completion the stockholders avote remaining ofthe law, without approximately 94.4% ofGoldenTelecom’s outstanding ofthe shares to permit commonstock, anamountsufficient These periods. represented shares andsubsequentoffering initial the of GoldenTelecom during commonstock tendered Telecom 26, successfully commonstock. was The onFebruary completed 38,093,677 2008, subsequentoffer with shares ofGolden shares forallremaining 18, commencedasubsequentoffer and not OnFebruary withdrawn. 2008, Lillian approximately ofGoldenTelecom’s representing 90.5% outstanding ofthe shares delivery), commonstock tendered 36,533,2552008, with ofguaranteed notices through ofGoldenTelecom shares commonstock (including delivered shares Telecom’s commonstock at of$105 aprice incash. pershare 15, successfully was The onFebruary completed tenderoffer 18, onJanuary of VimpelCom, 100% ofGolden outstanding 2008, to ofthe shares commencedatenderoffer acquire Inc.(“ Acquisition Lillian agreement, Pursuant to merger the agreement. merger RussianFederation, inthe signedadefinitive services andInternet telecommunications ofintegrated provider iess(. er egtdaeaermiigueu lf)70,361 46,977 686,743 price Total acquisition assumed Total liabilities Long-term liabilities Current liabilities Total acquired assets assets non-current Other Goodwill useful remaining weightedaverage intangible (1years Other assets life) (13.6Customer Relationships useful remaining weighted average years life) useful (3.3 remaining Licenses weightedaverage years life) and equipment Property assets current Other Cash andcashequivalents (CONTINUED) continued Lillian Golden ”), an indirect wholly owned subsidiary wholly subsidiary owned ”), anindirect

Telecom )

”), a l As oftheDateAcquisition eading facilities-based eading facilities-based $ 5,272,067 $ 4,316,159 $ 955,908 2,884,341 1,101,217 $ 56,095 $ 382,990 576,894 379,014 43,343 allocated approximately US$41,646 to US$8,329license, tax to deferred andUS$5,100 interest. liability to noncontrolling Company telecom the ofthe Onacquisition, purchase forasanasset entity. accounted interest avariable through license 10% the ofthe to purchase interest acalloption hasalsoacquired VimpelCom (“Atlas”), forUS$28,000 Altimo. from The 10% by remaining a owned ofAtlas are ofSotelco’s of90% purchase the madethrough parent was company, (BVI)Cambodia. The Atlas Trade transaction Limited company Sotelco Ltd. (“ Cambodian inthe andeconomicinterest voting 90% anindirect On July acquired 16, Ararima 2008,through VimpelCom SOTELCO ofGTEL-Mobile,including GSM registration the frequencies. andrelated license Agreement, JointVenture andShareholders underthe required approvals regulatory GTEL-Mobile allofthe hasreceived US$266,670 inGTEL-Mobile that interests hasbeenpaid TSC of51% andGTEL infull.GTEL haveequity and9%,respectively. investmentof foranequity inGTEL-Mobile a40% andeconomicinterest voting inconsideration received Ararima (“ Telecommunications Corporation nameofGTEL-Mobileunder the JointStock Company (“ inVietnam jointventure to amobiletelecommunications establish Agreement signed aJointVenture andShareholders (Cyprus) (“ Limited Enterprises Ararima subsidiary On July 100% direct 8,andits VimpelCom owned 2008 GTEL-MOBILE Telecom amountedto US$312,912 unit. andassignedto reporting Russiafixed amountedto US acquired amountofUS$17,348in the by US$40,404. interest andadjusted minority The total assets net fair value ofidentifiable ofapproximately period 12 tax overaweightedaverage ofadeferred years,which willbeamortized recording liability and acquired assets the assumed, andassuch,liabilities Company the hasassignedUS$68,120 to intangible assets The basedonafair price value Company’s assessment purchase ofthe allocation of the statements reflect financial ofaccounting. method underpurchase Telecom. ofCorbina 100% recorded own shares was ofthe The stepacquisition now and US$4,250 together subsidiary andits VimpelCom Asaresult to transaction, acquisition. ofthis ofcostsrelated 51% subsidiary of Golden Telecom by acquiring the remaining 49% from Inure Enterprises Ltd.51% Enterprises Inure 49% remaining from the ofGoldenTelecom ( subsidiary by acquiring On June11, inClosed ofownership JointStock Company share (“ its Cortec increased VimpelCom 2008 CORBINA TELECOM 3. BusinessCombinationsandDisposals (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Sotelco $95,338. The ex The $95,338. ”), whichholdsaGSM900/1800 of territory forthe frequencies andrelated license GTEL cess of the acquisition cost over the fair value of identifiable net assets of Corbina ofCorbina assets net fair costoverthe value ofidentifiable acquisition cess ofthe ”), a Vietnamese state-owned enterprise and GTEL TSC, a subsidiary of GTEL. TSC, ofGTEL. andGTEL asubsidiary state-owned enterprise ”), aVietnamese (CONTINUED) GTEL-Mobile (continued) ”). The inGTEL-Mobile other participants Global are l ocal partner. The acquisition ofSotelco partner. was Theocal acquisition l ocal partner, a Cambodian enterpreneur. partner,ocal aCambodianenterpreneur.

“Inure” Corbina TelecomCorbina ) forUS$404,000 Ararima ”) ”), 113 ВымпелКом / Годовой отчет 2008 114 VimpelCom / Annual Report 2008 the Russia fixed reporting unit and is subject to andissubject annualimpairment unit tests. reporting Russiafixed the amountedto assets US$10,315. net identifiable of the mainly was assignedto as goodwill, This recorded amountwas US$21,959 by US$11,744. interest andadjusted minority value fair costoverthe market The acquisition ofthe excess companies acquired amountedto ofthe assets net The ofaccounting. identifiable fairmethod value ofacquired ofUS$32,274. total the consideration ofRussiawith regions different purchase underthe recorded were The acquisitions offixed Company small the year2008 acquisitions several completed the During in operators telecommunication line Limited. Investments whichisheldby Crowell 25% inLimnotex to remaining share the respect with arrangements and calloption tosubject annualimpairment tests. To apath ensure overKaR-Tel, to onput ownership complete hasagreed VimpelCom andis unit amounted to US$309,490. reporting assignedto Kazakhstan was the asgoodwill, This recorded amountwas amountedtoassets US$99,946. assets net value identifiable fair ofthe costoverthe market The acquisition ofthe excess amountofUS$42,834in the by US$153,981. interest andadjusted minority net The identifiable fair value ofacquired tax ofapproximately period ofadeferred 7years, overaweightedaverage recording which willbeamortized liability and acquired assets the assumed, andassuch,liabilities Company the hasassignedUS$147,734 to intangible assets The basedonafair price value Company’s assessment purchase ofthe allocation of the statements reflect financial ofaccounting. method purchase underthe 50% asstepacquisition plus to 75%. oneshare recorded was The acquisition from increased stake share inLimnotex Kazakhstan. VimpelCom’s Asaresult andindirect exercise, ofthe direct overall (“ Limited 25% anadditional to acquire option its On July 1, Developments exercised VimpelCom ofLimnotex 2008 less oneshare OTHER ACQUISITIONS HoldingsLtd. Ltd. Management ofMorefront 25% by shares Rambert owned ofthe a further to years, respect three with after exercisable onputandcallarrangements, hasagreed VimpelCom transaction, part ofthe VimpelCom’sthe net fair inthe value amountedto US$405,516. ofidentifiable share ofEuroset liabilities Inaddition,as net fair value amountedto ofidentifiable US$355,515. acquired liabilities costover The acquisition ofthe excess The ofaccounting. US$226,000. estimated total method equity preliminary underthe recorded was The acquisition (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” 100% of the Euroset Group (“ Group 100% Euroset ofthe 49.9% HoldingsLtd, acquired ofMorefront Ararima shares 23,On October acompany through VimpelCom 2008 that owns EUROSET 3. BusinessCombinationsandDisposals Limnotex ”) forUS$561,807. parent company isthe Limnotex ofKaR-Tel, VimpelCom’s in subsidiary operating Euroset ”), from Rambert Management Ltd, Management Rambert ”), from acompany by Inure,forapproximately controlled (CONTINUED) (continued)

Cash and cash equivalents consisted of the following consistedofthe at December31:Cash andcashequivalents 4. CashandEquivalents future. inthe whichmay beachieved resultsthe ofoperations date onorasofthe indicated, occurred of assumedtherein indicative necessarily norisit transactions hadthe VimpelCom of to results only present the not purposes ofoperations anddo purport forinformational provided amountsare forma not results. would impact the These andtherefore combined results pro not do include entity Sotelco asnon-operating at beginningof2007. the hadoccurred asifthey businesscombinations TelecomCorbina The andEuroset forma pro to CSK,GoldenTelecom, the effect give forVimpelCom The combinedresults forma pro following ofoperations unaudited 3. BusinessCombinationsandDisposals (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Other currencies Other

EURO Ukrainian Hryivna Ukrainian Dram Armenian TengeKazakhstan Pro forma basicanddilutedPro forma incomepercommonshare net income net Pro forma Uzbekistan Sum Uzbekistan Rubles US dollars revenues totalPro forma operating Unaudited (CONTINUED) (continued) YearendedDecember31, $ 10,359,737

$ 914,683 $ 553,611 299,455 182,165 32,740 56,571 75,727 $ 5.91 8,835 3,120 1,914 082007 2008 082007 2008 $ 8,403,248 $ 1003,711 1,0 $ $ 183,746 1,314,887 736,490 $ 25.84 43,283 16,647 10,772 11,214 1,078 481 115 ВымпелКом / Годовой отчет 2008 116 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” term US dollar denominated obligations with a forward exchange rate 26.1775 rate exchange aforward with denominated obligations USdollar term per1USdollar. rubles foratotal agreements amountofUS$53,010 forward 2007 into short-term entered In March VimpelCom short- to hedgeits 1 USdollar. 26.6 to 26.7 from per1USdollar duein2007 ranged rubles Thesedenominated and2008. obligations per contracts rubles foratotal amountofUS$736,629 contracts exchange foreign 2006, into forward entered VimpelCom USdollar to hedgeits US$14,336 exchange offoreign at fair value asofDecember 31, contracts these recognising loss from 2006. InNovember gain/loss. exchange The change–asforeign statements accompanying include currency financial due to functional the July from 1, gain/loss July andstarting 2006 before asnon-operating 1, recognized 2006 was value contracts ofthese to yearendedDecember31, 26.98 inthe andmatured per1USdollar rubles per1USdollar rubles 2006. The changeinfair 26.79 from ranged contracts inthe rates exchange The denominated obligations. forward USdollar term short to hedgeits foratotal agreements amountofUS$570,000 forward ofshort-term In JuneandJuly into aseries entered 2006 VimpelCom to changeinfair the valuerelated ofderivatives. amountofUS$3,153in the included accompanying were inthe year2008 consolidated forthe statements ofincomeand of US$5,493, US$2,248, US$780 endedDecember31, years forthe 2008, 2007 expense and2006, andinterest respectively, exchange foreign loss of US$14,250 endedDecember31, years forthe 2008, 2007 and2006, other net respectively, losses gainsofUS$12 The exchange equity. foreign inshareholders net amountshavebeenrecorded No US$109,751was andat December31, 2007, asshort-term recorded US$10,912. was fair the value ofderivatives liabilities At December31, asnon-current US$8,544 recorded was assets fair 2008, the value ofderivatives andcurrent liabilities basis usingLevel at 2approach. fair measured value The onarecurring fair value ofderivatives to assumptions. develop own its entity data, reporting the whichrequire is orindirectly; directly inputs inwhichthere and(Level either 3)unobservable observable that are ornomarket little markets, (Level markets; 2)inputs, quoted inactive the prices inputs other than suchasquoted inactive prices observable fair value inputs asfollows: usedinmeasuring the (Level 1) whichprioritizes fair value hierarchy, athree-tier establishes or anasset useinpricing would participants market suchassumptions, SFAS Asabasisforconsidering 157liability. participants. Assuch, that basedonassumptions that shouldbedetermined fair measurement value isamarket-based the amount that would be received to orpaid sellanasset a to bereceived amountthat would transfer the basis. SFAS 157 ornonrecurring price, that fair representing value isanexit arecurring fair value oneither clarifies fair value and andexpands formeasuring majorasset disclosure foreach framework at measured category liability in statement inthe foronafair ofincome. value accounted changesinfair Asdescribed recorded basisandthe valueare are to beeconomichedges, considered are allderivatives however Derivatives purposes. orspeculative fortrading use them not tools anddoes management asrisk instruments The exposures. rate Company andinterest derivative views currency foreign tocertain manage and options instruments, contracts including swaps, forward usesderivative VimpelCom Instruments 5. Derivative Note 2 , we adopted SFAS, weadopted 157 1, onJanuary SFAS 2008. 157, amongother things, fair value, defines aconsistent establishes (CONTINUED) l iability in an orderly transaction between market market between transaction inanorderly iability 0,102 0,102 and US$39,312, net 24.90 rubles per 1 US dollar. Options are exercisable at various dates ranging from April 2009 to April dates September2009. from at various ranging exercisable are 24.90 Options per1USdollar. rubles to not at VimpelCom rate to sameamountofUSdollars sellthe aright to VTB granting forthe exchange lower than US$851,813 to purchase aright received not at 33.15 higherthan arate forRussianrubles in per1USdollar rubles Vneshtorgbank with (“ collar) (zero-cost agreement into option the 3,entered VimpelCom On October 2008 2009. to August March dates 2008 from at various ranging exercisable are Options per1USdollar. rubles to not at VimpelCom rate to sameamountofUSdollars sellthe to DeutscheBankaright granting the lower 23.50 than US$643,620 to purchase a right for not at 26.84 higherthan arate inexchange forRussianrubles per1USdollar rubles DeutscheBankandreceived with collar) (zero-cost agreement into anoption 5,entered VimpelCom 2008 On March statements. accompanyingother expense, inthe financial ofUS$5,011, asset amountofUS$1,400 derivative the the andderecognized inother incomeand whichhavebeenrecorded N.A., London. Asaresult ofthis, 12, onMarch N.A., London in payment 2008, KaR-Tel Citibank, atermination from received Citibank, with mutualagreement 2010. basedonthe terminated was 4, transaction swap 2008, the onMarch However, to 122.64 rate settlement the payable rate floating interest fora andcurrent tengeper1USdollar Kazakhstan N.A., London amountofUS$100,000 forthe Citibank, or12,246,000 dealwith a swap tengeby fixing Kazakhstan thousand 8, OnNovember 2006, KaR-Tel derivatives. into with entered Kar-Telwhich provides to enterinto transactions rights 3,On October 2006, KaR-Tel LLP(“ 2008. closed was swap inFebuary rate andLIBORfluctuation. interest to Russianruble the This USdollar the cross-currency of rate exchange changeofthe the with goingforward, inconjunction to willbesubject remeasurement contract the The isUS$236,111 swap amountofthe at 26.64 aswella6.37% per1USdollar rubles rate. The interest amount of transaction. swap rate interest cross-currency into ashort-term entered of2006 VimpelCom quarter fourth the During 24.9281 was ofparticipation rate the closed were inJune2008. These collars per1USdollar. zero-cost rubles US$120,545 27.0323 was ofprotection rate exchange debt. The USdollar to hedgeits forward and per1USdollar rubles foratotal agreement amountof collar zero-cost 2007 inshort-term quarter entered VimpelCom third the During Instruments 5. Derivative (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” the European Bank of Reconstruction andDevelopment (“ BankofReconstruction European the Kar-Tel ”), our subsidiary in Kazakhstan, and Citibank, N.A., London signed an agreement N.A., London inKazakhstan, signedanagreement ”), oursubsidiary andCitibank, (continued) (CONTINUED) EBRD

”) at 9.9%. This agreement was effective until December 18, until ”) at 9.9%. effective This was agreement VTB l oan with oan with ”) and 117 ВымпелКом / Годовой отчет 2008 118 VimpelCom / Annual Report 2008 In 2007 VimpelCom acquired DominantaIn 2007 LLC acquired VimpelCom ( havenot beenstarted, businessoperations which the amountofUS$41,741 inthe asofDecember31, 2008. Telecommunication usemainly not ofGSMtelecommunications comprised incurrent licenses by Sotelco, owned license for off the value the ofDVB-T/DVB-Hoff isUS$37,620. The endof2008. asofthe licenses total amountofwrite-off Due to high the whensuch terms onthe level ofuncertainty canbeobtained,licenses to write- decided management the to andcurrent operations, start required are licenses not does haveamechanism ofobtaininglegislation such licenses. broadcasting Both license. additional However, services. TV to forVimpelCom provide start gaveanopportunity licenses LLC ( Colangon-Optim Golden Telecom, acquired VimpelCom 2008 inFebruary (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Property andequipment,at following cost,consistedofthe atProperty December31: andEquipment 6. Property 31, and2007 asfollows: 2008 were ofVimpelCom’sThe value amortization andaccumulated telecommunications total carrying gross asofDecember licenses date. at fair their value acquisition asofthe recorded initially were inbusinesscombinations acquired Telecommunications at cost.Telecommunications recorded initially by directly were VimpelCom acquired licenses licenses 7. Assets Intangible Telecommunications LicensesandOther Total telecommunications licenses, net Telecommunications use not incurrent licenses

$6,425,873 amortization Accumulated Telecommunications licenses, at cost andequipment,net Total property depreciation Accumulated equipment Other equipment andmeasuring Office Land, buildingsandconstructions Telecommunications equipment Equipment not installed underconstruction andassets “Dominanta” (CONTINUED) )

–

an entity whichholdDVB-H anentity and,license with together “Colangon” (2,828,845) $ 6,608,140 $ 1,301,169 (588,962) 1,183,506 $ 764,783 8,071,212 351,055 ), an entity whichholdDVB-T ), anentity 400,713 712,207 711,304 52,576 082007 2008 082007 2008

(2,209,951) $ 5,517,009 $ 5,497,819 $ 1,331,531$ (495,805) 6,762,584 $ 915,211 945,186 326,439 281,744 835,726 637,392 79,485

Amortization expense for all VimpelCom’s intangible assets for each of the succeeding five years is expected to beasfollows: forallVimpelCom’s isexpected expense years succeedingfive ofthe Amortization intangible foreach assets 2008 ispresented below: 2008 yearendedDecember31, forthe The amountofgoodwill The units. Company changeincarrying following hasthe reporting Assets 8. Impairment ofGoodwillandLong-Lived asofDecember31,class andDecember31, 2008 2007 asfollows: was ofVimpelCom’sThe value amortization andaccumulated intangible by total assets majorintangible carrying asset gross 7. Assets Intangible Telecommunications LicensesandOther (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” kan oie8,9 (53,778) – – – – 13,063 81,999 Tadjikistan mobile mobile Ukraine usambl 5,2 5,8 – – 453,684 451,428 Russia mobile retlfxd1,1 – – – 10,211 fixed Armentel Total otherintangible assets, net Kazakhstan Kazakhstan 205,967 141,642Reporting units 273,499 294,570 312,713 $366,646 4.8 13.3 Thereafter 9.1 2013 2012 2011 2010 2009 amortization Accumulated intangibleOther assets Customer relationships Telephone capacity line usafxd–27383–(315,049) – 2,753,883 – Russia fixed aahtnfxd1,1 1,7)– (12,870) – 12,911 fixed Kazakhstan retlmbl 3,6 – – – 135,662 mobile Armentel Total Uzbekistan Uzbekistan oie$1041$3940$(,4)$– $(7,045) $309,490 $180,481 mobile oie1401––– – – 154,061 mobile of December31, ,3,1 ,1,5 1,1)$(368,827) $(19,915) $3,517,057 $ 1,039,816 Balance as 07Acquisition 2007 (CONTINUED) fPrhs rc Impairment of PurchasePrice mriainpro,yas20 2007 2008 amortization period,years Finalization Weighted average 11.2 – $ 882,830 (326,641) $ 144,927 1,209,471 228,170 836,374 $ (691,189) adjustment (503,379) Translation (155,134) $ (3,220) (28,221) (1,110) (84) (continued) (41) – – of December31, $ 3,476,942 $ 1,935,455 $ 479,706 (218,882) $ 262,502 Balance as $ 172,672 134,552 154,061 749,978 481,384 210,158 13,063 10,127 98,554 2008

– – 119 ВымпелКом / Годовой отчет 2008 120 VimpelCom / Annual Report 2008 these reporting units were reset to their implied fair values to implied their asofDecember31, reset were units 2008. reporting these impairment Asaresultunits, taken goodwill respectively. ofthe asofDecember 31, in values of goodwill carrying 2008, the impairments ofUS$315,049 goodwill Companythe recorded andUS$53,778 reporting Mobile andUkraine at RussiaFixed the inabusinesscombination. Asaresult hadbeenacquired Step ofthese unit 2 analyses, taxes) reporting asifthe deferred and assets the to allits units intangible andrelated (including assets anyunrecognized reporting of the liabilities fair by Step the allocating value The inthe 2analysesunits. determined was fair determined value implied ofgoodwill fair reporting forthese values. impairment Asaresult, performed testwas secondstep(“Step goodwill the 2”)ofthe estimated their exceeded units reporting ofthe assets values net ofthe units, carrying asthe reporting Mobile Ukraine and RussiaFixed The inthe impairment apotential ofgoodwill was results indicated Step that there ofthis 1process unpredictable to andinherently uncertain. bereasonable,butwhichare believes it value onassumptions estimates fair comparable capitalization, analyst basesits company Management estimates. market multiples earnings andresearch other Company’s value suchasthe available, indicators with where The results corroborated DCFanalyses ofthe were 28.9% from to 54.5%. ranged OIBDA margins average the (“OIBDA”) is margin Company the however factors expects less dependentonthose in2007. than lower margins In2008, by 18%; are rates these growth usedin2007.lower those andAmortization than Depreciation IncomeBefore Operating to zero from Rates ranged andothers. Compound In2008, AnnualGrowth the share market growth, traffic projections, currency andforeign Product) Domestic factors, country, GDP(Gross numerous including inparticular sizeofmarket basedon year.These future vary andeach rates unit reporting foreach rates The Company growth revenue estimates (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” the significant economic downturn inthe economicdownturn significant the judgment.Asaresult ofsignificant of application the Flow fair (“DCF”)analysis. values estimated requires Determining units, Company the employed fairfair values estimated values. reporting the ofthe aDiscountedCash Indetermining SFAStest inaccordance with 142, to estimated their units Company the reporting values book ofits compared net the impairment step(“Step goodwill 1”)ofthe first the Inperforming changesincircumstances. eventsorsubstantive certain ofSFASUnder provisions 142, istestedannually goodwill forimpairment asofDecember31 of occurrence oruponthe Assets 8. Impairment ofGoodwillandLong-Lived risk due to current economicvolatility. dueto current risk increased havebeenadjusted to method reflect underthis Assumptions including expenditures. factors capital estimated costsandother relevant The revenue,operating includes basisforourcashflow andforecasted assumptions historical dampened Company’s the businessperformance. offuture expectations things, unemployment, increased businessandconsumerspending. andreduced Theselower consumerconfidence factors global hasresulted past. the inthe economicrecession judgmentthan in, Inparticular, more amongother required units emnlgot ae335 3% 11.8–18.8% 7years 3–3.5% 16.6–21.9% –10 7years years period growth Start ofterminal rate Terminal growth Discount rate l ast few months of 2008, determining the fair the value Company’s of2008,the determining ast fewmonths reporting (CONTINUED) (continued) 082007 2008 volatility, which became more pronounced during the fourth quarter of2008. quarter fourth the during pronounced whichbecamemore volatility, economic to current the cashflows attributable future estimated inthe inherent risks inthe increase anexpected reflect date and(b) acquisition the These crisis. assumptions ofcurrent cashflowseffect due to future lower negative projected 17.0% denominated cashflows forruble ascompared to 12.8% valuation ofGoldenTelecom original asof usedinthe of to useofahigherdiscountrate (a)the attributable was unit The reporting RussiaFixed forthe impairment charge of21.9%rate ascompared to in2008 12.0% cashflows. in2007 inforecasted and(b)decrease to useofhigherdiscount (a)the attributable was unit reporting Mobile The Ukraine forthe impairment charge aggregate be: would unit infair value decreases ofreporting discussedabove, relative units the reporting For the ofapproximately units US$1,492,655 combinedfair inthe value reporting ofthe a decrease andUS$1,101,282, respectively. by 10% result would in growth inrevenue pointorareduction by onepercentage discountrate inthe An increase to fail unit Step units, 1. achangeinfair value of30% not reporting other would reporting causethe As forthe of US$246,149 berecorded. would by impairment to 10%, decrease charge were unit anadditional Additionally, fair ifthe value reporting RussiaFixed ofthe ultimatethe amountofimpairment loss to record. to determine to beperformed impairment berequired to testwould Step goodwill occur, caseswere 2ofthe If anyofthese set forth in the table. inthe forth set percentages the fair value value haveexceeded by book would approximately unit amounts the below, reporting listed the beenhypothetically fair units values,changes inestimated fair hadthe values reporting following ofthe material lower by to future impairments. impairments relative goodwill goodwill To ofpotential illustratein additional magnitude the fair values inestimated Consequently, 2008. couldresult decline during other VimpelCom’s anyfurther units reporting fair values estimated inthe ofall causedadecrease economiccrisis impairment, overall the goodwill thus, recorded impairment failed testand, Step goodwill units 1ofthe Although reporting Mobile only andUkraine RussiaFixed the Assets 8. Impairment ofGoodwillandLong-Lived (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” aahtnMbl .%7.1% 7.5% 6.0% 10.3% 6.8% 7.5% 6.4% 8.5% 152,812 67,891 $90,126 34,263 37,709 Mobile Kazakhstan Mobile $57,171 Armenia Fixed Armenia – Russia Fixed 7,526 $24,217 Mobile Kazakhstan Mobile Armenia Fixed Armenia (CONTINUED) 1%age PointIncrease 0 0 30% 20% 10% In DiscountRate (continued) in RevenueGrowth 10% Decrease 121 ВымпелКом / Годовой отчет 2008 122 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” impairment date. at aninterim company’s ifthe to suchassets betestedfor period) require orother factors aninterim results(i.e., during ofoperations that suchimpairments, of2009 quarter to ifrequired, fourth prior the andmay needto couldbematerial berecorded fair values estimated inthe couldresult decline inimpairments toAny further Itispossible orgoodwill. assets long-lived fair values at December31, 2008. to estimated their reset As aresult values impairments impaired were asset ofthe assets ofthe taken carrying in2008, the impairments other asset Company ofUS$37,620In addition,the recorded in2008. recognized.was Company’sthe analyses), Company previous the impaired, concluded were suchassets impairment andanasset ofUS$36,300 to (relative revenues inservice decline cashflows dueto projected future the expected inthe decrease because ofthe unit, reporting Mobile noimpairment. Ukraine was value forthe assets, However, ofthose there andthus carrying the the with cashflows associated undiscountedfuture the unit, reporting RussiaFixed For the for impairment to pursuant FASB intangible assets units, Company the finite-lived impairments alsotestedthe As aresult at reporting goodwill these ofthe LONG-LIVED ASSETS Assets 8. Impairment ofGoodwillandLong-Lived Investments in associates consisted of the following consistedofthe at December31:Investments inassociates 10. inAssociates Investments December 31, 2007 asfollows: were asofDecember31, ofVimpelCom’sThe value amortization andaccumulated software total and carrying 2008 gross 9. Software Euroset (1) Euroset at cost Software, oa otae e $549,166 Total net software, depreciation Accumulated GTEL - Mobile (2) -Mobile GTEL Total Others (3) Rascom Statement No. 144, Impairment Assets. forthe orDisposalofLong-Lived Accounting (CONTINUED) 20 2007 2008 20 2007 2008 (continued) $ 1,453,319 $ 493,550 (904,153) $ 160,127 306,027 23,409 3,987 l ong-lived assets exceeded exceeded assets ong-lived

$ 1,432,647 $ (809,832) $ 622,815 $ 5,908 5,908 $ – – – Inventory consisted of the following consistedofthe atInventory December31: 11 method. Equity in net income of Rascom for the yearendedDecember31, forthe incomeofRascom method. innet Equity ofUS$2,176. was 2008 Company Rascom. that the presumption Therefore, controls the equity Company investmentunderthe the forthis accounts rights, overcome andasresult, participating suchrights substantive represent shareholder minority ofthe rights the because ofaccounting method consolidation underthe foraccounting is 54%. not does qualify InvestmentinRascom The Company’s CJSC ( inRascom share (3) US$1,797 gains. amountofinvestmentsandmainly resultedforex carrying the from increased date to acquisition December31, date. from starting reporting Theas ofthe amountof period inthe gainforthe net 2008 telecommunication telecommunication ( inVietnam license As ofDecember31, 2008,hasinvestmentsinGTEL-Mobile VimpelCom ofUS$304,230, company the mobile that holdsthe (2) 31, amountofUS$60,294 inthe 2008 amountofUS$7,528. incomeinthe other comprehensive andaccumulated investment includes VimpelCom’s date innet share to acquisition December the from starting period forthe loss ofEuroset amountofUS$371,578in the adjustment amountofUS$1,926. inthe translation andcurrency amountof The carrying amountofVimpelCom’s andthe innet which aninvestmentiscarried ofgoodwill share constists ofEuroset liabilities US$160,127 were of Euroset andUS$213,377, asofDecember31, respectively, amountat the between The 2008. difference Company’s innet amountofthe The underlying equity amountofthe andthe carrying investmentsinEuroset liabilities date to acquisition December31, the from starting anet was period for the 2008 loss amountofUS$120,829. inthe as ofDecember31, ofUS$1,086,425 comprised 2008 andUS$1,514,035, The respectively. operations result ofEuroset 49.9% ( 2008 acquired inOctober VimpelCom inEuroset interest (1) 10. inAssociates Investments (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Equipment forsale Other inventory Other cards Scratch Info materials SIM-Cards forsale Telephone andaccessories handsets Total . Inventory “Rascom” Note 3 ). GTEL - Mobile has not started rendering of telecommunication services services oftelecommunication hasnot rendering started -Mobile ). GTEL ), a company acquired as part of Golden Telecom acquisition ( ), acompany aspart ofGoldenTelecom acquired acquisition (continued) (CONTINUED) Note 3

). Total andtotal assets ofEuroset liabilities 20 2007 2008 $ 142,649 $ 78,607 16,090 16,205 1 9 2 8 11, 12,918 7,000 Note 3 $ 58,838 $ $ 6,792 $ ), 12,265 20,181 12,154 ,446 4 4 7, – 123 ВымпелКом / Годовой отчет 2008 124 VimpelCom / Annual Report 2008 tendered shares in February 2008 ( 2008 inFebruary shares tendered andusedto accounts pay andcontrol GoldenTelecom fortheir escrow shareholders the from This released was deposit ofGoldenTelecom. acquisition the with inconnection executed Agreement Merger Golden Telecom ofthe terms underthe to Lillian’s inaccordance obligations with accounts andcontrol escrow on the placed Funds were account. on acontrol As of31 N.A. included at US$120,000 Citibank December2007 amountsheldby Lillian andUS$80,000 account onanescrow assets. in other current The ofMenacrest. capital Mobile the entire issued share capital of Menacrest Limited (“ Limited ofMenacrest capital issuedshare entire the 10%. The 11,February “ 2008, (the 13, (“ On February InvestmentsLimited to Crowell 2008,advanced VimpelCom (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Other current assets consisted of the following consistedofthe at assets December31: current Other 12. Information BalanceSheet Supplemental Other non-current assets consisted of the following consistedofthe at assets December31: non-current Other Other Other long-term assets andpermissions Frequencies debt issuecosts Unamortized Long advances term Prepayments forinvestmentsinequity cashdeposit Escrow Prepayments for to suppliers assets long-lived investments term Short toAdvances suppliers oa te o-urn ses$725,502 Total assets othernon-current Long input VAT term Long term loans receivable Forwards andother derivatives Forwards Prepaid taxes auseful with Software oneyear than shorter life oa te urn ses$440,479 Total assets othercurrent Other receivable Interest ”), a mobile operator in Kyrgyzstan. Crowell granted the Company two call options over the entire issued share issuedshare entire overthe calloptions Company the inKyrgyzstan.”), amobileoperator two granted Crowell l oan is secured by 25% of the shares of Limnotex. The Loan Agreement was entered into after Crowell acquired acquired Crowell into The after entered by ofLimnotex. was 25% Loanoan issecured shares ofthe Agreement Loan Agreement l oan has been recorded in oan hasbeenrecorded long-term ofUS$26,790 interest accrued andrelated loans receivable Note 3 ). ”), a l oan in the principal amountofUS$350,000 principal oan inthe of rate andat interest the (CONTINUED) Menacrest ”), which is the parent company”), whichisthe (“ Mobile ofLLC Sky Crowell ”), undera $ 85,887 $ 56,953 350,000 154,837 109,751 1,972 113, 28,489 56,486 32,184 41,222 29,331 25,727 81,142 082007 2008 082007 2008 l – – – oan agreement asof oan agreement $ 166,887 $ 497,896 $ 69,906 $ 45,362 $ 200,170 33,043 69,534 35,955 32,965 43,597 75,279 42,712 Sky 2,425 6,367 7,468 – – – Other non-current non-current Other following consistedofthe at December31: liabilities December 31, 2008. ofGoldenTelecom amountnot ofGoldenTelecom forshares paid represents Cash rigts shareholders asof to previous the the amountofUS$12,030the from reclassified ( was to equity liability date at modification in the accrued provision Asaresult, basedcompensation stock historical requirements. the classification equity to satisfy On December24, stock-based program compensation its modified VimpelCom 2008 obligations andother debt asof: obligations The ofoutstanding bank following asummary table provides loans, indebtedness, equipmentfinancing capital lease including expenditures. capital The Company to flexibility. usebankdebt continues and financial andissuedNotes to fundoperations, ofcredit lines of usingavariety operations its finances costsandmaximize VimpelCom to minimizetotal inorder lenders borrowing Debt andLong Term 13. Short accrued following current consistedofthe Other at December 31: liabilities 12. Information BalanceSheet Supplemental (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” akadohr on,cretprin$1,909,221 $6,5 Bank andotherloans, portion current Total long-term debt Other debtOther ofequipment financing portion Short-term Bank loans, portion current ofcapital Long portion -term leases $288,755 Total accruedliabilities current Short-term portion of capital ofcapital portion Short-term leases Long-term portion ofequipmentfinancing Long-term portion Bank loans, portion less current obligations retirement Asset accrued Other liabilities Derivatives payableInterest ofGoldenTelecom forshares Cash rights Stock option reserve ( reserve Stock option oa te o-urn laiiis$122,825 Total liabilities othernon-current non-current Other including FIN48provision liabilities, revenue Long deferred term Accrued income Accrued ( reserve ofstock option portion Current Derivatives Note 19 ) Note 19 ) (CONTINUED) Note 19 20 2007 2008 ). (continued) eebr3,20 December31,2007 December 31,2008 $ 6,405,492 $ 1,705,777$ $ 145,930 $ 29,717 114,001 127,807 55,094 88,704 84,606 33,705 29,470 7002 17,0 41,217 8,544 082007 2008 406 739 – – – $ 2,088,438 $ $ 2,240,097 $ 419,495 $ 526,512 $ 186,114$ $ 21,095$ $ 52,614$ 151,659 143,563 15,845 81,050 25,967 15,674 10,912 24,712 2,368 4,559 $– – – – – 125 ВымпелКом / Годовой отчет 2008 126 VimpelCom / Annual Report 2008 Facility BasofDecember31,Facility US$2,000,000. was 2008 below). The 30, described onApril amountofdebt principal (asfurther outstanding under 2008 Limited Ireland Finance amountofUS$2,000,000, principal an aggregate issuanceof fundedby the limited-recourse notesloan by VIP participation oftwo B. OnMay proceeds 6, the in Afrom Company 2008, the Limited fully repaid Ireland Facility VIPFinance loans from ofFacility syndication the completed Mandated the andBookrunners 2008 At Lead endofMarch the agreement. Arrangers Rate (“LIBOR”)plus of1.5% amargin perannum. 19, OnFebruary US$3,500,000 down 2008,drew VimpelCom underthe at Offered London interest Interbank Bbears 7to and1.25% 9months; Facility from period for the perannumthereafter. at LIBORplus of0.75% interest Abore margins signingdate. the after 1%perannum 6months; Facility perannumforfirst date the 12 to from falling berepaid inequalsemi-annualinstalments starting Bisrequired months Facility conditions. 12 within to subject market by offinancing, anissuanceofbondsorother to months form berefinanced required A was (“ facility aUS$1,500,000 to provide jointly committed term bridge (“ loan facility ABN BNPParibas, Capital, AMROBankN.V., CALYON, Barclays N.A., HSBCBankplc, Citibank, INGBankN.V. andUBSLimited 8, into anew 2008,entered VimpelCom On February amountofUS$3,500,000. principal foranaggregate loan agreement (1) (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Bank loans following consistedofthe asofDecember31: BANK LOANS Debt andLongTerm 13. Short oa ln-embn las$6,405,492 Total long-term bankloans Less current portion Less current Other loans Citibank/Standard BankLondonCitibank/Standard (17) Citibank/Sumitomo (16) Citibank/Sumitomo Raiffeisenbank Austria – Austria Raiffeisenbank loan to URS(12) N.A. (11)Citibank Standart BankPLC – loan to URS(9) EBRD – loan to KaR-Tel (8) OTP Bank– loan to URS(15) – Landesbank Bayerische loan to URS(13) Handelsbanken ABSvenska (10) Bayerische Hypo-undVereinsbank AGBayerische (14) ydctdFclt 1 $2,000,000 plc (7) International Citibank Ruble Bonds(6) (5) (Euro) Syndicated Facility (4) Sberbank UBS (Luxembourg) S.A. (3) (2) Eurobonds B(1) Syndicated Facility Facility B Facility ”) to partially finance the acquisition of Golden Telecom by a subsidiary of the Company. Facility ofGoldenTelecom Company. ofthe by asubsidiary acquisition Facility ”) to the partially finance (continued) (CONTINUED) 20 2007 2008 Facility A Facility ”) andaUS$2,000,000 term loan (1,705,777) 2,000,000 8,111,269 1,417,234 100,000 275,000 340,363 829,230 127,965 777,179 32,000 32,000 10,000 25,020 81,866 61,191 2,221 – – $ 2,088,438 $ (419,495) 2,507,933 1,417,234 100,000 229,400 106,067 309,337 90,000 40,000 40,000 10,000 41,038 47,223 77,634 l oan $ – – – – – – a series of offerings of ofofferings a series notesloan “ (the participation h mut orwdadtersetv neetrtsaddedtsfrec eiso h on. Loans. andduedates ofthe rates series interest foreach respective and the amountsborrowed the The Notes are to UBS.The recourse Luxembourg onthe Stock following without Exchange outlines listed andare (“ Starting in June of 2004, VimpelCom entered into a series of into inJuneof2004, aseries entered Starting VimpelCom “ (the loan agreements (3) and 10 respectively. years at an annual rate of9.125%at anannualrate payable 2018. semi-annually dueinApril andare The 2013.April The 10-year US$1,000,000 “ issue(the related of8.375% atloan anannualrate amountbearinterest sameprincipal inthe payable semi-annually duein andare amountofUS$2,000,000 principal an aggregate to VimpelCom. The US$1,000,000 five-year “ issue(the offunding and10-year tranches, solepurpose forthe notes,loan five-year equally participation between split loans in amountofUS$2,000,000 principal ofanaggregate anoffering completed 30, Limited On April Ireland 2008, VIPFinance (2) BANK LOANS Debt andLongTerm 13. Short (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” offering (whichinclude US$ issuance costs)comprised gross offering fully to 2013A was the amountUS$1,500,000. repaid inthe costsrelating and2018 financing Deferred Notes offering Notes into orby operators entering wireless Russiaorabroad. OnMay within local 6, partnershipsorjointventures 2008, Facility Russiaorabroad, within operators new by wireless establishing orinvestmentsinexisting possibleacquisitions through development ofGoldenTelecom the to andexpansion Company’s and(ii) ofthe continue acquisition including networks, Aunderthe to repay Facility (i) Stock with Exchange financing this Irish andare the Limited. raised VimpelCom Ireland to VIPFinance recourse limited aeBroe u aePyetPro mutBroe neetRt 1Dc0 31-Dec-07 31-Dec-08 10% InterestRate $250,000 AmountBorrowed Semi-annually PaymentPeriod 16-Jun-09 DueDate 16-Jun-04 Date Borrowed 4Jl0 6Jn0 eianal 20001% 10% 200,000 Semi-annually 16-Jun-09 14-Jul-04 2Ot0 2Ot1 eianal 300083% 8.38% 300,000 Semi-annually 22-Oct-11 22-Oct-04 1Fb0 1Fb1 eiana 30008 8% 300,000 Semi-annual 11-Feb-10 11-Feb-05 2My0 2My1 eianal 0,0 .5 8.25% $600,000 Semi-annually 22-May-16 22-May-06 oa $ Total UBS ”), whereby various amounts were borrowed to finance operations and capital expenditures. UBS then completed completed UBSthen expenditures. andcapital operations to finance borrowed amountswere various ”), whereby (continued) l oan agreement entered into on February 8, 2008 (as described above), in connection with its its with above),inconnection 8, (asdescribed into 2008 on February entered oan agreement 2018 Notes (continued) (CONTINUED) Notes ”) for the sole purpose offundingthe solepurpose ”) forthe ”) and related ”) andrelated loan amountbearinterest sameprincipal inthe 8,027 and US$8,327 over5 andwillbeamortized respectively l oan participation notes are notes are oan participation on listed Loans ”) with UBS(Luxembourg) S.A., ”) with

1,417,234 600,000 200,000 300,000 300,000 l $ oans to VimpelCom.

17,234 2013 Notes 200,000 300,000 300,000 600,000 $ 1,417,234$ ”) and $ 17,234 127 ВымпелКом / Годовой отчет 2008 128 VimpelCom / Annual Report 2008 was US$16,225.was upto 9.25%. rate interest the increased The amountoutstanding credit principal underthis asofDecember31,line, 2008, 1, November 20%. Sberbank than From 2008 by more haveincreased BankofRussianFederation by Central established has the right to increase the annual interest rate by not more than rubles 1.3 rubles by whenthe than not rate more times annualinterest the to increase right has the Sberbank Loan the Agreement Inaccordance with condition. to financial related including restrictions several restrictions, (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” rate asofDecember31,rate Under the 2008). KB” credit this against pledged ascollateral included notes issuedby toline VimpelCom promissory Impuls-KB CJSC( AsofDecember31, Sberbank. with events. ofpledgeagreements of certain In2004, signedaseries VimpelCom 2008, assets The asofDecember31, rate interest 2007, 8.5% was occurrence to uponthe perannumandissubject changeby Sberbank to VimpelCom. The denominated, USdollar afive-year, 2004, provided In April secured, Sberbank credit non-revolving ofUS$130,000line (4) US$28,421 comprised Exchangethe Offer) over10 years. andwillbeamortized to 2016 the compensatory with (whichincludes issuancecostandthe feeconnected costs relating gross Notes offering Loansoutstanding amountdueunderthe principal dueJune16, US$450,000 2009 from to US$217,234. financing Deferred US$232,766 2016 aggregate underthe the principal 2009 Notes, tendered reducing the against thereby Loan offset was remaining the ofUBSto advance obligation the issued inJuneandJuly Exchange 2004. Asaconsequenceofthe Offer, an equal principal amount of validly tendered and accepted 10.0% andaccepted tendered amountofvalidly an equalprincipal notesloan “ due2009 (the participation US$232,766 2016 amountofthe principal “ (the offer issuedinanexchange Notes was 2016 “ amountofthe principal (the offer issuedinaconcurrent Notes was (the “ (the dated June16, 2004 to US$17, ofUS$600,000 234. 8.25% anoffering UBScompleted notesloan due2016 participation On May 22, 2006, into aLoan entered UBSandVimpelCom Loan forUS$600,000 amountofthe principal the andreduced BANK LOANS Debt andLongTerm 13. Short )as collateral against this credit credit this against )as collateral anominalamountof1,610,000 with line (US$54,798 rubles thousand at exchange the 2016 Notes (continued) ”) for the sole purpose offundingsuchUS$600,000 solepurpose ”) forthe loan “ (the l oan isto berepaid ineightequalinstallments, 27, basis, onaquarterly February commencing 2007.

l oan agreement, VimpelCom is subject to certain defined debt covenant to defined issubject certain VimpelCom oan agreement, (continued) (CONTINUED)

Concurrent Offer Concurrent 2016 Loan Exchange Offer ”) to VimpelCom. US$367,234 ”) for cash consideration and ”) forcashconsideration l egal reserve requirements requirements egal reserve ”) in exchange for ”) inexchange 2009 Notes 2009 “Impuls- ”) Svyaz ( Svyaz this against pledgedascollateral 2008, assets notesloan issuedby to VimpelCom Service- consistedofpromissory RTI events, suchasachangeinRussian BankofRussia.AsDecember31, Central ofthe rate interest orachangeinthe law ofcertain of8.5%, at arate annualinterest occurrence bears whichmay uponthe bechangedunilaterally by Sberbank (US$204,218 amountof6,000 Russianrubles inthe million line asofDecember31, rate at exchange the The 2008). On August 31, denominated credit non-revolving Russianruble athree-year with 2006, VimpelCom provided Sberbank BANK LOANS Debt andLongTerm 13. Short (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” the exchange rate asofDecember31, rate exchange the 2008. amount ofdebt outstanding underthis asofDecember31,loan agreement EUR551 was 2008 million, orUS$777,179 at by EUR75 commitments the amendedto was increase million. The agreement the principal andDecember2008 November 16, October from isEURIBORplusinstalments 2009. starting 2.30% facility The forthe perannum. ofinterest rate In at signingdate the commitments EUR476 were equalsemi-annual to berepaid infive isrequired million. The facility andWestLB AG, London Limited Branch Europe Corporation Banking Standard Ltd., UFJ, Mitsubishi BankPlc, BNPParibas, Capital, Aktiengesellschaft, Mitsui Sumitomo Commerzbank Barclays underanewunsecured 15,On October 2008,signedandborrowed VimpelCom The with BankofTokyo-loan agreement (5) December 31, US$608,787, was 2008 to RUR17,886 equivalent the million. upto 11%. rate interest the increased 1,November Sberbank 2008 The amountofdebt outstanding underthis loan asof the 1.3 by than not rate when more annualinterest the times to increase right hasthe Sberbank Loan the Agreement with June26, was disbursement amountof3,447 inthe final andthe 2008 Russian rubles Inaccordance Russianrubles. million amountof4,823the onJune6, Russianrubles, was amountof9,616 second disbursement inthe the million 2008 million the down and9.25% years of9.5% at arate annual interest two andsubsequentyears. The first forthe third forthe Company drew at date the rate down. The draw at exchange ofthe the inRussianrubles credit down followingthe draw bears line 14,On February yearcredit 2008, signedafive VimpelCom amountofUS$750,000 inthe Sberbank with line with (US$204,218rubles asofDecember31, rate at exchange the 2008). up to 9.75%. AsofDecember31, debt principal 2008, outstanding the underthis 6,000 Russian was loan million agreement rate interest the increased 1, November 20%. Sberbank than From 2008 by more haveincreased Bank ofRussianFeseration and the December 31, The 2008). increase the annual interest rate by not more than 1.3 by than not rate whenthe more annualinterest the times increase to right credit hasthe non-revolving under this Sberbank Loan the Agreement Inaccordance with Sberbank. with line l egal reserve requirements established by Central Bank of Russian Federation have increased by more than 20%. From 20%. than From by more haveincreased BankofRussianFederation by Central established requirements egal reserve “RTI l ast ofwhichwillbeonAugust 30, 2009. 26, OnFebruary 6,000 Russianrubles 2007 down million drew VimpelCom l oan during the availability period by three disbursements: the first disbursement was on February 29, onFebruary was in disbursement 2008 first the disbursements: by three period availability the oan during ”) and Impuls-KB with anominalamountof3,830,000”) andImpuls-KB with (US$130,359 rubles thousand asof rate at exchange the (continued) l oan will be repaid in three quarterly installments, the first of which will be on February 27, installments, ofwhichwillbeonFebruary quarterly oan willberepaid first inthree the 2009,

(continued) (CONTINUED)

as mandated The andbookrunners. total lead arrangers

l egal reserve requirements established by Central by Central established requirements egal reserve l oan 129 ВымпелКом / Годовой отчет 2008 130 VimpelCom / Annual Report 2008 December 31, US$127,965. was 2008 KaR-Tel date.require to stated repay the debt maturity the before The amountofdebt outstanding underthis loan asof The agreement. signedthe banks participating the 10, April from date 2008, debt the ofthe uptoThe and effected allows extension 7 years forthe when amendedagreement ofbanks. LIBORplus by EBRDand6-month group by provided the 1.85% provided tranche the tranche perannumforthe Osterreich, Zentralbank LIBORplus The Calyon is6-month rate 2.05% andNordea). (Raiffeisen interest per annumfor US$65,000 sources, US$65,000 remaining ofbanks own andthe by EBRDprovided agroup its provided conditions. from amountofthe the to increase On December29, 2007, KaR-Tel agreed AmendedandRestated andEBRDsignedthe parties inwhichthe Loan Agreement forupto US$20,000.guarantee AsofDecember31, 2007, debt principal underthis the US$90,000. was loan agreement aparent banks. provided VimpelCom EBRDandLIBORplus participant the the 3.5% from from tranche tranche the forthe BankAB. LIBORplus was rate 3.9% andNordea The interest Osterreich for Zentralbank original Vereinsbank, Raffeisen Citigroup, ofbanks: agroup andanother US$50,000 Hypo- und with Bayerische sources byown participation granted was On December16, 2005, KaR-Tel signed aUS$100,000 EBRD.The the US$50,000 EBRDgranted with its loan agreement from (8) asofDecember31, Agreement to US$275,000. Facility 2008 the andoutstanding under total the amountborrowed bringing Agreement US$50,000an additional Facility underthe inJanuary, 2012. andmatures andLIBORplusfour months 2%perannum thereafter borrowed 2008, Sovintel InApril US$275,000. equalto at LIBORplus arate interest bears 1.5% twenty- Agreement first perannumforthe The Facility (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” and EDN Sovintel LLCand EDNSovintel (“ underwhichGoldenTelecom, GTS facility Finance, Inc. credit anunsecured established Agreement Theagent. Facility andINGBankN.V. N.A. Londonlenders, Branch asmandated Citibank, plc as International andCitibank lead arrangers, ( agreement facility dateAs ofthe ofVimpelCom’s ofGoldenTelecom acquisition (7) December 31, 10,000 was 2008 to US$340,363. rubles, equivalent the million no payment. interest The sevenbusinessdays third than later the amountofdebt before outstanding underthis loan asof payment forsubsequentperiods is9.05%. rate three periods annualinterest the first the willdetermine VimpelCom-Invest 22, 2010, at isto 100% bepaid Interest ofnominalvalue interest. semi-annually. plus accrued The for rate annual interest asofJulyrate 25, The 2008). dueonJuly bondsare 19, 2013, onJanuary exercisable haveaputoption andbondholders amountof10,000 principal (US$427,749 bondsinanaggregate Russian ruble-denominated rubles million at exchange On July 25, 2008,LLC VimpelCom-Invest ( (6) BANK LOANS Debt andLongTerm 13. Short (continued) the “Facility Agreement” the “Facility Sovintel

l oan facility available to KaR-Tel available upto US$130,000oan facility and andto other terms amendcertain ”), wholly-owned subsidiaries ofGoldenTelecom, of upto subsidiaries ”), wholly-owned anaggregate may borrow “Vimpelcom-Invest” ) with banks, financial institutions and other institutional andother institutional institutions banks, as lenders ) with financial (continued) l oan has a number of financial covenants that in case of breach would would covenantsthat incaseofbreach oan hasanumberoffinancial (CONTINUED) ( Note 3 ), aconsolidated ofVimpelCom, Russiansubsidiary issued ) , Golden Telecom was a party to a five-year term , GoldenTelecom term apartyto was afive-year

the rate of six-month LIBORplus ofsix-month rate 0.325%,the whichispayable semi-annually. Under the equal installments, onasemi-annualbasis, not commencing 20, November than later 2004. The guarantee. Theguarantee. 3,On November 2005, signedaUS$99,705 VimpelCom Handelsbanken AB Svenska with underanEKN loan agreement amount outstanding credit underthis as ofDecember31,line US$24,892. 2008, was The condition. to principal financial related including restrictions several debt covenantrestrictions, to defined certain On October 19,On October 2006 URSsignedaUS$40,000 Zentralbank Raiffeisen with loan agreement (12) US$61,191.was not commencing May than later 6, 2007. The amount ofdebt principal outstanding underthis loan asofDecember31, 2008 21, underthis 2006. The borrowed second tranche loan isto berepaid equalinstallments intwelve onasemi-annualbasis underthis borrowed loan isto onNovember berepaid equalinstallments intwelve onasemi-annualbasiscommencing AG. The Kreditversicherungs Euler Hermes 1,On November 2006, signedasix-yearUS$99,350 VimpelCom by N.A., andinsured by Citibank arranged loan agreement (11) US$56,974. andincluding 30, until April for drawing 2006. AsofDecember31, debt principal 2008, underthis the was loan agreement not equalinstallments onasemi-annualbasiscommencing in fourteen May than later 30, available was 2006. The facility (“ Board Guarantee SwedishExport ofthe Credits underguarantee VimpelCom 24,On February 2004, Handelsbanken AB denominated Svenska credit aseven-year, USdollar provided ofUS$69,700line to (10) US$100,000. was amount ofdebt outstanding facility underthis On September18, 2007, US$100,000 down URSdrew underthis AsofDecember31,loan agreement. principal 2008, the 1.15% andisfully by VimpelCom. guaranteed The ofLIBORplus at arate interest bears Standard plc. with Theloan BankPlc, BankEurope agreement facility SMBCandVTB On March 26,On March 2007, VimpelCom’s CJSC( Systems Radio Ukrainian wholly subsidiary owned (9) BANK LOANS Debt andLongTerm 13. Short (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” facility was US$32,000. was facility onDecember19,installments starting AsofDecember31, 2008. amountofdebt principal outstanding the underthis 2008 ofLIBORplusat arate 1.0 %andisfully by VimpelCom. guaranteed The On December12, 2006 URSsignedaUS$40,000 interest bears The Landesbank. Bayerische facility with loan agreement (13) outstanding underthis US$32,000. was loan agreement 17, onOctober installments starting equalquarterly in five AsofDecember31, 2008. amountofdebt principal 2008, the ofLIBORplus at arate interest 1.25% bears The andisfully facility by VimpelCom. guaranteed The (continued) l oan bears interest at LIBORplus interest oan bears 0.325% underthis borrowed perannum. tranche Each loan isto berepaid

l oan bears interest at the rate ofLIBORplus at rate the 0.1% interest oan bears perannum. The tranche first l oan will be repaid in five installments, starting from March 26, March installments, from 2009.oan willberepaid infive starting (continued) (CONTINUED)

l oan should be repaid in five equal quarterly equal quarterly oan shouldberepaid infive EKN ”). The l oan agreement, VimpelCom is subject issubject VimpelCom oan agreement, “URS l Ö oan isto berepaid infourteen sterreich Aktiengesellschaft. Aktiengesellschaft. sterreich ”) signedaUS$100,000 l oan bears interest at interest oan bears l oan shouldberepaid 131 ВымпелКом / Годовой отчет 2008 132 VimpelCom / Annual Report 2008 US$47,223 AsofDecember31, Loan onthis Facility. nooutstanding facility. was amountunderthis there 2008 28, Vimpelcom fully 2008 andSMBC.OnFebruary outstanding repaid the indebtedness amountof inthe by Citigroup adjusted tocovenants were bein syndicated covenantsofthe with line 18, onNovember 2005, arranged loan facility 2.5% from reduced to was 1%p.a. facility underthe margin restrictive andcertain rate interest the agreement, facility Pursuant to amendedandrestated the agreement. to facility the signedanamendmentandrestatedVimpelCom agreement signingdate, the beginning oneyearafter at LIBORplus interest andbears 2.5% perannum. OnAugust 29, 2006, (“ London Limited 28, 2005,On February signed aUS$425,000 VimpelCom syndicated andStandard Bank Citigroup with loan agreement (17) facility. under the fullyVimpelCom outstanding repaid the indebtedness. AsofDecember31, debt noprincipal was outstanding 2008, there 50% total ofthe The adjusts Company’s basedonthe rate commitment. 18, OnNovember, interest ratings. 2008 credit LIBOR plus 1.35% forrevolving loan, andLIBORplus 1.50% forterm loan and0.15% over feefordisbursements utilization of aUS$147 revolving million loan term andaUS$103 amortizing million of anannualrate loan. interest bore The facility (“ Limited Europe Corporation Banking Mitsui 18,On November 2005, signedaUS$250,000 VimpelCom syndicated andSumitomo by Citigroup arranged loan agreement (16) under this US$10,000. was loan agreement 20, onJanuary installments starting 2009.equal quarterly AsofDecember31, amountoutstanding principal 2008, the ofLIBORplus at arate annual interest 3.0%bears andisfully by VimpelCom. guaranteed The 9,On November 2006, URSsignedaUS$20,000 The Ukraine). facility Raiffeisen OTPBank(formerly with loan agreement (15) outstanding underthis US$7,455. was loan agreement 18, April repaid inteninstallments onasemi-annualbasiscommencing 2006. AsofDecember31, amount principal the 2008 to 16, November berepaid intenequalinstallments onasemi-annualbasiscommencing isto 2005, be second tranche andthe loan facility. Theloan facility. Vostok-Zapad into Telecom assumedVostok-Zapad andVimpelCom VimpelCom merged was Telecom’s underthis obligations a US$22,525 BankAB Hypo-undVereinsbank AG Bayerische andNordea underECA In2006 guarantee. with loan agreement On June30, 2005, Vostok-Zapad into Telecom, VimpelCom, andsincemerged ofVimpelCom signed asubsidiary at time the December 31, amountoutstanding principal 2008, underthese the US$17,565. was loan agreements second the loan isto 18, November berepaid intenequalinstallments onasemi-annualbasiscommencing 2005. Asof annum. The first loan isto 7, November berepaid intenequalinstallments onasemi-annualbasiscommencing 2005, and (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Hypo- und Vereinsbank AG and Nordea BankAB.Hypo- undVereinsbank AG andNordea The On June30, unsecured 2005, signedtwo VimpelCom amountofUS$59,000 inanaggregate Bayerische loan agreements with (14) BANK LOANS Debt andLongTerm 13. Short (continued) l oan bears interest at LIBORplus interest oan bears 0.35% underthis perannum. borrowed The tranche first is loan agreement Standard Bank

”). The facility was a three-year unsecured unsecured athree-year was ”). The facility loan, payments principal quarterly with SMBC (continued) ”). The facility was a three-year unsecured syndicated unsecured athree-year was ”). The facility loan, consisting l oans have identical terms and bear interest at LIBORplus andbearinterest terms 0.35%oans haveidentical per (CONTINUED)

l oan shouldberepaid infour indebtedness, including bank equipmentpurchases. loans offinancing obtained purposes forthe The debt ofVimpelCom’sterm agreement. following asummary table provides outstanding equipmentfinancing material to similar a to bedeferred equipment.These allow expenditures forthe agreements GSMnetwork telecommunications ofmobile andinstallation purchase forthe equipmentvendors different with into agreements hasentered VimpelCom EQUIPMENT FINANCINGOBLIGATIONS Debt andLongTerm 13. Short (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” KaR-Tel (2) Citibank Citibank (2) KaR-Tel escretprin $216,511 equipment Long-term portion Less current Total equipmentfinancing orwrVno Interest Com rate Vimpel Borrower Vendor te Other LIBOR+0.2%, 6month BaernLB (4) KaR-Tel HVB (3) KaR-Tel ArmenTel (10) Siemens A.E 3 month EURIBOR+ 3month A.E Siemens (10) 8% ArmenTel 8% Huawei (6) Huawei Tacom (5) Unitel R 7 uwi7% 3month from SA Intracom Huawei (8) (7) ArmenTel URS ArmenTel (9) BNP Paribas 6 month EURIBOR+0.9% 6month Paribas BNP (9) ArmenTel iacn $ 127,807 financing (1) HSBC 6 month MOSPRIME+ 6month HSBC (1) Plc International (Hermes2) 6 month LIBOR+0.25%,6 month to 12 EURIBOR+ month 6 month LIBOR+0.38%6 month 6 month LIBOR+0.30%6 month 1.5%, 12 LIBOR month 6 month LIBOR+0.4%6 month EURIBOR+1.5% plus 1.5% 0.08% (continued) 1.5% (CONTINUED) (88,704) $ 58,375 29,498 24,345 14,728 30,818 Outstanding debtasof 37,824 1,058 6,679 9,991 3,195 082007 2008 December 31, –

5,5 151,659 $ 8,5)(81,050) 217Semiannually, $ 82,197 3,0 232,709 367Semiannually, 33,687 21,005 Various dates Various 21,005 13,843 Various dates Various 13,843 201Semiannually, 42,011 10,817 Various dates Various 10,817 17,559 Various dates Various 17,559 4,886 Various dates Various 4,886 ,0 5,302 1,402 Various dates Various 1,402 Semiannually, – January 24,January 2007 – 2007 2014 –March final –December final final –December final August 28, 2011 September 28, through 2008 through through 2008 through through 2008 through through 2010through through 2012through through 2011through auiydt Security Maturity date 21, 2011 21, 27, 2012 EHECA gurantee EKN guarantee VimpelCom VimpelCom equipment equipment guarantee guarantee ATF Bank Network Network Network Network None None None None l ong

133 ВымпелКом / Годовой отчет 2008 134 VimpelCom / Annual Report 2008 loan asofDecember31, US$37,824. was 2008 The Agency. Export Credit Hermes to LIBOR+0.38% 6-month perannum. date The maturity ofthe equipment.Thetelecommunication amountwillberepaid principal in10 equalsemi-annualpayments plus equal interest amount ofUS$47,500. for Alcatel-Lucent AG expenditures Deutschland capital to reimburse The borrowed fundswere On May 5, 2008, KaR-Tel signeda (4) under this loan asofDecember31, US$8,822. was 2008 0.2% agency. The p.a. interest credit including outstanding balance accrued by the EKNexport isguaranteed The Facility 2006 –2007.through + Principal amountwillberepaid equalto by equalsemi-annual payments 6mLibor interests with On June26, 2007 KaR-Tel signedaEUR10,624 equipment ofEricsson deliveries the HVBto refinance with loan agreement p.a. The asat December31, interest including outstanding balance accrued the US$15,523. 2008, was value ofUS$23,756. +0.4% Principal amountwillberepaid equalto by equalsemi-annualpayments 6mLibor interests with to apledge ATF US$20,000. Bankamounting equipmentwith by apledgeoftelecommunication secured was The facility (“ (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” On September14, US$31,320 2006 KaR-Tel borrowed under a (3) underthis interest includingbalance accrued the loan asofDecember31, US$19,294. was 2008 +0.30%Principal amountwillberepaid equalto by equalsemi-annualpayments 6mLibor interests p.a. with The outstanding by ECGD,to June19, coverthis guaranteed 2007 loan, ofupto US$30,000 parent guarantee foranaggregate forboth loans. September6, the 2005 covering parent guarantee its extended plc, KaR-Tel International loan between andCitibank The ofthe purpose On June19, 2007, plc underanECGDguarantee. International KaR-Tel Citibank with signedaUS$28,599 Agreement Facility US$10,204 was interest including accrued the underthis loan. +0.25% equaltoequal semi-annualpayments 6mLibor interests with p.a. AsofDecember 31, outstanding the balance 2008 forupto US$30,000. aparent guarantee provided VimpelCom Motorola. from Principal amountwillberepaid by delivered Department (“ Guarantee Credit On September6, Int.plc. underanEnglish 2005, Citibank KaR-Tel with signedaUS$30,000 agreement facility (2) underthis interest accrued the loan asofDecember31, US$58,375. was 2008 basis. The onareimbursement to by including outstanding VimpelCom provided Ericsson balance equipment andservices total by EKNforthe supported amountof2,100 isto finance facility The Russianrubles. credit million facility export On September10, 2007, HSBCBankPLC. This with denominated Swedish agreement isaruble signedafacility VimpelCom (1) EQUIPMENT FINANCINGOBLIGATIONS Debt andLongTerm 13. Short HVB ”). The facility is guaranteed by Euler Hermes Kreditversicherungs AG. The Kreditversicherungs by EulerHermes isguaranteed ”). The facility l oan is refinancing the deliveries of Motorola telecommunications equipmentin2006-2007. telecommunications ofMotorola deliveries VimpelCom the oan isrefinancing ECGD ”) guarantee. The”) guarantee. ofthe purpose l oan agreement with Bayerische Landesbank, Germany for an aggregate principal principal foranaggregate Germany Landesbank, Bayerische with oan agreement l oan isnot secured. The underthis interest including outstanding balance accrued the (continued) (continued) (CONTINUED)

l oan agreement with the Bayerische Hypo-undVereinsbank AG Bayerische the with oan agreement l l oan is refinancing of telecommunications equipment oftelecommunications oan isrefinancing oan isDecember27, 2012. The

l oan was provided with a guarantee from from aguarantee with provided oan was l oan is guaranteed by Euler oan isguaranteed of telecommunications equipmentforanamountuptoof telecommunications US$ In 2006 Unitel entered into several deferred payment agreements with Huawei Technologies payment with (“ agreements deferred into several entered In 2006 Unitel (5) EQUIPMENT FINANCINGOBLIGATIONS Debt andLongTerm 13. Short (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” December 31, agreement. underthis nooutstanding balance were 2008, there value atotal ofUS$16,819.On June30, with contract agreement 2006, financing URSandHuawei signedavendor Asof (7) US$3,195. was interest including accrued the agreement underthis interest including accrued the Huawei. AsofDecember31, from This equipmentacquired by indebtedness the issecured 2008, outstanding balance GSMequipment. ofthe purchase Huawei forthe with arrangement 2006,In April, into Tacom financing avendor entered (6) US$26,043. Huawei asofDecember30, with was 2008 The underagreements interest including outstanding balance accrued the at 8%perannum. interest bears Huawei. The from This facility pledgeofequipmentacquired by debt the issecured ofanamountupto US$18,835. forfinancing Huawei providing with agreements into financing newvendor entered Unitel at 8%perannum. interest bears OnJune12, Huawei. Thefrom facility Company’s 2008, the subsidiary wholly-owned ofanamountupto US$31,591. forfinancing Huawei providing This pledgeofequipmentacquired by debt the issecured 15, with On February agreement Company’s 2008, the into financing anewvendor entered Unitel subsidiary wholly-owned asofDecember31, agreement financing vendor underthis US$2,471. 2008, was interest accrued the to $8,676. Huawei. The from This including outstanding balance pledgeofequipmentacquired by debt the issecured ofanamountup forfinancing Huawei providing with agreement into 2007 financing In October vendor entered Unitel asofDecember31, agreement financing US$1,634. 2008, was Huawei. vendor The underthis from interest including outstanding balance pledgeofequipmentacquired accrued the the ofanamountupto US$9,600. Huawei forfinancing with This agreement by debt isalsosecured financing vendor Huawei. OnSeptember29, from pledgeof equipmentacquired by into 2007 the anadditional is secured entered Unitel In July 27, Huawei, foranamountupto with US$6,265. agreement into 2007financing avendor entered Unitel This debt asofDecember31, agreement financing vendor underthis US$670. 2008, was interest includingbalance accrued the upto $7,800. agreement total increasing financing value vendor ofthe Agreement, a Supplementary The outstanding up to US$6,900. signed 2007 Huawei. InApril parties the from This pledgeofequipmentacquired by debt the issecured ofanamount forfinancing Huawei providing with agreement into 2007financing avendor entered Unitel In February agreements. underthese interest accrued the dates AsofDecember31, 2008. Huawei andisdueonvarious through from including nooutstanding was balance there 2008 (continued) (continued) (CONTINUED)

10,743. T 10,743. his indebtedness is secured by the equipment acquired equipmentacquired byhis indebtedness the issecured

Huawei ”) for the purchase purchase ”) forthe 135 ВымпелКом / Годовой отчет 2008 136 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Future paymentsFuture underbank loans, andcapital equipmentfinancing andother debt lease agreements 2006. The asat outstanding December31, balance, interest, including accrued US$1,058 was 2008 30, equipmentonMarch telecommunication AEforfinancing Siemens with ArmenTel agreement financing signedavendor (10) US$9,991. Belgium. Siemens equipment with The asat outstanding December31, balance, interest, including accrued was 2008 21, BNPParibas onMarch with agreement ArmenTel telecommunication 2006, into financing avendor entered forfinancing (9) asofDecember31,balances, interest, including accrued amountedto US$5,080. 2008 Three loans, total forthe amountofEUR6,905, 20, signedonOctober were 23, 2005, March 2006, 14, andApril 2006. The cumula December 31, 2008, is$9,648. The The loan total forthe amountofEUR48,726, signedonJuly was 1, 2002. The asof balance, interest, including accrued developing network: their SA.The following Intracom with agreements equipmentand telecommunications loans usedforpurchasing were 16,On November ofArmenTel 2006, acquisition ( the completed whenVimpelCom (8) EQUIPMENT FINANCINGOBLIGATIONS Debt andLongTerm 13. Short December 31, US$41,871. was 2008, amountofdebt principal outstanding agreement underthis upto August 31,and callarrangement Asof 2009, becomeexercisable. date whichisthe first at putandcalloptions whichthe put ofthe ofUS$20,000. price to minimum purchase the borrowing willbeaccreted forasasecured accounted The borrowing InterestinThatSubsidiary totheMinority Indexed andaDerivative a Consolidated Subsidiary US$60,000. ofEITFNo. Following provisions 00-4, the be price future innoeventwillthe however The isbased onaformula; price future US$57,500less than than ormore purchaser. heldby the interest remaining to entire sellto the anoption VimpelCom to purchaser the granted VimpelCom and, purchaser heldby the interest remaining simultaneously, entire the to acquire to anoption VimpelCom granted onJune14, purchaser finalized the was 2007. The agreement, 7%ofUnitel. this represents transaction with Inconnection Enterprises, ofUS$20,000. Inc.(BVI) forasaleprice Freevale 21.0% owns Enterprises Freevale The ofUnitel. saleeffectively 2007,In April to sella33.3% into anagreement subsidiary, entered wholly-owned VimpelCom inits interest ownership OTHER DEBT Total Thereafter 2013 2012 2011 2010 2009 l oan matures inJune2012.oan matures (continued) (continued) Majority Owner’sMajority AccountingforaTransaction intheSharesof (CONTINUED)

Note 3 ), ArmenTel financing hadvendor , the sale consideration was was saleconsideration , the .

are asfollows: are $ 8,442,926 $ $ 1,909,221 $ 1,098,288 1,502,556 1,991,560 1,617,041 324,260 tive

the Board approved Amendment No. 3 to the Plan making certain amendments to the method of exercise under the Plan. underthe of exercise amendmentsto method certain AmendmentNo. approved the making 3to Plan Board the the Plan. underthe OnMay awards issuanceofstock basedcompensation 24, forthe utilized 2006, were shares purchased the 2006, VCESOPN.V. 200,000 ofVimpelCom’s purchased shares common stock forUS$38,535 transactions, inopenmarket 450,000 from Plan underthe to 650,000. authorized numberofshare maximumaggregate the andMay InApril increase Plan. underthe 7, OnApril awards compensation to 2006, AmendmentNo. approved inorder 2to Plan Board the the issuanceofstock based forthe shares purchased the to VCESOPN.V. shares these utilized VimpelCom transferred then 135,508In June2005, purchased VimpelCom commonstock forUS$18,374 ofits shares and transactions inopenmarket 250,000from to December31, date 450,000 from Plan ofthe expiration the andto extend 2006, to December31, 2015. Stock Option Plan (the “ (the Plan Stock Option 22,On April 2005, VimpelCom’s “ (the ofDirectors Board ofconversion. ofcommonstock at time value the ofoneshare market of the June30, after 2016,time holderuponpayment ofthe to premium equalto at ofaconversion election VimpelCom 100% the ofcommonstock at into any oneshare stock isconvertible 29.3804 was ofpreferred rate share Each per1USdollar. rubles VimpelCom’s AsofDecember31, fundsavailable. exchange sufficient official 2008, are liquidation, the there to extent the afixed of.001 to receive dividend peryear and(iii) pershare ruble event inthe valueliquidation pershare of.005 ruble holderto (i)onevote, afixed its to (ii) receive by Eco owned stock entitles Telecom.stock were ofpreferred share Each In 1996, issued6,426,600 VimpelCom stock. AsofDecember31, ofpreferred shares ofpreferred shares 2008, allofthe 14. Shareholders’ Equity 2009. AsofDecember31, outstandingnotes US$72,130. the debt was underpromissory 2008 upto November, period the They andbearnointerest. at within ruble-denominated mature notes weekly are intervals December 31, The payment services. The 2008. promissory issuedasanadvance notes future to were secure promissory to US$81,660 notes amountequivalent inthe andDecember2008,issuedpromissory VimpelCom In November asof OTHER DEBT Debt andLongTerm 13. Short (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” (continued) Plan

”) in order to increase the maximum aggregate number of shares authorized under the plan plan underthe authorized numberofshares maximumaggregate the to increase ”) inorder (continued) (CONTINUED) Board ”) approved AmendmentNo.”) approved 1to AmendedandRestated the

of 137 ВымпелКом / Годовой отчет 2008 138 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Rule 10b5-1 of1934, Exchange Act Securities ofthe “ asamended(the 650,000 from Plan underthe to 1,050,000 authorized under number ofshares plan purchasing asystematic andestablished On December14, maximumaggregate the to 2006, AmendmentNo. approved increase inorder 4to Plan Board the the 14. Shareholders’ Equity the consolidated underU.S.the income, net GAAP. asdetermined willgenerally beequalto payment atthe annually annualdividend amountofthe ofcashdividends andthe least 25.0% of underRussian aswellthose policy dividend in the willrecommend Board contemplates that the policy law, the 2007,In March contained Company’s the and guidelines approved to Board constraints the Subject the policy. dividend statements. accompanying inthe consolidated shares financial astreasury treated The heldby VCESOPN.V. shares (663,614 and 504,182 shares asofDecember31, shares and2007, 2008 were respectively) Plan. underthe awards of stock basedcompensation VimpelCom’s commonstock forUS$114,476 issuance forthe utilized were shares purchased the transactions, inopenmarket below). InJuneandJuly mentioned 2008, VCESOPN.V. 200,000 ADSratio of changeinthe purchased the shares (“ Shares Depositary of1934, Exchange Act Securities the asamended, ofupto 4,000,000 repurchases Company’s ofthe to facilitate American underRule10b5-1 plan purchasing asystematic established VimpelCom in2008 of Plan the with In connection ofapproximatelya total consideration US$81,069. aggregate May 1, between 2007,repurchased andMay 8, 2007, ofUS$101.29 price at anaverage asdiscussedbelow), for (pre-ADS split of 200,000 Company’s ofthe below) were shares mentioned to adjustment ADSratio commonstock, prior the inthe 10b-18 VimpelCom’s Exchange ofthe Act. Rule10b5-1 commencedonMay 1, plan 2007, equivalent ADSs(the and800,000 U.S. andRussiansecurities in accordance with law, including ofRule volume, the andother requirements price, timing all privately negotiatedtransactions, achieved. orthrough are may prices openmarket Purchases bemadeinthe trading VimpelCom’s Rule10b5-1 onadaily amountsofADSsmay bepurchased plan, that specified specified certain basisprovided Under periods. blackout becauseofself-imposed trading not market would beinthe ordinarily whenit at times shares its below). Rule10b5-1 mentioned 1,600,000 company ADSratio changeinthe apublic the to ADSs(before repurchase permits ADSs ”), which is equivalent to 200,000 Company’s”), whichisequivalent ofthe shares commonstock (asadjusted for (continued) (CONTINUED)

Exchange Act ”), to facilitate repurchases ofupto repurchases ”), to facilitate exchange rate. exchange underRussian distributable earnings retained US$4,382,089 were legislation ( December31, through have been insignificant Transfers2008. to reserves AsofDecember31, 2008. 2008, VimpelCom’s Russian tax tax ofupto to 15% subject awithholding are legislation, 1, whenpayable, dividends January from starting statements, Inaccordance with Russianstatutory tothe reserves. financial not outofamountspreviously transferred in asshown earnings andunreserved undistributed accumulated may from only Dividends bedeclared operations. the Russian In accordance with into orinvestthem asdividends allprofits legislation, candistribute VimpelCom fundsavailable. part ofVimpelCom’s sufficient receive are there to extent assets the by approved shareholders, eventofVimpelCom’s insuchamountsashave beenvalidly andinthe dividends liquidation, to meetings, ofVimpelCom’s to outstanding holderto receive share Each participate inshareholders its commonstock entitles indicated.otherwise where ratio, except revised statements the accompanying havebeen restated to Allamountsinthe shares. financial reflect dateThe August to 21, was distribution ADSholders 2007. nochangesto There VimpelCom’s were underlying common at close the ofbusinessonAugust 17, ofrecord ADS holders 2007, ADSheld. ADSsforevery fouradditional received August 21, to effective 20common share ADSsforonecommonshare 2007. change, To VimpelCom ratio implement the On August 8, 2007, fourADSsforone NYSEfrom onthe ADSstraded ofits ratio announcedachangeinthe VimpelCom Company that the results. not commonstock basedon2008 meeting pay onits dividends 4, Company 2009, ofthe Shareholders On February unanimously Board hasdecided to the AnnualGeneral to the recommend US$79,080 atax ofuptoapproximately amount,whichwas 15% withheld VimpelCom dividend RUR1.9 onthe (orapproximately billion Russiantax asofJune9, rate Inaccordance with 2008). Bankexchange RussianCentral based onthe legislation, results to baseduponthe 2007 atotal year, ofthe 2008 amounting fiscal ofRUR13.85 (orapproximately billion US$588,580 stock, orapproximately ofVimpelCom share US$0.57 asofJune9, rate Bankexchange RussianCentral perADSbasedonthe amountof270.01 inthe shares to ofcommonregistered holders of acashannualdividend percommon Russianrubles payment approved heldonJune9,of June29, shareholders the 2008 Meeting 2007). Shareholders At AnnualGeneral the approximatelywhich was RUR1.2 (orapproximately billion US$44,664 as rate Bankexchange RussianCentral basedonthe Russiantax accordance with atax amountuponpayment, ofuptolegislation, 30% dividend withheld VimpelCom onthe RUR8.6 (orapproximately billion US$331,742 asofJune29, rate Bankexchange 2007). RussianCentral basedonthe In to atotal year, below) results amounting basedonthe 2006 fiscal mentioned ofthe of ADSratio changeinthe for the asofdate rate US$0.32 June29, Bankexchange ofapproval, RussianCentral perADSbasedonthe 2007, asadjusted commonstock (orapproximately paid ofthe In 2007 was amountof166.88 inthe pershare adividend Russianrubles 14. Shareholders’ Equity (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” based on the Russian Central Bank exchange rate asofJune9, rate 2008). Bankexchange RussianCentral based onthe (continued) (CONTINUED)

non-audited ) , at the official year-end , at official the 139 ВымпелКом / Годовой отчет 2008 140 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Income tax expense consisted of the following for the years endedDecember31: following years consistedofthe Income taxforthe expense of legal, consulting, ofallowable inexcess andother expenses representational limits. consistprimarily expenses by onIncomeTax avaluation allowance). Non-deductible Rate (unlessreserved have aneffect tax accumulated taxable income. future tax However, foruseagainst losses, forward whichmay becarried losses not do (US$137,762) tax balances on deferred asofDecember31, isreflected to primarily relate Incometax 2008. exemptions 1, January impact 2009. in2008, the enacted changewas tax Asthe to rate tax the 20% rates effective which decreased tax enacted of approximately andKazakhstan 18%). RussianFederation ofthe governments In2008, the changes law rate incometax25%, –15%, isacomplex regime,that results –20%, Armenia Georgia there inUzbekistan inaneffective andTajikistan –30%, Ukraine – (Kazakhstan tax rates different having and income(loss) injurisdictions beinggenerated tax allowed taxes underapplicable before dueto tax certain benefits expenses ofcertain legislation, non-deductibility the amountcomputed by the applyingoperate. statutory from The (24%) the rate forincometaxes provision varies to income tax by the asprescribed tax their returns file inwhichthey subsidiaries andits VimpelCom jurisdictions ofthe laws 15. IncomeTaxes follows: statutory of24% taxes tax rate RussianFederation byincome before multiplied the endedDecember31 years forthe isas statements accompanying inthe consolidated and financial reported incometax the expense between A reconciliation Income tax expense reported in the accompanying inthe reported Income tax expense Other ofchangeinstatutory Incometax rate Effect gain/loss exchange inforeign ofdifference Effect Effect of different tax rates in different jurisdictions indifferent tax rates ofdifferent Effect Taxable capital contribution Taxable contribution capital oftax claims Effect Effect of non-deductible expenses expenses ofnon-deductible Effect taxes computedIncome tax onincomebefore at expense $ taxes Deferred incometaxes Current 303,934 Effect of deductible temporary differences not recognized not recognized differences temporary ofdeductible Effect Effect of goodwill impairment ofgoodwill Effect consolidated financial statementsconsolidated financial recognition Russian statutory tax rate as measured by the change invaluation by allowance the as measured (CONTINUED) 20 072006 2007 2008 20 072006 2007 2008 $ 396,588 $ 303,934 $ 213,896 (137,762) (92,654) (2,023) 89,056 14,875 58,871 15,738 42,515 8,768 – 0,8 $290,913 $ 508,886 9,2 $390,663 $ 593,928 9,2 $390,663 $ 593,928 $ 561,070 $ 330,520 $ 561,070 $ 953 (4,025) (9,543) 501– 15,001 28860,143 32,858 10842,246 71,028 65 26,531 (615) ,8 1,120 8,984 8 8,681 187 25,197 –– – –– the fairthe values and ofassets ( dates asofthe ofacquisition liabilities of whichresulted recognition inthe In 2008, 2007 acquisitions and2006, ofsignificant aseries completed VimpelCom 15. IncomeTaxes (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” December 31, 2007 table presented inthe below: endedDecember31, years including andpenaltiesforthe (interest), fines tax benefit, amounts ofunrecognized and 2008 1, January 2007, from Starting ofFIN48( Company the provisions the adopted differences. taxable temporary various the o taxable incomeandreversals offuture future.These inthe basedonexpectations evaluations are willnotassets berealized ismore tax assets. whenit Valuation provided deferred of the allowances are likely not deferred than that someorallofthe management’s forrealization to estimate purposes, reflect avaluation allowance hasbeenrecognized reporting For financial 31, andDecember31, 2008 2007, respectively: forincometax balances following hasthe significant VimpelCom forward, fullylosses asofDecember provisioned carried and equipment, accounting. purchase inthe andother intangible recognized assets licenses tax fair Company deferred the the value inthe property ofthe resulted increase with inasignificant associated liabilities aac so eebr3,20 $58,371 2,567 (9,441) 5,880 $44,344 (353) 3,146 Balance asofDecember 31, 2008 adjustment translation currency Foreign asaresult through ofresolution tax benefits unrecognized inthe Decrease litigation period aprior taken during oftax positions Decrease period aprior taken during oftax positions Increase (1,063) period current the taken during oftax positions Decrease period current the taken during oftax positions Increase tax included benefits, inunrecognized inincome (decreases) The increase amountsofthe gross asaresult ofbusinesscombinations tax benefits The unrecognized inthe amountofincreases Balance asofDecember31, 2007 adjustment translation currency Foreign asaresult through ofresolution tax benefits unrecognized inthe Decrease litigation period aprior taken during oftax positions Decrease period aprior taken during oftax positions Increase Not intime limited Not period 2012–2013 current the taken intime during oftax positions Decrease limited 2015–2018 period current the taken 2019–2028 during oftax positions Increase tax included benefits, inunrecognized inincome (decreases) The increase amountsofthe gross 1, asofJanuary Balance 2007 adoption $305,896 20,489 20,615 44,125 10,260 43,781 Periodforcarry-forward $166,626 Total Belgium Cyprus Georgia Russia Balanceasof31.12.2008 USA Urkaine Jurisdiction tax expense in the accompanying inthe tax consolidated expense statements ofincome, asaresult of: accompanying inthe tax consolidated expense statements ofincome, asaresult of: (continued)

(CONTINUED) Carry-forward rule is set upannually isset rule by Carry-forward legislation. The as rule of the end of 2008 – period not –period endof2008 of the intime limited Note 3 ). The purchase price allocation conducted by conducted ). The allocation price purchase Note 2 ). The reconciliation of the total ofthe ). The reconciliation (42,875) (10,257) $ 11,389 (16,176) $ 45,080 (2,648) 30,139 43,719 tax tax f

141 ВымпелКом / Годовой отчет 2008 142 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” At 1, January Company US$10,311, 2008, the hadaccrued US$ periods. future inany incometax rate US$20,169, effective the that, ifrecognized, tax affect benefits would ofunrecognized respectively, The asofDecember31, amountoftotal tax benefit unrecognized andDecember31, 2008 2007, includes US$5 15. IncomeTaxes The Russian tax inspectorate has completed its examination ofVimpelCom’sThe 2003-2006 years examination forthe ( its hascompleted Russiantax inspectorate tax filings asofDecember31, consolidated sheet inthe balance penalties recognized (interest) US$9,226, comprised 2008 US$3,625. andpenaltiesofUS$11,275, (interest) fines US$3,832 andUS$1,488, US$4,826, The respectively. total and amountsoffines yearendedDecember31, For the respectively. (interest), andDecember31, 2008 2007, Company additional the accrued if any. impact onVimpelCom’s oftheir statements, materiality consolidated andthe financial outcomeofanytax the examinations predict isunableto Management reliably 2008. tax 2006 through forthe years tois subject incometax examination inArmenia subsidiary andthe 2008; tax 2004 through forthe years to issubject incometax examination Kazakhstan in subsidiary the 2008; tax 2003 forthe years to through issubject income tax examination inGeorgia subsidiary the 2008; tax 2005Tajikistan, through forthe years to subject incometax examinations are andUzbekistan Ukraine to beopen. 2008 2005 through VimpelCom’s Company the tax from the years considers in authorities, subsidiaries to that, subject certain Due to fact the tax by the legal issues, opento examination arepeated 2005 yearremains the andDecember31,2008 2007, respectively. of statutory results orthe term offoregoing limitation US$13,203 comprised litigations andUS$37,077 asofDecember31, 12 within The dueto ordecrease months that couldsignificantly increase total tax benefit amountofunrecognized lapse incometax benefits. unrecognized amountofthe change the of2005-2006 in2009 couldpossibly tax years, examination the iffinalized resultingfrom to claims tax the inspectorate asofDecember31, incometax benefits unrecognized amountofthe the related The 2008. will not hearings affect court fortax 2003-2004 to years claims tax the inspectorate has beenfinalized,they respect therefore, with The hearings court (continued)

(CONTINUED) 10,148 10,148 for the potential payment potential andpenaltiesfor the offines 6,101 6,101 Note 21 and ). consisted of the following:consisted ofthe statements accompanying to The inthe reverse. consolidated at expected December31 financial amountsreported are amountsandtax and baseofassets carrying the between differences liabilities temporary inwhichthe to period the calculatedThe by were tax applying balances presently statutory following the applicable deferred tax enacted rate 15. IncomeTaxes (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Accrued operating and interest expenses andinterest operating Accrued Long term assets Non-current Loss carry-forwards Valuation allowance Loss carry-forwards expenses, andinterest including gainfrom operating Accrued Short term tax assets: Deferred

Deferred revenue Deferred e eerdtx iblte 561,468 tax deferred Less current liability tax assets deferred Add non-current tax assets deferred Add current tax liabilities deferred Net Derivatives Bad debts assets Bad debts provision Short term tax liabilities: Deferred Property andequipment Property Long term oa ln-emntdfre a laiiy$644,475 Total tax liability deferred long-term net Derivatives payableAccounts Telecommunication licenses Customer relationships andother intangible assets Customer relationships Other non-current assets non-current Other derivatives (continued)

(CONTINUED) 20 2007 2008 (74,707) 660,229 144,379 173,468 166,478 (1,302) 1,6 8 63 317, 68,094 82,788 75,356 30,789 98,761 7,111 $ 2,627 3,079 9,345 7,856 1,521 945 – – – $ 576,276 (10,280) $ 22,255 175,960 593,961 312,445 116,092 477,869 126,372 98,407 58,225 19,968 43,818 55,557 11 9 11,18 8,408 2,043 1,292 5,707 2,678 178 610 – – 143 ВымпелКом / Годовой отчет 2008 144 VimpelCom / Annual Report 2008 taxes ofUS$9,848, US$9,525 andUS$3,933 endedDecember31, years forthe 2008, 2007 and2006 respectively. The forbaddebts included provision accompanying inthe consolidated value-added statements ofrelated ofincomeisnet (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” unrecognized deferred taxes related to these undistributed earnings isnot earnings practical. taxes to undistributed these related deferred unrecognized amountof ofthe RussianFederation. Determination investedoutsideofthe indefinitely willremain intend that they amountedto approximatelyFederation US At Russian December31, investedoutsideofthe indefinitely subsidiaries ofourforeign earnings 2008, undistributed 15. IncomeTaxes parties. parties. andother related affiliates andtheir shareholders its with The into enters transactions certain to time Company time from 17. Transactions Party Related and 2006: endedDecember31, years forthe The allowance fordoubtfulaccounts changesinthe the following summarizes 2008, 2007 16. Valuation andQualifyingAccounts aac so eebr3,20 $31,944 3,143 2,208 Balance asofDecember31, 2008 adjustment translation currency Foreign off written receivable Accounts forbaddebtsProvision Balance asofDecember31, 2007 adjustment translation currency Foreign off written receivable Accounts forbaddebtsProvision Balance asofDecember31, 2006 adjustment translation currency Foreign off written receivable Accounts forbaddebtsProvision Balance asofDecember31, 2005 (continued) $550,000. We We $550,000.

(CONTINUED) have not provided deferred taxes on these earnings becausewe taxes earnings onthese deferred have not provided (78,761) (2,958) (55,966) $ 16,467 64,559 49,104 (4,973) 39,483 62,444 25,781 service to Telenor HoldingAS service Mobile Norway. telecommunication fixed Telenor to provide with RussiaAS. alsohasacontract VimpelCom Agreement Services General Telecommunications Ltd. and ofpersonnel forprovision Agreement Hunga, General Telenor the Sweden Norway; Mobile Montenegro, DTAC/UCOM ProMonte with Thailand,contracts Montenegro, Telenor ProMonte AS Pannon Mobil Norway, GSM hasroaming VimpelCom consolidated Inparticular, andtheir subsidiaries. owners consolidated direct its subsidiaries, its VimpelCom’s with Telenor results Telenor, with represent ofoperations shareholder andtransactions Outstanding balances US$139,114business. The were bankaccounts inthese balances andUS$52,736 at December31, and2007, 2008 respectively. of usedforpayroll course inAlfa maintainsVimpelCom andother payments Bank,whichare bankaccounts ordinary inthe to Eco Telecom service subsidiaries. telecommunication andits fixed Altimo of forprovision with Agreement Service The to services. provide legal andpersonnel Company alsohasacontracts andequipment Company property the to Alfa provide with Insurance General with the insurance; has contracts liability VimpelCom Telecom, consolidated Inparticular, andtheir subsidiaries. owners consolidated direct its subsidiaries, its VimpelCom’s with results Alfa Eco represent ofoperations shareholder with andtransactions Outstanding balances The following table summarises the significant transactions and balances with related parties: related with andbalances The transactions significant the following table summarises and parties related the from of services loans results to ofVimpelCom. them, to financial not the material whichare below, consistprimarily described transactions forthe parties, related except andits VimpelCom between Transactions 17. Transactions Party Related (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Accounts payableAccounts to Telenor payableAccounts to Alfa

Accounts payableAccounts to other payableAccounts to associates associates from receivable Accounts Alfa from receivable Accounts Accounts receivable from other from receivable Accounts Telenor from receivable Accounts Services from other from Services associates from Services Services from Telenor from Services Alfa from Services other Revenue from associates Revenue from TelenorRevenue from Alfa Revenue from (continued) (CONTINUED) 20 072006 2007 2008 $ 168,196

$ 53,325 $ 10,377 $ 27,154 163,871 $ 3,536 $ 7,492 $ 9,122 35,900 5,248 5,039 3,264 9,622 $ 434 3,934 1,704 3,221 396 393 106 858$11,651 $ 18,548 159$8,518 $ 21,599 ,0 $384 $ 1,806 $ 5,405 $ $ 2,773 1098,407 21,079 ,6 5,567 8,160 1,097 1,627 5,272 , 07 4 , 4 2 9 7,9 9 1,293 590 2 111 520 133 $ – $ – $– $ – 49 – –– 145 ВымпелКом / Годовой отчет 2008 146 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” transactions included from the acquisition date ( acquisition included the from transactions VimpelCom’s with include investees( associates operations equity with andtransactions Outstanding balances 17. Transactions Party Related including the number of options to be granted, the exercise price and the vesting schedule. vesting andthe to price including begranted, numberofoptions the exercise the Plan, underthe of VimpelCom’s ofgrants andconditions terms the Board. to power determine has the The Committee which,The by a Committee isadministered asofDecember31, Plan Committee Compensation 2008, consistedofthe As discussedin 19. BasedCompensation Plan Stock The computation ofbasicanddiluted the pershare: following earnings table forth sets ofcommonstock. ofoneshare to one-twentieth ADSisequivalent aseach incomeperADSequivalent net determine to ofcommonstock hasbeenadjusted period. by the incomepershare afactoroftwenty Net outstanding during per Share SFAS inaccordance with No. presented hasbeendetermined 128, forallperiods incomepercommonshare Net 18. perShare Earnings Firma Kurier. VimpelCom also has a contract to provide fixed telecommunication service with ZAO Rascom. with service telecommunication fixed to provide alsohasacontract VimpelCom Kurier. Firma fr services alsoinclude ofbilldelivery associates purchase with andcommissionforpayments Operations receipts. subscribers the periods presented. periods the not included for were computation ofdiluted future inthe the havebeenantidilutive EPSbecauseto sowould do asofDecember31, money outofthe Employee that are stock options that could potentially 2008 dilute basicEPSin Net income before cumulative effect ofchangein effect cumulative incomebefore Net Numerator:

Denominator for basic earnings per share –weighted Denominator pershare forbasicearnings Denominator: Denominator fordiluted pershare–assumed earnings Employee stock options securities: ofdilutive Effect iue e noeprcmo hr $10.34 $10.34 Diluted incomepercommonshare net incomepercommonshare Basic net accounting principle accounting average shares average ovrin 50,703 conversions , by dividing income available to common shareholders by the weighted average number of common shares numberof commonshares weightedaverage by the to commonshareholders incomeavailable , by dividing Note 14 , VimpelCom has adopted a stock based compensation plan, astock basedcompensation hasadopted , VimpelCom which has beenamendedsinceinception. Note 3 (continued) ) mainly represent dealer commission payments for the acquisition of new ofnew ) mainly dealercommissionpayments represent acquisition forthe (CONTINUED) 20 072006 2007 2008

$ 524,334

( In thousandsofUSdollars,exceptpershareamounts 50,700 YearsendedDecember31, 3 ,6,0 $813,371 $ 1,462,706 87 $15.97 $15.98 $ 28.78 $ 28.78 08850,911 50,818 08850,947 50,818 –36 Note 10 Earnings Earnings ). Euroset ). Euroset ) om om average exercise prices of options for each of the following groups of options asofDecember31, ofoptions following ofthe groups foreach ofoptions prices 2008: exercise average endedDecember31, years inthe expired options No 2008, 2007 or2006. The weighted- the following table summarizes The following table summarizes the activity for the plan: forthe The activity the following table summarizes 19. BasedCompensation Plan Stock (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” pin xrial,edo er264,516 572,297 endofyear exercisable, Options outstanding, endofyear Options Weighted-average exercise price price exercise Weighted-average The numberofoptions forfeited Options exercised Options granted Options outstanding,Options beginningofyear The aggregate intrinsic valueThe of intrinsic aggregate 572,297 (47,558) remaining The weighted-average 199,911 (23,089) 223,000 price exercise Weighted-average 223,000 (2,219) 7,281 The numberofoptions – (22,250) outstanding options Out ofthe 229,150 – valueThe intrinsic aggregate 103,865 – remaining The weighted-average 32,090 – price exercise Weighted-average outstanding,Options ( endofyear – price exercise (38,560) Weighted-average The forfeited numberofoptions (14,310) – price exercise Weighted-average The exercised numberofoptions price exercise Weighted-average The granted numberofoptions usadn,bgnigo er4,0 4,2 6,0 ,0 459,825 – 9,500 261,500 $1 142,425 46,400 outstanding of options outstanding, beginningofyear pin xrial 9 $190 1.7 $– 3.4 $– 2.7 264,516 $– 2,411 $190 2.5 2.4 4,750 $– $– 3.4 1.3 121,400 $– $190 3 103,865 0.5 32,090 $530.6 $– 2.4 $1 $658.0 $658 exercisable options $– $496.2 $658 contractual (years) life 1.3 exercisable of options $401.9 $– $190 exercisable 0.5 $– year at endofthe the $– $1 outstanding of options $– contractual (years) life $– outstanding of options $1 $– forfeited of options exercised of options granted of options

in 2005 Options granted 36.9 $ 177.0 $ 401.9 $ 496.2 $ 658.0 $ 285.5 $ 658.0 $ 496.2 $ 401.9 $ 177.0 $ 436.9 $ 36.9 658.0 $ 204.0 $ 496.2 $ – $ 401.9 $ – $ 177.0 $ 307.4 $ 36.9 – $ 401.9 $ 177.0 $ 496.2 $ 36.9 401.9 $ 177.0 $ 36.9 (CONTINUED) in 2006 Options granted 20 072006 NumberofOptions 2007 2008 (continued) First options (62,970) 010 (62,970) – – 10,100) (47,558) in 2007 223,000 granted 459,825

Second options in 2007 granted 1746 (79,006) (177,436) 1,0)(30,500) (14,500) 5,2 372,261 459,825 7,0 273,500 279,500 7,6 208,267 372,261 28583,428 92,825 n20 Total in 2008 Options granted 147 ВымпелКом / Годовой отчет 2008 148 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” options asofDecember31,options 2008: of following ofthe groups modelforeach The Scholes following Black ofthe table illustrates majorassumptions the all grants. for experience historic forthe asanaverage determined was rate options, Forfeiture the applicable. approximated where equalto expected the to Bonds, term maturity onRussianGovernment aremaining rate usingthe having determined of life other factors. The included yieldwas into modelbasedon dividend the payment. was dividend rate Thelast free risk NewYork equalto expected onthe Stock the Exchange shares period of the overthe and granted option ofthe life ofVimpelCom’s volatility historical basedonthe estimated was participants. Expected shares volatility stock option of basedonanalysis behavior ofhistorical determined was options Expected ofthe assumptions. term significant following modelthat usesthe pricing option Scholes The usingaBlack hasbeenestimated fair value options ofthe is1.2 to berecognized isexpected years. overwhichit period weighted-average and the date balance-sheet the presented, isUS$2,255 total not the recognized to yet non-vestedawards costrelated compensation US$171,242 andUS$44,317 expense endedDecember31, years inthe expense 2008, 2007 and2006, Asof respectively. included Plan accompanying ofthe inthe US$121,890 consolidated was inrespect statementsexpense ofoperations gain, underFAScompensation No. 123R considered were options andthe The awards. amountofcompensation liability forstock-based ofstock options, toThe accounting prior December24, mannerofexercise variable 2008, required US$12 of 49,411 2006 was during 79,006 forthe converted exercised options andshare-based paid to employees of was liabilities 2007 100,113 was during exercised andshare-based paid to employees ofUS$51,471. was liabilities The numberofshares and share-based paid to employees ofUS$25,487. was liabilities 177,436 The forthe converted numberofshares options and US$14,275, 62,970 The forthe converted respectively. numberofshares 40,568 was 2008 during exercised options endedandasofDecember31, years the vestedduring values ofshares 2008, 2007 ofUS$5,683, and2006 were US$60,148 The vesting. to graded total subject the forawards fair tranche costseparately compensation vesting recognizes foreach employees forcertain isaccelerated. period VimpelCom vesting the occur, grant tooption each relating agreement the and Plan forinthe eventsprovided Ifcertain yearperiods. overtwo rates generally vestat varying The granted options 19. BasedCompensation Plan Stock ofiuert .%54 .%54 .%5.4% 5.4% 5.4% 1.8% 1.8% 5.4% 1.8% 5.4% 8,3–11,8% 8,3–10% 1.8% 5.4% 8,3–9,2% 1.8% 91–156% 7,9–9,0% 110–154% 7,6–8,7% 1.8% 123–156% 127–184% 147–180% rate Forfeiture rate interest free Risk yield Expected dividend expected The weighted-average Expected volatility em(nyas . . . . . 0.8 1.3 0.7 0.6 0.4 0.2 (inyears) term ,855. ,855. Amounts of liabilities paid were equal to intrinsic value of options exercised as of excercise date.Amounts of asofexcercise exercised value paid equaltoofoptions intrinsic were liabilities

in 2005 Options granted (CONTINUED) in 2006 Options granted (continued) First options in 2007 granted

Second options in 2007 granted n20 Total in 2008 Options granted unaffiliated companies. The accounting policies of the segments are the same as those ofVimpelCom. sameasthose the segmentsare companies. ofthe policies Theunaffiliated accounting salesto from inconsolidation. eliminated are forat Inter-segment may amountsdifferent beaccounted revenues revenues Inter-segment economicreturns. income, incometaxes cashflows incomealong incomebefore andoverall andnet with basedonrevenue,operating basisprimarily segmentsonareguilar ofits herein. evaluates Management performance the VimpelCom’s consistent with are statements consolidated and, financial samebasis onthe reported accordingly, are andmultiple ofdata onemeasurement views measurements than dominant the However, segment performance. to measure more The utilize date andmanagement the Board acquisitions. from oftheir herein reflected are operations for acquired The strategies. segmentdata investmentandmarketing different areas, requiring geographical development indifferent of andstages economicenvironments segmentsseparately analyzesManagement reportable the becauseofdifferent andRelatedDisclosure aboutSegmentsofanEnterprise Information businessismanaged, the how whichisin iseffectively asthis approach this ofSFAS requirements No. the 131, with line hashistorically basis. taken Management segmentsonageographical reportable its Historically, hasreflected VimpelCom 20. SegmentInformation US$325. US$32.2 from ADS ranging to US$44.98. AsofDecember31, 2008, the statement 60days date financial within ofthe orwillbecomeredeemable at perphantom aprice redeemable currently are ADSs, AsofDecember31, respectively. of3,375,000 2008, anaggregate outstanding, phantom ADSswere ofwhich 2,172,120 of2,575,000 granting the calendar ineach year.In2007 authorized managers Board and2008, the and4,460,000 phantom amountofphantom to Board. ofthe ADSsthat senior may aggregate begranted the The determines Committee Board phantom Compensation byVimpelCom’s ADSsinanamountapproved the to receive alsoeligible are seniormanagers amounted to US$2,416. US$0.96 from perphantom toprices ADSranging US$20.88. AsofDecember31, 2008, the of which1,140,000 statement 60 days date financial within ofthe orwillbecomeredeemable at redeemable currently are AsofDecember31,a director. of1,360,000 2008, anaggregate outstanding phantom underphantom ADSwere stock plan, to date date the the from heorsheisno ofhisorherre-election at anytime asadirector ofhis/herservice period longer to suchphantom may aprevious ADSrelated redeem to Board the provided, re-elected whoare that however, directors Board. by isset the director The date phantom forcashonthe ceasesto ADSmay beredeemed beadirector; director the The director. by the numberofphantom to served ADSto each per phantomone-yearterm begranted ADSperyearofeach Board, ofthe may US$3.00 not amountpaid that exceed the uponredemption committee to provided adirector official asheadofany and10,000 Board ofthe forserving to chairman the todirector granted phantom each ADSsgranted 10,000 upto amaximumof20,000 receive anadditional each to phantom whichthey phantom ADSsperyearwith ADSs not employees whoare to Plan, the Board participate ina“phantom” ofthe members In addition stock plan, pursuant amounted to US$12,030. Plan underthe granted As ofDecember31, arrangements compensation to share-based the related equity 2008, the 19. BasedCompensation Plan Stock (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” (CONTINUED) (continued) (“ l SFAS No.131 iability related to phantom the ADSsamountedto related iability

”). l iability related to phantoms the related iability

149 ВымпелКом / Годовой отчет 2008 150 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Year endedDecember31, 2008: followingthe tables. endedDecember31, years segmentforthe by reportable information Financial 2008, 2007 and2006 ispresented in items. other reconciling separate combinedanddisclosed category from was “Other” inthe ofbusinessactivity materiality dueto not non reportable segmentsthat are andoperating aboutother businessactivities segments. Information reportable geographic ofthe review segmentsaspart oftheir operating ofthese performance assessthe management The and andconsumerInternet. Board services,broadband telecommunication wireline forproviding all activities to Company’s the services fixed telecommunication ofwireless subscribers; providing forthe includesline activities mobileincludes operations: oftheir These nature areas. basedonthe segmentshavebeendetermined geographical indifferent businessactivities Russia mobile, segmentsbasedonthe Russiafixed, reporting CISmobileandfixed ofGoldenTelecom date the (Note 3),VimpelCom’s from ofacquisition Starting identified andmanagement Board 20. SegmentInformation neeticm 7411,0 ,8 ,4 1,685 37,620 (1,968) 1,140 – (5,982) (45,900) 4,081 – 23,942 (52,235) 90,078 14,703 215 (18,209) 81,765 47,663 315,049 97,451 (464,682) (191,226) 88,526 20,318 – 2,667,369 368,305 142,769 219,442 incometaxesIncome before and 61,279 expense Interest 1,204,676 income Interest income Operating andamortization Depreciation Impairment loss revenues Intersegment from revenues operating Net Russia Mobile oa ses8247340863301257197543,080 (98,116) 781,917 3,372 3,061,215 (260,448) (4,613) 4,088,643 (266,443) 8,284,753 (5,062) 1,145,969 (1,439) (1,863) other than assets Non-current 316,911 Total assets income Net (benefit) Income tax expense/ odil799819545781,382 1,935,455 749,978 for Expenditures long-lived Goodwill ioiyitrs ,6,2 2800 1667 5 (107,690) 250 (196,607) (268,040) 1,463,321 $– interest minority $225,071 $1,294,677 $1,286,697 $7,310,487 customers external odil5127915903196476235531,140 672,335 1,926,447 1,579,043 5,132,739 goodwill ses1428733616609190119,327 139,041 636,069 343,601 1,432,807 assets (continued) (CONTINUED) ie ln CISMobile Fixed line Russia

ie ln te Total Other Fixed line 017– 10,127 CIS $ 10,116,932$ 16,759,608 2,535,950 (543,076) 2,570,845 3,476,942 9,841,704 1,881,164 303,934 524,334 272,029 1,060 6 0 119, 891,234 442,747 Year endedDecember31, 2006: Year endedDecember31, 2007: 20. SegmentInformation (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Net operating revenues from from revenues operating Net neeticm 259–695 – – 51 – – (64) 699 (1,263) – – (20,422) – – (4,665) 8,223 3,572 – (173,796) 22,599 145,949 – 1,403,247 – 1,509 income taxesIncome before expense Interest 900,292 income Interest income Operating andamortization Depreciation revenues Intersegment e noe8505–(269 97 – 20,692 – (947) 372,413 1,730,423 458 (42,629) – – 16,539 6,549,159 – 855,065 373,666 other than assets Non-current Total assets income Net Income tax expense odil2898–5882733– 7,363 518,892 – 248,968 for Expenditures long-lived Goodwill Income before incometaxesIncome before and ercainadaotzto ,0,7 2,3 123– 61,243 220,339 – 1,108,971 andamortization Depreciation xenlcsoes$44026$–$4070$1,2 $– $16,922 $450,760 $– $4,400,296 customers external n ioiyitrs ,3,6 1,6)(6)– (164) (18,965) – 1,231,267 interest and minority odil49265–12678367220,662 336,772 1,276,718 – 4,902,615 goodwill ses10941–4774488– 4,868 457,764 – 1,049,481 assets Non-current assets other than other than assets Non-current Net operating revenues from from revenues operating Net Expenditures for Expenditures long-lived nesgetrvne ,5 043–– – 10,413 – 3,354 revenues Intersegment noetxepne5489–7,5 ,5 – 2,752 76,357 – 514,819 Income tax expense xenlcsoes$60036$ 3,1 4,6 $– $143,363 $ 937,419 $– $6,090,316 customers external prtn noe19183–18521,6 – 15,765 198,592 – 1,991,833 income Operating ioiyitrs ,3,8 6,1 355– 13,555 169,715 – 1,937,086 interest minority neetepne(6,4)–(716 145 – (1,415) (47,146) – (168,944) expense Interest neeticm 455–6240– 490 662 – 54,535 income Interest oa ses78132–25878432824,620 473,278 2,568,758 – 7,891,322 Total assets e noe14221–3,6 ,2 – 9,824 30,661 – 1,422,221 income Net odil4148–55262,2 – 23,122 565,266 – 451,428 Goodwill odil55654–17068405624,363 400,556 1,790,698 – 5,586,534 goodwill ses10250–64136,7 – 66,176 634,123 – 1,072,520 assets Russia Mobile Russia Mobile (continued) (CONTINUED) ie ln CISMobile Fixed line ie ln CISMobile Fixed line Russia Russia

ie ln te Total Other Fixed line ie ln te Total Other Fixed line CIS CIS $ 4,867,978 $ 7,171,098 10,957,978 (194,282) 1,054,464 1,462,706 1,390,553 2,206,190 8,672,687 2,120,356 (217,505) 6,536,767 1,039,816 ,802,151 8 7, 1,212,138 1,772,819 1,397,319 1,512,113 390,663 593,928 775,223 811,489 55,687 23,349 13,767 5,081 151 ВымпелКом / Годовой отчет 2008 152 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” A reconciliation ofVimpelCom’s consolidated amountsfollows: to corresponding the information totalA reconciliation segmentfinancial 20. SegmentInformation decline in revenue streams andcashgeneration. streams inrevenue decline companies. The ofourcustomers may mainly power alsodamage inbusinesssector andthus crisis purchasing lead to forRussian to andcostofcapital access capital the andcompanies,banks toregarding beuncertainty continues there aimedat providing measures forRussian ofstabilization debt arange refinancing introduced andsupporting liquidity has RussianGovernment depreciation. Whilethe Russiaaswellruble within conditions credit sector, andtighter of deterioration significant banking inthe instability, hasresulted markets incapital crisis globalliquidity financial world. in the The andeconomicslowdownselsewhere ongoing The downturns to market Russianeconomyisvulnerable to supervisory, regard with actions continued legal andeconomicreforms. Tajikistan,Ukraine, governments’ Uzbekistan, willbesignificantly impacted respective by andArmenia their Georgia economiesofRussia, ofthe Kazakhstan, The successandstability continued territories. outsideoftheir to beilliquid inflation, of currency national lack whichcausethe controls ofcurrency markets, capital existence inthe andthe liquidity past haveinthe included historic normal higherthan These intransition. characteristics that ofamarket consistent with The economiesofRussia, Kazakhstan, Tajikistan, Ukraine, to traits certain display Uzbekistan, continue andArmenia Georgia 21. Commitments,Contingencies andUncertainties 2008, respectively. ended December31, and 2008, respectively amounted to assets US$6,206,125long-lived andUS$998,216 asofDecember31, customers amountedto US$8,597,184 external In RussiaandKazakhstan, from ourrevenues andUS$740,378 year forthe neeticm 339(,7)15,471 (186,404) 3 7,878 (194,839) (7,878) 22,666 (22,666) 23,349 (194,282) (217,505) 55,687 ofintercompany balances Elimination Total segments forreportable assets Assets expense interest income interest For theyearendedDecember31, 2006 expense interest income interest For theyearendedDecember31, 2007 expense interest income interest For theyearendedDecember31, 2008 oa osldtdast $15,725,153 Total consolidated assets (continued) (CONTINUED) Segment total

5306 742(495,634) 47,442 (543,076) 1,6 4,4)$71,618 $(47,442) $ 119,060

$ 16,759,608 (1,034,455) December 31, Intersegment interest 2008 December 31, $ 10,568,884 $ Consolidated $ 10,957,978$ (389,094) totals 3,021 2007

fifth years from the date of granting ofthe date the from years ofgranting fifth RussianFederation, third,the andalsowillhaveto endofthe by numberofbasestations buildacertain and the fourth by of dates certain provision 3Gstandards area subject that support base stations andwillhaveto ineach services start willhaveto that VimpelCom numberof buildacertain are The commitments. majorconditions capital certain three onMay 21, that expires RussianFederation ofthe 2017. territory entire for the The 3G to subject granted was license a 2007In April awarded was VimpelCom in2011).expires in2011–2012expire GSM-900/1800 (the region, Autonomous Buryatskiy forIrkutsk excluding Ust-Ordynskiy Region,license 28, onApril 2013.expire The GSM-900/1800 region, andpart ofFar Urals Eastregion Northwest that cover the licenses region,region, newterms andunderthe Volga Central havebeenreissued region region, Caucasusregion, Siberia andthe various underits authorized VimpelCom’slicenses. networks GSM-900/1800 Moscow andthe that coverMoscow licenses telecommunications wireless ofthe operation VimpelCom’s inRussiaisdependentuponthe revenues to generate ability TELECOM LICENSESCAPITALCOMMITMENTS inRussia, Kazakhstan, enterprises similar Tajikistan, Uzbekistan, Ukraine, andArmenia. Georgia of those than significant anymore are operations, to its asrelated contingencies, that these not does believe VimpelCom Thesetax regulations. developments impact onVimpelCom’s operations. couldhaveasignificant to continue ability Tajikistan, andfuture Uzbekistan, ofexisting Ukraine, andArmenia, including application Georgia the and legislation developments inRussia, Kazakhstan, by political to beaffected willcontinue position VimpelCom’s andfinancial operations or results ofoperations ofVimpelCom. liquidity condition, financial uponthe or other matters, what Note, other than isdiscussedinthis effect willnot haveamaterial VimpelCom’s opinionofmanagement, Inthe operates. ifany, inallpending liability, other litigation, legal proceeding inwhichVimpelCom environments andregulatory to developing andevolving the fiscal ofwhichrelate certain markets ofbusiness, course may VimpelCom ordinary bepartytoIn the various legal andtax proceedings, to andsubject claims, Company’sthe inamannernot determinable. currently position results andfinancial abovecouldnegatively affect described areas inthe deterioration further circumstances, unexpected current in the VimpelCom’s ofthe sustainability the to business support measures appropriate istaking it believes While management 21. Commitments,Contingencies andUncertainties (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” cover cities with populations of more than 1000 peopleby than December31, ofmore populations with 2012.cover cities isto commitment related GSM-900 the 2008, the foruseof1800radiofrequency, permission the addedwith was license ofKazakhstan. InJuly regions to coverapproximately indifferent majorhighways 98%ofthe network telecommunication 10,000 than ofmore populations people. AsofDecember31, with andcities Kar-Telof resorts 2008 hadbuilt its territory inthe ofKazakhstan, roads territory inthe allmajorhighways that covers network telecommunication the The KaR-Tel owns a GSM-900 KaR-Tel ofKazakhstan. The aGSM-900 owns territory entire overthe to operate license l icense was given to KaR-Tel subject to its ability to meet the following requirements by August 2003: following to the to requirements develop meet given KaR-Telicense was ability to subject its l icense for the provision of“ provision icense forthe l icense. (CONTINUED) 3G ” mobile radiotelephony communications services services communications ” mobileradiotelephony (continued) l icense expires inAugust 2013.icense expires 153 ВымпелКом / Годовой отчет 2008 154 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” finished. tax 2004–2005 havebeen forthe years to tax the examination respect inspectorate’s with decision. hearings Allcourt final tax ofthe that invalidated allclaims rulings court yearandasofDecember31, 2008 during positive received 2008, Sovintel a of approximately US$24.1 endedDecember31, years forthe million 2004 and2005. 4, OnOctober 2006, filed Sovintel on September25, 2006. taxes, owes The that Sovintel andpenalties amount claimed Russiantax inthe fines inspectorate in to tax issuedby isengaged the inspectorate claims EDN Sovintel inregard Russiantax the inspectorate with litigation the the approximately US$1,654 asofDecember31, rate andpenalties) at exchange infines the The 2008. intaxes andpenalties),rubles (including whichisapproximately infines 48.6 Russianrubles US$42,562 million (including 1,250.5 decision, anadditional to owes final VimpelCom the 2005 and2006. years According Russian for financial million RussiantaxOn June30, ofthe inspectorate’s decision ofVimpelCom’s Company afinal 2008, the review received tax filings tax 2003–2004 forthe years havebeenfinished. taxthe examination be partly to (164 respect Russianrubles, with orUS$5,580) million hearings 2005 tax the year.Allcourt during deducted asofDecember31, rate at exchange abovesumcan the that the hasacknowledged tax the however, inspectorate 2008), total forthe claim inincometax amountof166 (whichisapproximately ofits Russianrubles million portion US$5,650the tax ofthe inspectorate’s decision. VimpelCom that majorportion invalidated At the final sametime the rulings court lost tax challengedthe inspectorate’sVimpelCom andasofDecember31, decision final positive 2008,received VimpelCom US$11,879 asofDecember31, rate andpenalties) at exchange infines the 2008. (including andpenalties), 349 whichisapproximately infines Russianrubles US$61,401 million (including approximately intaxes 1,804 Russianrubles 2003–2004 The million states Russiantax anadditional filings. decision owes that VimpelCom On July ofVimpelCom’s to audit 6, the respect Russiantax 2006, the inspectorate’s with decision received VimpelCom final management’s bestestimate. tax exists, uncertainty hasaccrued VimpelCom Where alltaxes applicable. has paid that are oraccrued basedon liabilities that it notbelieves unusual.Management are between ofFinance andMinistry tax authorities andfederal local, regional opinionsofthe the to issubject interpretation andtheir not always clearly whichwere written, aswellin2008 periods in previous RussianFederation, manytaxthe VimpelCom’s were there market, predominant introduced regulations andrelated laws economies. In oriented acommandto market economiesfrom national their transform governments national respective The inRussia, systems Kazakhstan, taxation Tajikistan, evolving astheir Uzbekistan, are Ukraine, andArmenia Georgia TAXATION 21. Commitments,Contingencies andUncertainties l awsuit against the tax inspectorate disputing the claims. Sovintel challenged the tax challengedthe inspectorate’s claims.Sovintel decision the final disputing tax the inspectorate against awsuit tax inspectorate’s l ocal tax inspectors and officials of the Ministry ofFinance. Instances ofinconsistentopinions Ministry ofthe tax andofficials inspectors ocal decision and has filed a andhasfiled decision courts Russianarbitration inthe lawsuit (CONTINUED) (continued) . Company disagrees with Company with disagrees the taxthe inspectorate’s a andintendsto file decision approximately 30, asofApril rate andpenalties) US$1,080 with at 2009. exchange infines the disagrees EDNSovintel RUR323.8 intaxes (including million RUR35.9 andpenalties), whichisapproximately infines million US$9,739 (including 2006 and2007. years anadditional forfinancial owes decision, to final EDNSovintel tax the filings ofits According review 30,On April Russiantax ofthe inspectorate’s 2009, decision Company’s afinal the –received –EDNSovintel subsidiary TAXATION 21. Commitments,Contingencies andUncertainties (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Tel will take whatever actions it deems necessary and appropriate to protect itself against the Fund’s the against to andappropriate itself protect deemsnecessary Tel it claim. will take whatever actions Kar-Tel Fund’s andKar- that the filings. to parties’ basisofthe believe onthe continues merit, a decision iswithout claim Fund to the Kar-Tel’s from a response inJuly 2006. The filing court casemay presiding overthe Turkish issue court Kar-Tel’srejected OnDecember11, request. to stay the ofexecution respect appealwith Kar-Tel 2008 alsoreceived On December11, ofIstanbul dated Court 2008, December12, Kar-Tel ofTerritorial aDecision received 2007, Court the where and factual part ofIstanbul, the denyinginmaterial Court to pay. order ofthe Fund madeby insupport the legal assertions response, dated June30, 2006, Administrative to 4th the to Fund’s the to ofJustice, beforwarded Ministry Kazakh the via Panel Review ofKazakhstan. ofthe Supreme Court InJuly adecision ofthe 2006,in accordance with Kar-Tel its submitted by Kar-Tel redeemed inKar-Tel were interests interests 2003 their inNovember equity 60%ofthe until an aggregate owned includes Kar-Tel, Telecom A.S.These Rumeli Turkish A.S.and Telsim companies Telekomunikasyon two Hizmetleri Mobil failurethe ofT. ImarBankasi, T.A.S. The Fund’s to Kar-Tel’s response ofcompanies Uzangroup that the claims petition Uzanfamily with the with inconnection ofcompanies affiliated Uzangroup US$5.5 that were the against inclaims billion ofapproximately collection asserts, ofits amongother things, to pay order that the issuedinfurtherance was FundOn June1, response,the Inits 2006 Kar-Tel to order. Fund’s cancelthe the alsoreceived petition to its response to stay the application. respect with Kar-Tel ruling to anappealofthe order. cancelthe hassubmitted denied. Kar-Tel’s Kar-Tel Turkish counselhasadvised stay isbeingadjudicated that the request separately petition the from was request stay that the On June1, ofexecution Court’s 2006, ruling Administrative Kar-Tel ofthe notice formal received to pursuant applicable reviewed law. Turkey. We understand that Kar-Tel’s inTurkey, Court shouldbe andit Administrative assignedto 4th was the petition in proceedings andstay to Turkish order ofexecution the cancelthe court andrequesting order ofthe propriety the 17,On January to to objecting Turkish the court 2005, Kar-Tel to Turkish the inAlmaty consulate apetition delivered forpayment term Treasury andthe May was 6, 2004. of, nature the regarding any information debt, to other than asserted orbasisfor, state isadebt the to Turkish that it the 7,of October to Company the ofAlmaty. Bostandykski by Regional 2004, the Court The delivered not was does provide order 1, asofJanuary 2005). The dated order, as whichbecameeffective NewTurkish ofthe Lira, to introduction issued prior the “Fund”),(the amountofapproximately inthe US$5.5 (stated asapproximately billion Turkish 7.55lira and quadrillion Fund, bankinsolvencies Insurance from Deposit state arising claims aTurkish forcollecting state responsible agency Partnership “KaR-Tel” 10,On January Liability 2005, (“Kar-Tel”) Limited an“order received to pay” issuedby The Savings KAR-TEL (continued) l awsuit in the Russian Arbitration courts. RussianArbitration inthe awsuit (CONTINUED) (continued) 155 ВымпелКом / Годовой отчет 2008 156 VimpelCom / Annual Report 2008 legal action against it in connection with this matter. this with inconnection it against legal action taken usorthem. date against As ofthe actions hereof, against and directors Company the ofanypending isnot aware andwilldefend ourcompany ourreputation andthat wewillprotect and ourofficers ofourshareholders bestinterests the allapplicable Case, we, inaccordance with Farimex ofcourse, ofthe willact implications andin laws, andregulations rules Telenor’s outcomeor andstated, the letter respecting adecision amongother things, with faced that ifandwhenweare Telenor United inthe us(and, against whatever remedies ifappropriate, involved, any ofourmanagement personally) to asmay be available Case, Telenor Farimex ofthe payment willnot the inaction, ofenforcement hesitate to ourown ofproceeds pursue through any proceeds from the Farimex Case. Telenor Farimex the also stated from inthe any proceeds caseor the Caseandpublicly state willhavenothing to with do that Farimex it publicly denouncethe would VimpelCom ofTelenor’s rights, andstates, violations andsubstantive been gross that amongother procedural things, expect that they (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” 29, 2008 the Court of Appeals vacated the 29, ofAppealsvacated Court the 2008 and heldTelenor forapproximatelyliable US$2.8 ofdamages. billion Telenor andonDecember decision appealedthis Eco Telecom andTelenor claim. the to OnAugust 16, secure instance inpart sustained claim the offirst court 2008, the inourcompany shares by the owned URS, whichcausedusdamages. claimant’s to the motion arrest The rejected court nominated of by onourboard Telenor, directors the inouracquisition caused adelay through and that Telenor, acting Amongother things, allegedthat Alfa Kyivstarmarket. claimant andTelenor the prevented ourcompany acquiring from telecommunications into Ukrainian to the ourentrance defendants regard ofthe to ourcompany with actions by the defendants the to from ourcompany reimbursement seeking ofapproximately US$3.8 inallegeddamages caused billion party. The namedasathird solely was is aperson person claimant that the against cannot dueto fact beentered the partyisnot adefendant andjudgments ifhesochooses.Athird claim inthe proceedings who canparticipate inthe Under Russian case inthe potentially partyto isgenerally aperson interested aclaim namedasathird law, aperson Johansen,Fridman, Arve Reznikovich, to case. Alexey the parties Torgersen, namedasthird RustenandHenrik Fridtjof are Telenor directors, namely, andformer andOJSCCT-Mobile. Both ourcompany ofourcurrent Messrs. Mikhail andseveral Ecodefendants Telecom are claim underthe Limited, Altimo, Limited, Avenue Limited, SantelLimited, Properties Janow holderof25,000 Products, purported ofourADSs. Inc.,the Farimex TheAutonomous inRussiafrom named Okrug ofKhanty-Mansiisky Court Arbitration the with filed claim 15,On April acopyofpurported 2008, wereceived OTHER LITIGATIONS 21. Commitments,Contingencies andUncertainties former CEO, relating to the Farimex Case. Inthe to Farimex the CEO,relating former days to hasfive paythat it sumvoluntarily. the a We received to aclaim pay3, with 2009, US$1.7 beenserved Telenor to and publicly VimpelCom disclosed hasofficially billion that it OnApril shares. arrested decision. saleofthe this isgranted, the Ifastayis appealing freeze ofenforcement would it application.Telenor deniedthe court haspublicly stated butthe proceedings forastay that it ofenforcement applied Telenor oftime. has period acertain judgmentwithin court the cannot besoldtoto that they satisfy usto extent the shares the may alsotransfer judgment.The court bailiff the court to satisfy bailiff circumstances, court be soldby the by Telenor. owned 15.3 shares can, We arrested shares understand that these ofourordinary undercertain million bailiff for approximately US$1.7 indamages. billion decision. acourt Telenor ruling, this Subsequentto court the isappealing instance. 20,of first instance OnFebruary inpart andfoundTelenor sustained claim 2009, the offirst court the liable States and Europe, or before any transnational courts or agencies. On April 3, OnApril 2009, oragencies. to courts weresponded States anytransnational orbefore andEurope, l ower court’s ruling and remanded it for a new hearing at a different court court at adifferent foranewhearing it andremanded court’sower ruling l etter, Telenor alleges that in connection with the Farimex Case there have Casethere Farimex the with Telenoretter, allegesthat inconnection (CONTINUED) l l etter from Telenor, from datedetter 31, March 2009, to our addressed etter that if for any reason we accept, whether actively or actively whether weaccept, that ifforanyreason etter (continued)

not purchase the IPhone handsets in the first quarter of2009. quarter first inthe IPhonehandsets the not purchase The 2008. quarter Company fourth inthe butdid launch installment made12% ofIPhonesin2008 purchase quarterly ofits commercial beginningwith year period installments overatwo purchase quarterly underthe IPhonehandsets million On August 13, (“Apple”) 1.5 AppleSalesInternational to purchase with Company the into 2008 anagreement entered OTHER COMMITMENTS with remaining 3.73% remaining with by BV, Vimpelcom owned Finance ofVimpelCom. wholly subsidiary owned ofGoldenTelecom,into equity of96.27% the owner Inc.andbecameadirect ofGolden Telecom, capital share ofthe Inc. debt byTelecom, amountofthe GoldenTelecom owed underthese entire ofthe conversion Inc.completed loan agreements underthese becameaborrower Acquisition loan On22andGolden 2009 VimpelCom Lillian agreements. January with Acquisition Lillian wholly subsidiary owned loans total inthe amountofUS$4,128,400. GoldenTelecom, merger Inc.after ofGoldenTelecom, to acquisition its Inc.provided with inconnection VimpelCom 2008 In December2007 andinFebruary 22. SubsequentEvents Operating to beasfollows: isexpected years succeedingfive ofthe foreach lease commitments OPERATING LEASECOMMITMENTS to claim. this statements inrelation financial Company. inthese amountshavebeenaccrued No orour we cannot what, members ifany, predict shareholders, may namedboard haveonourstrategic matter impact this and matter this to take wewilltake regarding orwillberequired At stage, not what, this actions wedo know ifany, further amountisnot to that the subject tax. believes orservices,management forgoods obligations to Company’sVimpelCom. judgmentisnot the amountofthe related that the Taking business into consideration ordinary 2, of asofMarch 2009, decision reimbursement the Court concerning details ofthe the Telenorlosses from infavor of overVAT Company that the 2009, ofcontrol In April requested provide payments, purpose forthe tax the authorities OTHER LITIGATIONS 21. Commitments,Contingencies andUncertainties (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” Total Thereafter 2013 2012 2011 2010 2009 (continued)

(CONTINUED) (continued) $ 201,060 $ 86,037 14,930 65,270 13,294 11,843 9,686 157 ВымпелКом / Годовой отчет 2008 158 VimpelCom / Annual Report 2008 (Amounts presentedareinthousandsofUSdollarsunlessotherwiseindicatedandexceptpershare(ADS)amounts) FINANCIAL CONSOLIDATED STATEMENTS TO NOTES Open JointStockCompany“Vimpel-Communications” signing of the amendmentisnotsigning ofthe possible. statementsconsolidated ofGoldenTelecom, financial incase Inc.ormake prepayment facility fullamountofthe ofthe May 29, 2009. The Company isgoingto signanamendmentto the 30, awaiver 2009 wehavereceived until from period letter statements delivery offinancial anextension with lenders 21 within isnot remedied 120 breach yearandthis subsequentbusinessdays. financial days endofthe OnApril the after statements. Eventofdefaultfinancial within statements not provided incaseannualconsolidated are financial occurs LLC,EDN Sovintel GTS Finance, Inc.andsyndicate ofbanks, GoldenTelecom, consolidated audited its Inc.mustprovide US$275,000 ofthe terms datedIn accordance with agreement 25 2007 January amongGoldenTelecom, facility Inc., denominated USdollar of2009.term quarter fourth dueinthe liabilities US$166,692 to acquire agreements to hedgeourshort- inRussianrubles 2009, offorward intoIn March a series weentered equal to LIBOR+1.95% 6-month perannum. date The maturity ofthe basis. The onareimbursement amountwillberepaid principal in14Ericsson equalsemi-annualpayments plus interest to by VimpelCom provided equipmentandservices isto finance agency. The credit facility by EKNexport is guaranteed 24,On March 2009, signedasevenyear VimpelCom amountofUS$160,250. HVBinthe with loan agreement The facility this amountofUS$257,500. equipmentinthe telecommunication pledgeofthe by the willbesecured loan agreement of13.0% at arate annualmaximuminterest bears agreement onDecember27, andmatures 2012. The indebtedness under 10,On March 2009, signedafouryear VimpelCom amountof$US250,000. inthe Sberbank with loan The agreement to US amountequivalent ruble equipment inthe telecommunication the 19.0% onDecember27, andmatures 2011. The indebtedness underthis pledgeof by the willbesecured loan agreement the equivalent to US$223 equivalent the 10,On March 2009, year signedathree VimpelCom amountofRUR8,000 inthe million, Sberbank with loan agreement bonds, issuethe willbeableto does fullamountintended. issuebondsforthe that it bondsorthat ifit these development andthe ofVimpelCom’scurrency business. willbeableto that VimpelCom There issue core isnoassurance indebtedness denominated inforeign existing ofits bondsforrefinancing the from intendsto proceeds VimpelCom usethe result placement. asthe ofapublic The willbedefined rate annualinterest conditions. orredemption, dependingon market put-option ofthe to prior exercise period forthe will bedetermined values face foreach, of10 series rubles with foreach The couponrate billion series andthe bondsmay beissuedinthree placement. to public prior the whichwillbedetermined underconditions bondsto earlier sell their VimpelCom-Invest years. The to isfive bepaid couponsare to semiannually. period The right willhavethe Bondholders maturity proposed asof11 rate exchange 2009. February The by VimpelCom. bondswillbeguaranteed ofapproximately issueisupto Russianrubles,the equivalent 30 whichisthe billion US$834,992 BankofRussia at Central documentation. The amountof submitted proposed the registers Service Markets Financial RussianFederal on whichthe VimpelCom. The date bondsmay the beissueddependingonVimpelCom’s ofoneyearfrom aperiod fundingneedswithin LLC of awholly VimpelCom-Invest, bondsthrough subsidiary issuanceofRussianruble-denominated owned potential the for required documentation Service On 11 Markets Financial to RussianFederal the submitted 2009 VimpelCom February, 22. SubsequentEvents ,855 as of March 10, 2009. The 10, 2009. March of as ,855 (continued) (CONTINUED) l oan agreement bears annual maximum interest at a rate of at arate annualmaximuminterest bears oan agreement

l oan facility in order to exclude requirement to submit to submit to exclude requirement inorder oan facility l oan is2016. $233,649 as of March 10, 2009. 10, March of as $233,649 l oan

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