IMPORTANT NOTICE THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE EITHER (1) QIBS (AS DEFINED BELOW) OR (2) NON-U.S. PERSONS OR ADDRESSEES OUTSIDE OF THE UNITED STATES. IMPORTANT: You must read the following before continuing. The following applies to the prospectus following this page (the “Prospectus”) and you are therefore advised to read this carefully before reading, accessing or making any other use of the Prospectus. In accessing the Prospectus, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT, BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS AND WHICH DOES NOT REQUIRE THE ISSUER TO REGISTER UNDER THE INVESTMENT COMPANY ACT. THE FOLLOWING PROSPECTUS MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. Confirmation of your Representation: In order to be eligible to view this Prospectus or make an investment decision with respect to the securities, investors must be either (1) Qualified Institutional Buyers (“QIBs”) (within the meaning of Rule 144A under the Securities Act) or (2) non-U.S. persons (within the meaning of Regulation S under the Securities Act) outside the United States who are not acting for the account or benefit of U.S. persons. This Prospectus is being sent at your request and by accepting the e-mail and accessing this Prospectus, you shall be deemed to have represented to us that (1) you and any customers you represent are either (a) QIBs or (b) not a U.S. person and that the electronic mail address that you gave us and to which this e-mail has been delivered is not located in the United States and (2) that you consent to delivery of such Prospectus by electronic transmission. You are reminded that this Prospectus has been delivered to you on the basis that you are a person into whose possession this Prospectus may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorized to, deliver this Prospectus to any other person. The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the underwriters or any affiliate of the underwriters is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the underwriters or such affiliate on behalf of the issuer in such jurisdiction. This communication is only directed at persons who (i) are outside the United Kingdom or (ii) are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, (the “Financial Promotion Order”) or (iii) are persons falling within Article 49(2)(a) to (e) of the Financial Promotion Order (all such persons together being referred to as “relevant persons”). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this communication. This Prospectus has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of Barclays Bank PLC, Citigroup Global Markets Limited, ING Bank N.V., London Branch or The Royal Bank of Scotland plc (the “Lead Managers”) or any person who controls any of them, nor any director, officer, employee nor agent of any of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Prospectus distributed to you in electronic format and the hard copy version available to you on request from any of the Lead Managers. VimpelCom Holdings B.V. (a private limited liability company incorporated under Dutch law) US$600,000,000 5.20% Notes due 2019 and US$1,000,000,000 5.95% Notes due 2023 and RUB12,000,000,000 9.00% Notes due 2018 irrevocably and unconditionally guaranteed by Open Joint Stock Company “Vimpel-Communications” (an Open Joint Stock Company incorporated in the Russian Federation) Issue Price: 100.0% VimpelCom Holdings B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law (the “Issuer”), is offering an aggregate principal amount of US$600,000,000 5.20% Notes due 2019 (the “2019 Notes”), US$1,000,000,000 5.95% Notes due 2023 (the “2023 Notes” and, together with the 2019 Notes, the “USD Notes”) and RUB12,000,000,000 9.00% Notes due 2018 (the “RUB Notes” and, together with the USD Notes, the “Notes”). Open Joint Stock Company “Vimpel-Communications” (the “Guarantor”or“OJSC VimpelCom”), the Issuer’s direct 100.0% (minus one share) owned subsidiary, has irrevocably and unconditionally guaranteed the due and punctual payment of all amounts at any time becoming due and payable in respect of each of the USD Notes and the RUB Notes under the guarantees (the “Guarantees”) contained in the trust deeds relating to the Notes (the “Trust Deeds”). The Issuer has the option to terminate the Guarantees in certain circumstances, as described in “Terms and Conditions of the Notes.” The Issuer will pay interest on the 2019 Notes at an annual rate equal to 5.20%, on the 2023 Notes at an annual rate equal to 5.95% and on the RUB Notes at an annual rate equal to 9.00%. Interest on the Notes is payable semi-annually in arrear on February 13 and August 13 in each year, commencing on August 13, 2013. Payments on the Notes (including payments by a Guarantor under each Guarantee or otherwise under each Trust Deed) will be made without deduction for or on account of taxes of the Netherlands or the Russian Federation, unless such withholding or deduction is required by law. In such event, the Issuer or (as the case may be) the Guarantor will, subject to certain exceptions and limitations, pay additional amounts to the holder of any Note to the extent described under “Terms and Conditions of the Notes— Condition 8 (Taxation).” The 2019 Notes will be redeemed on February 13, 2019, the 2023 Notes will be redeemed on February 13, 2023 and the RUB Notes will be redeemed on February 13, 2018. The Issuer may redeem all of the Notes at 100% of the principal amount thereof, plus accrued and unpaid interest, in the event of certain taxation changes. See “Terms and Conditions of the Notes—Redemption and Purchase—Condition 6(b) (Redemption by the Issuer for tax reasons).” The Notes will rank equally in right of payment with the Issuer’s other existing and future unsecured and unsubordinated indebtedness. Each Guarantee will rank equally in right of payment to all existing and future senior unsecured and unsubordinated indebtedness of the Guarantor. This prospectus has been approved by the Central Bank of Ireland (the “Central Bank”) as competent authority under Directive 2003/71/EC (the “Prospectus Directive”). Such approval relates only to the Notes which are to be admitted to trading on a regulated market for the purposes of Directive 2004/39/EC or which are to be offered to the public in any Member State of the European Economic Area. The Central Bank only approves this prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Application has been made to the Irish Stock Exchange (the “Irish Stock Exchange”) for the Notes to be admitted to the official list (the “Official List”) and trading on its regulated market. No certainty can be given that the application will be granted. Furthermore, admission of the Notes to the Official List and trading on its regulated market is not an indication of the merits of the Issuer, the Guarantor or the Notes. This Prospectus constitutes a “prospectus” for the purposes of the Prospectus (Directive 2003/71/EC) Regulations 2005 (the “Prospectus Regulations”) which implement the Prospectus Directive in Ireland. References in this prospectus to Notes being “listed” (and all related references) shall mean that such Notes have been admitted to trading on the regulated market of the Irish Stock Exchange. There can be no assurance that a trading market in the Notes will develop or be maintained. AN INVESTMENT IN THE NOTES INVOLVES A HIGH DEGREE OF RISK. SEE THE SECTION OF THIS PROSPECTUS ENTITLED “RISK FACTORS” BEGINNING ON PAGE 14 OF THIS PROSPECTUS. The Notes and the Guarantees have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or under any securities laws of any other jurisdiction. The Notes will be offered and sold outside the United States to non-U.S. persons in offshore transactions as defined in and in reliance on Regulation S under the Securities Act and in the United States to persons that are qualified institutional buyers (“QIBs”) (within the meaning of Rule 144A under the Securities Act) in reliance on an exemption from registration pursuant to Rule 144A under the Securities Act. Prospective purchasers of the Notes are hereby notified that the Issuer of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. For a description of these and certain further restrictions on the transfer of the Notes, see “Form of Notes and Transfer Restrictions.” The Notes will be ready for delivery in book-entry form only through the facilities of Clearstream Banking, société anonyme (“Clearstream, Luxembourg”), Euroclear Bank SA/NV as operator of the Euroclear System (“Euroclear”) and, in the case of the USD Notes only, The Depository Trust Company (“DTC”) on or about February 13, 2013. Lead Managers and Bookrunners Barclays Citigroup ING The Royal Bank of Scotland The date of this prospectus is February 11, 2013. IMPORTANT INFORMATION ABOUT THE OFFER For information about VimpelCom Holdings B.V. (the “Issuer”), Open Joint Stock Company “Vimpel-Communications” (the “Guarantor” or “OJSC VimpelCom”), this offering (the “Offer”), and the terms and conditions of the Notes, you should rely only on the information contained in this prospectus. Barclays Bank PLC, Citigroup Global Markets Limited, ING Bank N.V., London Branch and The Royal Bank of Scotland plc (collectively, the “Lead Managers” and each a “Lead Manager”), the Issuer, the Guarantor and BNY Mellon Corporate Trustee Services Limited (the “Trustee”) have not authorized any person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that, unless otherwise indicated, the information appearing in this prospectus is accurate as of the date of this prospectus only. The Issuer’s and the Guarantor’s business, financial condition, results of operations and the information set forth in this prospectus may have changed since that date. The Issuer and the Guarantor accept responsibility for the information contained in this prospectus. To the best of the knowledge and belief of the Issuer and the Guarantor (having taken all reasonable care to ensure that such is the case), the information contained in this prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Each of the Issuer and the Guarantor, having made all reasonable inquiries, confirms that (i) this prospectus contains all information with respect to the Issuer, the Guarantor, the Issuer’s subsidiaries, the Guarantees and the Notes that is material to the Offer; (ii) such information is true and accurate in every material respect and is not misleading in any material respect; (iii) the opinions, assumptions and intentions expressed in this prospectus on the part of the Issuer and the Guarantor are honestly held or made, have been reached after considering all relevant circumstances, are based on reasonable assumptions and are not misleading in any material respect; (iv) this prospectus does not contain any untrue statement of a material fact nor does it omit to state a material fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading; and (v) all proper inquiries have been made to ascertain and verify the foregoing. Accordingly, other than as provided above and in the paragraph below, the Issuer and the Guarantor accept responsibility for the information contained in this prospectus. Notwithstanding the preceding paragraph, the Issuer and the Guarantor obtained the market data used in this prospectus from internal surveys, industry sources, government sources and publicly available information. Although the Issuer and the Guarantor believe that their sources are reliable, information and data from industry and government sources has not been independently verified by the Issuer, the Guarantor, the Lead Managers or the Trustee or any of their respective affiliates or agents. Each of the Issuer and the Guarantor confirms that the market data from internal surveys, industry sources, government sources and publicly available information used in this prospectus has been accurately reproduced and that as far as it is aware and is able to ascertain from information published, no facts have been omitted which would render the reproduced information inaccurate or misleading, but none of the Issuer, the Guarantor, the Lead Managers or the Trustee nor any of their respective affiliates or agents makes any further representation or warranty relating thereto. Each Noteholder participating in the Offer will be deemed to have made certain acknowledgments, representations and agreements as set forth under the section of this prospectus entitled “Form of Notes and Transfer Restrictions.” The Notes and the Guarantees have not been registered under the Securities Act or any state securities laws or the laws of any other jurisdiction, are subject to restrictions on transferability and resales, and unless so registered, may not be transferred or resold except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws. Each purchaser of Notes should be aware that it may be required to bear the financial risks of this investment for an indefinite period of time. None of the Issuer, the Guarantor, the Lead Managers, the Trustee or any of their respective affiliates or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of any of the information in this prospectus. Each person receiving this prospectus acknowledges that such person has not relied on the Issuer, the Guarantor, any Lead Manager, the Trustee or any of their respective affiliates or agents in connection with its investigation of the accuracy of such information or its investment decision. Each person contemplating accepting the Offer and making an investment in the Notes must make its own investigation and analysis of the creditworthiness of the Issuer and the Guarantor and its own determination of the suitability of such investment, with particular reference to its own investment objectives and experience, and any other factors that may be relevant to it in connection with such investment. No person has been authorized in connection with the Offer to make or provide any representation or information regarding the Issuer, the Guarantor, the Notes or the Guarantees other than as contained in this prospectus. Any such representation or information should not be relied upon as having been authorized by the Issuer, the Guarantor, the Lead Managers, the Trustee or any of their respective affiliates or agents.

i Neither the delivery of this prospectus nor the offering, sale or delivery of any Note in the Offer shall in any circumstances create any implication that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the condition (financial or otherwise) of the Issuer or the Guarantor since the date of this prospectus. Unless otherwise indicated, all information in this prospectus is given as of the date hereof. This prospectus does not constitute an offer of, or the solicitation of an offer to buy, the Notes in any jurisdiction where it is unlawful to make such an offer or solicitation. The distribution of this prospectus and the offering, sale and delivery of the Notes in the Offer in certain jurisdictions may be restricted by law. Persons into whose possession this prospectus comes are required by the Lead Managers, the Issuer, the Guarantor and the Trustee to inform themselves about and to observe any such restrictions. This prospectus may not be used for, or in connection with, any offer to, or solicitation by, anyone in any jurisdiction or under any circumstances in which such offer or solicitation is not authorized or is unlawful. For a description of certain further restrictions on offers, sales and deliveries of the Notes and distribution of this information, see the section of this prospectus entitled “Subscription and Sale.” None of the Issuer, the Guarantor, the Lead Managers, the Trustee and any of their respective affiliates or agents makes any representation about the legality of the acceptance of the Offer or the purchase of, or exchange for, the Notes by an investor under applicable investment or similar laws. Each prospective investor is advised to consult its own counsel and business adviser as to legal, business and related matters concerning the acceptance of the Offer and the Notes. The contents of this prospectus are not to be construed as legal, business or tax advice. Each prospective purchaser of the Notes must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases, offers or sells the Notes and must obtain any consent, approval or permission required of it for the purchase, offer or sale by it of the Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales, and none of the Issuer, the Guarantor, the Lead Managers or the Trustee or any of their respective affiliates or agents shall have any responsibility therefor. This prospectus contains summaries intended to be accurate with respect to certain terms of the Trust Deeds and the agency agreements relating to the Notes (the “Agency Agreements”), but reference is made to the actual documents, which will be made available free of charge to prospective investors upon request to the Issuer, the Guarantor or at the office of the principal paying agent in London, for complete information with respect thereto, and all summaries are qualified in their entirety by such reference. The Issuer may withdraw the Offer at any time and the Issuer and the Lead Managers reserve the right to reject any offer to purchase the Notes in whole or in part and to sell to any prospective investor less than the full amount of Notes sought by such investor. The Lead Managers and certain related entities may acquire a portion of the Notes for their own account. This prospectus has been filed with and approved by the Central Bank as required by the Prospectus Regulations. Any investment in Notes does not have the status of a bank deposit and in not within the scope of the deposit protection scheme operated by the Central Bank. The Issuer is not and will not be regulated by the Central Bank or by the Dutch Central Bank (De Nederlandsche Bank N.V.) as a result of issuing the Notes. The Notes have not been recommended by or approved by the SEC or any other federal or state securities commission or regulatory authority, nor has any commission or regulatory authority passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

STABILIZATION IN CONNECTION WITH THE ISSUE OF THE NOTES, BARCLAYS BANK PLC (THE “STABILIZING MANAGER”) (OR PERSONS ACTING ON ITS BEHALF) MAY OVER ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILIZING MANAGER (OR PERSONS ACTING ON ITS BEHALF) WILL UNDERTAKE STABILIZATION ACTION. ANY STABILIZATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF ALLOTMENT OF THE NOTES. ANY STABILIZATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE RELEVANT STABILIZING MANAGER (OR PERSONS ACTING ON ITS BEHALF) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.

ii NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ANNOTATED, 1955, AS AMENDED, WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE NEW HAMPSHIRE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICE TO INVESTORS IN THE UK This communication is only directed at persons who (i) are outside the United Kingdom or (ii) are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Financial Promotion Order”) or (iii) are persons falling within Article 49(2)(a) to (e) of the Financial Promotion Order, or all such persons together being referred to as “relevant persons.” This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this communication.

NOTICE TO INVESTORS IN THE NETHERLANDS The Notes (including the rights representing an interest in the Notes in global form), which are the subject of this prospectus, shall not be offered, sold, transferred or delivered to the public in the Netherlands, unless in reliance on Article 3(2) of the Prospectus Directive and provided: • such offer is made exclusively to legal entities which are qualified investors (within the meaning of the Prospectus Directive) in the Netherlands; • standard logo and exemption wording are incorporated in the offer documents, advertisements and documents in which the offer is announced, as required by article 5:20(5) of the Dutch Financial Supervision Act (Wet op het financieel toezicht) (the “Dutch FSA”); or • such offer is otherwise made in circumstances in which article 5:20(5) of the Dutch FSA is not applicable. For the purposes of this paragraph, the expression an “offer of Notes to the public” in relation to any Notes in the Netherlands means the announcement or communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive) and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

NOTICE TO INVESTORS IN THE EUROPEAN ECONOMIC AREA This prospectus has been prepared on the basis that all offers of Notes other than the offer(s) contemplated in this prospectus in Ireland, once the prospectus has been approved by the competent authority in such Member State and published in accordance with the Prospectus Directive (2003/71/EC), as amended, as implemented in Ireland, will be made pursuant to an exemption under the Prospectus Directive, as implemented in member states of the European Economic Area (“EEA”) from the requirement to produce a prospectus for offers of Notes. Accordingly any person making or intending to make any offer within the EEA of Notes which are the subject of the placement contemplated in this prospectus should only do so in circumstances in which no obligation arises for the Issuer, the Guarantor or the Lead Managers to produce a prospectus for such offer. Neither the Issuer, the Guarantor nor the Lead Managers have authorized, nor do they authorize, the making of any offer of Notes through any financial intermediary.

NOTICE TO INVESTORS IN SWITZERLAND Neither this prospectus nor any other offering nor marketing material relating to the Notes constitutes a prospectus as such term is understood pursuant to article 652a or article 1156 of the Swiss Code of Obligations or

iii a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange Ltd or any other regulated trading facility in Switzerland or a simplified prospectus or a prospectus as such term is defined in the Swiss Federal Collective Investment Scheme Act. Neither this prospectus nor any other offering nor marketing material relating to the Notes will be publicly distributed or otherwise made publicly available in Switzerland by the Issuer, the Guarantor or the Lead Managers.

NOTICE TO INVESTORS IN HONG KONG The contents of this prospectus have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the Offer. If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice from your broker, bank manager, solicitor, professional accountant, financial advisor, or other professional advisor. This prospectus and the information contained herein may not be used other than by the person to whom it is addressed and may not be reproduced in any form or transferred to any person in Hong Kong. This Offer is not an offer for sale to the public in Hong Kong and it is not the intention of the Issuer that the Notes be offered for sale to the public in Hong Kong.

NOTICE TO INVESTORS IN SINGAPORE This prospectus has not been, and will not be, registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes offered in this Offer may not be circulated or distributed, nor may the Notes offered in this Offer be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the Notes offered in this Offer are subscribed or purchased under Section 275 of the SFA by a relevant person which is: • a corporation, which is not an accredited investor (as defined in Section 4A of the SFA), the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or • a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest, howsoever described, in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes offered in this Offer pursuant to an offer made under Section 275 of the SFA except: • to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than Singapore $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA; • where no consideration is or will be given for the transfer; or • where the transfer is by operation of law. For a description of certain further restrictions on offers and sales of the Notes and distribution of this prospectus, see the section of this prospectus entitled “Subscription and Sale.”

LIMITATION ON ENFORCEABILITY OF CIVIL LIABILITIES The Issuer’s and Guarantor’s presence outside the United Kingdom and the United States may limit your legal recourse against the Issuer and the Guarantor. The Issuer is a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law and the Guarantor is incorporated under the laws of the Russian Federation and neither has a presence in the United Kingdom or the United States. The Issuer’s and Guarantor’s directors and executive officers named in this prospectus reside outside the United Kingdom and the United States, principally, in the Netherlands and Russia. All or a substantial portion of the

iv Issuer’s and Guarantor’s assets and the assets of the Issuer’s and Guarantor’s officers and directors are also located outside the United Kingdom and the United States. As a result, it may not be possible for the Trustee, acting on behalf of Noteholders or, in certain circumstances, a Noteholder, to: • effect service of process within the United Kingdom or the United States on the Issuer or the Guarantor or on the Issuer’s or the Guarantor’s officers and directors named; or • obtain or enforce English or U.S. court judgments against the Issuer, the Guarantor, the Issuer’s or Guarantor’s officers and directors on any basis, including actions under the civil liability provisions of English law or U.S. securities laws. Under the terms of the Trust Deeds, the Issuer and the Guarantor will appoint an agent for service of process in London, England for claims under the Trust Deeds. It is possible that a Russian court will not recognize this appointment. The Issuer and the Guarantor will not appoint an agent for service of process in the United States. It may be difficult for the Trustee, acting on behalf of Noteholders, to enforce, in original actions brought in courts in jurisdictions located outside the United Kingdom or United States, liabilities predicated upon English law or U.S. securities laws. In addition, judgments rendered by a court in any jurisdiction outside the Russian Federation will be recognized by courts in Russia only if an international treaty providing for the recognition and enforcement of judgments in civil cases exists between the Russian Federation and the country where the judgment is rendered. No such treaty exists between the United States and the Russian Federation, or between the United Kingdom and the Russian Federation, for the reciprocal recognition and enforcement of foreign court judgments in civil and commercial matters. However, according to recent trends in Russian court practice, a foreign judgment can be recognized and enforced in the Russian Federation based on the principles of reciprocity and international comity in absence of a bilateral or multilateral treaty to which the Russian Federation and the relevant foreign country are parties. Currently there exist several cases in which Russian courts recognized and enforced foreign court judgments based on such principles (several English court judgments and a Dutch court judgment). However, in the absence of established court practices, it is difficult to predict whether a Russian court will be inclined in any particular case to recognize and enforce an English court judgment on these grounds. These limitations may deprive the Trustee of effective legal recourse for claims related to your investment in the Notes. In addition, it may be difficult for investors to enforce judgments obtained in non-Dutch courts against the Issuer. The Netherlands does not currently have a treaty with the United States providing for reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any court in any federal or state court in the United States based on civil liability, whether or not predicated solely upon United States federal securities laws, would not automatically be recognized or enforceable in the Netherlands. In order to obtain a judgment which is enforceable in the Netherlands, the claim must be re-litigated before a competent Dutch court. A Dutch court will, under current practice, generally grant the same judgment without re-litigation on the merits (i) if that judgment results from legal proceedings compatible with Dutch notions of due process, (ii) if that judgment does not contravene public policy (openbare orde) of the Netherlands and (iii) if the jurisdiction of the relevant federal or state court in the United States has been based on internationally accepted principles of private international law. Subject to the foregoing and service of process in accordance with applicable treaties, investors may be able to enforce in the Netherlands judgments in civil and commercial matters obtained from U.S. federal or state courts. However, no assurance can be given that such judgments will be enforceable. In addition, it is doubtful whether a Dutch court would accept jurisdiction and impose civil liability in an original action commenced in the Netherlands and predicated solely upon U.S. federal securities laws. The Notes and the Trust Deeds are governed by the laws of England and the Issuer and the Guarantor have agreed in the Trust Deeds that disputes arising thereunder and under the Notes are subject to arbitration in accordance with the Rules of Arbitration of the London Court of International Arbitration, also known as LCIA with the seat of any such arbitration in London, England. See “Terms and Conditions of the Notes—Condition 18 Governing Law and Arbitration.” The Netherlands and the Russian Federation are parties to the United Nations (New York) Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”) Consequently, an arbitral award from an arbitral tribunal in the United Kingdom, or the United States would generally be recognized and enforced in the Russian Federation on the basis of the rules of the New York Convention and the enforcement in the Netherlands of an arbitral award rendered in the United Kingdom or the United States will be subject to the provisions of the New York Convention. However, it may be difficult to enforce arbitral awards in the Russian Federation due to: • the limited experience of Russian courts in international commercial transactions;

v • official and unofficial political resistance to the enforcement of awards against Russian companies in favor of foreign investors; and • the inability of Russian courts to enforce such orders and corruption. See “Risk Factors—Legal and Regulatory Risks—Lack of independence and experience of the judiciary, difficulty of enforcing court decisions, the unpredictable acknowledgement and enforcement of foreign court judgments or arbitral awards in Russia, Ukraine and the CIS and governmental discretion in enforcing claims give rise to significant uncertainties.”

vi CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains “forward-looking statements,” as this phrase is defined in Section 27A of the U.S. Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Forward-looking statements are not historical facts and can often be identified by the use of terms like “estimates,” “projects,” “anticipates,” “expects,” “intends,” “believes,” “will,” “may,” “should” or the negative of these terms. All forward-looking statements, including discussions of strategy, plans, objectives, goals and future events or performance, involve risks and uncertainties. Examples of forward-looking statements include: • our strategy to generate sufficient net cash flow in order to meet our debt service obligations; • our plans to develop and provide integrated telecommunications services to our customers, increase fixed and mobile telephone use and expand our operations in Russia, Ukraine, the CIS and other countries where we operate; • our ability to execute our business strategy successfully and achieve the expected benefits from our existing and future acquisitions; • our ability to extract anticipated synergies or to integrate an acquired business into our group in a timely and cost-effective manner; • our ability to successfully challenge claims brought against KaR-Tel; • our expectations as to pricing for our products and services in the future, improving the total average monthly service revenues per subscriber and our future operating results; • our ability to meet our projected capital requirements; • our ability to meet license requirements and to obtain, maintain, renew or extend licenses, frequency allocations and frequency channels and obtain related regulatory approvals; • our ability to obtain and maintain interconnect agreements; and • other statements regarding matters that are not historical facts. While these statements are based on sources believed to be reliable and on our management’s current knowledge and best belief, they are merely estimates or predictions and cannot be relied upon. We cannot assure you that future results will be achieved. The risks and uncertainties that may cause our actual results to differ materially from the results indicated, expressed or implied in the forward-looking statements used in this prospectus include: • risks relating to changes in political, economic and social conditions in each of the countries in which we operate; • in each of the countries in which we operate, risks relating to legislation, regulation and taxation, including laws, regulations, decrees and decisions governing the telecommunications industry, currency and exchange controls and taxation legislation, and their official interpretation by governmental and other regulatory bodies and courts; • risks that various courts or regulatory agencies in which we are involved in legal challenges or appeals may not find in our favor; • risks relating to our company, including demand for and market acceptance of our products and services, regulatory uncertainty regarding our licenses, frequency allocations and numbering capacity, constraints on our spectrum capacity, availability of line capacity and competitive product and pricing pressures; • risks associated with discrepancies in subscriber numbers and penetration rates caused by differences in the churn policies of mobile operators; and • other risks and uncertainties. These factors and the other risk factors described in this prospectus (in the section entitled “Risk Factors” beginning on page 14 are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our future results. Under no circumstances should the inclusion of such forward looking statements in this prospectus be regarded as a representation or warranty by us, the Lead Managers, or any other person with respect to the achievement of results set out in such statements or that the underlying assumptions

vii used will in fact be the case. The forward-looking statements included in this prospectus are made only as of the date of this prospectus and we cannot assure you that projected results or events will be achieved. Except to the extent required by law, we disclaim any obligation to update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise.

viii PRESENTATION OF FINANCIAL AND OTHER INFORMATION This prospectus describes matters that relate generally to the Issuer, a private limited liability company incorporated under Dutch law, and its consolidated subsidiaries. Thus, we use terms such as “we,” “us,” “our,” “our company” or “our group” and similar plural pronouns when describing the matters that relate generally to the Issuer and its consolidated subsidiaries. In addition, the discussion of our business and the telecommunications industry contains references to certain terms specific to our business, including numerous technical and industry terms. Certain of these terms, as well as other terms used in this prospectus, are below: • References to our operations in the “Moscow license area” are to our operations in the City of Moscow and the Moscow region. • References to our operations in “the regions,” “the regions outside of Moscow” and “the regions outside of the Moscow license area” are to our operations in the regions of the Russian Federation outside of the City of Moscow and the Moscow region. • Unless the context otherwise requires, references to our operations in the “CIS” are to our operations in the Commonwealth of Independent States outside of the Russian Federation and Ukraine. Although Georgia is no longer a member of the CIS, consistent with our historic reporting practice, we continue to include Georgia in our CIS mobile reporting segment, and references to “CIS” in this prospectus generally include Georgia. • References to the “super-regions” are to Russia’s seven large geographical regions and the Moscow license area. • References to “GSM-900/1800” are to dual band networks that provide mobile telephone services using the Global System for Mobile Communications standard in the 900 MHz and 1800 MHz frequency ranges. References to “GSM-1800” are to networks that provide mobile telephone services using GSM in the 1800 MHz frequency range. References to “GSM-900” are to networks that provide mobile telephone services using GSM in the 900MHz frequency range. References to “GSM” are to both the GSM-900 and GSM-1800 standards. • References to “3G” technologies are to third generation mobile technologies, including Universal Mobile Telecommunications System (“UMTS”). • References to “4G” technologies are to fourth generation mobile technologies for high-speed wireless data transmission. • References to “LTE” technologies are to long term evolution, a “4G” mobile access technology. • References to “mobile services” are to our wireless voice and data transmission services but excluding Wireless Fidelity technology (“WiFi”). • References to our “mobile subscribers” are to active subscribers of our mobile telecommunications services. A subscriber is considered “active” if the subscriber’s activity resulted in income to our group during the most recent three months and if the subscriber remained in the mobile subscriber base at the end of the reported period. Such activity includes all incoming and outgoing calls, subscriber fee accruals, debits related to service, mobile Internet service via Universal Serial Bus (“USB”) modems, outgoing short messaging service (“SMS”), and multimedia messaging service (“MMS”), and data transmission and receipt sessions, but does not include incoming SMS and MMS sent by our company or abandoned calls. We calculate monthly average minutes of use per mobile subscriber (“MOU”) and monthly average revenue per mobile subscriber (“ARPU”), on the basis of subscriber data using the “active subscriber” definition. Previously, we reported mobile subscriber data on the basis of registered mobile subscribers. A registered mobile subscriber is an authorized user of mobile services, using one SIM card (GSM/3G) with one or several selective numbers. Other mobile telecommunications operators may apply mobile subscriber policies that differ from ours. • References to “Russian roubles” or “roubles” or “RUB” or “RUR” are to the lawful currency of the Russian Federation. • References to “US$” or “$” or “USD” or “U.S. dollars” are to the lawful currency of the United States of America. • References to “LIBOR” are to the London Interbank Offered Rate. • References to “AB SEK” are to AB Svensk Exportkredit.

ix • References to “MosPRIME” are to the Moscow Prime Offered Rate. • References to “Moody’s Investors Service” are to Moody’s Investors Service Ltd. • References to “Moody’s” are to Moody’s Investors Service, Inc. Moody’s is not established in the European Union and is not registered under the CRA Regulation (as defined in “Overview—The Notes.”). • References to “the Notes” mean, collectively, the 2019 Notes, the 2023 Notes and the RUB Notes, unless the context indicates that such reference is intended to specify the 2019 Notes, the 2023 Notes or the RUB Notes, in which case, such reference shall mean the 2019 Notes, the 2023 Notes or the RUB Notes, as the case may be. • References to the “VimpelCom Ltd. Group” are to VimpelCom Ltd. and its subsidiaries. • References to “OJSC VimpelCom” or the “Guarantor” are to Open Joint Stock Company “Vimpel-Communications” and its subsidiaries. • References to “KaR-Tel” are to Limited Liability Partnership KaR-Tel. • References to “Sky Mobile” are to Limited Liability Company Sky Mobile. • References to “URS” are to Private Joint Stock Company “Ukrainian Radio Systems”. • References to “Weather” are to Weather Investments II S.à r.l. and references to the “Weather Group” are to Weather and its subsidiaries. • References to “Wind Telecom” are to Wind Telecom S.p.A., which until December 30, 2010, was known as Weather Investments S.p.A., and its subsidiaries. • References to the “Wind Telecom Transaction” are to the acquisition by our indirect parent company, VimpelCom Ltd., of Wind Telecom. • References to the “Telenor Group” or “Telenor” are to Telenor ASA and its subsidiaries. • References to the “Alfa Group” are to the Alfa Group Consortium, which includes Altimo Holdings & Investments Ltd. and its affiliates. References to “Altimo Holdings” are to Altimo Holdings & Investments Ltd. only. References to “Altimo” are to Altimo Holdings & Investments Ltd. and/or (as the context may require) its subsidiaries holding shares in VimpelCom Ltd. References to “Altimo Coöperatief” are to Altimo Coöperatief U.A., a subsidiary of Altimo Holdings and the direct holder of Altimo’s shares in VimpelCom Ltd. • References to “Kyivstar” are to Private Joint Stock Company, “Kyivstar”. • References to the “Original Promissory Note” are to the promissory note issued by the Issuer to VimpelCom Ltd. in September 2010 in the approximate principal amount of US$16.7 billion, and subsequently transferred to VimpelCom Amsterdam B.V. and refinanced in June 2011 by the Outstanding Promissory Note. • References to the “Outstanding Promissory Note” are to the promissory note issued by the Issuer to VimpelCom Amsterdam B.V. dated June 29, 2011, in the original principal amount of approximately US$16.1 billion, as amended on February 13, 2013 to extend its maturity date to March 13, 2023. Certain amounts and percentages that appear in this prospectus have been subject to rounding adjustments. As a result, certain numerical figures shown as totals, including in tables, may not be exact arithmetic aggregations of the figures that precede or follow them. In October 2009, Telenor ASA, the parent company of the Telenor Group, and Altimo Holdings, a member of the Alfa Group and the parent company of Eco Telecom Limited, announced that they agreed to combine their ownership of OJSC VimpelCom and Kyivstar, under a new company called VimpelCom Ltd. Kyivstar is a Ukrainian mobile operator, 56.5% of which was owned by subsidiaries of Telenor and 43.5% of which was owned by subsidiaries of Altimo. We refer to the combination in this prospectus as the “VimpelCom Ltd. Transaction.” The VimpelCom Ltd. Transaction involved a series of transactions, including an exchange offer by VimpelCom Ltd. comprised of (i) an offer to all holders resident in the United States (including its territories and possessions) of shares of OJSC VimpelCom’s common and preferred stock and to all holders of OJSC VimpelCom’s ADSs, wherever located, referred to in this prospectus as the “U.S. Offer,” and (ii) a separate voluntary tender offer to all holders of shares of OJSC VimpelCom’s common and preferred stock, wherever located, referred to in this prospectus as the “Russian Offer.” The Russian Offer and the U.S. Offer are

x collectively referred to in this prospectus as the “VimpelCom Ltd. Exchange Offers.” Completion of the VimpelCom Ltd. Exchange Offers was conditioned upon greater than 95.0% of OJSC VimpelCom’s shares, including those represented by ADSs, being validly tendered and not withdrawn, in addition to other conditions. On April 21, 2010, all conditions of the VimpelCom Ltd. Exchange Offers were satisfied, and VimpelCom Ltd. acquired approximately 98.0% of OJSC VimpelCom’s outstanding shares, including shares represented by ADSs. Immediately following completion of the VimpelCom Ltd. Exchange Offers, subsidiaries of Telenor and Altimo caused their direct and indirect interests in Kyivstar to be transferred to the Issuer. On May 14, 2010, OJSC VimpelCom’s ADSs were delisted from the NYSE, and on June 2, 2010, OJSC VimpelCom’s shares were excluded from the list of traded securities at the Open Joint Stock Company Russian Trading System Stock Exchange (the “Russian Trading System”). On August 6, 2010, VimpelCom Ltd. completed the acquisition of all of OJSC VimpelCom’s shares, including those represented by ADSs, from OJSC VimpelCom’s remaining minority shareholders by way of a squeeze-out process under Russian law commenced on May 25, 2010. Please also see the section of this prospectus entitled “Glossary of Technical Terms” for definitions of certain terms used in this prospectus.

Non-IFRS Financial Measures Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and adjusted EBITDA margin are non-IFRS financial measures. We calculate adjusted EBITDA as profit for the period before depreciation, amortization, impairment loss, finance costs, income tax expense and the other line items reflected in the reconciliation table in “Overview—Summary Financial Data” below. Our consolidated adjusted EBITDA includes certain reconciliation adjustments necessary because our Russia segment excludes certain expenses from their adjusted EBITDA. As result of the reconciliations, our consolidated adjusted EBITDA differs from the aggregation of adjusted EBITDA of each of our business units. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by total operating revenues. Adjusted EBITDA and adjusted EBITDA margin should not be considered in isolation or as a substitute for analyses of the results as reported under IFRS. Our management uses adjusted EBITDA and adjusted EBITDA margin as supplemental performance measures and believes that adjusted EBITDA and adjusted EBITDA margin provide useful information to investors because they are indicators of the strength and performance of our business operations, including its ability to fund discretionary spending, such as capital expenditures, acquisitions and other investments, as well as indicating its ability to incur and service debt. In addition, the components of adjusted EBITDA and adjusted EBITDA margin include the key revenue and expense items for which the company’s operating managers are responsible and upon which their performance is evaluated. Adjusted EBITDA and adjusted EBITDA margin also assist management and investors by increasing the comparability of the company’s performance against the performance of other telecommunications companies that provide EBITDA (earnings before interest, taxes, depreciation and amortization) or OIBDA (operating income before depreciation and amortization) information. This increased comparability is achieved by excluding the potentially inconsistent effects between periods or companies of depreciation, amortization and impairment losses, which items may significantly affect operating profit between periods. However, our adjusted EBITDA results may not be directly comparable to other companies’ reported EBITDA or OIBDA results due to variances and adjustments in the components of EBITDA (including our calculation of adjusted EBITDA) or calculation measures. Additionally, a limitation of EBITDA’s or adjusted EBITDA’s use as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues or the need to replace capital equipment over time. Reconciliation of adjusted EBITDA to profit for the period, the most directly comparable IFRS financial measure, is presented in “Overview—Summary Financial Data” below.

xi TABLE OF CONTENTS

OVERVIEW ...... 1 RISK FACTORS ...... 14 USE OF PROCEEDS ...... 58 CAPITALIZATION ...... 59 SELECTED CONSOLIDATED FINANCIAL DATA ...... 60 SELECTED OPERATING DATA ...... 62 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 65 BUSINESS ...... 103 REGULATION OF TELECOMMUNICATIONS ...... 142 MANAGEMENT ...... 157 MAJOR SHAREHOLDERS ...... 168 CERTAIN TRANSACTIONS ...... 171 TERMS AND CONDITIONS OF THE NOTES ...... 177 SUMMARY OF PROVISIONS OF THE NOTES WHILE IN GLOBAL FORM ...... 201 DESCRIPTION OF THE ISSUER ...... 203 TAX CONSIDERATIONS ...... 206 CERTAIN ERISA CONSIDERATIONS ...... 218 FORM OF NOTES AND TRANSFER RESTRICTIONS ...... 219 SUBSCRIPTION AND SALE ...... 228 GENERAL INFORMATION ...... 232 GLOSSARY OF TECHNICAL TERMS ...... 235 INDEX TO FINANCIAL STATEMENTS ...... F-1

xii OVERVIEW This summary contains basic information about us, our industry and the offer. You should read the entire prospectus carefully, including the risk factors, and the financial statements and their related notes included elsewhere in this prospectus.

Business We are a holding company for telecommunications services operators, providing voice and data services through a range of broadband mobile and fixed technologies. Our group includes companies operating in Russia, Ukraine, Kazakhstan, Uzbekistan, Armenia, Tajikistan, Georgia, Kyrgyzstan, the Kingdom of Cambodia and Laos. The operations of these companies cover a territory with a total population of approximately 271 million. Our group is part of a larger group of companies consisting of VimpelCom Ltd. and its subsidiaries. Our total operating revenues were US$9,186.0 million for the nine months ended September 30, 2012 compared to US$9,003.0 million for the nine months ended September 30, 2011. Our operating profit was US$2,356.0 million for the nine months ended September 30, 2012 compared to US$2,182.0 million for the nine months ended September 30, 2011. As of September 30, 2012, our total number of mobile subscribers was 105.7 million (including 56.2 million in Russia, 25.2 million in Ukraine, 8.6 million in Kazakhstan, 9.2 million in Uzbekistan, 0.8 million in Armenia, 0.9 million in Tajikistan, 1.0 million in Georgia, 2.4 million in Kyrgyzstan, 1.0 million in Cambodia and 0.3 million in Laos.

Strategy Our strategy focuses on increased cash flows, and our businesses combine mature, strong cash-generating companies with emerging growth opportunities in a number of regions. We combine strong and growing positions in mobile broadband businesses with a selective presence in fixed-line, which is expected to further support our growth strategy as mobile and broadband services continue to expand across our markets. Through our decentralized business model, we seek to capture profitable growth in mobile data, fixed data and mobile voice, by tailoring our strategy in each individual market according to its local characteristics. We believe that subscribers will increasingly rely on mobile broadband as the primary means of accessing the Internet and other data services and, in the medium term, the principal technology for such access will be LTE. As such, our strategy is primarily mobile-based and we seek to prioritize resources and investment allocation to mobile capacity and coverage. In particular, our focus will be on capturing growth in mobile data services by moving away from unlimited plans to tiered pricing, rationally managing traffic and differentiating our services through more sophisticated offerings. This broader view of the business provides the basis for VimpelCom Ltd.’s strategy, or “Value Agenda,” which is focused on increasing net cash from operating activities. The Value Agenda is based on delivering excellence to our subscribers and implementing a passionate, performance oriented culture with a key focus on operations and execution at the business unit level. As part of this strategy, which is focused on increasing net cash from operating activities, we have identified four key strategic initiatives that we will seek to implement within each of our business units:

• Profitable Growth. We aim to drive revenue growth that leads to higher profitability by focusing on gaining share in mobile data revenues and capitalizing on areas such as mobile financial services and partnerships with over-the-top (“OTT”) players, while limiting cost of traffic. We seek to increase mobile data revenues by driving smartphone and tablet penetration through strong local distribution. We will also be introducing value-based commissioning, promoting tiered pricing for speed and time of data, partnering with internet players and improving network quality. We believe effective deployment of integrated bundles will allow us to monetize the strong growth in mobile data.

• Customer Excellence. We are committed to creating a superior customer experience, optimizing distribution and developing superior pricing capabilities. We plan to undertake a systematic effort involving dedicated analytics and research to continuously optimize the customer experience and drive superior pricing through integrated bundles that combine traditional voice with SMS and, most importantly, data. This will provide value to the customer while at the same time protect our revenue stream from cannibalization among various services, such as SMS and Instant Messaging

1 (“IM”). In order to optimize our distribution, we will focus on the most efficient distribution channels in each market. We expect these actions to reduce churn and limit our retention and commercial costs. • Operational Excellence. Operational excellence and operational cost management represents a company-wide strategy and we seek to implement this strategy at all levels of our organization by taking a holistic approach at both our group and business unit levels and implementing a continuous culture of improvement across our businesses. • Capital Efficiency. Our goal is to ultimately reduce the ratio of our capital expenditure to revenues over time by deploying capital more efficiently through increased network sharing and continued business portfolio optimization and capital structure optimization. An important element of this strategy is network outsourcing and sharing in order to improve both network utilization and quality. We derive advantages from the VimpelCom Ltd. Group’s procurement model and systematic approach to managing working capital and optimizing our capital structure. Within the VimpelCom Ltd. Group’s broad priorities, we pursue the following specific objectives: driving value capture in the mature voice business in core markets, emerging as a leader from the transition to a data- centric world and selectively building scale. • Drive value capture in the mature voice business in core markets. • We recognize that our industry is one where the prices of the traditional products and services that we provide are generally falling over time, despite price elasticity being significantly below one. In contrast, many of the costs of delivering these products and services experience significant inflationary pressures. To address this imbalance, we continuously focus on cost efficiency, especially on optimizing business support costs. We also strive to design our go-to-market actions thoughtfully, with the dual ambition of ensuring that we remain a highly attractive choice for consumers at all times, while at the same time promoting responsible industry conduct. • We also see that the telecommunications market is highly heterogeneous, consisting of a significant number of sub-segments with partially unique needs. Therefore, we selectively, but aggressively seek to capture opportunities in the B2C (consumer) and B2B (business) sub-segments, especially in those areas where we can leverage the fact that we have both, fixed and mobile assets, or where our international footprint can be a source of competitive advantage. • We believe that the shift away from the traditional voice- and SMS-centric telephone company world and towards a data-centric world is fundamental and we therefore carefully scrutinize any investment in legacy infrastructure that does not also support our future data business, while ensuring that we remain able to deliver a set of core traditional telephone company services that fully meet customer expectations. • Emerge as leader from the transition to a data-centric world. • We believe that the move towards a data-centric world is the single biggest industry change that our core mobile business has experienced so far. We also see that a key success factor over the coming few years for any telecommunications operator with a significant mobile business will be to manage pricing approaches well. We therefore spend considerable time and effort to ensure that we offer a pro-active and customer-centric transition from legacy voice pricing to data-centric pricing with bundled tariff plans, with the ambition to retain and ultimately grow ARPU. • We see that data offerings are already becoming a significant operator decision parameter for certain customer segments, and we expect this trend to broaden further. To ensure that we are the natural consumer choice in the data-centric world we aim to provide the best “value-for- money” data product portfolio while staying highly price-competitive at all times. • We recognize that a data network is more complex to manage than a voice network and that the optimization potential in a data network is significant. We therefore aim to drive smart cost efficiency in technology investments, including traffic management and off-loading as well as content compression.

2 Competitive Strengths We believe that we are well positioned to capitalize on opportunities in all our mobile, fixed-line and broadband telecommunications markets. We seek to differentiate ourselves from our competitors by innovative products, high-quality mobile, fixed-line and broadband telecommunications service offerings, specialized customer care and strong, recognized brand names, providing unified technological and IT-procurement.

• Recognized local brand names. We market our mobile services under local names in each of our markets. Our “Beeline” brand name is incumbent for eight countries (Russia, Kazakhstan, Uzbekistan, Armenia, Tajikistan, Georgia, Kyrgyzstan and Cambodia). Primarily as a result of our innovative marketing and brand licensing efforts, our “Beeline” brand name is among the most recognized brand names in business unit Russia and business unit CIS. We market our mobile services primarily under the “Kyivstar”, “Kyivstar Business”, “djuice” brands in Ukraine. Each of these brands are very well known in their markets and have high top of mind brand awareness.

• Product and service innovation. In our mobile business, we continue to seek out new products and services to provide our subscribers with faster access and easier usage to be competitive in the markets in which we operate. We continue to develop services oriented towards our prepaid consumer segment. • Pricing. Acknowledging differences in competitive situations and consumer behavior across markets, we undertake a systematic effort involving dedicated analytics and research to develop an optimal pricing structure. This pricing approach is designed to ensure that we maximize value from all segments and lets us offer different tariffs and solutions to all market segments and types of companies, including special tariff options and bundles for voice, messaging and data services. • Data Services. We believe data services are driving market growth and we are focusing our efforts at winning this segment. We are actively developing data services in all markets as part of our pre- paid and post-paid tariff proposals. We also offer USB dongles (for GPRS and 3G use) to all customer segments with a separate price plans targeted to large screen users. We now offer a broad portfolio of competitive services in both the fixed-line and mobile corporate data markets that are designed to match the needs of our customers. For our business and corporate clients, we offer a wide range of data services, including wireless office internet solutions and high bandwidth corporate Internet access. • Specialized customer care. We provide specialized customer service to our different subscriber segments. We believe that our ability to provide specialized customer service has helped us maintain a high level of subscriber satisfaction with our products and services and control churn. We also believe that we have provided particularly strong customer service to our corporate subscribers. • Broad distribution network. We have large distribution network for mobile and fixed services in markets of our operation. The network is used both for sale purpose as well as for the purpose of customer care thus providing higher standards of customer service. Our network consists of our own branded shops as well as franchise network, simple retail agreements with local retail players and networks of our strategic retail partners. Proper mix of these channels secures our position in the market at a proper cost and provides us with a platform for new business growth which is beyond our core business of mobile and fixed. • Unified, sophisticated mobile network. We are able to provide uniform mobile products and services that we develop and launch on an international rather than local basis due to our centralization of IT platform which operates throughout our unified mobile network system. We believe that our level of centralization and standardization is unique in the license areas where we operate and that this gives us a competitive advantage and efficiency in developing and rolling out new services. We build our mobile networks with advanced technology from the world’s leading mobile telecommunications equipment suppliers, such as Alcatel-Lucent, Ericsson, Nokia-Siemens Networks, and Huawei in order to provide our subscribers with high-quality, dependable networks capable of offering enhanced VAS and features.

3 Recent Developments On October 9, 2012, OJSC VimpelCom signed a facility agreement with HSBC Bank PLC and Nordea Bank AB (publ) for a Russian rouble denominated Swedish export credit facility supported by the Swedish Export Credits Guarantee Board (“EKN”) for a total principal amount of the Russian rouble equivalent of US$200.0 million. The purpose of the facility is to finance equipment and services provided to OJSC VimpelCom by Ericsson on a reimbursement basis. On December 6, 2012, we acquired an additional 0.1% of Euroset Holding N.V., which owns 100.0% of the shares of Euroset, the leading mobile handset retailer and dealer for major mobile network operators in Russia, thereby increasing our ownership interest in Euroset to 50.0%. We also amended the terms of our shareholding in Euroset to increase our governance rights.

Risk Factors You should carefully consider all information in this prospectus. In particular, you should evaluate the specific risk factors relating to an investment in our securities set forth in the section of this prospectus entitled “Risk Factors.” The Issuer was incorporated as a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) on June 29, 2009. The corporate seat of the Issuer (statutaire zetel) is in Amsterdam, The Netherlands. The registered office of the Issuer is Claude Debussylaan 88, 1082 MD Amsterdam, The Netherlands and the telephone number is +31 (0)20 7977 200. The Issuer has been registered with the trade register of the Chamber of Commerce in Amsterdam, the Netherlands under number 34345993.

4 Summary Financial Data The following summary consolidated financial data for the three years ended December 31, 2011 is derived from our historical consolidated financial statements which have been audited by Ernst & Young Accountants LLP, an independent registered public accounting firm, for the years ended December 31, 2011 and 2010, and by Ernst & Young LLC, an independent registered public accounting firm, for the year ended December 31, 2009. The summary consolidated financial data for the nine-month periods ended September 30, 2012 and 2011 is derived from unaudited financial statements. The data should be read in conjunction with our audited consolidated financial statements and related notes and our unaudited condensed consolidated interim financial statements and related notes included elsewhere in this prospectus and the financial information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As a result of the VimpelCom Ltd. Transaction, the Issuer is the accounting successor to OJSC VimpelCom, and accordingly, accounting data and disclosures relating to periods prior to April 21, 2010 represent accounting data and disclosures of OJSC VimpelCom, except for equity which was restated to reflect the capital structure of the Issuer. Nine Months Ended September 30, Year Ended December 31, 2012 2011 2011 2010 2009 (In millions of U.S. dollars) Service revenues ...... 8,911 8,792 11,727 10,303 8,691 Sale of equipment and accessories ...... 261 201 322 194 110 Other revenues ...... 14 10 14 16 12 Total operating revenues ...... 9,186 9,003 12,063 10,513 8,813 Operating expenses Service costs ...... 1,918 2,118 2,860 2,250 1,895 Cost of equipment and accessories ...... 245 247 390 217 111 Selling, general and administrative expenses ...... 2,933 2,719 3,701 3,129 2,482 Depreciation ...... 1,224 1,227 1,643 1,404 1,190 Amortization ...... 389 460 613 618 440 Impairment loss ...... – – 526 – – Loss on disposals of non-current assets ...... 121 50 77 48 77 Total operating expenses ...... 6,830 6,821 9,810 7,666 6,195 Operating profit ...... 2,356 2,182 2,253 2,847 2,618 Finance costs ...... 1,216 941 1,259 620 603 Finance income ...... (290) (182) (269) (82) (58) Other non-operating losses/(gains) ...... 25 99 171 5 69 Shares of loss/(profit) of associates and joint ventures accounted for using the equity method ...... (62) (33) (63) (90) (3) Net foreign exchange loss ...... (67) (170) (161) 14 404 Profit before tax ...... 1,534 1,527 1,316 2,380 1,603 Income tax expense ...... 528 532 675 522 431 Profit for the period ...... 1,006 995 641 1,858 1,172 Attributable to: The owners of the parent ...... 968 967 779 1,810 1,142 Non-controlling interest ...... 38 28 (138) 48 30 1,006 995 641 1,858 1,172

5 At September 30, At December 31, 2012 2011 2010 2009 (In millions of U.S. dollars) Consolidated balance sheets data: Cash and cash equivalents ...... 1,370 767 851 1,451 Working capital (deficit)(1) ...... (413) (1,678) (1,000) (562) Property and equipment, net ...... 8,309 8,188 7,296 5,861 Intangible assets and Goodwill ...... 8,907 9,061 9,212 4,843 Total assets ...... 25,290 23,712 20,147 14,618 Total liabilities ...... 28,592 28,065 25,244 10,416 Total equity(2) ...... (3,302) (4,353) (5,097) 4,202

(1) Working capital is calculated as current assets less current liabilities. (2) For more information regarding the Issuer’s negative equity, see the section of this prospectus entitled “Description of the Issuer—Negative Total Equity.” Nine Months Ended September 30, Year Ended December 31, 2012 2011 2011 2010 2009 (In millions of U.S. dollars) Other data: Adjusted EBITDA* ...... 4,090 3,919 5,115 4,970 4,334

* Adjusted EBITDA is a non-IFRS financial measure. Please see “Presentation of Financial and Other Information—Non-IFRS Financial Measures,” for more information on how we calculate adjusted EBITDA. Reconciliation of adjusted EBITDA to profit for the period, the most directly comparable IFRS financial measure, is presented below.

Reconciliation of Adjusted EBITDA to profit for the period (Unaudited, in millions of U.S. dollars) Nine Months Ended September 30, Year Ended December 31, 2012 2011 2011 2010 2009 Adjusted EBITDA ...... 4,090 3,919 5,115 4,970 4,334 Reconciliation adjustments(1) ...... – – (3) (53) (9) Depreciation ...... (1,224) (1,227) (1,643) (1,404) (1,190) Amortization ...... (389) (460) (613) (618) (440) Impairment loss ...... – – (526) – – Loss on disposals of non-current assets ...... (121) (50) (77) (48) (77) Finance costs ...... (1,216) (941) (1,259) (620) (603) Finance income ...... 290 182 269 82 58 Other non-operating (gains)/losses ...... (25) (99) (171) (5) (69) Shares of (loss)/profit of associates and joint ventures accounted for using the equity method ...... 62 33 63 90 3 Net foreign exchange loss ...... 67 170 161 (14) (404) Income tax expense ...... (528) (532) (675) (522) (431) Profit for the period ...... 1,006 995 641 1,858 1,172

(1) Reconciliation adjustments primarily represent differences relating to the classification of operating expenses.

6 Summary Operating Data The following summary operating data as of September 30, 2012 and as of December 31, 2011, 2010 and 2009 has been derived from internal company sources and from independent sources that we believe to be reliable. The summary operating data set forth below should be read in conjunction with our consolidated financial statements and their related notes included elsewhere in this prospectus and the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our subscriber data, mobile MOU and mobile churn figures for all periods indicated in the table below are reported on the basis of active subscribers. The historical operating data for periods prior to April 21, 2010, the date on which the VimpelCom Ltd. Transaction was completed, represents the historical operating data of OJSC VimpelCom and excludes the historical operating data of Kyivstar. As of September 30, As of December 31, 2012 2011 2010 2009 Selected industry operating data: Estimated population:(1) Russia ...... 139,893,000 139,893,000 140,128,248 140,681,500 Ukraine ...... 45,183,000 45,183,000 45,306,567 45,813,764 Kazakhstan ...... 15,860,000 15,860,000 15,807,055 15,704,000 Tajikistan ...... 7,182,000 7,182,000 7,143,494 7,011,000 Uzbekistan ...... 28,087,000 28,087,000 27,960,495 28,381,000 Armenia ...... 3,090,000 3,090,000 3,095,279 2,990,000 Georgia ...... 4,170,000 4,170,000 4,205,647 4,318,000 Kyrgyzstan ...... 5,616,000 5,616,000 5,580,940 – Cambodia ...... 15,289,000 15,289,000 15,183,540 15,097,000 Laos ...... 6,554,000 6,554,000 – – Estimated mobile subscribers:(2) Russia ...... 233,875,920 229,341,900 220,384,130 209,206,000 Ukraine ...... 55,060,100 52,620,400 49,969,900 55,251,400 Kazakhstan ...... 25,762,400 22,002,780 17,279,900 16,581,000 Tajikistan ...... 9,405,413 7,247,150 5,532,150 4,334,900 Uzbekistan ...... 28,012,600 24,387,240 20,995,500 16,569,900 Armenia ...... 3,803,200 3,725,920 3,694,000 2,616,700 Georgia ...... 5,298,000 4,967,000 4,422,000 3,894,800 Kyrgyzstan ...... 5,856,180 5,714,830 5,027,000 – Cambodia ...... 21,164,945 16,901,085 8,930,200 5,477,100 Laos ...... 4,418,171 4,644,820 – – Mobile penetration rate:(3) Russia ...... 167.2% 163.9% 157.3% 148.7% Ukraine ...... 121.9% 116.5% 110.3% 120.6% Kazakhstan ...... 162.4% 138.7% 109.3% 105.6% Tajikistan ...... 131.0% 100.9% 77.4% 61.8% Uzbekistan ...... 99.7% 86.8% 75.1% 58.4% Armenia ...... 123.1% 120.6% 119.3% 87.5% Georgia ...... 127.1% 119.1% 105.1% 90.2% Kyrgyzstan ...... 104.3% 101.8% 90.1% – Cambodia ...... 138.4% 110.5% 58.8% 36.3% Laos ...... 67.4% 70.9% – – Selected company operating data:(4) End of period mobile subscribers: Russia ...... 56,181,099 57,223,518 52,020,000 50,886,127 Ukraine ...... 25,220,719 24,776,208 24,389,838 2,004,729 Kazakhstan ...... 8,595,765 8,408,682 6,867,000 6,135,275 Tajikistan ...... 947,402 964,807 786,600 743,140 Uzbekistan ...... 9,229,360 6,361,040 4,821,700 3,514,516 Armenia ...... 802,788 765,417 672,300 545,201 Georgia ...... 990,932 832,600 560,200 399,161 Kyrgyzstan ...... 2,418,747 2,370,613 1,904,300 – Cambodia ...... 1,020,000 1,013,000 651,000 367,474 Laos ...... 337,000 405,000 – – Total mobile subscribers ...... 105,743,812 103,120,885 92,672,938 64,595,623

7 As of September 30, As of December 31, 2012 2011 2010 2009 Mobile MOU(5) Russia ...... 271.5 243.3 218.5 211.4 Ukraine ...... 491.2 467.0 378.4 208.7 Kazakhstan ...... 204.4 147.5 120.3 93.1 Tajikistan ...... 235.3 228.8 178.5 172.9 Uzbekistan ...... 455.7 425.2 385.7 314.0 Armenia ...... 267.5 256.7 294.3 237.8 Georgia ...... 234.5 206.9 136.7 138.3 Kyrgyzstan ...... 278.2 302.9 257.7 – Cambodia ...... 552.0 411.3 331.1 78.2 Laos ...... 59.4 233.3 – – Mobile ARPU(6) Russia ...... US$10.6 US$ 11.1 US$ 10.8 US$10.1 Ukraine ...... US$5.0 US$5.1 US$4.8 US$4.7 Kazakhstan ...... US$7.6 US$8.3 US$9.2 US$8.1 Tajikistan ...... US$8.4 US$8.8 US$6.5 US$7.1 Uzbekistan ...... US$4.3 US$4.1 US$4.1 US$4.7 Armenia ...... US$6.9 US$8.1 US$10.3 US$13.2 Georgia ...... US$6.7 US$6.8 US$7.5 US$8.9 Kyrgyzstan ...... US$5.5 US$5.5 US$5.3 – Cambodia ...... US$1.6 US$2.9 US$3.5 US$1.4 Laos ...... US$5.4 US$5.1 – – Mobile churn rate(7) Russia ...... 47.7% 62.8% 50.8% 42.8% Ukraine ...... 21.6% 22.3% 29.5% 81.0% Kazakhstan ...... 41.1% 47.4% 38.1% 46.3% Tajikistan ...... 55.6% 67.4% 79.9% 52.9% Uzbekistan ...... 45.0% 59.7% 39.4% 63.7% Armenia ...... 61.7% 87.6% 55.3% 58.6% Georgia ...... 55.8% 70.1% 30.1% 46.6% Kyrgyzstan ...... 52.3% 52.3% 63.3% – Cambodia ...... 148.3% 73.0% 167% n/a Laos ...... 115.4% 258.0% – – Number of GSM base stations(8): Russia ...... 48,436 42,940 33,535 28,718 Ukraine ...... 14,770 14,691 15,394 3,039 Kazakhstan ...... 5,763 4,688 3,546 3,191 Tajikistan ...... 1,097 929 661 523 Uzbekistan ...... 3,361 2,936 1,972 1,625 Armenia ...... 954 891 735 518 Georgia ...... 1,151 1,085 809 609 Kyrgyzstan ...... 1,424 1,281 946 – Cambodia ...... 1,456 1,356 958 552 Laos ...... 774 712 – – End of period broadband subscribers: Russia ...... 4,800,698 4,611,270 3,348,000 2,110,881 Ukraine ...... 550,723 397,338 200,438 71,000 Kazakhstan ...... 4,677,812 4,365,550 12,000 1,342 Uzbekistan ...... 4,216,007 2,820,025 37,300 9,029 Armenia ...... 506,662 454,790 75,000 26,196 Total broadband subscribers(9) ...... 14,751,902 12,648,973 3,672,738 2,218,448

(1) Informa Telecoms & Media does not provide estimated population statistics as of September 30, 2012, and therefore data as of December 31, 2011 has been provided for the purposes of this table. Estimated population statistics as of December 31, 2011 and 2010 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media). Estimated population statistics as of December 31, 2009 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media), except for the statistics on Ukraine, which were provided by AC&M, a management consulting and research agency specializing in the telecommunications industry in Russia and the CIS.

8 (2) Estimated mobile subscriber statistics by country as of September 30, 2012 and December 31, 2011 and 2010 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media). Estimated mobile subscriber statistics by country as of December 31, 2009 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media), except for the statistics on Ukraine, which were provided by AC&M. (3) Estimated mobile penetration rate statistics as of September 30, 2012 and December 31, 2011 and 2010 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media). Estimated mobile penetration rate statistics as of December 31, 2009 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media), except for the statistics on Ukraine, which were provided by AC&M. (4) Operating data for Ukraine does not include figures associated with Kyivstar’s operations prior to April 21, 2010, when Kyivstar’s operations were integrated into the group. (5) Mobile MOU is calculated by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile subscribers during the period and dividing by the number of months in that period. (6) Mobile ARPU is calculated by dividing our mobile service revenue during the relevant period, including roaming revenue and interconnect revenue, but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of our mobile subscribers during the period and dividing by the number of months in that period. (7) Churn rate is based on active subscribers. We define our churn rate of mobile subscribers as the total number of churned mobile subscribers over the reported period expressed as a percentage of the average of our mobile subscriber base at the starting date and at the ending date of the period. The total number of churned mobile subscribers is calculated as the difference between the number of new subscribers who engaged in a revenue generating activity in the reported period and the change in the mobile subscriber base between the starting date and the ending date of the reported period. Migration between prepaid and contract forms of payment and between tariff plans may technically be recorded as churn, which contributes to our churn rate even though we do not lose those subscribers. Churn rates have seasonal fluctuations and typically increase in the last quarter of the year due to churn of new subscribers obtained in the summer months of the year. Policies regarding the calculation of churn differ among operators. (8) Including 3G base stations. (9) Broadband subscribers are those subscribers in the registered subscriber base who were a party to a revenue generating activity in the past three months. Such activities include monthly Internet access using FTTB, xDSL and WiFi technologies as well as mobile internet access via USB modems using 3G/HSDPA technologies.

9 The Notes Issuer ...... VimpelCom Holdings B.V., a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law, having its official seat (statutaire zetel)in Amsterdam, The Netherlands and having its registered office address at Claude Debussylaan 88, 1082 MD Amsterdam, The Netherlands, registered with the trade register of the Chamber of Commerce in Amsterdam, The Netherlands under number 34345993. Guarantor ...... Open Joint Stock Company “Vimpel-Communications”. Issue Amount ...... US$600,000,000 aggregate principal amount of 5.20% notes due 2019 (the “2019 Notes”) and US$1,000,000,000 aggregate principal amount of 5.95% notes due 2023 (the “2023 Notes” and, together with the 2019 Notes, the “USD Notes”). RUB12,000,000,000 aggregate principal amount of 9.00% notes due 2018 (the “RUB Notes,” and, together with the USD Notes, the “Notes”). Lead Managers ...... Barclays Bank PLC, Citigroup Global Markets Limited, ING Bank N.V., London Branch and The Royal Bank of Scotland plc. Issue Price ...... 100.0% of the principal amount of the Notes. Closing Date ...... February 13, 2013. Maturity Date ...... The2019 Notes will be redeemed on February 13, 2019. The 2023 Notes will be redeemed on February 13, 2023. The RUB Notes will be redeemed on February 13, 2018. Trustee ...... BNYMellon Corporate Trustee Services Limited. Principal Paying Agent ...... The Bank of New York Mellon, London Branch, at its specified office in London. Registrar ...... TheBank of New York Mellon (Luxembourg) S.A., at its specified office in Luxembourg. Luxembourg Transfer Agent and Luxembourg Paying Agent ...... TheBank of New York Mellon (Luxembourg) S.A., at its specified office in Luxembourg. U.S. Transfer Agent and U.S. Paying Agent ...... The Bank of New York Mellon, New York Branch, at its specified office in New York. Exchange Agent ...... The Bank of New York Mellon, London Branch, at its specified office in London. Interest ...... The2019 Notes will accrue interest from the date of their issuance at a rate of 5.20% per year. The 2023 Notes will accrue interest from the date of their issuance at a rate of 5.95% per year. Interest on the USD Notes will be payable semi-annually in arrear on February 13 and August 13 of each year, commencing on August 13, 2013. The RUB Notes will accrue interest from the date of their issuance at a rate of 9.00% per year. Interest on the RUB Notes will be payable semi-annually in arrear on February 13 and August 13 of each year, commencing on August 13, 2013. Form ...... TheNotes will be issued in registered form. The USD Notes will be in denominations in aggregate principal amount of US$200,000 each and integral multiples of US$1,000 thereafter and will be represented by global note certificates. The RUB Notes will be in denominations in aggregate principal amount of RUB5,000,000 each and integral multiples of RUB1,000 thereafter and will be represented by global

10 note certificates. The global note certificates will be exchangeable for Notes in individual form in the limited circumstances specified in the global note certificates. Status of the Notes ...... TheNotes constitute unsubordinated and unsecured obligations of the Issuer which rank pari passu and without preference among themselves. The Guarantees constitute unsubordinated and unsecured obligations of the Guarantor. Each of the Issuer and the Guarantor shall ensure that at all times the claims of the Noteholders against them under the Notes and the Guarantees, respectively, rank in right of payment at least pari passu with the claims of all their other unsecured and unsubordinated creditors, save those whose claims are preferred by any mandatory operation of law. Guarantees ...... Subject as provided in Condition 2 (Guarantee) of the Terms and Conditions of the Notes, the payment, when due, of all sums expressed to be payable by the Issuer under the Notes and the Trust Deeds has the benefit of unconditional and irrevocable Guarantees of the Guarantor. The Issuer has the option to terminate the Guarantees if: (a) the Notes are rated Baa3 or better by Moody’s Investors Service or BBB- or better by Standard & Poor’s Ratings Services; or (b) the total outstanding principal amount of Priority Debt following the termination of the Guarantees (including also the effect of termination of any other guarantee by the Guarantor) would be less than 25% of the Consolidated Total Assets of the Issuer. If the Issuer exercises its option to terminate the Guarantees in accordance with paragraph (b) above, and such termination results in the downgrading of the Notes by a Rating Agency within 60 days, where (1) the Rating Agency (as defined in the section of the prospectus entitled “Terms and Conditions of the Notes”) attributes the downgrade in whole or in part to termination of the Guarantees and (2) the downgrade results in the Rating Agency’s rating of the Notes falling at least one notch below the then current rating by such Rating Agency of the June 2011 Notes (as defined in the section of this prospectus entitled “Terms and Conditions of the Notes”) (or, if the June 2011 Notes are not outstanding at the time, then one notch below the then current rating by such Rating Agency of the loan participation notes issued by but with limited recourse to VIP Finance Ireland Limited for the purpose of funding loans to the Guarantor, or, if such notes are not outstanding at the time, then one notch below the then current rating by such Rating Agency of the loan participation notes issued by but without recourse to UBS (Luxembourg) S.A. for the purpose of funding loans to the Guarantor or, if such notes are not outstanding at the time, then one notch below the then current rating by such Rating Agency of the Guarantor), then a Put Option Event (as defined in the section of this prospectus entitled “Terms and Conditions of the Notes”) shall have occurred and the Issuer shall, at the option of the holder of any Note, redeem such Note at 100% of its principal amount together with interest accrued to the date of redemption. Notwithstanding the termination of the Guarantees, the obligation to pay principal and accrued interest in respect of any Notes which a Noteholder has required to be redeemed under the Put Option shall be fully and unconditionally guaranteed by the Guarantor. Payments in Respect of RUB Notes . . . Payments of principal and interest in respect of the RUB Notes will be made or procured to be made by a Paying Agent in accordance

11 with the Agency Agreement in respect of the RUB Notes in roubles, unless a holder of RUB Notes has made an irrevocable election to the Principal Paying Agent to receive payment in dollars at least five Business Days prior to a date on which principal and/or interest is due on the RUB Notes, in each case through the facilities of Euroclear and Clearstream, Luxembourg. In accordance with any such irrevocable elections received by the Principal Paying Agent, the Exchange Agent shall procure dollars at a purchase price calculated on the basis of the Applicable Exchange Rate (as defined in Condition 7 (Payments) of the Terms and Conditions in Respect of the RUB Notes). The Exchange Agent will not be liable to any person for any losses resulting from application by the Exchange Agent of the Applicable Exchange Rate. Use of Proceeds ...... Thefees and expenses associated with the Offer are estimated to be approximately US$8.9 million. We expect the aggregate net proceeds of the issuance of the USD Notes to be approximately US$1,592.3 million and the aggregate net proceeds of the issuance of the RUB Notes to be approximately RUB11.96 billion. We will use the aggregate net proceeds from the issuance of the Notes for repaying existing indebtedness of OJSC VimpelCom and other general corporate purposes. None of the proceeds from the issuance of the Notes will be used to fund, finance or facilitate any activity, business or transaction that is the subject of a sanctions regime administered or enforced by the U.S. Department of Treasury’s OFAC, the UN Security Council, the European Union (the “EU”) or other relevant sanctions authorities. Redemption for Tax Reasons ...... TheNotesmayberedeemedattheoptionoftheIssuerinwhole,butnot in part, at any time, on giving not less than 25 days’ notice to the Noteholders, at the principal amount thereof, together with interest accrued and unpaid to (but excluding) the date fixed for redemption, if (i) the Issuer (or the Guarantor if the Guarantees are called) will become obliged to pay additional amounts as a result of any change in, or amendment to, the laws or regulations of The Netherlands or the Russian Federation or any political or governmental subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the Closing Date and (ii) such obligations cannot be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures available to it. At redemption the Issuer will also pay any such additional amounts then due. Redemption upon a Put Option Event ...... Upon the occurrence of a Put Option Event, the Issuer shall, at the option of the holder of any Note, redeem such Note at 100% of its principal amount together with interest accrued to the date of redemption. See “—Guarantees” above. Covenants ...... TheTermsandConditions of the Notes and the Trust Deeds, will among other things, restrict, with certain exceptions, the ability of the Issuer and its subsidiaries, and (for so long as the Guarantees are in effect) the Guarantor and its subsidiaries, to create or incur liens. In addition, the Terms and Conditions of the Notes and the Trust Deeds require us to provide certain periodic information to the Trustee and require the Issuer and (for so long as the Guarantees are in effect) the Guarantor, subject to certain exceptions, to maintain their corporate existence and material telecommunications licenses. Events of Default ...... Inthecase of an Event of Default (as defined in the section of this prospectus entitled “Terms and Conditions of the Notes”), the Trustee

12 may, subject as provided in the Trust Deeds, give notice to the Issuer and the Guarantor that the Notes are immediately due and repayable. Rating ...... The Notes have been rated “BB” by Standard & Poor’s Ratings Services and “Ba3” by Moody’s Investors Service. The Guarantor has been given a long-term corporate credit rating of “BB” by Standard & Poor’s Ratings Services and a senior implied rating of “Ba3” by Moody’s Investors Service. Credit ratings assigned to the Notes do not necessarily mean they are a suitable investment for you. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organization. Similar ratings on different types of Notes do not necessarily mean the same thing. The ratings do not address the likelihood that the principal on the Notes will be prepaid, paid on an expected final payment date or paid on any particular date before the legal final maturity date of the Notes. The ratings do not address the marketability of the Notes or any market price. Any change in the credit ratings of the Notes, the Issuer or the Guarantor could adversely affect the price that a subsequent purchaser will be willing to pay for the Notes. We recommend that you analyze the significance of each rating independently from any other rating. Each of the credit ratings issued by Standard & Poor’s Rating Services are issued out of the Moscow branch of Standard & Poor’s International Services, Inc. which is not established in the European Union and therefore has not applied for registration under the Regulation (EC) No 1060/2009 of 16 September 2009 on credit rating agencies (the “CRA Regulation”). Moody’s Investors Service is established in the European Union and is registered under the CRA Regulation. Withholding Tax ...... AllpaymentsontheNotesorunder the Guarantees shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatsoever nature imposed or levied by the Netherlands or the Russian Federation or any political subdivision or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In that event, the Issuer or (as the case may be and for so long as the Guarantees are in effect) the Guarantor shall, subject to certain exceptions, pay such additional amounts as will result in the receipt by the Noteholders of such amounts as would have been received by them if no such withholding or deduction had been made or required to be made. Listing ...... Theprospectus has been approved by the Central Bank as competent authority under the Prospectus Directive. The Central Bank only approves this prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and trading on its regulated market. No certainty can be given that the application will be granted. Transfer Restrictions ...... The Notes and the Guarantees have not been and will not be registered under the Securities Act and, subject to certain exceptions, the Notes may not be offered or sold within the United States. The Notes may be sold in other jurisdictions only in compliance with applicable laws. See the sections of this prospectus entitled “Form of Notes and Transfer Restrictions” and “Subscription and Sale.” Governing Law ...... The Notes, the Agency Agreements and the Trust Deeds (including the Guarantees) and any non-contractual matters arising therewith will be governed by English law and the Notes and the Trust Deeds contain certain provisions for arbitration in London, England.

13 RISK FACTORS Investing in the Notes involves a high degree of risk. Before purchasing the Notes, you should carefully consider all of the information set forth in this prospectus and, in particular, the risks described below. If any of the following risks actually occurs, our business, financial condition, results of operations or prospects could be adversely affected. In that case, the value of the Notes could decline and you could lose all or part of your investment. The risks and uncertainties below are not the only ones we face, but represent the risks that we believe are material. However, there may be additional risks that we currently consider not to be material or of which we are not currently aware and these risks could materially adversely affect our business, financial condition, results of operations and prospects.

Risks Related to Our Business

There is no restriction in the Trust Deeds or the Notes preventing the transfer of operations of the Issuer outside of the Issuer’s group. Neither the Trust Deeds nor the Notes contain provisions preventing the Issuer or its subsidiaries, including OJSC VimpelCom and Kyivstar, from transferring assets to other companies in the VimpelCom Ltd. Group (which may not be subsidiaries of the Issuer) or to outside third parties. Any such transfers of operations to companies that are not subsidiaries of the Issuer could deprive us of sources of current or future income, which could adversely affect our business, financial condition, results of operations and prospects.

Substantial leverage and debt service obligations may materially adversely affect our cash flow. We have substantial amounts of indebtedness. As of September 30, 2012, our total external debt for equipment financing, capital leases, bank and other loans (excluding amounts due to related parties under the Outstanding Promissory Note held by VimpelCom Amsterdam B.V. as further described below under “—The Issuer’s substantial Outstanding Promissory Note held by VimpelCom Amsterdam B.V. will rank pari passu with the Notes until the Issuer’s insolvency, when it becomes subordinated to the Notes, but until the Issuer’s insolvency it may be prepaid in whole or in part, potentially diverting funds from payment of the Notes to payment of the Outstanding Promissory Note or reducing the assets of the Issuer available upon insolvency for application to the Notes”) was US$11.9 billion on an actual basis and approximately US$13.9 billion on an adjusted basis after giving effect to the issuance of the Notes (assuming a principal amount of US$2.0 billion and excluding any expenses relating to the Offer). The figure of US$13.9 billion does not reflect the repayment of any of our existing indebtedness since September 30, 2012. In connection with the Wind Telecom Transaction, we incurred significant additional indebtedness to assist our indirect parent VimpelCom Ltd. to pay for the acquisition of Wind Telecom and to refinance debt of Wind Telecom entities that had to be refinanced because it had acquired control. For more information on the Wind Telecom Transaction, see the section of this prospectus entitled “Business—History and Development.” For more information on the debt agreements entered into by our company in connection with the Wind Telecom Transaction, see the section of this prospectus entitled “Certain Transactions—Agreements Related to the Wind Telecom Transaction.” In addition to our debt existing before the Wind Telecom Transaction and debt we incurred in connection with the Wind Telecom Transaction, in acquiring Wind Telecom, VimpelCom Ltd. acquired entities with substantial debt that was not refinanced. As of the date of this prospectus, this debt remains outstanding and further increases the indebtedness of the VimpelCom Ltd. Group. The proceeds from the issuance of the Notes will be used for repaying existing indebtedness of OJSC VimpelCom and other general corporate purposes. For more information on the use of proceeds from the issuance of the Notes, please see the section of this prospectus entitled “Use of Proceeds.” To the extent that the proceeds from the Notes or any other debt obligations we incur are lent or distributed to VimpelCom Ltd. or its subsidiaries which are not our subsidiaries, we may not have the availability of the proceeds of that debt to support our operations and debt service obligations. There can be no assurance that we would be able to recover any amounts we lend to, or any amounts paid on guarantees for the benefit of, VimpelCom Ltd. or its subsidiaries or obtain funding from our parent companies or other companies within the VimpelCom Ltd. group that are not part of our group. Furthermore, because the acquisition of Wind Telecom was undertaken by our parent company, we will not derive additional sources of cash flow or revenues from this transaction or the entities acquired as a result of the transaction and will have to satisfy our debt service obligations from our existing cash flow and external and internal revenue sources, which include OJSC VimpelCom and Kyivstar. For more information regarding our outstanding indebtedness, see the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources— Financing Activities.”

14 From time to time, we may enter into guarantee arrangements on behalf of our parent companies or other companies within the VimpelCom Ltd. group that are not part of our group, including debt guarantees. These guarantee arrangements enhance the credit standing of our parent companies, enabling our parent companies to borrow money for their general corporate and other purposes. These guarantee arrangements may involve elements of performance and credit risk for us, which may not be included on our consolidated balance sheets. The possibility of us having to perform under any guarantee we issue on behalf of our parent companies is largely dependent upon the future performance of our parent companies, investees and other third parties, or the occurrence of certain future events. Any guarantees issued by us on behalf of our parent companies may increase our potential exposure in the event of a default by our parent companies, which could have a material adverse effect on our future financial condition and results of operations, as well as a negative impact on our liquidity and our ability to service the Notes. See the section of this prospectus entitled “Certain Transactions” for information about OJSC VimpelCom’s and the Issuer’s guarantees of certain obligations of VimpelCom Amsterdam B.V. Our substantial indebtedness and the limits imposed by our debt obligations could have significant negative consequences, including making it difficult for us to satisfy our obligations with respect to the Notes and requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for dividends, working capital, capital expenditures, acquisitions, joint ventures and other purposes that may be necessary for us to maintain our competitive position and placing us at a disadvantage in relation to competitors with less indebtedness and greater access to financial resources. These factors could also increase our vulnerability to, and limit our flexibility to respond to, general adverse economic and industry conditions, limit our ability to obtain additional financing and increase the cost of such financing. We must generate sufficient net cash flow in order to meet our group’s debt service obligations (including any payments that might be required with respect to guarantee arrangements entered into on behalf of our parent companies), and we cannot assure you that we will be able to meet such obligations. If we are unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments, we would be in default under the terms of our indebtedness and the holders of our indebtedness would be able to accelerate the maturity of such indebtedness and could cause defaults under our other indebtedness. If we do not generate sufficient cash flow from operations and cannot meet our debt service obligations, we may have to undertake alternative financing plans to alleviate liquidity constraints, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital expenditures or seeking additional capital. We cannot assure you that any refinancing or additional financing would be available or available on acceptable terms, or that assets could be sold, or if sold, whether such sales would be on satisfactory terms and whether the proceeds realized from those sales or refinancing would be sufficient to meet our debt service obligations or that such sales or refinancing could be effected in time to alleviate financial constraints. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance debt or refinance it on commercially reasonable terms, could materially adversely affect our business, financial condition, results of operations and prospects.

Covenants in our debt agreements could impair our liquidity and our ability to expand or finance our future operations. Certain of the agreements under which we borrow funds (as set forth in further detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources— Financing Activities”) contain a number of different covenants that impose on us certain operating and financial restrictions. Some of these covenants relate to our financial performance, such as the level of earnings, debt and assets. Other covenants limit the ability of, and in some cases prohibit, among other things, us or certain of our subsidiaries from incurring additional indebtedness, creating liens on assets, entering into business combinations or engaging in certain activities with companies within our group. A failure to comply with these covenants would constitute a default under the relevant agreements and could trigger cross payment default/cross acceleration provisions under some or all of these agreements discussed above. In the event of such a default, the debtor’s obligations under one or more of these agreements (including, without limitation, the Notes) could, under certain circumstances, become immediately due and payable, which could negatively impact our liquidity and shareholders’ equity and could in turn have a material adverse effect on our business, financial condition, results of operations and prospects.

The Issuer’s substantial Outstanding Promissory Note held by VimpelCom Amsterdam B.V. will rank pari passu with the Notes until the Issuer’s insolvency, when it becomes subordinated to the Notes, but until the Issuer’s insolvency it may be prepaid in whole or in part, potentially diverting funds from payment of the Notes to payment of the Outstanding Promissory Note or reducing the assets of the Issuer available upon insolvency for application to the Notes. Through a series of intercompany transactions within the VimpelCom Ltd. Group, in September 2010, the Issuer issued the Original Promissory Note to VimpelCom Ltd. in the principal amount of US$16.7 billion.

15 VimpelCom Ltd. subsequently transferred the Original Promissory Note to VimpelCom Amsterdam B.V., which directly owns 100.0% of the shares of the Issuer. The Original Promissory Note contributed significantly to the negative total equity shown on the Issuer’s consolidated financial statements. For more information about the negative total equity position of the Issuer, see the section of this prospectus entitled “Description of the Issuer— Negative Total Equity.” The Original Promissory Note was used to facilitate the flow of funds from the Issuer to its parent company, VimpelCom Amsterdam B.V., including the flow of funds generated by OJSC VimpelCom, effectively providing a means for revenues generated by the Issuer’s operating subsidiaries to be used for payment of dividends and obligations by the Issuer’s direct and indirect parent companies. The Original Promissory Note arose from the following transactions: after completion of the VimpelCom Ltd. Exchange Offers, VimpelCom Ltd. completed, in August 2010, the acquisition of all of OJSC VimpelCom’s shares, including those represented by ADSs, from OJSC VimpelCom’s remaining minority shareholders, by way of a squeeze-out process under Russian law. Subsequently, in September 2010, VimpelCom Ltd. transferred to the Issuer 100.0% minus one share of the capital stock of OJSC VimpelCom. The Issuer paid VimpelCom Ltd. the fair market value of the OJSC VimpelCom shares through a combination of the Original Promissory Note and EUR 150,000 in cash. Shortly thereafter, VimpelCom Ltd. contributed the Original Promissory Note to the share capital of VimpelCom Amsterdam B.V. as share premium. In connection with an offering of notes by the Issuer completed on June 29, 2011, the Issuer repaid the outstanding amount under the Original Promissory Note by issuing to VimpelCom Amsterdam B.V. the Outstanding Promissory Note on June 29, 2011, in the principal amount of US$16.1 billion, representing the remaining outstanding principal plus unpaid interest on the Original Promissory Note. In connection with the offering of the Notes, the Outstanding Promissory Note was amended pursuant to an amendment agreement dated February 13, 2013, pursuant to which the maturity date for the Outstanding Promissory Note was extended from March 31, 2022 to March 13, 2023, so that principal and accrued but unpaid interest owing on the Outstanding Promissory Note would only be due and payable after the maturity of the Notes (although principal can be prepaid at any time by the Issuer under the terms of the Outstanding Promissory Note). The principal amount of the Outstanding Promissory Note was US$12.0 billion as of December 31, 2012. Interest on the Outstanding Promissory Note is payable annually, or, if not paid, added annually to the principal owed. Interest on the Outstanding Promissory Note is at the rate of one year LIBOR plus 4.5%. Proceeds of the Notes used to repay the outstanding indebtedness of OJSC VimpelCom will be provided to OJSC VimpelCom via intercompany loans, and any portion of the aggregate net proceeds from the issuance of the Notes in excess of the amounts to be applied for repayment of OJSC VimpelCom’s indebtedness may be used for general corporate purposes. Because the Outstanding Promissory Note constitutes unsecured debt of the Issuer ranking pari passu with the Notes, the Issuer and VimpelCom Amsterdam B.V., as holder of the Outstanding Promissory Note, have agreed by the Subordination Deed dated February 13, 2013, that, if an Insolvency Event (as defined in the Subordination Deed) occurs in respect of the Issuer (as more specifically set out in the Subordination Deed), then payments on the Outstanding Promissory Note would be subordinated to payments to all other creditors of the Issuer, including the Noteholders. The subordination under the Subordination Deed is limited because the Outstanding Promissory Note is subordinated only if an Insolvency Event occurs in respect of the Issuer. No earlier subordination is triggered by any other specified event, such as an event of default under other debt obligations of the Issuer or the Subordination Deed, and, as a result, the Subordination Deed does not contain the protections frequently afforded when a subordination becomes effective from the outset. Because the subordination will not be effective until an Insolvency Event occurs in respect of the Issuer, investors should note that under the Subordination Deed, before an Insolvency Event occurs: (i) the Issuer would be permitted to make payments or prepayments under the Outstanding Promissory Note, at any time, which could reduce the amount of assets distributable to the Noteholders in the event of such an Insolvency Event; (ii) the Issuer would be permitted to amend the Outstanding Promissory Note at any time for any reason or in any way; and (iii) VimpelCom Amsterdam B.V. would be entitled to exercise any of its rights under the Outstanding Promissory Note, including the rights to accelerate or demand payment under the Outstanding Promissory Note, to take any action against the Issuer to enforce the Outstanding Promissory Note or to commence insolvency proceedings against the Issuer on the basis of the Outstanding Promissory Note. The Trustee for the Notes is a party to the Subordination Deed for the limited purpose of enforcing its rights under the Subordination Deed following the occurrence of an Insolvency Event and shall not be bound to enquire as to whether any default of payment has occurred under the Outstanding Promissory Note or any default or breach has occurred under the Subordination Deed.

We may not be able to raise additional capital. We may need to raise additional capital in the future, including through debt financing. The actual amount of debt financing that we will need to raise will be influenced by the actual pace of subscriber growth and

16 growth in usage over the period, the pace of technological development, capital expenditures, our acquisition plans and our ability to continue to generate sufficient amounts of revenue and ARPU growth. If we incur additional indebtedness, the related risks that we now face could increase. Specifically, we may not be able to generate enough cash to pay the principal, interest and other amounts due under our indebtedness. In addition, we may not be able to borrow money within the local or international capital markets on acceptable terms or at all. As a result, we may be unable to make desired capital expenditures, take advantage of investment opportunities, refinance existing indebtedness or meet unexpected financial requirements, and our growth strategy and liquidity may be negatively affected. This could cause us to be unable to repay indebtedness as it comes due, to delay or abandon anticipated expenditures and investments or otherwise limit operations, which could materially adversely affect our business, financial condition, results of operations and prospects.

We are exposed to foreign currency exchange loss and convertibility risks. A significant amount of our costs, expenditures and liabilities are denominated in U.S. dollars, including capital expenditures and borrowings, while a significant amount of our revenues are in foreign currencies other than U.S. dollars. We have introduced Russian rouble denominated mobile and fixed-line tariff plans throughout our license areas in Russia, and we denominate tariffs in local currencies in most of our geographic areas of operation. As we continue to have U.S. dollar-denominated debts and may incur Euro-denominated debts, and we continue to buy our telecommunications equipment in foreign currencies, we are exposed to higher foreign currency exchange loss risks related to the varying exchange rates of the Russian rouble and local currencies against the U.S. dollar or Euro. Unless effectively hedged, these risks could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that we will be able to effectively hedge currency fluctuations due to the cost or availability of hedging instruments. Also, the imposition of exchange controls or other similar restrictions on currency convertibility in our geographic areas of operation could limit our ability to convert currencies in a timely manner or at all, which could have a material adverse effect on our business, financial condition, results of operations and prospects. In Russia, we are required to collect revenues from our subscribers and from other Russian telecommunications operators for interconnect charges in Russian roubles, and there may be limits on our ability to convert these Russian roubles into foreign currency. We hold part of our readily available cash in U.S. dollars in order to manage against the risk of Russian rouble and Ukrainian hryvnia devaluation. Even though we have entered into forward and option agreements to hedge some of our financial obligations, if the U.S. dollar value of the Russian rouble or the Ukrainian hryvnia were to dramatically decline, we could have difficulty repaying or refinancing our foreign currency denominated indebtedness. Significant changes in the Russian rouble or the Ukrainian hryvnia to the value of the U.S. dollar, unless effectively hedged, could result in significant variability in our earnings and cash flows. There can be no assurance that we will be able to effectively hedge currency fluctuations due to the cost or availability of hedging instruments. The decline in the value of the Russian rouble or the Ukrainian hryvnia relative to the U.S. dollar could, unless effectively hedged, result in a net foreign currency exchange loss due to an increase in the Russian rouble or the Ukrainian hryvnia value of our U.S. dollar denominated liabilities. In turn, our net income could decrease. Accordingly, fluctuations in the value of the Russian rouble or the Ukrainian hryvnia against the U.S. dollar could materially adversely affect our business, financial condition and results of operations. For more information about the market risks we are exposed to as a result of foreign currency exchange rate fluctuations, please see the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Market Risk.” In addition, the existence or imposition of exchange controls or other similar restrictions on currency convertibility in Russia, Kazakhstan, Ukraine, Uzbekistan and other CIS countries could limit our ability to convert currencies in a timely and profitable manner, which could materially adversely affect our business, financial condition, results of operations and prospects.

We may not realize the anticipated benefits from past, and any future, acquisitions and we may assume unexpected or unforeseen liabilities and obligations or incur greater than expected liabilities in connection with acquisitions. The actual outcome of our past, and any future, acquisitions and their effect on our company and its subsidiaries and the results of our operations may differ materially from our expectations as a result of the following factors, among others: • past and future compliance with the terms of the telecommunications licenses and permissions of the acquired companies, their ability to get additional frequencies and their past and future compliance with applicable laws, rules and regulations (including, without limitation, tax and customs legislation);

17 • unexpected or unforeseen liabilities or obligations or greater than expected liabilities incurred prior to or after the acquisition, including tax, customs, indebtedness and other liabilities; • the acquired company’s inability to comply with the terms of its debt and other contractual obligations; • the acquired company’s ability to obtain or maintain favorable interconnect terms; • our inability to extract anticipated synergies or to integrate an acquired business into our group in a timely and cost-effective manner; • changes to the incumbent management personnel of our acquired companies or the possible deterioration of relationships with employees and customers as a result of integration; • exposure to foreign exchange risks that are difficult or expensive to hedge; • the acquired company’s inability to protect its trademarks and intellectual property and to register trademarks and other intellectual property used by such company in the past; • developments in competition within each jurisdiction, including the entry of new competitors or an increase in aggressive competitive measures by our competitors; • governmental regulation of the telecommunications industry in each jurisdiction, ambiguity in regulation and changing treatment of certain license conditions; • political economic, social, legal and regulatory developments and uncertainties in each jurisdiction; and • claims by third parties challenging our ownership or otherwise. For information about our past acquisitions, please see the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Investing Activities.” We may continue to pursue a strategy that includes additional expansion. Any future acquisitions or investments could be significant and in any case could involve risks inherent in assessing the value, strengths and weaknesses of such opportunities, particularly if we are unable to conduct thorough due diligence prior to the acquisition. Such acquisitions or investments may divert our resources and management time. We cannot assure you that any acquisition or investment could be made in a timely manner or on terms and conditions acceptable to us, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

VimpelCom Ltd. has publicly stated that it is primarily dependent on the Issuer for funds to pay dividends to its shareholders. VimpelCom Ltd., the Issuer’s indirect parent company, has publicly stated that it looks to the Issuer as a primary source of funds for dividends to VimpelCom Ltd.’s shareholders, at least in the near future. VimpelCom Ltd. has also publicly stated that it aims to pay interim and final dividends annually in cash that represent a significant part of its annual operating free cash flow, defined as net cash from operating activities less capital expenditure, to its shareholders. For the period 2013-2014, VimpelCom Ltd. has publicly stated that it aims to pay out at least US$0.80 per share per year, assuming not more than 1,628.0 million common shares are issued and outstanding. Cash flows that are available from the Wind Telecom entities are limited due to various factors, including restrictions on dividends in loan agreements of Wind Italy and restrictions imposed in Algeria. Therefore, funds to pay dividends to shareholders of VimpelCom Ltd. are provided mainly by the operations of the Issuer’s subsidiaries, including OJSC VimpelCom and Kyivstar. Financial support that we provide to VimpelCom Ltd. for dividends would reduce our access to funds for corporate purposes, including debt service, which could adversely affect our business, financial condition, results of operations and prospects.

If we are unable to maintain our favorable brand image, we may be unable to attract new subscribers and retain existing subscribers, leading to loss of market share and revenues. We have expended significant time and resources building our “Beeline,” “Kyivstar” and “djuice” brand images. Our ability to attract new subscribers and retain existing subscribers depends in part on our ability to maintain what we believe to be our favorable brand image. Negative rumors or various claims by Russian, Ukrainian or foreign governmental authorities, individual subscribers and third parties against us could materially adversely affect this brand image. In addition, consumer preferences change and our failure to anticipate, identify

18 or react to these changes by providing attractive services at competitive prices could negatively affect our market share. We cannot assure you that we will continue to maintain a favorable brand image in the future. Any loss of market share resulting from any or all of these factors could negatively affect our business, financial condition, results of operations and prospects.

Our strategic partnerships and relationships to develop our business are accompanied by inherent business risks. We are in, and may enter into additional, strategic partnerships and joint ventures with other companies to develop our business and expand our operations. We currently participate in strategic partnerships and joint ventures in a number of countries where we operate, including Russia (Euroset), Kazakhstan (KaR-Tel, TNS-Plus, 2Day Telecom, S&G, KAZEUROMOBILE LLP), Uzbekistan (Buzton), Kyrgyzstan (Sky Mobile, Terra), Georgia (Mobitel), Tajikistan (Tacom) and Cambodia (Sotelco). Our participation in each of our subsidiaries and affiliated companies varies from market to market, and we do not always have a majority interest in our affiliated companies. Our business, prospects, financial condition, results of operations and prospects may be materially and adversely affected if disagreements develop with our partners. Our ability to withdraw funds, including dividends, from our participation in, and to exercise management control over, subsidiaries and investments may depend on the consent of partners. Further, failure to resolve any disputes with our partners in certain of our operating subsidiaries could restrict payments made by these operating subsidiaries to us and have an adverse effect on our business, prospects, financial condition and results of operations. In addition, agreements governing these arrangements contain, in some cases, change of control and similar provisions, which, if triggered under certain circumstances could give other participants in these investments the ability to purchase our interests or enact other penalties. Emerging market strategic partnerships and joint ventures are often accompanied by risks, including in relation to: • the possibility that a strategic or joint venture partner or partners will default in connection with their obligations; • the possibility that a strategic or joint venture partner will hinder development by blocking capital increases and other decisions if that partner runs out of money, disagrees with our views on developing the business, or loses interest in pursuing the partnership or joint projects; • risk inherent in the business of the partnership or joint venture itself, such as funding and liquidity; • diversion of resources and management time; • potential joint and several or secondary liability for transactions and liabilities of the partnership or joint venture entity; • the difficulty of maintaining uniform standards, controls, procedures and policies; and • the loss of a strategic or joint venture partner and the associated benefits, such as insight into operating a business in an economic, social and political environment that is unfamiliar to us.

We may become subject to civil and criminal investigations, face liability and suffer reputational harm due to the activity of our local contractual counterparties. Although we perform due diligence on our local counterparties and put in place contractual arrangements in an effort to secure that these counterparties comply with applicable law, we can nonetheless be subject to investigation, liability, and enforcement risk if they engage in conduct in violation of applicable law. At present, TeliaSonera, one of our competitors in various markets, has come under scrutiny in Sweden for its ongoing partnership with Takilant Ltd. relating to TeliaSonera’s Uzbek operations. The Swedish press has reported that TeliaSonera and some of its senior officers are under investigation in Sweden for violating local anti-bribery laws due to TeliaSonera’s transactions with Takilant. Takilant is also currently being investigated in Sweden and Switzerland on allegations that the company and persons associated with it have committed acts of bribery and money-laundering connected with activity in Uzbekistan. Takilant held a minority interest in our business in Uzbekistan from 2007 until 2009, and, in addition, we have worked with Takilant in the past to acquire frequency spectrum in Uzbekistan. Although we are not aware of any current investigations of our company in connection with our relationship with Takilant, there can be no assurance that we will not become subject to investigations, face liability or suffer reputational harm due to our relationship with Takilant.

19 VimpelCom Ltd.’s strategic shareholders may pursue different development strategies from us and from one another in Russia, Ukraine, the CIS or other regions, which may hinder our ability to grow and/or compete in such regions and may lead to a deterioration in the relationship among our strategic shareholders. Our company is indirectly wholly owned and controlled by VimpelCom Ltd. VimpelCom Ltd.’s largest shareholders, Telenor and Altimo and their respective affiliates, beneficially own, in the aggregate, approximately 90.8% of VimpelCom Ltd.’s outstanding voting shares, with Telenor beneficially owning approximately 42.95% and Altimo owning approximately 47.85%. Previously, the shareholders agreement among VimpelCom Ltd., Telenor and Altimo dated October 4, 2009 (the “VimpelCom Ltd. Shareholders Agreement”), which terminated on December 10, 2011, gave Telenor and Altimo the ability to influence our management and affairs by giving each of them the right to nominate one candidate to each of the five-person boards of directors of the Issuer, OJSC VimpelCom and Kyivstar. The VimpelCom Ltd. Shareholders Agreement also included a voting arrangement that determined the composition of VimpelCom Ltd.’s supervisory board and granted each of Telenor and Altimo the right to appoint three of the nine members of the VimpelCom Ltd. supervisory board and to influence the appointment of the remaining three members of the VimpelCom Ltd. supervisory board. Although the VimpelCom Ltd. Shareholders Agreement is no longer in effect, VimpelCom Ltd.’s largest shareholders nevertheless have sufficient voting rights to jointly elect a majority of its supervisory board and to determine the outcome of matters submitted to VimpelCom Ltd.’s shareholders for approval, and they may in the future enter into arrangements similar to those present in the VimpelCom Ltd. Shareholders Agreement. VimpelCom Ltd. or its major shareholders acting jointly, through directors they elect on the VimpelCom Ltd. supervisory board, could cause us to take corporate actions or block corporate decisions by our companies, including with respect to our strategy, capital structure, financings and acquisitions, which may not be in the best interest of our security holders, including holders of the Notes. In addition, in April 2012 VimpelCom Ltd., the Issuer and the Guarantor were named as third parties in a claim brought by the Russian Federal Antimonopoly Service (the “FAS”) against Telenor East and Weather II in the Moscow Arbitration Court, claiming primarily that Telenor’s acquisition of 234 million VimpelCom Ltd. convertible preferred shares from Weather II in February 2012 violated Russian law, which prohibits a company controlled by a foreign state from exercising control over a Russian entity having strategic importance for the national defense and state security of the Russian Federation. Among other measures, the FAS asked the Moscow Arbitration Court to oblige VimpelCom Ltd., Telenor East and Altimo to enter into a shareholders’ agreement on substantially the same terms as the VimpelCom Ltd. Shareholders Agreement. While the case was under review by the Moscow Arbitration Court, two requests for injunctive relief were granted by the court, which had the effect of prohibiting VimpelCom Ltd., the Issuer and OJSC VimpelCom from performing certain actions, including issuing dividends and voting at OJSC VimpelCom shareholder meetings and prohibiting the directors of OJSC VimpelCom elected at its annual general meeting in May 2012 from exercising their powers. Although the FAS ultimately withdrew its claims, the court proceedings were terminated and the injunction was lifted, we cannot be certain that the FAS or other state authorities, shareholders or third parties will not file similar or other suits impacting our corporate activities, which could have a material adverse effect on our business, financial condition, results of operations and prospects. For more information on the claim brought by the FAS, see the section of this prospectus entitled “Business—Legal Proceedings.” As a result of the Wind Telecom Transaction, VimpelCom Ltd. also controls Wind Telecom and its subsidiaries and in the future may pursue other acquisition opportunities, which could further shift the focus of its major shareholders away from our company and its subsidiaries. In the past, Telenor and Alfa Group have had different strategies from us and from one another in pursuing development in Ukraine and the CIS. For example, prior to the VimpelCom Ltd. Transaction, affiliates of Telenor and members of the Alfa Group of companies reportedly owned 56.5% and 43.5%, respectively, of Kyivstar. According to public reports, companies in the Telenor Group and the Alfa Group historically were involved in various disputes and litigations regarding their ownership of and control over Kyivstar. See also “—Litigation involving Telenor and Altimo, two of VimpelCom Ltd.’s largest shareholders, could lead to deterioration in their relationship and could have a material adverse effect on our business, financial condition, results of operations and prospects” below. We cannot assure you that the VimpelCom Ltd. Group, the Telenor Group or the Alfa Group will not choose to pursue different strategies, including in markets or countries where the Telenor group or the Alfa Group have a presence. Furthermore, if and to the extent that VimpelCom Ltd.’s strategic shareholders have different expansion strategies, it could lead to deterioration of their relationship which could have a material adverse effect on our business, financial condition, results of operations and prospects.

20 Litigation involving Telenor and Altimo, two of VimpelCom Ltd.’s largest shareholders, could lead to deterioration in their relationship and could have a material adverse effect on our business, financial condition, results of operations and prospects. During the past six years, VimpelCom Ltd.’s two largest shareholders, Telenor and Altimo, have been involved in various disputes and litigation regarding their ownership of and control over OJSC VimpelCom and Kyivstar. In October 2009, Telenor and Altimo entered into agreements under which, among other things, they agreed to dismiss or withdraw or to cause the dismissal or withdrawal of outstanding legal proceedings between, or involving, them and their respective affiliates, and based on public sources, they did so. In 2011 and 2012, Telenor and Altimo again were involved in litigation regarding their ownership of and control over VimpelCom Ltd. On January 28, 2011, Telenor commenced arbitration proceedings against each of Altimo Holdings, Altimo Coöperatief, and VimpelCom Ltd. for the stated purpose of enforcing its alleged pre-emptive rights under the VimpelCom Ltd. Shareholders Agreement with respect to VimpelCom Ltd. shares issued in the Wind Telecom Transaction. In this prospectus, we refer to these proceedings as the “Arbitration Proceedings.” On February 15, 2012, Telenor notified the tribunal in the Arbitration Proceedings that it was withdrawing all of its claims against Altimo Holdings, Altimo Coöperatief and VimpelCom Ltd. According to Telenor’s February 15, 2012 press release, Telenor withdrew its claims because it purchased 234,000,000 of Weather II’s VimpelCom Ltd. convertible preferred shares, thus raising Telenor’s share of VimpelCom’s outstanding voting shares at the time to 36.4%. On March 8, 2012, the tribunal dismissed all claims in the Arbitration Proceedings with prejudice. Telenor’s voting stake has since reportedly increased to 43.0%. For more information on our largest shareholders, see “Major Shareholders.” In addition, as a result of Altimo’s sale of 123,600,000 convertible preferred shares in June 2011, which reduced its interest in voting shares at the time in VimpelCom Ltd., and indirectly in our company, to below 25%, the VimpelCom Ltd. Shareholders Agreement terminated on December 10, 2011. Altimo’s stake has since reportedly increased to 47.9%. For information regarding subsequent changes in Altimo’s shareholdings, see the section of this prospectus entitled “Major Shareholders.” Termination of the VimpelCom Ltd. Shareholders Agreement could result in further disputes between Telenor and Altimo. Any legal proceedings that may arise between Altimo and Telenor in the future could cause the relationship between Altimo and Telenor to deteriorate, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

A disposition by VimpelCom Ltd.’s strategic shareholders of their respective stakes in VimpelCom Ltd. or a change in control of VimpelCom Ltd. could harm our business. Certain of our debt agreements have “change of control” provisions that may require us to make a prepayment if certain parties acquire beneficial or legal ownership of or control over more than 50.0% of our shares, which could occur if certain parties acquired more than 50.0% of VimpelCom Ltd. Generally, this change of control provision is not triggered as long as the Alfa Group and Telenor, alone or together, own more than 50% of VimpelCom Ltd. If a change of control is triggered and we fail to make any required prepayment, this could lead to an event of default, and could trigger cross default or cross acceleration provisions under certain of our other debt agreements. In such event, our obligations under one or more of these agreements, including, without limitation, the Notes, could become immediately due and payable, which would have a material adverse effect on our business, financial condition, results of operations and prospects. We derive benefits and resources from the participation of Telenor and Altimo in the VimpelCom Ltd. Group. If Telenor or Altimo were to dispose of its stake in VimpelCom Ltd., either voluntarily or involuntarily, we may be deprived of the benefits and resources that we derive from Telenor or Altimo, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

The return on, and benefits from, our recent additional investment in Euroset might be affected by disagreements among Euroset shareholders. On December 6, 2012, our wholly owned subsidiary, Ararima Enterprises Limited, acquired an additional 0.1% of Euroset Holding N.V., increasing our indirect ownership to 50.0%. As part of the same transaction, Lefbord Investments Limited, a Cyprus company in which OJSC Megafon and Garsdale Services Investment Ltd. (a BVI Company) are shareholders purchased the other 50.0% of Euroset Holding N.V. from Alpazo Limited, a Cypriot company. As a result of this transaction, Ararima and Lefbord have equal economic interests and corporate governance rights, which can result in deadlocks in governing Euroset. The corporate governance agreement entered into among Lefbord, Euroset, Garsdale, Megafon and OJSC VimpelCom regarding governance of Euroset does not include any mechanics to deal with deadlocks on

21 decisions between Euroset’s shareholders. Conflicts between Lefbord and us as to the management of Euroset could therefore lead to deadlock situations, which could hinder the timely and effective management of Euroset and thus affect the return on, and expected benefits from, our investment in it, which could adversely affect our business, financial condition, results of operations and prospects.

Risks Related to Our Industry

Our business is highly capital intensive and requires substantial and ongoing expenditures of capital, which, in the future, we may not be able to obtain on favorable terms or at all. Our industry is highly capital intensive, and our success depends to a significant degree on our ability to keep pace with new developments in technology, to develop and market innovative products and to update our facilities and process technology. All of our operations have extensive capital expenditure programs that require substantial outlays. We may require additional capital in the future to finance our future growth and development, implement further marketing and sales activities, fund our ongoing research and development activities, implement new technological advances and meet our general working capital needs. The amount and timing of our capital requirements will depend on many factors, including acceptance of and demand for our products and services, the extent to which we invest in new technology and research and development projects, and the status and timing of competitive developments. For example, we have commitments under our 4G/LTE licenses in Russia that require that we invest the equivalent of approximately US$470 million annually from July 2012 through December 2019. We may require greater capital investments in shorter time frames than we have anticipated, and we or our operations may not have the resources to make such investments. Several Russian regions are considering the possibility of implementing “clear sky” regulations, which are regulations prescribing the relocation underground of telecommunications cables. Similar regulations are currently already in force in parts of the Russian micro-region of Tatarstan. If other local authorities were to adopt similar regulations, we could be required to relocate aerial cables underground, which could cause us to incur significant additional costs. Failure to comply could result in fines and dismantling of the existing cables. If we do not have the resources for necessary capital expenditures, we may be required to raise additional debt or equity financing, which may not be available when needed on terms favorable to us or at all. If we are unable to obtain adequate funds on acceptable terms or at all, we may be unable to develop or enhance our products, take advantage of future opportunities or respond to competitive pressures, which could adversely affect our business, financial condition, results of operations and prospects.

Our revenues are often unpredictable and our revenue sources are short-term in nature. Future revenues from our prepaid mobile subscribers, our primary source of revenues, and our contract mobile subscribers are unpredictable. We do not require our prepaid mobile subscribers to enter into long-term service contracts and cannot be certain that they will continue to use our services in the future. We require our contract mobile subscribers to enter into service contracts; however, many of these service contracts can be cancelled by the subscriber with limited advance notice and without significant penalty. Our churn rate fluctuates significantly and is difficult to predict. Our mobile churn rate for our biggest markets, Russia and Ukraine, were 47.7% and 21.6%, respectively, for the nine months ended September 30, 2012 and ranged from 21.6% to 61.7% for the other markets. Our mobile churn rates in Russia for 2011 and 2010 were 62.8% and 50.8%, respectively, while in Ukraine our churn rates for 2011 and 2010 were 22.3% and 29.5%, respectively. For our other markets, our mobile churn rates ranged from 22.3% to 87.6% for 2011, and from 30.1% to 79.9% for 2010.

In addition, consumption of mobile telephone services is driven by the level of consumer discretionary income. Deterioration in the economic situation could cause subscribers to have less discretionary income, thus affecting their spending on our services. The loss of a larger number of subscribers than anticipated could result in a loss of a significant amount of expected revenues. Because we incur costs based on our expectations of future revenues, our failure to accurately predict revenues could adversely affect our business, financial condition, results of operations and prospects.

Mobile telecommunications in Russia is a mature industry and, in order to continue to grow our business, we must develop new products and services. Historically, our business has grown through the rapid expansion of our mobile subscriber base. However, mobile penetration in most of our markets has become increasingly saturated and the level of growth in our subscriber base has moderated. According to Informa Telecoms & Media, for example, as of September 30, 2012, mobile penetration in the Russian Federation was estimated to be 167.2%. Accordingly, there are limits on the extent to which we can continue to grow our subscriber base. While it is possible to attract subscribers from

22 other operators because of the high rate of churn in Russia, we are subject to the same risk of churn by our subscribers. Competition for subscribers has in the past, and may in the future, create additional pricing pressure for operators, which could have a material adverse impact on our margins and profitability. For example, if one or more of our competitors adopts an aggressive strategy to attempt to increase market share, we may be forced to follow suit, which could result in higher subscriber acquisition costs or pressure to decrease prices. Because of the moderation of growth in our subscriber levels, the continued growth in our business and results of operations will depend, in part, on our ability to extract greater revenue from our existing subscribers, including through expansion of data services and introduction of next generation technologies. We may fail to develop and offer data services or technologies that are attractive to our existing subscribers or for which our existing subscribers are not willing or able to pay. We also may not be able to develop other platforms, products and services to attract and retain subscribers, or make strategic acquisitions in order to expand our business. Even if successful in making such developments or acquisitions, they may not result in an increased customer base and greater profits for us. If we fail to extract additional revenues from our existing subscribers or continue to expand our subscriber base, our business, financial condition, results of operations and prospects will be materially adversely affected.

We are in a competitive industry and we may face greater competition as a result of market developments. The markets in which we operate are competitive in nature, and we expect that competition, especially in the least developed markets, will continue to increase. If we are unsuccessful in our marketing campaigns or the services we introduce are not well received by consumers, or in the event of any delays in developing our networks, we will not generate the revenue anticipated and our ARPU may decline, which may materially adversely affect our business, financial condition and results of operations. We cannot assure you that our revenue will grow in the future, as competition puts pressure on prices. For more information on competition we face in the market for mobile services, see the section of this prospectus entitled “Business—Competition—Mobile Business in Russia.” In addition, as the subscriber penetration rates increase and the markets in which we operate mature, mobile services providers, including us, may be forced to utilize more aggressive marketing schemes to retain existing subscribers and attract new ones. If this were to occur, we may choose to adopt lower tariffs, offer handset subsidies or increase dealer commissions, any or all of which could materially adversely affect our business, financial condition, results of operations and prospects. As we expand the scope of our services, such as fixed-line residential and commercial broadband services, we anticipate that we will encounter a greater number of competitors who provide similar services. Unfavorable competitive developments could have a material adverse effect on our business. For example, in Russia, OJSC VimpelCom experienced competitive pressures in 2009 and 2010 resulting in a reduction in our market share. In the event we fail to successfully address challenges from our competition, our business, financial condition, results of operations and prospects could be materially and adversely affected. The issuance of additional telecommunications licenses, the implementation of new technology or the liberalization of relevant regulations in any of the license areas in which we operate could greatly increase competition and put pressure on our pricing. For example, in 2006, 2007, 2008 and 2011, our competitors, Tele2 and Sky Link, were awarded GSM licenses in parts of Russia and the CIS. In addition, in 2007 a third GSM license was issued in Kazakhstan, and it was reported that Tele2 purchased an interest in the company holding this license in 2010. This acquisition has resulted in increased competition in the Kazakh market. A third GSM license was issued in Armenia to France Telecom in 2008. Furthermore, the government of Armenia has liberalized the fixed-line market in Armenia, which will result in increased competition. If competitors are able to operate telecommunications networks that are more cost effective than ours, then they may have competitive advantages over us, which could harm our business. Providers of traditional fixed-line telephone services and mobile operators that have obtained fixed-line licenses may compete more effectively with us. The fixed-line market has historically been dominated by former state-controlled service providers Telecommunication Investment Joint Stock Company Svyazinvest (“Svyazinvest”) in Russia and Public Joint Stock Company “Ukrtelecom” (“Ukrtelecom”) in Ukraine, and current state-controlled service providers such as Rostelcom, which became the legal successor to Svyazinvest’s assets as a result of a restructuring of the state-owned telecommunications sector by the Russian Government, Kazakhtelecom in Kazakhstan, Uzbektelecom in Uzbekistan, Tajiktelecom in Tajikistan and Kyrgyztelecom in Kyrgyzstan. These companies and other established competitors have some competitive advantages over our fixed-line operations, including:

• significant resources and greater market presence and network coverage; • brand name recognition, customer loyalty and goodwill;

23 • control over domestic transmission lines and over access to these lines by other participants; and • close ties to national and local regulatory authorities who may be reluctant to adopt policies that would result in increased competition for Rostelecom, Uzbektelecom, Kazakhtelecom or Ukrtelecom and other historically state-owned companies. Our competitors, particularly current or former state-controlled telecommunications company service providers, including Rostelecom and Ukrtelecom, may receive preferential treatment from the regulatory authorities and benefit from the resources of their shareholders, potentially giving them a substantial competitive advantage over us. Additionally, current or future relationships among our competitors and third parties may restrict our access to critical systems and resources. New competitors or alliances among competitors could rapidly acquire significant market share. We cannot assure you that we will be able to forge similar relationships or successfully compete against them. See also “—Legal and Regulatory Risks—Our strategic partnerships and relationships to develop our business are accompanied by inherent business risks.” In 2011, the Russian government completed the first phase of the reorganization of the state-controlled telecommunications companies Svyazinvest and Rostelecom, by transferring to Rostelecom the fixed-line business of Svyazinvest. As a result, Rostelecom is currently the largest fixed-line operator and fifth largest mobile operator in Russia. According to public reports, during the second phase of the reorganization, which is expected to be completed in 2013, several regional state-controlled operators will be consolidated under Svyazinvest, which will be merged into Rostelecom. In February to March 2011, Rostelecom was awarded 39 out of 40 regional licenses and a regional operator in Chechnya was awarded one regional license to provide WiMax services within the 2300-2400 MHz frequency band. On November 30, 2011, Rostelecom received permission for the use of such frequencies for the deployment of an LTE/4G network in advance of the 2012 tender by the Russian government for LTE/4G licenses discussed below under “—Our failure to keep pace with technological changes and evolving industry standards could harm our competitive position and, in turn, materially adversely affect our business.” Rostelecom was also awarded an LTE/4G license in July 2012 covering the entire territory of Russia and additional frequencies. This state-controlled company, including its mobile operations, may receive preferential treatment from regulatory authorities in terms of licensing, frequency allocation, tariff regulation, access to existing infrastructure, and the regulatory regime, among others, and may receive favorable pricing terms for interconnection from state-controlled regional fixed line operators, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, we do not possess a “first mover advantage” in most of the geographic areas where we operate. In many cases, we have been the second, third, or fourth mobile operator to enter a particular market. As a result, it may be more difficult for us to attract new subscribers than it is for our competitors (including MTS and MegaFon and their respective affiliates in Russia, Ukraine and the CIS) that entered markets and established a local presence in some cases years before we did. The mobile markets outside Russia are significant to us, as the rate of subscriber growth in Russia has significantly slowed as a result of oversaturation. In many of these markets outside of Russia we entered the market when other mobile operators were already well established. If we are not successful in penetrating markets where we operate, our business, financial condition, results of operations and prospects may be materially adversely affected.

We could experience subscriber database piracy, which may materially adversely affect our reputation, lead to subscriber lawsuits, loss of subscribers or hinder our ability to gain new subscribers and thereby materially adversely affect our business. We may be exposed to database piracy which could result in the unauthorized dissemination of information about our subscribers, including their names, addresses, home phone numbers, passport details and individual tax numbers. The breach of security of our database and illegal sale of our subscribers’ personal information could materially adversely impact our reputation, prompt lawsuits against us by individual and corporate subscribers, lead to adverse actions by the telecommunications regulators, lead to a loss in subscribers and hinder our ability to attract new subscribers. If severe customer data security breaches are detected, the regulatory authority can sanction our company, and such sanction can include suspension of operations for some time period. These factors, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our failure to keep pace with technological changes and evolving industry standards could harm our competitive position and, in turn, materially adversely affect our business. The telecommunications industry is characterized by rapidly changing technology and evolving industry standards. We experience new customer demand for more sophisticated telecommunications and Internet services in Russia, Ukraine and the CIS as well as for other new technologies such as Internet Protocol (“IP”)

24 telephony and Worldwide Interoperability for Microwave Access. Accordingly, our future success will depend, in part, on the adoption of a favorable policy and regulation of standards utilizing these technologies. Our success will also depend on our ability to adapt to the changing technological landscape. However, the rapid technological advances in the telecommunications industry make it difficult to predict the extent of future competition. It is possible that the technologies we utilize today will become obsolete or subject to competition from new technologies in the future for which we may be unable to obtain the appropriate license. We may not be able to meet all of these challenges in a timely and cost-effective manner or be able to develop strategies compatible with new technology. In addition, we may not be able to acquire licenses or frequencies, which we may deem necessary to compete or we may not be able to acquire such licenses on reasonable terms. For example, we have in the past been unable to obtain necessary frequency allocations in order to launch telecommunications services in Ukraine using 3G technologies. We operate 3G networks in some of our markets, and we still need to develop 3G networks in additional markets in which we operate, including Ukraine where we operate in 2-2.5G technology. On April 20, 2007, the Russian Federal Communications Agency announced the results of three tenders for awarding 3G licenses and OJSC VimpelCom was awarded a license for the provision of IMT-2000/UMTS 3G mobile radiotelephony communications services for the entire territory of the Russian Federation. The 3G license was granted subject to certain capital commitments. The major conditions are that we will have to build a certain number of base stations that support 3G standards and will have to start services provision by certain dates in each region of the Russian Federation, and also will have to build a certain number of base stations by the end of the third, fourth and fifth years from the date of granting the license. To date, we have complied with the required conditions in each year. Part of the frequency spectrum related to the 3G license is currently used by other commercial and governmental entities, including the military, and OJSC VimpelCom is working to have such frequencies vacated so that it can develop its 3G network. Additionally, 3G network development requires significant financial investments and there can be no assurance that we will be able to develop a 3G network on commercially reasonable terms, that we will not experience delays in developing our 3G network or that we will be able to meet all of the license terms and conditions or that we will be granted such licenses at all. Therefore, we may be unable to successfully compete in the future. If we experience substantial problems with our 3G services, or if we fail to introduce new services on a timely basis relative to our competitors, it may impair the success of our 3G services, delay or decrease revenues and profits and therefore may hinder recovery of our significant capital investments in 3G services as well as our growth. In September 2009, the National Commission for Communications Regulation (which, following administrative reforms in 2011, was replaced by the National Commission for the State Regulation of Communication and Informatization (the “NCCIR”)) made a decision to issue four 3G licenses to Ukrainian telecommunications operators, in addition to the 3G license awarded to Ukrtelecom in 2005. On September 22, 2009, the NCCIR announced its decision to hold an auction for the first of these 3G licenses and, on September 29, 2009, approved the auction conditions. This tender was subsequently cancelled by government authorities, and no tender has been held yet. The only operator in Ukraine holding a 3G license is Limited Liability Company “Trimob”, a subsidiary of Ukrtelecom. If Kyivstar is unable to obtain a 3G license or if a 3G license is awarded to one of Kyivstar’s competitors, Kyivstar would face increased competition in the provision of mobile services in Ukraine. Similarly, if Kyivstar ultimately acquires a 3G license later than its competitors or is required to pay a significantly higher price to obtain a 3G license than its competitors, it could be at a significant competitive disadvantage and face increased costs in implementing its 3G network rollout. We also expect to face future competition from networks that provide faster, higher quality data transfer and streaming capability than 2G and 3G networks. In 2010, the Russian government issued licenses for WiMax broadband wireless mobile access services for 40 regions throughout Russia. Svyazinvest (now Rostelecom) won the tender for 39 out of the 40 licenses and a regional operator in Chechnya won one. Increased competition from the new networks could have a material adverse effect on our business, financial condition, results of operations and prospects. The next step in the development of Russian telecommunications is the deployment of 4G/LTE networks. The cost of 4G/LTE network development and the quality of services (including data speed and quality of coverage) depend on the band and the width of frequency range given to an operator. In July 2012, OJSC VimpelCom was awarded one of four nationwide LTE licenses granted in Russia. The other three licenses were granted to MTS, Megafon and Rostelecom. The license allows OJSC VimpelCom to provide services using radio-electronic devices in Russia via networks that use the LTE standard within certain designated frequency bands. Our license is subject to several conditions, including that we begin providing service by June 1, 2013, and that we invest a certain amount in our network in each year in which it is being constructed. There can be no assurance that we will be able to obtain the technical permissions required to begin providing service by the June 1, 2013 deadline. For more information regarding the terms of our LTE license, please see the section of this prospectus entitled “Business—Description of our

25 Operations in Russia—Mobile Telecommunications Licenses in Russia.” Additionally, the State Radio Frequencies Commission gave Scartel (Yota brand) two ranges of LTE frequencies, 30 MHz each, in the 2.5-2.7 GHz band for use in the whole territory of Russia in exchange for 4G frequencies held by Scartel for WiMax technology bandwidth of 70MHz (the exchange was completed on a non-auction basis). According to public reports, shareholders of Megafon and shareholders of Scartel established a joint venture, Garsdale Services Investment Ltd., through which shareholders of Megafon indirectly hold an 82% equity interest in Scartel. In addition, according to public reports, Megafon entered into a MVNO agreement with Scartel for the joint development and provision of 4G technology networks under the LTE standard in Russia. OJSC VimpelCom is in the process of negotiating with Scartel regarding potential implementation of the MVNO model for the joint development and provision of 4G technology networks under the LTE standard in Russia. In light of the fact that Megafon shareholders indirectly control Scartel, Megafon may obtain a significant competitive advantage both in terms of frequency resources and LTE network development costs using Scartel’s network. Furthermore, the limited number of available frequencies may prevent us from realizing the full benefits we expect to receive from the development of a 4G network, because our network capacity would be constrained and our ability to expand limited. We are developing a 4G/LTE network for deploying 4G/LTE services under our own license. We cannot be sure that we will be able to develop a commercially viable means of providing 4G/LTE services on competitive terms in the markets in which we operate or that we will satisfy all conditions in our licenses. In addition, currently the penetration rate for 4G/LTE compatible devices is low. If this rate does not increase to levels that support the cost of development of our own 4G/LTE network, our business, financial condition, results or operations and prospectus may be materially adversely affected. If our competitors gain access to, or deploy, 4G/LTE networks before us or on better terms, they would have an advantage over us, which may in turn have a material adverse effect on our business, financial condition, results of operations and prospects.

Our ability to provide telecommunications services would be severely hampered if our access to local and long distance line capacity were limited or if the commercial terms of our interconnect agreements were significantly altered. Our ability to secure and maintain interconnect agreements with other wireless and local, domestic and international fixed-line operators on cost-effective terms is critical to the economic viability of our operations. Interconnection is required to complete calls that originate on our respective networks but terminate outside of our respective networks, or that originate from outside our networks and terminate on our respective networks. A significant increase in our interconnect costs as a result of new regulations, commercial decisions by other fixed-line operators, increased inflation rates in the countries in which we operate or a lack of available line capacity for interconnection could have a material adverse effect on our ability to provide services, which could in turn have a material adverse effect on our business, financial condition, results of operations and prospects.

Our equipment supply arrangements may be terminated or interrupted and our existing equipment, technological and management systems may be subject to disruption and failure, which could cause us to lose customers, limit our growth and violate our licenses. The successful build-out and operation of our networks depends heavily on obtaining adequate supplies of switching equipment, base stations and other equipment on a timely basis. We currently purchase our equipment from a small number of suppliers, principally Alcatel-Lucent, Cisco Systems, Comverse, Ericsson, Huawei and Nokia-Siemens Networks, although some of the equipment that we use is available from other suppliers. From time to time, we have experienced delays receiving equipment. Our business could be materially adversely affected if we are unable to obtain adequate supplies or equipment from our suppliers in a timely manner and on reasonable terms. Our business depends on providing customers with reliability, capacity and security. As telecommunications increases in technological capacity, it may become increasingly subject to computer viruses and other disruptions. We cannot be sure that our network system will not be the target of a virus or, if it is, that we will be able to maintain the integrity of the data of our corporate customers or of that in individual handsets of our mobile subscribers or that a virus will not overload our network, causing significant harm to our operations. In addition to computer viruses, the services we provide may be subject to disruptions resulting from numerous other factors, including human error, security breaches, equipment defects, and natural disasters, which could have a material adverse effect on our business. Our technological infrastructure is vulnerable to damage or disruptions from numerous events, including fire, flood, windstorms or other natural disasters, power outages, terrorist acts, equipment or system failures, human errors or intentional wrongdoings, including breaches of our network or information technology security. Problems with our backbone, switches, controllers, fiber optic network or network nodes at one or more of our base stations, whether or not within our control, could result in service interruptions or significant damage to our

26 networks. All of our equipment for provision of mobile services in Moscow is located primarily in two buildings in Moscow. Disruption to the operation of these buildings, or buildings where our equipment is held in other jurisdictions where we operate, such as from electricity outages or damage to these buildings could result in disruption of our mobile services in those jurisdictions. Although we have back-up capacity for our network management operations and maintenance systems, automatic transfer to our back-up capacity may not be seamless, and may cause network service interruptions. We have experienced network service interruptions, which occur from time to time during installations of new software. Interruptions of services could harm our business reputation and reduce the confidence of our subscribers and consequently impair our ability to obtain and retain subscribers and could lead to a violation of the terms of our licenses, each of which could materially adversely affect our business. We carry business interruption insurance to prevent against network disruptions in some, but not all, of the markets in which we have operations. Our ability to manage our business successfully is contingent upon our ability to implement sufficient operational resources systems and processes to support our rapid growth. We may face risks in connection with the correct use of the newly introduced systems and processes in the regions where our group operates or integrating new technologies into existing systems. For example, if our billing systems develop unexpected limitations or problems, subscriber bills may not be generated promptly and/or correctly. This could materially adversely impact our business since we would not be able to collect promptly on subscriber balances. The introduction of new tariffs and mobile Internet services in Ukraine have increased the amount of traffic on Kyivstar’s and its competitors’ networks. If we fail to invest sufficiently in our networks, we may be unable to maintain the level of reliability and capacity we have historically provided, which could adversely affect our ability to retain subscribers. The resulting loss of revenue could materially adversely affect our business, financial condition, results of operations and prospects.

We depend on third parties for certain services important to our business. There is inherent risk in relying on third parties for services important for our operations. For example, we may outsource our networks in certain markets in which we operate, and our networks are important to our business. To the extent that the third parties on which we rely fail to provide the required service, it could have a materially adverse impact on our business, financial condition, results of operations and prospects. Historically the vast majority of our operating subsidiaries’ revenue has come from providing telecommunications services, with relatively little of our revenue coming from sales of handsets and other devices. In 2008, OJSC VimpelCom significantly increased its sale of devices by beginning to sell broadband Internet modems and entering into an agreement with Apple Sales International to sell iPhones in Russia. Sales of devices tend to yield lower profit margins than the sale of services and the need to maintain devices in inventory can have a negative impact on our working capital. In addition, sales of handsets are sensitive to changes in economic conditions and there can be no assurance that we will be able to make the purchase installments contemplated by the agreement with Apple. At the same time, we expect that the sales of handsets, including iPhones, will contribute to our subscriber growth, and such sales are therefore critical for our overall growth strategy. In the event we are unable to extend our existing agreements with, or fail to agree on acceptable terms or lose exclusivity in our agreements with handset providers, we could experience a negative impact on our ARPU and our churn rate, which could have a material adverse effect on our business, financial condition and results of operations. For more information, please see the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Contractual Obligations.” For information on proceedings commenced by FAS relating to our sale of iPhones, please see the section of this prospectus entitled “Business—Legal Proceedings—Proceedings Involving OJSC VimpelCom and its Subsidiaries—FAS Antimonopoly Litigation—iPhone Proceedings.” Many of our mobile products and services are sold to customers through retail channels. The third party distributors, retailers and sales agencies that we use to distribute and sell products are not under our control and may stop distributing or selling our products and services at any time. Should this occur with particularly important distributors, retailers or agencies, we may face difficulty in finding new distributors, retailers or sales agencies that can generate the same level of revenues. In addition, distributors, retailers and sales agencies that also distribute or sell competing products and services may more actively promote the products and services of our competitors. Such developments with our third party distributors, retailers and sales agencies could materially adversely affect our business, financial condition, results of operation and prospects.

27 If we cannot attract, train, retain and motivate qualified personnel, then we may be unable to successfully manage our business or otherwise compete effectively in the telecommunications industry, which could have a material adverse effect on our business. To successfully manage our business, we depend in large part upon our ability to attract, train, retain and motivate highly skilled employees and management. There is significant competition for such employees, particularly during economic downturns such as the one we recently experienced. We may lose some of our most talented personnel to our competitors. If we cannot attract, train, retain and motivate qualified personnel, then we may be unable to successfully manage our business or otherwise compete effectively in the telecommunications industry, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Allegations of health risks related to the use of mobile telephones could have a material adverse effect on us. There have been allegations that the use of certain portable mobile devices may cause serious health risks. The actual or perceived health risks of mobile devices could diminish subscriber growth, reduce network usage per subscriber, spark product liability lawsuits or limit available financing. Each of these possibilities has the potential to cause material adverse consequences for us and for the entire mobile industry.

Our intellectual property rights are costly and difficult to protect, and we cannot guarantee that the steps we have taken to protect our property rights will be adequate. We regard our copyrights, trademarks, trade dress, trade secrets and similar intellectual property, including our rights to certain domain names, as important to our continued success. We rely upon trademark and copyright law, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our proprietary rights. However, intellectual property rights are especially difficult to protect in the markets where we operate. In these markets, the regulatory agencies charged to protect intellectual property rights are inadequately funded, legislation is underdeveloped, piracy is commonplace and enforcement of court decisions is difficult. In addition, litigation may be necessary to enforce our intellectual property rights, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement. As the number of convergent product offerings and overlapping product functions increase, the possibility of intellectual property infringement claims against us may increase. Any such litigation may result in substantial costs and diversion of resources, and, if decided unfavorably to us, could have a material adverse effect on our business, financial condition, results of operations and prospects. We also may incur substantial acquisition or settlement costs where doing so would strengthen or expand our intellectual property rights or limit our exposure to intellectual property claims of third parties. While we have successfully enforced our intellectual property rights in courts in the past, we cannot assure you that we will be able to successfully protect our intellectual property rights in the future.

We may not be able to recover, or realize the value of, the debt investments that we make in our subsidiaries. The Issuer and OJSC VimpelCom lend funds to, and make further debt investments in, our subsidiaries under intercompany loan agreements and other types of contractual agreements. Certain of the Issuer’s and OJSC VimpelCom’s subsidiaries are also parties to third-party financing arrangements that restrict OJSC VimpelCom’s ability to recover its investments in these subsidiaries through the repayment of loans or dividends. For more information regarding our subsidiaries’ indebtedness, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities.” These restrictions on repayment of intercompany debt may reduce the ability of OJSC VimpelCom to upstream cash to us, which, in turn, could affect our ability to make timely payments of principal and interest on the Notes. In the future, we may enter into similar debt arrangements with our subsidiaries. These restrictions in OJSC VimpelCom’s or our debt arrangements could make it difficult for us to meet our debt service obligations, which could materially adversely affect our business, financial condition, results of operations and prospects.

Legal and Regulatory Risks

We are subject to anti-monopoly and consumer protection regulation in Russia, Ukraine and the CIS, which could restrict our business. As a multinational telecommunications company that operates in regulated markets, we are subject to different laws and regulations in each of the jurisdictions in which we provide services. Mobile, Internet, fixed- line, voice and data markets are all generally subject to extensive regulatory requirements, including strict

28 licensing regimes, as well as anti-monopoly and consumer protection regulations, in the countries in which we operate. Regulations may be especially strict in the markets of those countries in which we are considered to hold a significant or dominant market position. Furthermore, regulations could require us to reduce roaming prices and termination rates in mobile and/or fixed line networks, require us to offer access to our network to other operators, and result in the imposition of fines if we fail to fulfill our service commitments. Such regulations and regulatory actions could place significant competitive and pricing pressure on our operations and could have a material adverse effect on our business, financial condition, results of operations and cash flow. For more information on the regulatory environment in which we operate, see “Regulation of Telecommunications.” Anti-monopoly regulations in the countries where we operate may require us to obtain anti-monopoly approvals for certain acquisitions, reorganizations or other transactions as may be provided for in applicable law. The applicable rules are generally subject to different interpretations and the competent authorities may challenge the positions that we take. We may also be unable to comply with anti-monopoly approvals due to administrative delays in the review process or for other reasons. Failure to obtain such approval or the activity of the relevant anti-monopoly bodies may impede or adversely affect our business and ability to expand our operations. Anti-monopoly and consumer protection regulators in countries where we operate have oversight over consumer affairs and advertising and are authorized to regulate companies deemed to be a dominant force in, or a monopolist of, a market. In some countries in which we operate, including Russia, Ukraine, Kazakhstan, Tajikistan and Armenia, we have been identified by the regulators as having a significant or dominant market position. In such markets, regulations could require us to reduce roaming prices, retail mobile prices and/or termination rates in mobile and/or fixed networks, require us to grant access to our network to other operators and result in the imposition of fines if we fail to fulfill our service commitments. In addition, because of our identification as holding a dominant or significant market position, we are subject to stricter controls on our operations and higher scrutiny in achieving anti-monopoly approvals in such markets, potentially making us less flexible in terms of pricing our services and causing us to incur additional obligations when completing acquisitions. Regulatory measures taken in response to competition violations may include inter alia the requirement to discontinue certain activities, the imposition of fines, confiscation of revenue derived from monopolistic activities, restrictions on increase of tariffs, on acquisitions or on other activities, such as contractual obligations. Any successful challenge by an anti-monopoly regulator or other competent authority may expose us or certain of our officers, directors, or shareholders to fines or penalties and may result in the invalidation of certain agreements or arrangements. This may adversely affect the manner in which we manage and operate certain aspects of our business. In connection with the FAS approval of our acquisition of an additional 0.1% stake in Euroset in December 2012 (which increased our stake to 50.0%), the FAS issued orders that prohibit us from setting discriminatory terms while selling our services through Euroset and require that we instruct those entities controlled by us with regard to the orders. Since Euroset is 50% owned by us and 50% by Lefbord, our company does not control Euroset and we cannot assure you that we will be able to comply with the FAS orders. If we fail to comply with the FAS orders, the FAS may impose a fine on us and may apply to a court to invalidate the acquisition of our entire stake in Euroset. For more information about the competition proceedings in which our subsidiaries are involved, please see the section of this prospectus entitled “Business—Legal Proceedings” and note 25 to the unaudited condensed consolidated interim financial statements included elsewhere in this prospectus. Proposed changes to Russian legislation may adversely affect our business. In 2010, the Russian government announced its intent to monitor the pricing of roaming services. As a result, FAS conducted an investigation of the activities of Russian telecommunications operators and found that we, MTS and MegaFon violated antimonopoly laws relating to our pricing for roaming services and imposed significant fines. Since this decision, several draft laws were submitted for consideration to the State Duma, which are intended to change the regulation of inter-network and intra-network roaming in Russia by introducing a flat roaming tariff for inter-network roaming and eliminating intra-network roaming tariffs for incoming calls. If legislation is adopted as currently drafted, our revenues from the provision of roaming services could decline. This and other potential regulatory changes that may be enacted in the future, such as the introduction of new rules regulating MVNOs could weaken our competitive position in the mobile telecommunications market, which could have a material adverse effect on our business, financial condition, results of operations and prospects. In 2011, the Russian government continued its efforts to decrease pricing levels for international roaming retail services. Following governmental initiatives and discussions with the FAS, OJSC VimpelCom has decreased pricing levels for international roaming services rendered to its customers. However, if the FAS finds

29 such decreases insufficient, OJSC VimpelCom may still be required to further reduce the roaming tariffs, which could adversely affect our revenues and in turn have a material adverse effect on our business, financial condition, results of operations and prospects. FAS has repeatedly expressed its intention to require mobile operators to base all their tariffs on per-second billing for domestic calls, or at least to decrease the maximum possible billing interval, which is currently minute-based. As a result, the current draft of the rules on rendering mobile communication services (the “Draft Rules”), which is being developed by the Ministry of Communications, contains a provision which requires mobile operators to establish at least one tariff with per-second billing and at least one tariff with a 10-second billing interval in roaming in each Russian micro-region. In addition, the Draft Rules also contain certain provisions concerning an operator’s obligations to alert subscribers about changes in the terms of certain services provided, including a change in tariffs, availability of roaming services and services not included in certain packages. Although the Draft Rules are yet to be adopted, the proposed changes, once effective, may lead to additional expenses, including those for expansion of our billing and information systems, which may adversely affect our revenues and results of operations. In December 2012, the law containing amendments to the Federal Law No. 126-FZ “On Communications” dated July 7, 2003, was adopted, which will permit mobile subscribers to use the mobile number portability service (the “MNP”) for a fee determined by the operator (which must not exceed 100 roubles) from December 1, 2013. MNP will initially be implemented only at the regional level, allowing subscribers to retain their mobile phone numbers only after switching their mobile operator within the same region without obtaining the approval of the Federal Communications Agency as was previously required. In addition, the Ministry of Communications plans to set up a number database for subscribers who have taken advantage of MNP. We estimate that our expenses associated with the MNP launch may be approximately US$40.0 million if implemented. The implementation of MNP may also result in changes to the current market shares of the Russian telecommunications operators, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Any failure by our suppliers to obtain all permits required to import and operate telecommunications equipment could disrupt our business. Substantially all of our telecommunications equipment is imported by our suppliers and requires customs clearance. Russian customs legislation is frequently subject to change, which often results in significant revisions of customs clearance procedures. In particular, in December 2010, the Customs Code of the Russian Federation was effectively replaced with a new set of legislation including the Customs Code of the Customs Union of the Russian Federation, the Belarus Republic and the Kazakhstan Republic. The new customs legislation has been in force for a relatively short period of time, which leads to unclear and inconsistent implementation thereof and may result in inconsistent enforcement and delays in customs clearance of imported telecommunications equipment. Delays in, or the disruption of, supply of the equipment necessary for developing our network and for implementing new technologies could have a material adverse effect on our business. In addition, Russian law prohibits the operation of certain telecommunications equipment without a relevant permit. In most cases, it is the equipment supplier’s responsibility to obtain such a permit. If our suppliers are unable to obtain all permissions required for us to operate new equipment in a timely manner or at all, our business could be disrupted, which could have a material adverse effect on our financial condition, results of operations and prospects.

Russian companies may be required to adopt a decision on liquidation when their net assets are negative. Under Russian law, if a company’s net asset value at the end of its second or any subsequent financial year, as determined under Russian accounting standards, is less than the minimum charter capital required by law, such company must adopt a decision to decrease the charter capital or to liquidate if the company is registered as a limited liability company. If the company is registered as a joint-stock company, it must perform a number of actions provided by the law. In either case, if it fails to do so within a “reasonable period,” the company’s creditors are entitled to request early termination and acceleration of the company’s obligations to them and to demand compensation of damages, and governmental agencies may seek involuntary liquidation of such company. Limited Liability Company Kolangon-Optim and certain of our other Russian subsidiaries had negative net assets as of December 31, 2010, 2011 and 2012. We believe that these subsidiaries are solvent and continue to meet all of their obligations to creditors, however, if an involuntary liquidation of our subsidiaries were to occur, our business, financial condition, results of operations and prospects could be materially adversely affected.

30 In Ukraine, a joint-stock company cannot distribute dividends if its net assets are lower than its charter capital, reserve capital and the positive difference between its liquidation value and the par value of its preferred shares. If our Ukrainian subsidiaries cannot distribute dividends because their net assets are insufficient, our business, financial condition, results of operations and prospects could be materially adversely affected.

Our licenses may be suspended or revoked and we may be fined or penalized for alleged violations of law or regulations. We are required to meet certain terms and conditions under our licenses, including meeting certain conditions established by applicable legislation regulating the communications industry. For more information on our licenses and their related requirements, please see the sections of this prospectus entitled “Business—Licenses” and “Regulation of Telecommunications.” We may fail to comply with the conditions of our licenses or with any requirements established by applicable legislation regulating the communications industry, or to obtain permits for the operation of our equipment and use of frequencies or additional licenses for broadcasting directly or through agreements with broadcasting companies, and not be afforded a sufficient grace period to cure any such non-compliance. We cannot assure you that we will receive a grace period or that any grace afforded to us would be sufficient to allow us to cure any remaining non-compliance. We have been required to pay fines in the past for alleged violations of the law even in cases where we were able to cure such violations within the applicable grace period. In the event that we do not cure any non-compliance, the applicable regulator could decide to suspend and seek termination of the relevant license. The occurrence of any of these events could materially adversely affect our ability to build out our networks in accordance with our plans and could harm our reputation, which could in turn have a material adverse effect on our business, financial condition, results of operations and prospects. In Russia, as in other countries where we operate, we routinely receive notices with respect to alleged violations of our licenses. To the extent possible, we take measures to comply with the requirements of the notices. Nonetheless, at any given time, there may be outstanding notices with which we have not complied with within the grace periods specified in the notices, primarily due to delays in the issuance of frequency permits, sanitation- epidemiological permissions, and permissions for the operation of our equipment and communication facilities in connection with the rollout of our networks (including our transportation network) by responsible regulatory authorities. Accordingly, at any given time a certain percentage of our base stations and equipment may not have all permissions required, causing us to be in violation of the terms of our licenses. Failure to comply with the provisions of a notice due to a delay in the issuance of such permits or permissions by the regulatory bodies at times has not been, and in the future may not be, an acceptable explanation to the authorities issuing the notices. In each of the years from 2006 to 2011 and in the first nine months of 2012, in order to comply with notices from the regulator, we switched off a number of base stations that were operating without the necessary permissions. If we switch off additional base stations, the quality of service of our networks in those areas may deteriorate. We cannot assure you that we will be able to cure such violations within the grace periods permitted by such notices or that the regulator will be satisfied by the remedial actions we have taken or will take. In addition, we cannot assure you that our requests for extensions of time periods in order to enable us to comply with the terms of the notices will be granted. Accordingly, we cannot assure you that such findings by the regulator or any other authority will not result in the imposition of fines or penalties or more severe sanctions, including the suspension and subsequent termination of our licenses, frequency allocations, authorizations, registrations, or other permissions, any of which could increase our costs and materially adversely affect our business. In Ukraine, NCCIR asserted in 2012, as part of its regular license examinations, that Kyivstar had failed to comply with provisions in several licenses. Kyivstar has remedied these failures, except for a claimed failure to deploy its telecommunications network so that it provides fixed long-distance telephone communications services in more than 30% of Ukrainian cities and international telephone communications services in more than 20% of Ukrainian cities, as provided in its license for fixed communication services. Kyivstar has until July 2013 to remedy this noncompliance. There can be no assurance that Kyivstar will be able to cure such non-compliance within the permitted grace period. If Kyivstar fails to comply with the order, its licenses for provision of long- distance and international fixed-line telecommunications services throughout the territory of Ukraine may be revoked, which could have a material adverse effect on our business, financial condition, results of operations and prospects. If we fail to fulfill the specific terms of any of our licenses, frequency permissions or other governmental permissions or if we provide services in a manner that violates applicable legislation, regulators may levy fines, suspend or terminate our licenses, frequency permissions, or other governmental permissions or refuse to renew those that are up for renewal. A suspension and the subsequent termination of GSM licenses, 3G licenses, long distance, international services, fixed-line, telematic and data licenses or refusal to renew our licenses or other permissions could materially adversely affect our business, financial condition, results of operations and prospects.

31 Our licenses and frequency permissions are granted for specified periods and they may not be extended or replaced upon expiration. Most of our licenses are granted for specified terms, and we can give you no assurance that any license will be renewed upon expiration. Our super-regional GSM licenses in Russia will expire in 2013 and 2017, our territorial GSM licenses in Russia will expire in various years from 2015 to 2021, and our mobile licenses in the CIS will expire in various years from 2013 to 2026. Our 3G license in Russia will expire in 2017. Most of our fixed telecommunications licenses expire in various years from 2013 to 2019. Under the Russian Federal law “On Communications,” or the “Communications Law,” which came into effect on January 1, 2004, Roscomnadzor can reject an application for license renewal if the applicant’s telecommunication activity does not conform with telecommunications standards, regulations and rules, or if uncured violations of license requirements exist on the date of the renewal application, which could result in delays in license renewal, or even an outright refusal to renew. Although the Communications Law does not authorize Roscomnadzor to impose additional conditions upon license renewal, in practice government officials may exercise broad discretion. If renewed, our licenses may contain additional obligations, including payment obligations (which may involve a substantial renewal or extension fee), or may cover reduced service areas or scope of service. Our licenses are integral to our operations and any inability to extend our existing licenses on the same or comparable terms could materially affect our business. Consistent with its practice at the time, in 2011, the Ukrainian NCCIR denied extension of Kyivstar’s original celluar telecommunications licenses on that grounds that it was delivered prior to new telecommunications legislation, which took effect on December 24, 2003. In October 2011, however, the NCCIR issued to Kyivstar new 900 MHz (GSM) and 1800 MHz (GSM) licenses with 15-year effective periods for provision of wireless (mobile) telecommunications services throughout the territory of Ukraine. As a rule, the expiration date of frequency permissions for most of our mobile communications and radio- relay line base stations falls after the period during which our communications service licenses are valid. There can be no assurance that we will be able to obtain extensions of our frequency permissions and whether these extensions will be formalized and granted by the regulatory agency in a timely manner and without any significant additional costs. It is also possible that upon expiration of frequency permissions the frequency bands currently in use by us will be wholly or partly re-allocated in favor of other communications technologies and/or other communications operators, requiring that we coordinate the use of our frequencies with the other license holders and/or experience a loss of quality in our network. If our licenses for provision of telecommunications services or frequency allocations are not renewed, our business could be materially adversely affected. For more information on our licenses, please see the section of this prospectus entitled “Business—Licenses.”

We face uncertainty regarding our frequency allocations, equipment permits and network registration, and we may experience limited spectrum capacity for providing wireless services. To establish and commercially launch a mobile telecommunications network, we are required to receive, among other things, frequency allocations for bandwidths within the frequency spectrums in the regions in which we operate. There are a limited number of frequencies available for mobile operators in each of the regions in which we operate or hold licenses to operate. We are dependent on access to adequate frequency allocation in each such market in order to maintain and expand our subscriber base. If frequencies are not allocated to us in the future in the quantities, with the geographic span or for time periods that would allow us to provide mobile services on a commercially feasible basis throughout all of our license areas, our business, financial condition, results of operations and prospects may be materially adversely affected. In addition, a failure to make payments for frequency allocations could result in the suspension or revocation of our frequency allocations. A loss of allocated frequency that is not replaced by other adequate allocations also could have a substantial adverse impact on our network capacity and our ability to provide mobile services. In addition, frequency allocations may be issued for periods that are shorter than the terms of our licenses, and such allocations may not be renewed in a timely manner or at all. We have in the past been unable to obtain frequency allocations necessary to test or expand our networks in Russia. If our frequencies are revoked or we are unable to renew our frequency allocations, or obtain additional ones, our network capacity and our ability to provide mobile services would be constrained and our ability to expand would be limited, which could have a material adverse effect on our business, financial conditions, results of operations and prospects. Although OJSC VimpelCom received frequencies in three regions within the Far East super-region through tenders conducted in 2007 and seven regions within the Far East super-region through tenders conducted in April 2011, OJSC VimpelCom’s applications for such frequencies have sometimes been denied in the past.

32 We may encounter difficulties in building our networks or we may face other factors beyond our control that could affect our ability to operate our networks, decrease the quality of our services, increase the cost of construction or operation of our networks or delay the introduction of services. As a result, we could experience difficulty in increasing our subscriber base or could fail to meet license requirements, either of which may have a material adverse effect on our business. In addition, we could face significant increased costs if the laws or authorities in the countries in which we operate change the requirements for our equipment or networks, which could have a material adverse effect on our business, financial condition, results of operations and prospects. The laws of Russia, Ukraine and other countries in the CIS prohibit the operation of telecommunications equipment without a relevant permit from the appropriate regulatory body. Due to complex regulatory procedures, it is frequently not possible for us to procure in a timely manner the permissions and registrations required for our base stations, including registration of our title to land plots underlying our base stations and constructions permits, or other aspects of our network before we put the base stations into operation or to amend or maintain the permissions in a timely manner when it is necessary to change the location or technical specifications of our base stations. At times, there can be a number of base stations or other communications facilities and other aspects of our networks for which we are awaiting final permission to operate for indeterminate periods. This problem may be exacerbated if there are delays in issuing necessary permits. We also regularly receive notices from Russian, Ukrainian and other CIS regulatory authorities warning us that we are not in compliance with aspects of our licenses and permits and requiring us to cure the violations within a certain time period. We have closed base stations on several occasions in order to comply with regulations and notices from regulatory authorities. Any failure by our company to cure such violations could result in the applicable license being suspended and subsequently revoked through court action. Although we generally take all necessary steps to comply with any license violations within the stated time periods by switching off base stations that do not have all necessary permits until such permits are obtained, we cannot assure you that our licenses will not be suspended and not subsequently be revoked in the future. If we are found to operate telecommunications equipment without an applicable permit, we could experience a significant disruption in our service or network operation and this would have a material adverse effect on our business, financial condition, results of operations and prospects.

We may be subject to increases in payments for frequency allocations under the terms of some of our licenses. Applicable legislation in the markets in which we operate, including Russia, requires that we make payments for frequency spectrum usage. Any significant increase in the fees payable for the frequencies that we use or for additional frequencies that we need could have a negative effect on our financial results. In Russia, we make payments for radio-frequency spectrum use under Russian government regulations. In Ukraine, fees for use of radio-frequency spectrum are payable under the tax code of Ukraine. The fees for all available frequency assignments have been significant in the aggregate. Russian Government Decree No. 171 “On establishment of amounts of one-off and annual payment for radio frequency spectrum usage in Russia and of collecting such payments” dated March 16, 2011 requires everyone to pay for radio frequency spectrum use, including military and other users of radio networks. As a result, we cannot assure you that the fees we pay for radio-frequency spectrum use will not increase and that our financial performance will not be adversely affected by such an increase. In addition, the next generation of mobile technology, including the development of a 4G/ LTE network in Russia, may require use of parts of the frequency spectrum that have historically been dedicated to military uses. The fees we may be required to pay for use of this spectrum may increase our cost of rolling out a 4G/LTE network, which may have a material adverse effect on our business, financial condition, results of operations and prospects. In Ukraine, failure to make payments for frequency allocations for more than six months could result in revocation of frequency allocations and permission, which could limit our ability to provide services and also have a material adverse effect on our business, financial condition, results of operations and prospects. For more information, please see the section of this prospectus entitled “Regulation of Telecommunications.”

We are involved in disputes and litigation with regulators, competitors and third parties. We are party to lawsuits and other legal, regulatory and antitrust proceedings, the final outcome of which is uncertain. Litigation and regulatory proceedings are inherently unpredictable. An adverse outcome in, or any settlement of, these or other proceedings (including any that may be asserted in the future) may have a material adverse effect on our business, financial condition, results of operations and prospects. KaR-Tel received an “order to pay” issued by the Savings Deposit Insurance Fund (the “Fund”), a Turkish state agency responsible for collecting state claims arising from bank insolvencies, in the amount of

33 approximately US$4.9 billion (stated as approximately Turkish Lira 7.6 quadrillion and issued prior to the introduction of the New Turkish Lira, which became effective as of January 1, 2005). We believe that the order to pay is without merit. We challenged it in the Administrative Court of Istanbul, which, on October 25, 2010, ruled in our favor and cancelled the order to pay. However, the Fund has appealed the ruling and there can be no assurance that the ruling will not be overturned, that KaR-Tel will ultimately prevail in its petition for the cancellation of the order to pay or that we will not be subject to protracted litigation with the Fund or others. The adverse resolution of this matter and any other matter that may arise in connection with the order to pay issued by the Fund or any other claims made by the Fund or the former shareholders of KaR-Tel, could have a material adverse effect on our business, financial condition and results of operations, including an event of default under some or all of our outstanding indebtedness. For more information about our litigation regarding KaR-Tel, see “Business—Legal Proceedings—Proceedings Involving OJSC VimpelCom and Its Subsidiaries—KaR-Tel Litigation.” In October 2010, OJSC VimpelCom acquired 50.1% of the share capital of Menacrest Limited, which is the parent company of Sky Mobile, a mobile operator in Kyrgyzstan, from Crowell Investments Limited in exchange for a set-off of a portion of our US$350.0 million loan to Crowell. Sky Mobile is a defendant in litigation in the Isle of Man. The litigation was brought by affiliates of MTS against Sky Mobile and various companies and individuals directly or indirectly associated with the Alfa Group alleging that the Kyrgyz judgment determining that an Altimo affiliate was the rightful owner of an interest in the equity of Bitel, an MTS affiliate, prior to the asset sale between Sky Mobile and Bitel, was wrongfully obtained and that Bitel shares and Sky Mobile assets were misappropriated. The legal proceedings in this matter are pending. For more information about legal proceedings and threatened claims against us relating to Sky Mobile, see “Business—Legal Proceedings—Proceedings Involving OJSC VimpelCom and Its Subsidiaries—Sky Mobile Litigation.” There can be no assurance that MTS or any other party will not bring an additional action against our company or any of our subsidiaries in connection with Sky Mobile or, if so brought, that we will prevail in any such lawsuit. The adverse resolution of any matter that may arise in connection with Sky Mobile could have a material adverse effect on our business, expansion strategy and financial results. In April 2012, VimpelCom Ltd., the Issuer and OJSC VimpelCom were named as third parties in a claim brought by FAS against Telenor East and Weather II in the Moscow Arbitration Court. For more information on this claim, see “Business—Legal Proceedings—FAS Claim.” For more information regarding disputes, proceedings and litigation in which we are involved, please see the section of this prospectus entitled “Business—Legal Proceedings.”

We could be subject to tax claims that could have a material adverse effect on our business. Tax audits in Russia, Ukraine and in the other countries in which we operate are conducted regularly. We have been subject to substantial claims by the Russian and Ukrainian tax inspectorates with respect to other tax years for which we have been audited in the past. These claims have resulted in additional payments, including fines and penalties, by OJSC VimpelCom to the tax authorities. We have challenged claims in the past by the Russian tax inspectorate authorities in court and have been subject to fines in relation to such claims. For more information regarding tax claims and their effects on our financial statements, see the sections of this prospectus entitled “Business—Legal Proceedings” and note 10 to our unaudited condensed consolidated interim financial statements included elsewhere in this prospectus. In addition, for more information concerning the tax risks we face, see the risk factor in this section entitled “—Legal and Regulatory Risks—Unpredictable tax systems give rise to significant uncertainties and risks that could complicate our tax planning and business decisions.” Since the latest complex tax audit of Kyivstar carried out by the tax authorities in 2009, the tax laws of Ukraine substantially changed, including the new Tax Code coming into effect in 2011 and its subsequent amendments that have been introduced during the recent years. Given the rapidly changing tax environment in Ukraine, as well as discrepancies of interpretations of tax laws, the tax authorities may apply different approaches when auditing Kyivstar’s transactions for the unaudited period, which may give rise to disputes, reassessment of tax liabilities and other adverse tax consequences for Kyivstar. Although we are permitted to challenge the decisions of tax inspectorates in court, there can be no assurance that we will prevail in any such litigation. In addition, there can be no assurance that the tax authorities will not claim on the basis of the same asserted tax principles they have claimed against us for prior tax years or different tax principles, or that the relevant governmental authorities will not decide to initiate a criminal investigation in connection with claims by tax inspectorates for prior tax years. The adverse resolution of these or other tax matters that may arise could have a material adverse effect on our business, financial condition, results of operations and prospects.

34 Unpredictable tax systems give rise to significant uncertainties and risks that could complicate our tax planning and business decisions. The tax systems in Russia, Ukraine and other emerging markets in which we operate are unpredictable and give rise to significant uncertainties, which could complicate our tax planning and business decisions. Tax laws in Russia, Ukraine and other emerging markets in which we operate have been in force for a relatively short period of time as compared to tax laws in more developed market economies. Tax authorities in Russia, Ukraine and other emerging markets in which we operate are often arbitrary in their interpretation of tax laws, as well as in their enforcement and tax collection activities. Generally, taxes payable by Russian companies are relatively substantial and include, inter alia, corporate profits tax, VAT, excise, property tax and other taxes. Russian tax laws, regulations and court practice are subject to frequent change, varying interpretation and inconsistent and selective enforcement. The law and legal practice in Russia are not as clearly established as those of mature markets and there are a number of uncertainties with respect to the application of tax legislation. In some instances, although it may be viewed as contrary to Russian constitutional law, the Russian tax authorities have applied certain new tax laws retroactively, issued tax claims for periods for which the statute of limitations had expired and reviewed the same tax period multiple times. Despite the Russian government’s steps to reduce the overall tax burden in recent years, Russia’s largely ineffective tax collection system and continuing budgetary funding requirements may increase the likelihood that the Russian Federation will impose arbitrary or onerous taxes and penalties in the future, which could have a material impact on our business and financial performance. Additionally, taxation has been used as a tool for significant state intervention in certain key industries. Since Russian federal, regional and local tax laws and regulations are subject to frequent change and some of the sections of the Tax Code of the Russian Federation (the “Russian Tax Code”) are comparatively new, interpretation of these laws and regulations is often unclear or non-existent. Taxpayers and the Russian tax authorities often interpret tax laws differently. Differing interpretations of tax regulations exist both among and within government ministries and organizations at the federal, regional and local levels, creating uncertainties and inconsistent enforcement. Furthermore, in the absence of binding precedent, court rulings on tax or other related matters by different courts relating to the same or similar circumstances may also be inconsistent or contradictory. Taxpayers often have to resort to court proceedings to defend their position against the tax authorities. Recent events within the Russian Federation suggest that the tax authorities may be taking a more assertive position in their assessments and their interpretation of legislation and it is possible that transactions and activities that have not been challenged in the past may now be challenged. In addition to the usual tax burden imposed on Russian taxpayers, these conditions complicate tax planning and related business decisions, potentially exposing us to significant fines and penalties as well as potentially severe enforcement measures and greater than expected tax burdens despite our best efforts to comply. Current Russian tax legislation is, in general, based upon the formal manner in which transactions are documented, looking to form rather than substance. However, the Russian tax authorities, in some cases, are increasingly taking a “substance and form” approach, which may cause additional tax exposures to arise in the future. On October 12, 2006, the Plenum of the High Arbitration Court of the Russian Federation issued Resolution No. 53 formulating the concept of “unjustified tax benefit,” which is described in the resolution by reference to circumstances, such as absence of business purpose or transactions where the form does not match the substance, and which could lead to the disallowance of tax benefits resulting from the transaction or the recharacterization of the transaction. There is a growing practice on the interpretation of this concept by the tax authorities or the courts and it is apparent that the tax authorities actively seek to apply this concept when challenging tax positions taken by taxpayers. While the intention of this Resolution might have been to combat abuse of tax laws, in practice, there is no assurance that the tax authorities will not seek to apply this concept in a broader sense. In particular, we are aware of cases when this concept has been applied by the tax authorities in order to disallow benefits granted by double tax treaties. To date, in the majority of cases where this concept has been applied, the courts have ruled in favor of taxpayers, but it is not possible to determine whether the courts will follow these precedents in the future. In addition, to the usual tax burden imposed on Russian tax payers, these conditions complicate tax planning and related business decisions. This uncertainty could possibly expose us to significant fines and penalties and to enforcement measures, despite our best efforts at compliance, and could result in a greater than expected tax burden. There can be no assurance that the Russian Tax Code or its interpretation will not be changed in the future in a manner adverse to the stability and predictability of the tax system (including in relation to thin capitalization and transfer pricing rules and other rules governing the deductibility of interest or other expenses and the timing thereof). It is expected that Russian tax legislation will become more sophisticated, which, coupled with the state budget deficits, may result in the introduction of additional revenue-raising mechanisms.

35 Although it is unclear how these measures would operate, the introduction of such measures could affect our overall tax efficiency and result in significant additional tax liabilities. Additional tax exposure could have a significant adverse effect on our business, financial condition, results of operations and prospects. Intercompany dividends are subject to a withholding tax of 0.0% or 9.0% (depending on whether the recipient of dividends qualifies for Russian participation exemption rules), if being distributed to Russian companies, and 15.0% (or lower, subject to benefits provided by relevant double tax treaties), if being distributed to foreign companies. If the receiving Russian company itself pays a dividend, it may offset tax withheld against its own withholding liability of the onward dividend although not against any withholding made on a distribution to a foreign company. Failure to meet the requirements established for application of Russian participation exemption rules may result in additional burdens on and costs to our operations. Russian tax legislation in effect as at the date of this prospectus does not contain a concept of corporate tax residency (rather, the Russian domestic legislation recognizes the concept of a taxpayer). Russian legal entities and organizations are taxed on their worldwide income while foreign legal entities and organizations are taxed in Russia on income attributable to their permanent establishment and on Russian source income, received by these foreign legal entities and organizations. Some of our non-Russian companies may be treated by the tax authorities as having a permanent establishment in Russia. It should be noted that the Ministry of Finance in its Main Directions of Russian tax policy for 2013 and the planning period 2014 and 2015 has proposed the introduction into domestic tax law of a concept of tax residency for legal entities. According to the proposals, a company would be deemed a Russian tax resident based on the place of its effective management and control and/or based on the residence of its shareholders. No assurance can be currently given as to whether and when these amendments will be enacted, their exact nature, their potential interpretation by the tax authorities and the possible impact on our business. It cannot be ruled out that, as a result of the introduction of these changes to Russian tax legislation, our non-Russian companies might be deemed to become Russian tax residents, subject to all applicable Russian taxes with a possible impact on our business, financial condition, results of operations and prospects. We are part of a multi-national group, to which a number of double tax treaties applies, including with the Netherlands. On May 25, 2009, in his budget message, the President of Russia set a goal of introducing legal mechanisms designed to restrict the use of double tax treaties and minimize tax benefits for ultimate beneficiaries who are not residents of the country that is a party to the relevant double tax treaty. On December 3, 2012, the Russian Government issued an Order setting out the action plan aimed to mitigate tax avoidance. According to this plan, in 2013 it is planned to draft legislative proposals aimed at combat with tax avoidance structures through introduction of such concepts as tax residency for legal entities, beneficial ownership of income, CFC rules. In addition in the “Main Directions in Russian tax policy for 2013 and the planning period 2014 and 2015” approved by the Russian Government, the Russian Ministry of Finance suggests introducing the beneficial ownership concept and believes that it would become a tool for countering tax avoidance committed in the course of international tax relations. It cannot be predicted when the law introducing the beneficial ownership concept will be enacted and how it will be applied in practice. In particular, based on the official position of the Ministry of Finance expressed in the Letter No.03-08-13/1 dated 30 December 2011 (the “Letter”), special purpose vehicle companies (“SPVs”) used in Eurobond transactions may not be regarded as beneficial owners of interest income as required by the double taxation treaties, because they in fact act as intermediaries passing all the income to the Eurobond holders. Although that position refers to a deal structure which is not exactly the same as the transaction structure described in this prospectus, there can be no assurance that the position expressed in the Letter would not potentially be applied by the Russian tax authorities to the payments of interest in respect of the Notes issued after January 1, 2014. The issue of exempting interest payments related to Eurobonds structures has since been positively resolved via introduction of relevant changes to the Russian Tax Code specifically relating to Eurobonds structures. The beneficial ownership issue has been raised in practice by tax authorities in relation to interest paid from Russia also on structures not related to Eurobonds issues. Although the practice is still scarce and no noticeable court precedents exist, the above demonstrates an attempt by the Russian tax authorities to address the question of beneficial ownership of income in international financial transactions and holding structures.

Repeated tax audits and extension of liability beyond the limitation period may result in additional tax assessments. Tax declarations together with related documentation are subject to review and investigation by a number of authorities, which are empowered under Russian law to impose fines and penalties on taxpayers. Generally, tax returns in Russia remain open and subject to inspection by tax and/or customs authorities for three calendar

36 years immediately preceding the year in which the decision to conduct an audit is taken. However, the fact that a particular year has been reviewed by tax authorities does not preclude that year from further review or audit during the eligible three-year limitation period by a superior tax authority. On July 14, 2005, the Russian Constitutional Court issued a decision allowing the statute of limitations for tax liabilities to be extended beyond the three-year term set forth in the tax laws if a court determines that the taxpayer has obstructed or hindered a tax inspection. Moreover, amendments to the first part of the Russian Tax Code, effective January 1, 2007, provide for the extension of the three-year statute of limitations if the actions of the taxpayer created insurmountable obstacles for the tax audit. Because none of the relevant terms is defined, tax authorities may have broad discretion to argue that a taxpayer has “obstructed,” “hindered” or “created insurmountable obstacles” in respect of an inspection and to ultimately seek review and possibly apply penalties beyond the three-year term, and there is no guarantee that the tax authorities will not review our compliance with applicable tax law beyond the three-year limitation period. Therefore, the statute of limitation is not entirely effective. Tax audits may result in additional costs to our group if the relevant tax authorities conclude that the Russian entities of the Group did not satisfy their tax obligations in any given year. Such audits may also impose additional burdens on our group by diverting the attention of management resources. The outcome of these audits could have a material adverse effect on our business, financial condition, results of operations and prospects. Under such review the relevant tax authorities may conclude that we had significantly underpaid taxes relating to earlier periods, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Russian and Ukrainian transfer pricing rules have been substantially revised. Transfer pricing legislation became effective in the Russian Federation on January 1, 1999. This legislation allowed the tax authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of certain types of transactions, or “controlled transactions.” There were also special transfer pricing rules for transactions with securities and derivatives. However, the Russian transfer pricing rules were not well- developed and there was little guidance and court practice, which left wide room for interpretation by the Russian tax authorities and courts. Following adoption of Federal Law of July 18, 2011 No 227-FZ, the new Russian transfer pricing rules became effective from January 1, 2012. The new rules are more technically elaborate, detailed and, to a certain extent, better aligned with the international transfer pricing principles developed by the Organization for Economic Cooperation and Development. The amendments have toughened considerably the previous transfer pricing rules, by, among other things, effectively shifting the burden of proving market prices from the tax authorities to the taxpayer and obliging the taxpayer to keep specific documentation. The new rules also provide for the possibility to enter into advance pricing agreements with the tax authorities, however, at the moment it is unclear how such advance pricing agreements will operate in practice. Special transfer pricing rules continue to apply to transactions with securities and derivatives. It is currently difficult to evaluate what effect these new provisions may have on us. Introduction of the new transfer pricing rules may increase the risk of transfer pricing adjustments being made by the tax authorities and, as a result, have a material impact on our business and the results of operations. It will also require us to ensure compliance with the new transfer pricing documentation requirements proposed under such rules. In Ukraine transfer pricing rules were adopted on December 28, 1994. In subsequent years, these rudimentary rules were amended several times, but they still remained fairly simple and unsophisticated and focused mostly on barter and related party transactions, operations with taxpayers having special status, and VAT-able transactions. The general requirement was that in such transactions the pricing must correspond to the so-called “usual prices.” The “usual price” was defined as a fair market price set up by independent parties well informed about relevant market conditions. Adoption of the new Tax Code in late 2010 brought Ukraine closer to OECD-based transfer pricing practices. The new rules concerning transfer pricing took effect on January 1, 2013. Under these rules the “usual prices” are determined by the tax authorities using the following transfer pricing methods: (i) comparable uncontrolled price method, (ii) resale price method, (iii) cost plus method, (iv) transactional profit split method, and (v) transactional net margin method. Similarly to the previous version of the laws effective prior to the Tax Code, the burden of proof that the price is unfair rests on the tax authority. The taxpayer is not legally obliged to substantiate the price upon request from the tax authority, but may enter into the advance transfer pricing agreements with the tax authority. Such mechanism, however, is largely untested in practice. The Ukrainian government recently published a draft law concerning transfer pricing, which is to be submitted to the Ukrainian parliament. This draft provides for substantial revision of the current transfer pricing

37 regime and introduces a concept of so-called “controlled transactions.” As reported, this concept is expected to apply to taxpayers transacting with related parties or non-residents incorporated in foreign jurisdictions with favorable tax regime. Such taxpayers will be required to file special pricing reports pertaining to these transactions, which are likely to be closely scrutinized by the tax authorities. Methods and procedure to determine “usual prices” are expected to be further improved and detailed. If adopted, the proposed regime may increase the risk of transfer pricing adjustments and subject Ukrainian businesses to a higher scrutiny by tax authorities.

Telecommunications operators in Russia, Ukraine and the CIS are subject to regulatory levies and fees and may become subject to pricing regulation. Telecommunications operators in Russia, Ukraine and the other markets where we operate are obligated to pay levies and fees pursuant to law and regulation. For example, in Russia every telecommunications operator is required to make compulsory payments to a “universal services fund” (into which all telecommunications operators are required to make compulsory payments in order to compensate for losses from offering universal services in remote regions of Russia) in the amount of 1.2% of its revenues (excluding revenues from traffic transmissions). Additionally, the Communications Law provides for payments for numbering capacity allocation, including through auctions in instances where numbering capacity is scarce. Because we apply for numbering allocation on a regular basis, this payment requirement may have a material adverse effect on our financial condition. Telecommunications regulators in Russia, Ukraine and the CIS may impose additional levies and fees on our operations from time to time. Such payment obligations create financial burdens and we may not be able to pass related costs on to subscribers, which, in turn could have a material adverse effect on our business, financial condition, results of operations and prospects. In 2009, Kazakh authorities implemented new compulsory payments to their universal telecommunications services fund. The rates of such payments vary annually depending upon the costs of universal services operators. In 2010, Tajik authorities increased license fees for mobile telecommunications operators from 1.0% to 2.5% and introduced a levy on mobile telecommunications services for mobile telecommunications operators of 3.0%. In early 2011, Kyrgyz authorities increased license payments from 0.25% to 1.0% and may also increase payments for radio frequencies and numbering capacity. In Ukraine, during 2010, the Ukrainian government increased fivefold the fee for use of radio frequencies. In addition, in early 2011, the newly-adopted tax code of Ukraine introduced a rule that the fees for use of radio frequencies are subject to annual review based on inflation rates. As a result, the fees for use of radio frequencies in 2011 were approximately 10.0% higher compared to 2010, the fees for 2012 were approximately 9.0% higher compared to 2011 and the fees for 2013 are approximately 8.0% higher compared to 2012. From 2009 to 2011, a series of decisions were adopted by the NCCIR and the Antimonopoly Committee of Ukraine (the “UAMC”), which had the effect of naming Kyivstar as an operator with significant market power in markets of call termination on its mobile and fixed-line networks and regulating tarrifs charged by Kyivstar on the basis of those characterizations. In 2012, the NCCIR developed and approved a draft law that would require operators with significant market power in a retail telecommunications market to obtain the NCCIR’s approval for the tariffs charged by such operators and require compliance with regulations setting tariffs for accessing telecommunications network infrastructure. For more information regarding the proposed legislation, see the section of this prospectus entitled “Regulation of Telecommunications—Regulation of Telecommunications in Ukraine.” The above proposed law or other regulations, if enacted, could result in lower overall revenues for Kyivstar, which would have a material adverse effect on our business, financial condition, results of operations and prospects.

We operate in an uncertain regulatory environment, which could cause compliance to become more complicated, burdensome and expensive and could result in us operating without all of the required permissions or ceasing the affected operation. The application of the laws of any particular country is not always clear or consistent. This is particularly true in Russia, Ukraine and other emerging market countries in which we operate where the legislative drafting has not always kept pace with the demands of the marketplace. Investors in emerging markets are subject to greater risks than investors in more developed markets, including significant political, legal and economic risks and risks related to fluctuations in the global economy. As a result, it is often difficult to ensure that we are in compliance with changing legal requirements. If we are found to be involved in practices that do not comply with applicable laws or regulations, we may be exposed to, among other things, significant fines, the risk of prosecution or the suspension or loss of our licenses, frequency allocations, authorizations or various permissions, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

38 The regulators responsible for the control and supervision of communications services in each country in which we operate frequently check our compliance with the requirements of the applicable legislation and our telecommunications licenses. We intend to make all necessary efforts to comply with all such requirements. However, we cannot assure you that in the course of future inspections, we will not be found to be in violation of the applicable legislation. Any such finding could have a material adverse effect on our operations. In addition, it may be difficult and costly for us to comply with applicable Russian telecommunications regulations related to state surveillance of communications traffic. The Ukrainian authorities may also implement additional state surveillance of communications traffic. Full compliance with regulations that allow the state to monitor voice and data traffic may be overly burdensome, expensive and lead to a drop in quality of service. Noncompliance with such regulations once they are implemented may lead to the imposition of fines or penalties on us, or the revocation of our operating licenses. Further, some subscribers may refuse to utilize the services of a telecommunications operator whose networks facilitate state surveillance of communications traffic. As a result of the uncertainty in the regulatory environment in Russia, Ukraine and the CIS we have experienced and could experience in the future: • restrictions or delays in obtaining additional numbering capacity, receiving new licenses and frequencies, receiving regulatory approvals for rolling out our networks in the regions for which we have licenses, receiving regulatory approvals for changing our frequency plans and importing and certifying our equipment; • difficulty in complying with applicable legislation and the terms of any notices or warnings received from the regulatory authorities in a timely manner; • significant additional costs; • delays in implementing our operating or business plans; and • a more competitive operating environment.

Arbitrary action by the authorities may have a material adverse effect on our business. In countries where we operate, governmental, regulatory and tax authorities have a high degree of discretion and at times exercise their discretion arbitrarily, without a hearing or prior notice, and sometimes in a manner that is contrary to law. In Russia, governmental actions have included unscheduled inspections by regulators, suspension or withdrawal of licenses and permissions, unexpected tax audits, criminal prosecutions and civil actions. Russian federal and local government entities have also used common defects in matters surrounding share-issuances and registration as pretexts for court claims and other demands to invalidate such issuances and registrations and void transactions. Authorities also have the power in certain circumstances, by regulation or government act, to interfere with the performance of, nullify or possibly terminate contracts. Although such actions have been condemned at the highest government levels, they continue to take place according to press reports. Amendments to the Russian Federal Law “On Enforcement Proceedings” and the Russian Federal Law “On Court Bailiffs” effective since August 9, 2010 have given bailiffs the right to obtain from mobile services providers personal data on subscribers for law enforcement purposes. We could lose subscribers as a result of these amendments, which could have a material adverse effect on our business, financial condition, results of operations and prospects. According to various press reports, the operations of a mobile operator in Uzbekistan has been the subject of attack by regulatory authorities, including suspension of the license of a GSM cellular operator (followed by a change in ownership of the company) and cancellation and non-renewal of an expired license. Our operations may also be vulnerable to such action. For example, from 2007 to 2012, Unitel, the subsidiary through which we operate in Uzbekistan, was subject to several actions by the regulatory authorities that we believe to be arbitrary and targeted, such as, among others, suspension of the issuance of additional numbering resources, new permits and failure to extend expiring ones for base stations, without an explanation. There can be no assurance that Unitel can avoid such arbitrary regulatory actions in the future, even if it remains in compliance with current laws and regulations. Non-renewal of Unitel’s licenses, as well as any other action by the regulator detrimental to the operation of Unitel’s business, may have an adverse effect on our business, financial condition, results of operations and prospects.

Developing legal systems in the countries in which we operate create a number of uncertainties for our business. Many aspects of the legal systems in the countries in which we operate create uncertainties with respect to many of the legal and business decisions that we make, many of which do not exist in countries with more

39 developed legal systems. The uncertainties we face include, among others, potential for negative changes in laws, gaps and inconsistencies between the laws and regulatory structure, difficulties in enforcement and inconsistency in the judicial interpretation of legislation in similar cases due to an under-developed judicial system. The nature of much of the legislation in Russia, Ukraine and the CIS, the lack of consensus about the scope, content and pace of economic and political reform and the rapid evolution of the legal systems in Russia, Ukraine and the CIS in ways that may not always coincide with market developments, place the enforceability and, possibly, the constitutionality of laws and regulations in doubt and result in ambiguities, inconsistencies and anomalies. The legislation often contemplates implementing regulations that have not yet been promulgated, leaving substantial gaps in the regulatory infrastructure. All of these weaknesses could affect our ability to enforce our rights under our licenses and under our contracts, or to defend ourselves against claims by others, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Lack of independence and experience of the judiciary, difficulty of enforcing court decisions, the unpredictable acknowledgement and enforcement of foreign court judgments or arbitral awards in Russia, Ukraine and the CIS and governmental discretion in enforcing claims give rise to significant uncertainties. The independence of the judicial system and its immunity from political, economic and nationalistic influences in Russia, Ukraine and the CIS remains largely untested. Additional factors such as lack of formal binding effect of judicial precedents, poor availability and organization of legislation and court decisions, slow pace of judicial processes and difficulty in enforcement of court orders make judicial decisions in Russia, Ukraine and the CIS difficult to predict and make effective redress uncertain. Additionally, court claims are often used in furtherance of political aims. We may be subject to such claims and may not be able to receive a fair hearing. Additionally, court orders are not always enforced or followed by law enforcement agencies. None of the countries where we operate, including Russia and Ukraine, are parties to any multilateral or bilateral treaties with most Western jurisdictions, including the United States and the United Kingdom, for the mutual enforcement of judgments of state courts. Consequently, should a judgment be obtained from a court in any of such jurisdictions, it is highly unlikely to be given direct effect in the courts of Russia, Ukraine and the CIS. There is also a risk that Russian and Ukrainian procedural legislation will be changed by way of introducing further grounds preventing foreign court judgments and arbitral awards from being recognized and enforced in Russia and Ukraine. In practice, reliance upon international treaties may meet with resistance or a lack of understanding on the part of Russian and Ukrainian courts or other officials, thereby introducing delays and unpredictability into the process of enforcing any foreign judgment or foreign arbitral award in Russia and Ukraine.

Laws restricting foreign investment could materially adversely affect our business. We could be materially adversely affected by existing laws restricting foreign investment or the adoption of new laws or regulations restricting foreign investment, including foreign investment in the telecommunications industry in Russia or other emerging markets in which we operate. The Russian Law No. 57-FZ “On the Procedure for Making Foreign Investments in Business Enterprises Having Strategic Importance to Secure Defence and Security of the State” dated April 29, 2008 (the “Russian Foreign Investment Law”) limits foreign investment in companies that are deemed to be strategic. Under the Russian Foreign Investment Law, a company operating in the telecommunications sector may be deemed strategic if it holds a dominant position in the Russian communications market (except for the Internet services market) or, in the case of fixed-line telecommunications, if the particular company’s market covers five or more Russian regions or covers Russian cities of federal importance. In connection with the adoption of the Russian Foreign Investment Law, amendments were adopted to certain provisions of the Russian Communications Law which provide that with respect to mobile telecommunications, a company will be deemed to have a dominant position for purposes of application of the Russian Foreign Investment Law if its share of the Russian mobile telecommunications market exceeds 25.0%. The FAS has previously determined that a group of persons consisting of OJSC VimpelCom and two of its Russian subsidiaries, one of which subsequently merged with and into OJSC VimpelCom, has a dominant position, because their share of the Russian mobile telecommunications market exceeds 25.0%. As a result, OJSC VimpelCom is deemed to be a strategic enterprise and, among other things, any acquisition by a foreign investor of direct or indirect control over more than 50.0% of its voting shares, or 25% in the case of a company controlled by a foreign government, requires the prior approval of the Russian authorities pursuant to the Russian Foreign Investment Law. In the event any future transactions in our shares or shares of VimpelCom Ltd. result in the acquisition by a foreign investor of direct or indirect control over OJSC VimpelCom, such a transaction will require prior approval in accordance with the Russian Foreign Investment Law. Additionally, companies controlled by foreign governments are prohibited from acquiring control over strategic enterprises. For example, the FAS claim filed in April 2012 sought to invalidate acquisitions by Telenor of VimpelCom Ltd. shares on grounds that Telenor is owned by, and an instrumentality of, the Norwegian government, a foreign government and such acquisitions were in violation of the Foreign Investment Law. The FAS claim was terminated without a

40 determination on this issue. For more information regarding the FAS claim, see “Business—Legal Proceedings.” As a result, our ability to obtain financing from foreign investors may be limited, should prior approval be refused, delayed or require foreign investors to comply with certain conditions imposed by the Government Commission on Control of Foreign Investments in the Russian Federation or the FAS, which could materially and adversely affect our business, financial condition, results of operations and prospects. The Ukrainian economy is to a certain extent dependent on foreign investment. Despite improvements in the Ukrainian economy in recent years and an increase in foreign direct investment, it remains low for a country of Ukraine’s size and there can be no assurance that Ukraine will be able to increase or maintain its access to foreign investment. In addition, privatization remains relatively low and, in current market conditions with depressed local asset prices, it is unlikely to substantially increase. Furthermore, any future attempts to limit foreign investment, or ownership of Ukrainian assets or legal entities by non-Ukrainian entities or persons, nationalize, expropriate or re-privatize private enterprises and/or further strain on relations between Ukraine and the EU or US, could adversely affect the climate for foreign direct investment and have an adverse effect on the economy of Ukraine which, in turn, could materially adversely affect Kyivstar’s and our group’s growth potential, business, financial condition, results of operations and prospects. In Kazakhstan, the new law “On National Security” adopted in January 2012 limits investments by foreign legal entities or individuals in long distance operators who own certain communications lines (including fiber optic and microwave links) to less than 49.0%. Our growth strategy may also be limited by laws restricting foreign ownership in jurisdictions outside of Russia, Ukraine and the CIS.

We are subject to anti-corruption laws in the jurisdictions in which we operate. We are subject to a number of anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and various other anti-corruption laws. Our failure to comply with anti-corruption laws applicable to us could result in penalties which could harm our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects. The FCPA generally prohibits companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits. Although we regularly review and update our policies and procedures designed to ensure that we, our employees, distributors and other intermediaries comply with the anti-corruption laws to which we are subject, there can be no assurance that such policies or procedures will work effectively at all times or protect us against liability under these or other laws for actions taken by our employees, distributors and other intermediaries with respect to our business or any businesses that we may acquire. If we are not in compliance with anti-corruption laws and other laws governing the conduct of business with government entities (including local laws), we may be subject to criminal and civil penalties and other remedial measures, which could have an adverse impact on our business, financial condition, results of operations and prospects. Any investigation of any actual or alleged violations of such laws could also have an adverse impact on our business, financial condition, results of operations and prospects.

If reform policies in Russia, Ukraine and the CIS are reversed, our business could be harmed and it could restrict our ability to obtain financing. Our business, in part, depends on the political and economic policies set by the governments of the countries where we operate. For example, in recent years, the political and economic situation in Russia has been relatively stable, which has allowed for continued economic growth. However, there is a persistent sentiment in Russia against certain private enterprises that is being encouraged by a number of prominent Duma deputies, political analysts and members of the media. In addition, reforms may be hindered if conflicts of interest are permitted to exist when officials are also engaged in private business, particularly when the business interests are in the industry which the officials regulate. Notwithstanding initiatives to combat corruption, Russia, Ukraine and the CIS, like many other markets, continue to experience corruption and conflicts of interests of officials, which add to the uncertainties we face, and may increase our costs. Any deterioration of the investment climate could restrict our ability to obtain financing in international capital markets in the future and our business could be harmed if governmental instability recurs or if reform policies are reversed.

We may be exposed to liability for actions taken by our subsidiaries. In certain cases we may be jointly and severally liable for any obligations of a subsidiary under a transaction. We may also incur secondary liability for any obligations of a subsidiary in certain cases involving bankruptcy or insolvency. The other shareholders of the subsidiary may seek compensation from us for the losses sustained by the subsidiary that were caused by us. This type of liability could result in significant obligations and materially adversely affect our business, financial condition, results of operations and prospects.

41 Risks Relating to Russia, Ukraine and the CIS

The international economic environment could have a material adverse effect on our business. In late 2008 and 2009, the economies of Russia and all other markets in which we operate were adversely affected by the international economic crisis. Among other things, the crisis led to a slowdown in gross domestic product growth, devaluations of the currencies in Russia and the other markets in which we operate and a decrease in commodity prices. Although economic conditions have been improving, the timing of a return to sustained economic growth and consistently positive economic trends is difficult to predict. The recessionary effects and debt crisis in Europe continue to pose potentially significant macroeconomic risks to our group. The economic climate is further strained by high energy costs, in large part due to conflicts or social unrest in the Middle East, which can increase various costs including some of our operations’ costs, while at the same time discouraging spending by subscribers. In addition, because Russia and Kazakhstan, currently two of our largest markets, produce and export large amounts of oil, their economies are particularly vulnerable to fluctuations in the price of oil on the world market and those fluctuations can adversely affect such economies. The current difficult economic environment and any future downturns in the economies of Russia and the other markets in which we operate or may operate in the future could diminish demand for our services, increase our costs, constrain our ability to retain existing subscribers and collect payments from them and prevent us from executing our growth strategy. Adverse economic conditions could also hurt our liquidity and prevent us from obtaining financing needed to fund our development strategy, which could have a material adverse effect on our business, financial condition, results of operations and prospects. When we purchase a company, we record the difference between the sum of the purchase price plus the fair value of noncontrolling interest and the fair value of the net assets acquired as goodwill. On at least an annual basis, we perform an impairment test per cash generating unit. A deterioration in macroeconomic conditions in the countries in which we operate and/or a significant difference between the performance of an acquired company and the business case assumed at the time of acquisition could require us to further write down the value of the goodwill. A write down in goodwill could impact any covenants under our debt agreements and could lead to a material adverse effect on our business, financial condition, results of operations and prospects.

Investors in emerging markets, such as Russia, Ukraine, the CIS and other emerging markets where we operate, are subject to greater risks than investors in more developed markets, including significant political, legal and economic risks and risks related to fluctuations in the global economy. Investors in emerging markets should be aware that these markets are subject to greater risks than more developed markets, including in some cases significant political, legal and economic risks. Emerging market governments and judiciaries often exercise broad, unchecked discretion and are susceptible to abuse and corruption. Emerging economies are subject to rapid change and the information set out herein may become outdated relatively quickly. The economies of Russia, Ukraine, the CIS and other emerging markets where we operate, like other emerging economies, are vulnerable to market downturns and economic slowdowns elsewhere in the world. As has happened in the past, financial problems or an increase in the perceived risks associated with investing in emerging economies could dampen foreign investment in these markets and materially adversely affect their economies. These developments could severely limit our access to capital and could materially adversely affect the purchasing power of our subscribers and, consequently, our business. Generally, investment in emerging markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved and investors are urged to consult with their own legal, financial and tax advisors.

Sustained periods of high inflation may materially adversely affect our business. The countries in which we operate have experienced periods of high levels of inflation since the early 1990s. In Russia, our largest market, inflation increased dramatically following the August 1998 financial crisis, reaching a rate of 84.4% in 1998. Inflationary volatility and pressure on the Russian rouble remains significant, as evidenced by the increase in the inflation rate in 2007 to 11.9% and in 2008 to 13.3%. Although the inflation rate decreased to 8.8% in 2009 and 2010, 6.1% in 2011 and 5.2% in the first nine months of 2012, it may increase again in the near future as a result of challenging worldwide economic conditions. We face similar risks in other jurisdictions in which we operate. Our profit margins could be adversely affected if we are unable to sufficiently increase our prices to offset any significant future increase in the inflation rate, which may become more difficult as we attract more mass market subscribers and our subscriber base becomes more price sensitive. Inflationary pressure in Russia and the other CIS countries where we have operations could materially adversely affect our business, financial condition, results of operations and prospects.

42 Social instability in Russia, Ukraine and the CIS could lead to increased support for centralized authority and a rise in nationalism, which could harm our business. Social instability in Russia, Ukraine and the CIS, coupled with difficult economic conditions, could lead to increased support for centralized authority and a rise in nationalism. These sentiments could lead to restrictions on foreign ownership of companies in the telecommunications industry or large-scale nationalization or expropriation of foreign-owned assets or businesses. There is relatively little experience in these countries in enforcing legislation enacted to protect private property against nationalization or expropriation. As a result, we may not be able to obtain proper redress in the courts, and we may not receive adequate compensation if in the future the Russian, Ukrainian, Kazakh, Tajik, Uzbek, Georgian, Kyrgyz or Armenian governments decide to nationalize or expropriate some or all of our assets. If this occurs, our business could be harmed. In addition, ethnic, religious, historical and other divisions have, on occasion, given rise to tensions and, in certain cases, military conflict. The spread of violence, or its intensification, could have significant political consequences, including the imposition of a state of emergency in some parts or throughout Russia, Ukraine and the CIS. These events could materially adversely affect the investment environment in Russia, Ukraine and the CIS.

If political and economic relations between Russia, Ukraine and the countries of the CIS deteriorate, our operations could be materially adversely affected. Political and economic relations between Russia, Ukraine and the countries of the CIS are complex and conflicts have arisen between the government of Russia and the governments of Ukraine and some of the countries of the CIS. Although the situation has improved in recent years, relations between Russia and Ukraine have historically been strained. Ukraine’s economy depends heavily on its trade flows with Russia and the CIS largely because Ukraine imports a large proportion of its energy requirements, especially from Russia. In addition, a large share of Ukraine’s services receipts comprise transit charges for oil, gas and ammonia from Russia. As a result, Ukraine considers its relations with Russia to be of strategic importance. However, there have been and may in the future be periods when relations between Ukraine and Russia have cooled due to factors including: • disagreements over the prices and methods of payment for gas delivered by the Russian gas monopoly OJSC Gazprom to, or for transportation through, Ukraine; • issues relating to the delineation of the Russia-Ukraine maritime border; • a Russian ban on imports of meat and milk products from Ukraine and anti-dumping investigations conducted by the Russian authorities in relation to certain Ukrainian goods; and • over the stationing of the Russian Black Sea Fleet (Chernomorskii Flot) on the territory of Ukraine. Russia has in the past threatened to cut off the supply of oil and gas to Ukraine. For example, in early January 2009, Gazprom substantially decreased natural gas supplies to Ukraine, reportedly due to a failure by the National Joint-Stock Company “Naftogaz” (“Naftogaz”) to timely repay all outstanding debt owed to Gazprom for natural gas supplied to Ukraine for domestic consumption in 2008. Following negotiations between the governments of Russia and Ukraine and the signing on January 19, 2009 of agreements between Naftogaz and Gazprom setting out the terms of further natural gas supplies and transit through the territory of Ukraine, Gazprom resumed natural gas supplies to Ukraine and other European countries on January 20, 2009. In addition, on April 21, 2010, Ukraine and Russia signed a new agreement on the stationing of the Black Sea Fleet in Ukrainian waters. Under the agreement, the term for the stationing of the Black Sea Fleet was extended for a further 25-year period (starting upon expiration of the previous term in 2017) with an additional five year extension option, and the amount of the lease charges payable for the Black Sea Fleet stationing was increased. The agreement also provides that a portion of the lease charges payable for the stationing of the Black Sea Fleet will be set off against the discounts to the price of natural gas supplied by Gazprom for domestic consumption in Ukraine. Moreover, in May 2011, it was reported that Russia plans to divert approximately 20 billion cubic meters of gas per annum from Ukraine’s gas transit system to the Nord Stream and South Stream pipelines bypassing Ukraine. The Nord Stream pipeline commenced commercial operations in November 2011. Ukraine is seeking to minimize any potential adverse effect of Nord Stream to Naftogaz and its economy in general, including through assurances on transport volumes. If bilateral trade relations were to deteriorate, including if Russia were to stop transiting a large portion of its oil and gas through Ukraine or if Russia halted supplies of gas to Ukraine, Ukraine’s balance of payments and foreign currency reserves could be materially adversely affected. Any major changes in Ukraine’s relations with Russia, in particular, any such changes adversely affecting supplies of energy resources from Russia to Ukraine

43 or Ukraine’s revenues derived from transit charges for Russian oil and gas, may have negative effects on the Ukrainian economy which, in turn, could have a material adverse effect on our business, financial condition, results of operations and prospects. The relationship between Russia and Georgia has also been strained due to several ongoing disputes which resulted in military conflict in August 2008 and may lead to military and/or economic conflict in the future. Although our company operates in Ukraine and the CIS through local subsidiaries, governmental officials and consumers may associate our group and our brand with Russia. Any deterioration in political and economic relations between Russia, Ukraine and the countries of the CIS could have a material adverse effect on our business, financial condition, results of operations and prospects.

Political and governmental instability could adversely affect the value of investments in Russia or Ukraine. Following both the Russian parliamentary elections in December 2011 and presidential elections in March 2012, controversy concerning alleged electoral fraud in favor of the current ruling party, United Russia, and the newly elected President, Mr. Vladimir Putin, respectively, as well as criticism towards the political system implemented under Mr. Putin, led to organized political demonstrations. Additionally, the potential for political instability resulting from the recent global financial crisis could negatively impact the economic or political environment in Russia. Renewed protests or future shifts in governmental policy and regulation in the Russian Federation could also lead to political instability and disrupt or reverse political, economic and regulatory reforms, which could negatively impact the value of investments in the Russian Federation or our ability to obtain financing in the international markets, which in turn, could have a material adverse effect on our business, financial condition, results of operations and prospects. Since obtaining independence in 1991, Ukraine has undergone a substantial political transformation from a constituent republic of the former Union of Soviet Socialist Republics to an independent sovereign democratic state. Governmental instability has been a feature of the Ukrainian political scene and, as a result, Ukraine has experienced fifteen changes of Prime Minister during this period, with various actions and decisions being taken based primarily on political considerations. Historically, a lack of political consensus in the Verkhovna Rada (the Ukrainian Parliament) has consistently made it difficult for the Ukrainian government to secure the necessary parliamentary support to implement a variety of policies intended to foster economic reform and financial stability. Following presidential elections completed on February 7, 2010, which were won by Viktor Yanukovych, the leader of the Party of Regions and former Prime Minister, the Ukrainian Parliament passed a vote of no confidence in the Prime Minister, Yulia Tymoshenko, forcing her and her government to resign. In December 2010, criminal charges were filed by the Prosecutor General’s Office of Ukraine against Ms. Tymoshenko for allegedly misusing state funds by diverting revenues received in 2009 from Ukraine’s carbon emission rights under the Kyoto Protocol. In April 2011, additional criminal charges were filed by the Prosecutor General’s Office against Ms. Tymoshenko for allegedly causing losses to the state by exceeding her authority during the execution of gas contracts. Yuliya Tymoshenko was subsequently arrested and imprisoned and, as a result, she was unable to participate in the October 2012 parliamentary elections. The timing of and grounds for Ms. Tymoshenko’s arrest and imprisonment incited a negative reaction among some members of the Ukrainian public. In addition, European Union authorities have indicated that the signing of Ukraine’s Association Agreement with the European Union may be delayed pending a satisfactory resolution of the Yuliya Tymoshenko case. On September 30, 2010, the Constitutional Court of Ukraine (the “CCU”) issued a ruling against the constitutionality of the 2004 constitutional amendment law, which was the basis for the constitutional reform of 2006, limiting the powers of the President and transferring certain powers of the President to the Ukrainian Parliament and the Ukrainian Government. Pursuant to this ruling, the 2004 constitutional amendment law ceased to be effective from September 30, 2010 and the constitution that was in effect before the enactment of the 2004 constitutional amendment law resumed legal force from September 30, 2010. Accordingly, following the decision of the CCU, certain current Ukrainian legislation may contradict the constitution of Ukraine and require amendment to be constitutionally valid. This may result in uncertainty in the distribution of powers among Ukrainian state authorities and may lead to further political instability in Ukraine. In particular, the term of the Parliament elected in 2007 has become unclear as a result of the above ruling of the CCU. On February 4, 2011, a law amending the Constitution to unify the term of the President, the Parliament, and local councils entered into effect. Consequently, the five-year term of Parliament, which had been reduced to four years as a result of the ruling of the CCU, was reinstated. The most recent elections to the Ukrainian Parliament were held on October 28, 2012. Although the Party of Regions received the largest proportion of the vote, the election result has reduced the Party of Regions’ dominance in Parliament and it may have to offer substantial concessions to its informal partners (the Communist Party of Ukraine and the self-nominated parliamentarians) in order to secure their support for important

44 legislative initiatives. In the course of the elections, there were a number of disputes as to the election results and process and there can be no assurance that the election results will not be further disputed and that the operation of the Ukrainian Parliament will not be obstructed by such disputes. In December 2012, the Ukrainian Parliament re-appointed Mykola Azarov, a member of the Party of the Regions, as the Prime Minister of Ukraine. On December 24, 2012, the President of Ukraine appointed a new government that consists mainly of members of the President’s Party of Regions with a few positions being occupied by representatives of other political forces. There is no certainty that good relations between the President, the government and the majority in the Ukrainian Parliament will continue in the future. Such relations are subject to change through the normal process of political alliance-building or, if the required action is taken, through constitutional amendments and decisions of the CCU. Political developments have also highlighted potential inconsistencies between the constitution of Ukraine and various laws and presidential decrees and political instability in Ukraine could impair efforts to implement all the necessary reforms. Furthermore, such developments have raised questions regarding the judicial system’s independence from economic and political influences. A number of additional factors could adversely affect political stability in Ukraine, including: • lack of agreement within the factions and amongst individual deputies; • disputes between factions that form a majority and opposition factions on major policy issues, including Ukraine’s foreign and energy policy; • court actions taken by opposition parliamentarians against decrees and other actions of the president or the government of Ukraine or the majority factions; and • court action by the president against parliamentary or governmental resolutions or actions. No assurances can be given that the political initiatives necessary to achieve reforms will continue, will not be reversed or will achieve their intended aims. These and any other adverse political developments may have negative effects on the economy as a whole and, as a result, on our business, financial condition, results of operations and prospects.

The physical infrastructure in Russia, Ukraine and the CIS is in poor condition and further deterioration in the physical infrastructure could have a material adverse effect on our business. The physical infrastructure in Russia, Ukraine and the CIS largely dates back to Soviet times and has not been adequately funded and maintained in recent years. Particularly affected are the transportation networks, power generation and transmission and fixed-line communications systems. The public switched telephone networks have reached capacity limits and need modernization, which may inconvenience our subscribers and will require us to make additional capital expenditures. Additional investment is required to increase communication line capacity. In addition, continued growth in local, long-distance and international traffic, including that generated by our subscribers, and development in the types of services provided may require substantial investment in public switched telephone networks. Any efforts to modernize infrastructure may result in increased charges and tariffs, potentially adding costs to our business. The deterioration of the physical infrastructure harms the economies of these countries, disrupts the transportation of goods and supplies, adds costs to doing business and can interrupt business operations. These difficulties can impact us directly; for example, we have needed to keep portable electrical generators available to help us maintain base station operations in the event of power failures. Further deterioration in the physical infrastructure could have a material adverse effect on our business, financial conditions and results of operations.

The banking systems in Russia, Ukraine and the CIS remain underdeveloped and there are a limited number of creditworthy banks in these countries with which our company can conduct business. The banking and other financial systems in Russia, Ukraine and the CIS are not well developed or regulated, and laws relating to banks and bank accounts are subject to varying interpretations and inconsistent applications. In addition, central banks in emerging markets in which we operate may restrict or prevent international transfers (whether to shareholders or third parties), which could result in a material adverse effect on the business condition of our local operations or our ability to realize profits from such operations. In Russia, there is a limited number of banks that meet international banking standards and the transparency of the Russian banking sector in some respects lags behind internationally accepted norms. Most creditworthy Russian banks are located in Moscow and there are fewer creditworthy Russian banks in the regions outside of Moscow. Prior to the onset of the current global economic crisis, there had been a rapid increase in lending by Russian banks, which many believe had been accompanied by a deterioration in the credit quality of the loan portfolio of those banks. The deficiencies in the Russian banking system, coupled with a decline in the

45 quality of the credit portfolios of Russian banks, may result in the banking sector being more susceptible to the current worldwide credit market downturn and economic slowdown. The global financial crisis that began in the United States in the autumn of 2008 has resulted in decreased liquidity in the Russian credit market and weakened the Russian financial system. Efforts by the Russian government to increase liquidity have been stymied by an unwillingness in the banking sector to lend to other banks and to the real economy. The lack of liquidity and economic slowdown have raised the possibility of Russian corporate defaults and led to bank failures and downgrades of Russian banks by credit rating agencies. More bank failures and credit downgrades may result in a crisis throughout the Russian banking sector. Starting from the fourth quarter of 2008, a majority of the Russian banks experienced difficulties with funding on domestic and international markets and interest rates increased significantly. Some of the banks were unable to service their obligations and were sold to and/or merged into larger banks. Credit ratings of several banks have been lowered and some banks have lost their Central Bank of Russia (“CBR”) licenses. Although the situation began to improve in 2009, and the CBR changed its strategy from supporting the rouble exchange rate to targeting the inflation rate, it still continues to be an active liquidity provider, while the Russian banking system remains vulnerable to further disruptions. The major Russian banks are still unwilling or unable to transfer money to the economy in the form of long-term loans. A prolonged or serious banking crisis or the bankruptcy of a number of banks, including banks in which we receive or hold our funds or conduct other transactions necessary for our operations, could negatively impact our ability to complete banking transactions in Russia, which could place severe liquidity constraints on and materially adversely affect our business. The banking and financial systems in Ukraine and the CIS are also not well developed or regulated and may be susceptible to economic downturns. Few international banks have subsidiaries in Kazakhstan, Uzbekistan, Georgia and Armenia, and no international banks operate subsidiaries in Tajikistan and Kyrgyzstan. We have attempted to mitigate our banking risk by receiving and holding funds with the most creditworthy banks available in each country. However, in the event of a banking crisis in any of these countries or the bankruptcy or insolvency of the banks from which we receive, or with which we hold, our funds could result in the loss of our deposits or negatively affect our ability to complete banking transactions in these countries, which could have a material adverse effect on our business, financial conditions and results of operations.

Risks Related to the Notes

Russian roubles are not fully convertible outside of Russia and are subject to a limited market for conversion within Russia, which may adversely affect the value and liquidity of the RUB Notes. Prior to June 2004, when a new currency law came into force, the convertibility of the rouble was heavily regulated. Notwithstanding the relaxation of exchange control restrictions in the Russian Federation, the rouble is not fully convertible outside of the Russian Federation. There can be no assurance that the CBR will not reintroduce exchange controls and, should it decide to do so, the value of the rouble relative to the dollar or the euro could be adversely affected and this could impede or prevent Noteholders from converting rouble payments into foreign currencies, either of which may adversely affect the value and liquidity of the RUB Notes which are denominated and payable in Russian roubles. A market exists within the Russian Federation for the conversion of roubles into other currencies, but it is limited in size and is subject to rules limiting such conversion. The Russian Federation’s official international reserves in foreign currencies were US$530.0 billion as at October 1, 2012. Although the Russian Federation’s current international reserves may be sufficient to sustain the domestic currency market in the short term, there can be no assurance that the currency market will not deteriorate in the future due to the lack of foreign currency funding available in the global markets. Lack of growth of the Russian currency market and limited liquidity for the convertibility of roubles may adversely affect the value of the RUB Notes. Currency exchange rates can be volatile and unpredictable. The effective yield realized by an investor whose currency of investment or account is a currency other than the rouble will be adversely affected by the depreciation of the rouble against the investor’s currency of investment or account. Depreciation of the rouble against the dollar or euro may affect the market value of the RUB Notes and could result in an investor realizing a loss on the RUB Notes even if the RUB Notes are timely paid in full.

There are risks associated with the option in the Terms and Conditions of the RUB Notes for Noteholders to elect to receive a forthcoming payment of principal or interest on the RUB Notes in US dollars. For investors holding RUB Notes who have made an irrevocable election to receive payment in dollars, rouble interest and principal payments made by the Issuer on the RUB Notes will be converted into dollars by the Exchange Agent upon receipt of the Exchange Amount (as defined in Condition 7 (Payments) of the Terms and

46 Conditions in Respect of the RUB Notes) at a purchase price calculated on the basis of the Applicable Exchange Rate (as defined in Condition 7 (Payments) of the Terms and Conditions in Respect of the RUB Notes) for delivery on the date on which a payment becomes due on the RUB Notes. In converting the Exchange Amount, the Exchange Agent may rely conclusively on the basis on which its internal foreign exchange conversion rate (including, for the avoidance of doubt, any third party indices forming the basis for such conversion rates) for settlement has been determined and shall not be liable for losses associated with the basis for determination of such rate. No assurance can be given that the amount of dollars received by an investor will be equal to the amount of dollars that the investor could have realized in the foreign exchange market if the interest and principal payments made on the investor’s RUB Notes were instead paid directly to the investor in roubles. In addition, the Exchange Agent is entitled to retain for its own account any spread on foreign exchange transactions customarily charged by it in connection with such conversion.

There are risks associated with the newness of debt instruments that are both denominated and settled in roubles and the inexperience of both Euroclear and Clearstream, Luxembourg and the Russian and international banking systems in dealing with them. The RUB Notes are denominated and settled in roubles (subject as set out in Condition 7 (Payments) of the Terms and Conditions in Respect of the RUB Notes). Offerings of debt instruments that are both denominated and settled in roubles are a relatively new phenomenon in the international capital markets. This, coupled with the relative inexperience of both Euroclear and Clearstream, Luxembourg and the Russian and international banking systems in dealing with rouble payments and rouble accounts, could lead to unforeseen difficulties, which may have an adverse effect on the liquidity, marketability or trading price of the RUB Notes. In particular, debt instruments that are both denominated and settled in roubles only became accepted by the Euroclear and Clearstream, Luxembourg in early 2007 and only a small number of rouble-denominated debt instruments are now settled through these clearing systems. Due to the relative lack of experience of Euroclear and Clearstream, Luxembourg with settling, clearing and trading debt instruments that are both denominated and settled in roubles, there can be no assurance that such clearing, settlement and trading procedures will progress smoothly or in a way which is comparable to procedures carried out with respect to instruments denominated in more conventionally settled currencies, such as U.S. dollars or euros. Payments on rouble-denominated debt instruments cannot be made in roubles in DTC at all. No arrangements have been made for the RUB Notes to be settled or cleared through the DTC. Russian law previously prohibited or otherwise severely restricted the transfer and holding of roubles offshore and their repatriation onshore. Although these restrictions have now been lifted for non-residents (save for restrictions that apply to the regime of residents’ accounts held outside of the Russian Federation), there is still no specific tested framework under Russian law for transferring or holding roubles in offshore rouble accounts. As with much recent Russian legislation, there is extremely limited or non-existent regulatory or court practice in interpreting these regulations. If restrictions or prohibitions were placed on the transfer and holding of roubles offshore or if such legislation was reinterpreted by the Russian regulators or courts to the effect that restrictions were still deemed to apply to the transfer and holding of roubles offshore, this would severely hinder Noteholders’ ability to receive payments of principal or interest in roubles under the relevant RUB Notes or proceeds from the sale of such RUB Notes. Payments of principal and interest under the RUB Notes will be made in roubles (subject as set out in Condition 7 (Payments) of the Terms and Conditions in Respect of the RUB Notes) and proceeds from the sale of such RUB Notes will also be made in roubles. All payments of roubles to, from, or between rouble accounts located outside the Russian Federation will be made via onshore correspondent accounts within the Russian banking system. The Russian banking system is less developed than many of its Western counterparts and at present has little experience in dealing with payments relating to Eurobonds or similar international debt instruments. Consequently there is a risk that payments of both principal and interest under the RUB Notes and proceeds from the sale of RUB Notes, which need to pass through the Russian banking system, will be subject to delays and disruptions that may not exist in more mature banking markets. Holders of RUB Notes held through the Euroclear and Clearstream, Luxembourg, who have not irrevocably elected to receive payments in U.S. dollars, will be required to open and maintain a rouble-denominated bank account. The administrative difficulties associated with opening rouble accounts outside the Russian Federation are significant. Non-resident Noteholders may also encounter considerable procedural difficulties with opening rouble accounts onshore in the Russian Federation. There can therefore be no guarantee that Noteholders will be able to successfully open and maintain a rouble bank account either offshore or in the Russian Federation or transfer rouble payments made under the RUB Notes out of the Euroclear or Clearstream, Luxembourg.

47 Restrictive currency regulations may have a material adverse effect on the business, financial condition and results of operations of Russian companies, such as OJSC VimpelCom, and on payments on the RUB Notes denominated in roubles. Although the Russian currency control regime has been liberalized, and certain restrictions abolished, the current Russian currency control laws and regulations still contain a number of limitations. In particular, Russian companies must notify the Russian tax authorities on each occasion when they open, close or change the details of bank accounts denominated in any currency with banks located outside the Russian Federation. This notification must be filed within one month from the date on which such an account was opened or closed or on which the account details were changed. Moreover, currency control restrictions still include a general prohibition of foreign currency operations between Russian companies (except for operations specifically listed in the Currency Law and the operations between the authorized banks specifically listed in the CBR Regulations) and the requirement to repatriate, subject to certain exemptions, export-related earnings into the Russian Federation. Restrictions on the ability of OJSC VimpelCom to conduct some of these transactions could increase costs or prevent it from successfully implementing its business strategy, which could have a material adverse effect on its business, revenues, financial condition, results of operations and prospects. Restrictive currency regulations may also affect adversely payments of roubles on the RUB Notes denominated in roubles. As a result of the current state of the banking sector, considerable delays may occur in the transfer of funds within, and the remittance of funds out of, the Russian Federation. In addition, delays may occur in converting roubles into and out of foreign currency in order to meet payments. Any delay or other difficulty in transferring or remitting funds, converting roubles into a foreign currency or transferring foreign currency to make a payment could limit our ability to meet payment and debt obligations as they become due, which could result in the acceleration of debt obligations and cross-defaults and, in turn, could have a material adverse effect on our business, financial condition, results of operations and prospects.

The Issuer will have the option to terminate the Guarantees provided by OJSC VimpelCom in certain circumstances. The Notes will, as of the issue date, have the benefit of the Guarantees provided by OJSC VimpelCom. The Issuer will have the option to terminate the Guarantees upon the occurrence of certain events as described under “Terms and Conditions of the Notes—Condition 2 (Guarantee).” Accordingly, if the Issuer fails to make any payment of principal or interest when due under the Notes after the termination of the Guarantees, Noteholders will have no recourse to OJSC VimpelCom for payment of any such amounts, except (in the event a Put Option Event (as defined in the Terms and Conditions of the Notes) has occurred and a Noteholder has exercised the Put Option) with respect to the obligation to pay principal and accrued interest in respect of any Notes for which a Noteholder has requested early redemption.

We will have the ability to incur more debt and this could increase the risks described above. We may decide to incur additional debt in the future (where not restricted by negative pledge covenants), including secured debt that will be effectively senior to the Notes as to the value of the assets constituting collateral for such secured debt. While the Notes contain certain limitations on our ability to incur additional debt, nonetheless we are permitted to incur such debt. If new debt, in particular secured debt, is added to our current debt levels, the magnitude of the related risks described above could increase, and the foregoing factors could have an adverse effect on our ability to pay amounts due in respect of the Notes.

Secured indebtedness of OJSC VimpelCom is senior to the Guarantees. As of September 30, 2012, OJSC VimpelCom had no secured indebtedness on an unconsolidated basis. We cannot assure you, however, that OJSC VimpelCom will not incur secured indebtedness in the future. Any secured indebtedness of OJSC VimpelCom would be effectively senior to its obligations under the Guarantees, since the Guarantees and the Notes they guarantee are unsecured. As a result, if we default on the Notes and this default were to trigger an event of default under any of OJSC VimpelCom’s secured indebtedness, holders of OJSC VimpelCom’s secured indebtedness will have priority over the Noteholders if they pursue rights under the Guarantees to the extent of the value, validity and priority of the liens on the assets securing such indebtedness. In addition, we have a significant amount of unsecured indebtedness that ranks equally in right of payment with the Notes. As of September 30, 2012, the aggregate principal amount of our total outstanding unsecured indebtedness was US$11.9 billion (excluding amounts due under the Outstanding Promissory Note held by VimpelCom Amsterdam B.V. as further described above under “—Risks Related to Our Business—The Issuer’s substantial Outstanding Promissory Note held by VimpelCom Amsterdam B.V. will rank pari passu with the Notes until the Issuer’s insolvency, when it becomes subordinated to the Notes, but until the Issuer’s insolvency it may be prepaid in whole or in part, potentially diverting funds from payment of the Notes to payment of the

48 Outstanding Promissory Note or reducing the assets of the Issuer available upon insolvency for application to the Notes.”). Subsequent to September 30, 2012, there have been changes in certain of our secured and unsecured indebtedness. For information regarding these changes, please refer to the sections of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities.” Your right to receive payments on the Notes is structurally subordinated to indebtedness of our subsidiaries (other than OJSC VimpelCom so long as the Notes have the benefit of the Guarantees). OJSC VimpelCom will guarantee the Notes, but the Notes will not be guaranteed by any of our other subsidiaries, and, in certain circumstances, the Issuer will have the option to terminate the Guarantees provided by OJSC VimpelCom. Our consolidated subsidiaries (other than OJSC VimpelCom) are the primary or sole obligors on US$33 million, or 0.3%, of our total outstanding unsecured indebtedness as of September 30, 2012 (excluding liabilities of our subsidiary Sotelco, which we account for as an asset held for sale, in an aggregate principal amount of US$35 million) and there can be no assurance that the amount of such debt will not increase. OJSC VimpelCom is the primary or sole obligor on US$9,428 million, or 79%, of our total outstanding unsecured indebtedness as of September 30, 2012. In general, claims of a subsidiary’s creditors, including trade creditors, secured creditors and unsecured creditors holding indebtedness and guarantees issued by such subsidiary, will have priority with respect to the assets and earnings of that subsidiary over the claims of the creditors of its parent company as a shareholder, except to the extent that the parent company is a valid creditor of that subsidiary. The Notes, therefore, will effectively be structurally subordinated to creditors, including trade creditors, of each of our subsidiaries (other than OJSC VimpelCom for so long as the Notes have the benefit of the Guarantees). The claims of Noteholders may be limited in the event that we or any of our operating subsidiaries are declared bankrupt. Dutch, Russian and Ukrainian bankruptcy laws often differ from bankruptcy laws of England and the United States, and are subject to varying interpretations. It is difficult to predict how claims of the Noteholders against us or any of our operating subsidiaries would be resolved in the event of bankruptcy. In the event of bankruptcy, our obligations to the Noteholders could be subordinated to the following obligations: • workplace injury obligations; • severance pay and employment related obligations; • secured creditors; • tax and other payment obligations to the government; and • liabilities arising from the liquidation of the estate. In the event of our insolvency, Dutch, Russian and Ukrainian bankruptcy laws may adversely affect our ability to make payments to the Noteholders. You may not be adequately protected against corporate restructurings or highly leveraged transactions. The terms of the Notes do not contain provisions that would afford you protection in the event of a decline in our credit quality resulting from highly leveraged or other similar transactions in which we may engage. We are also not limited in the amount of other indebtedness or other liabilities that we may incur or securities that we may issue. You do not have the right to require us to repurchase or redeem the Notes in the event of many types of highly leveraged transactions. We cannot assure you that an active trading market will develop for the Notes. There is no existing market for the Notes and there can be no assurance that a market for the Notes will develop in the future. The Notes have not been registered under the Securities Act or any U.S. state securities laws and may not be offered or sold except in a transaction exempt from, or not subject to, the registration requirements of the Securities Act and applicable state securities laws. Although we have applied to list the Notes on the Irish Stock Exchange, we cannot assure you that our application will be granted or that an active trading market for the Notes will develop. We do not know the extent to which investor interest will lead to the development of an active trading market or how liquid that market might be, nor can we make any assurances regarding the ability of Noteholders to sell their Notes or the price at which the Notes might be sold. As a result, the market price of the Notes could be adversely affected. The market price of the Notes may be volatile. The market price of the Notes could be subject to significant fluctuations in response to actual or anticipated variations in our own and our competitors’ operating results, adverse business developments, changes

49 to the regulatory environment in which we operate, changes in financial estimates by securities analysts, and the actual or expected sale of a large number of Notes, as well as other factors. Historically, the market for non-investment grade debt, such as the Notes, has been subject to disruptions that have caused substantial volatility in the prices of such securities. Any such disruptions may harm Noteholders. In addition, in recent years the global financial markets, including emerging markets, have experienced significant price and volume fluctuations that, if repeated in the future, could adversely affect the market price of the Notes without regard to our results of operations, prospects or financial condition. In this context, future terrorist attacks in the United States, such as those of September 11, 2001, or elsewhere, such as those of March 11, 2004 in Spain, July 7, 2005 in the United Kingdom and terrorist attacks that have occurred in Russia, any worldwide developments responding to any terrorist attacks, and continued tension in the Middle East, though not directly affecting us or our operations, could produce sustained pressure on the global financial markets and worldwide economic trends. The market price of the Notes could be affected by any change in the credit ratings of the Notes or our company or the Guarantor. The Notes have been rated “BB” by Standard & Poor’s Ratings Services and “Ba3” by Moody’s Investors Service. Standard & Poor’s Ratings Services downgraded the Guarantor’s long-term credit rating to “BB” from “BB+” on April 20, 2011, and Moody’s Investors Service downgraded its corporate family rating from “Ba2” to “Ba3” on March 21, 2011 with a stable outlook. In announcing the downgrades, both agencies cited the increase in leverage resulting from the Wind Telecom Transaction. Standard & Poor’s Ratings Services improved the Guarantor’s outlook to stable on April 25, 2012. In the event of any further downgrade in our ratings by Standard & Poor’s Ratings Services, Moody’s Investors Service or another rating agency, or in the event that Standard & Poor’s Ratings Services, Moody’s Investors Service or any other rating agency imposes any financial or other condition on our retaining any rating assigned to OJSC VimpelCom, the Issuer or the Notes, or indicates that it is considering the downgrading, suspension or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating so assigned or any change in the outlook for any rating of OJSC VimpelCom, the Issuer or the Notes, as applicable, the market price of the Notes could be materially adversely affected. In addition, any such change or development may increase our cost of borrowing or affect our ability to obtain debt financing in the future.

Enforcing your rights as a holder of the Notes across multiple jurisdictions may prove difficult. The Issuer is incorporated under the laws of the Netherlands; for so long as the Notes have the benefit of the Guarantees, the Notes will be guaranteed by OJSC VimpelCom, which is organized under the laws of the Russian Federation and the transaction documents in relation to the issuance of the Notes are governed by English law. Therefore, your rights under the Notes and the Guarantees will be subject to the laws of more than one jurisdiction, and there can be no assurance that you will be able to effectively enforce your rights in multiple bankruptcy, insolvency or similar proceedings. Moreover, such multi-jurisdictional proceedings are typically complex and costly for creditors and often result in substantial uncertainty and delay in the enforcement of your rights. In addition, the bankruptcy, insolvency, administrative and other laws of the various jurisdictions of organization may be materially different from, or in conflict with, each other in certain areas. The application of these various laws in multiple jurisdictions could trigger disputes over which jurisdiction’s law should apply and could adversely affect your ability to enforce your rights and to collect payment in full under the Notes and the Guarantees.

As the Global Note Certificates are held by or on behalf of Euroclear, Clearstream, Luxembourg and, in respect of the USD Notes only, DTC, investors will have to rely on their procedures for transfer, payment and communication with the Issuer and/or the Guarantor. The Notes will be represented by the Global Note Certificates except in certain limited circumstances described therein. The Unrestricted Global Note Certificates and the Restricted Global RUB Note Certificate will be registered in the name of a nominee of, and deposited with, a Common Depositary for Euroclear and Clearstream, Luxembourg. The Restricted Global USD Note Certificates will be registered in the name of Cede & Co. as nominee of, and deposited with a custodian for, DTC. Except in certain limited circumstances described in the Global Note Certificates, investors will not be entitled to receive definitive Notes. Euroclear, Clearstream, Luxembourg and DTC will maintain records of the beneficial interests in the Global Note Certificates. While the Notes are represented by the Global Note Certificates, investors will be able to trade their beneficial interests only through, and in accordance with the customary procedures of, Euroclear, Clearstream, Luxembourg and, in respect of the USD Notes only, DTC. The Issuer and the Guarantor will discharge their payment obligations under the Notes by making payments to the Common Depositary for Euroclear and Clearstream, Luxembourg or, in the case of the Restricted USD Notes only, to the custodian for DTC, for distribution to their account holders. A holder of a beneficial interest in the Global Note

50 Certificates must rely on the procedures of Euroclear, Clearstream, Luxembourg and DTC, to receive payments under the Notes. The Issuer and the Guarantor have no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Note Certificates. Holders of beneficial interests in the Global Note Certificates will not have a direct right to vote in respect of the Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by Euroclear, Clearstream, Luxembourg and DTC to appoint appropriate proxies.

The Notes are subject to restrictions on transfer. The Notes are being offered and sold in the United States in reliance on Rule 144A to purchasers who are QIBs and outside the United States in reliance on Regulation S. Each purchaser of Notes pursuant to Rule 144A will be deemed to have represented to the Issuer that it is a QIB. Each purchaser of the Notes pursuant to Regulation S will be deemed to have represented to the Issuer that it is not a U.S. person within the meaning of Regulation S and is not acquiring Notes for the account or benefit of any U.S. person and that it is purchasing the Notes in an offshore transaction within the meaning of Regulation S. See “Form of Notes and Transfer Restrictions.”

Certain transactions in connection with an employee benefit plan’s investment in the Notes could constitute prohibited transactions under ERISA. The United States Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) and the United States Internal Revenue Code of 1986, as amended, (the “Code”) set forth certain restrictions on employee benefit plans and certain other plans and entities. Certain transactions in connection with an investment in the Notes by such plans and entities could be deemed to constitute direct or indirect prohibited transactions under ERISA or the Code. A prohibited transaction may result in an excise tax, penalty or other liabilities under ERISA or the Code, unless exemptive relief is available. Your attention is drawn to the section of this prospectus entitled “Certain ERISA Considerations,” in which any purchaser or transferee of Notes is deemed to have represented either that it is not and is not acquiring the Notes with the assets of a plan or entity subject to the prohibited transaction provisions of ERISA or the Code or that its purchase and holding of the Notes will not result in a non-exempt prohibited transaction under ERISA or the Code.

The Noteholders face risks associated with possible changes in law. The Terms and Conditions of the Notes are based on English law in effect as at the date of the prospectus. The descriptions of legal matters and tax analysis elaborated in the prospectus are based on relevant laws and regulations as currently in force. No assurance can be given as to the impact of any possible judicial decision or change to the laws and regulations or administrative practice after the date of the prospectus. If the laws and regulations are amended, such amendments could have an impact on the rights and obligations of the Noteholders and the tax treatment of (income derived from) the Notes.

Risks Related to the Issuer

The Issuer is a holding company with negative total equity of US$3.3 billion and, as a result, is dependent on cash flow from its operating subsidiaries to service its indebtedness. The Issuer is a holding company and its primary assets consist of its shares in its subsidiaries and cash in its bank accounts. As of September 30, 2012, the Issuer had negative total equity of US$3.3 billion, due to accounting rules that apply a historical cost basis to assets of OJSC VimpelCom. For an explanation of this negative total equity, see “Description of the Issuer—Negative Total Equity” below. As a holding company, the Issuer has no revenue generating operations of its own, and therefore the Issuer’s cash flow and ability to service its indebtedness, including the Notes, will depend primarily on the operating performance and financial condition of its operating subsidiaries and the receipt by the Issuer of funds from such subsidiaries in the form of dividends or otherwise. The Issuer’s operating subsidiaries may not generate income and cash flow sufficient to enable it to meet the payment obligations on the Notes, because their ability to provide funds to the Issuer by way of dividends or otherwise will depend, to some extent, on general economic, financial, competitive, market and other factors, many of which are beyond the Issuer’s control. Transfer of a subsidiary of the Issuer could also reduce income from operations. There are legal limits on dividends that the Issuer’s subsidiaries are permitted to pay to the Issuer. With respect to OJSC VimpelCom, Russian law prohibits declaration and payment of dividends by a Russian company if such company’s net asset value is lower than its charter capital or will become lower than its charter capital as a result of declaration or distribution of dividends. With respect to Kyivstar, under Ukrainian law, a joint stock

51 company is not allowed to pay dividends on ordinary shares if, among other things, the amount of its net assets is less than the aggregate amount of its charter capital, reserve capital and an excess amount of the liquidation value of the preferred shares (if any) over their nominal value. Furthermore, based on frequent discretionary application of Ukrainian law by relevant controlling agencies, it is possible that payment of dividends by Kyivstar may be subject to monetary transfer restrictions and foreign currency exchange restrictions in Ukraine. For example, currently Kyivstar is not required to obtain an individual license from the National Bank of Ukraine (“NBU”) in order to pay dividends to the Issuer. However, there can be no assurance that Ukrainian currency control regulations, or their interpretation by the NBU, will not change, resulting in the need for Kyivstar to obtain individual license from the NBU for the purpose of paying dividends to the Issuer or subjecting Kyivstar to other currency control restrictions. Our subsidiaries are separate and distinct legal entities. Any right that we have to receive any assets of or distributions from any subsidiary upon its bankruptcy, dissolution, liquidation or reorganization, or to realize proceeds from the sale of the assets of any subsidiary, will be junior to the claims of that subsidiary’s creditors, including trade creditors. The VimpelCom Ltd. Group has a global strategy which is set by group leadership in its Amsterdam headquarters. For more information on our strategy, see “Business—Strategy.” However, management at VimpelCom Ltd.’s subsidiaries’ (including our subsidiaries) operations is responsible for executing many aspects of its strategy. This can be made more challenging given the broad geographic span of VimpelCom Ltd.’s operations and great cultural diversity among its local operations, which can make it more difficult to implement and maintain effective internal communication and reporting across the VimpelCom Ltd. Group. Local management’s failure to execute the VimpelCom Ltd. Group’s, and in turn our, strategy effectively could have a material adverse effect on our business, financial condition, results of operations and prospects.

The Notes and the obligations in relation to the issuance of the Notes may be voided, voidable, subordinated, limited in scope, unenforceable or practically unenforceable under Dutch insolvency laws. The Issuer is incorporated in the Netherlands and therefore may be subject to insolvency proceedings governed by Dutch law. The Issuer may become subject to two types of insolvency proceedings under Dutch law. The first, suspension of payments, is intended to facilitate the reorganization of a debtor’s indebtedness, provide the debtor temporary relief against creditors and enable the debtor to continue as a going concern. The second, bankruptcy, is primarily designed to liquidate and distribute the proceeds of the assets of a debtor to its creditors. During a Dutch suspension of payments proceeding, a debtor loses the right to legally dispose of and administer the property, rights and interests of its estate at its own discretion. As of the date of the commencement of the suspension of payments until the termination of the suspension of payments, an administrator must co-sign all actions with respect to the disposal of or the administration of the property of the estate. Since the administrator is also not allowed to dispose of or administer the property of the estate or to enter into contracts on behalf of the estate on his own, the debtor and the administrator in fact co-manage the affairs of the debtor. If the Issuer were to be involved in a suspension of payments proceeding, the obligations of the Issuer in connection with the Notes may be difficult to enforce against the Issuer. In practice, a suspension of payments proceeding nearly always results in bankruptcy of the debtor. During a Dutch bankruptcy, a debtor loses the right to legally dispose of and administer the property, rights and interests of its estate from 00.00 hours on the date of the declaration of bankruptcy. The debtor therefore loses the right to dispose of and administer the bankrupt estate as of 00.00 hours on the date of the declaration of bankruptcy. From that time onwards, only the trustee in bankruptcy (curator) of the debtor can validly represent the debtor. Any transactions entered into by the Issuer after 00.00 hours of the date of declaration of bankruptcy, may be annulled by the trustee in bankruptcy. The bankruptcy estate includes all assets of the debtor at the time it is declared bankrupt as well as any assets acquired during the bankruptcy. As a result of bankruptcy, all legal proceedings against a debtor and all attachments on the debtor’s assets are terminated by operation of law. Further, if a debtor is legally obliged to perform a transaction, the performance of the obligation can be invalidated if the relevant counterparty knew that a request for bankruptcy of the debtor was pending or the performance of the obligation was the result of consultation between the insolvent person and the recipient with a view to give preference to the latter over the other creditors. The performance by the Issuer of its obligations in connection with the Notes may be invalidated if the relevant counterparty of such obligation was aware of a pending bankruptcy of the Issuer at the time the obligation was performed. Unlike Chapter 11 proceedings under U.S. bankruptcy law where both secured and unsecured creditors are generally barred from seeking to recover their claims, suspension of payment proceedings allow certain secured creditors and preferential creditors to satisfy their claims by exercising foreclosure rights on the assets

52 which secure their claims or to which they have preferential rights. Therefore, a recovery under Dutch law could involve a sale of the assets of the Issuer in a manner that does not reflect its going concern value. Consequently, Dutch insolvency laws could preclude or inhibit a restructuring of the Issuer. In Dutch bankruptcy proceedings, the assets of a debtor are generally liquidated and the proceeds distributed to the debtor’s creditors on the basis of the relative priority of the claims of those creditors and, to the extent claims of certain creditors have equal priority, in proportion to the amount of such claims. On the basis of the Subordination Deed, the relative priority of the claim of VimpelCom Amsterdam B.V. under the Outstanding Promissory Note will change if an Insolvency Event occurs in respect of the Issuer. The Subordination Deed provides that upon such an Insolvency Event, the Outstanding Promissory Note shall at that time be subordinated to all claims of all other creditors of the Issuer, including the Notes, until these claims are paid and discharged in full. The subordination created by the Subordination Deed will not be affected by a Dutch bankruptcy or suspension of payments of the Issuer. Certain parties, such as secured creditors (including senior lenders as secured creditors under senior credit facilities), will benefit from special rights. Secured creditors such as pledgees and mortgagees may enforce their rights separately from bankruptcy and do not have to contribute to the liquidation costs. However, the enforcement of the security interest might be subject to: (a) a statutory stay of execution of up to two months extendable by another period of up to two months imposed by a Dutch court order pursuant to Sections 63a and 241a of the Dutch Bankruptcy Act (Faillissementswet); (b) a trustee in bankruptcy can force a secured party to foreclose its security interest within a reasonable time (as determined by the trustee in bankruptcy pursuant to Section 58(1) of the Dutch Bankruptcy Act), failing which the trustee in bankruptcy will be entitled to sell the relevant rights or assets and distribute the proceeds to the secured party; and (c) excess proceeds of enforcement must be returned to the debtor’s trustee in bankruptcy; they may not be offset against an unsecured claim of the pledgee or the mortgagee against the debtor. All unsecured, pre-bankruptcy claims are submitted to a receiver for verification, and the receiver makes a determination as to the existence, ranking and value of the claim and whether and to what extent it should be admitted in the bankruptcy proceedings. Creditors that wish to dispute the verification of their claims by the trustee in bankruptcy will need to commence a court proceeding in order to establish the amount and rank of the disputed claim. Although no interest is payable in respect of unsecured claims as of the date of a bankruptcy, if the net present value of a claim of a holder needs to be determined, such determination will be made by taking into account the agreed payment date and interest rate.

You may have difficulty enforcing your rights against the Issuer and its directors and executive officers. The Issuer is incorporated in the Netherlands. None of the Issuer’s directors reside in the United States and a substantial amount of the Issuer’s assets, and a substantial amount of the assets of the Issuer’s directors are located outside of the United States. Civil liabilities based on the securities laws of the United States may not be enforceable in the Netherlands, either in an original action or in an action to enforce a judgment obtained in U.S. courts. The United States and the Netherlands currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Consequently, a final judgment for payment given by any court in the United States, whether or not predicated solely upon U.S. securities laws, would not be enforceable in the Netherlands. In order to obtain a judgment which is enforceable in the Netherlands, the claim must be re-litigated before a competent Dutch court. A Dutch court will, under current practice, generally grant the same judgment without re-litigation on the merits (i) if that judgment results from legal proceedings compatible with Dutch notions of due process, (ii) if that judgment does not contravene public policy (openbare orde) of the Netherlands and (iii) if the jurisdiction of the relevant federal or state court in the United States has been based on internationally accepted principles of private international law. Subject to the foregoing and provided that service of process occurs in accordance with applicable treaties, investors may be able to enforce in the Netherlands, judgments in civil and commercial matters obtained from U.S. federal or state courts. However, no assurance can be given that such judgments will be enforceable. In addition, it is doubtful whether a Dutch court would accept jurisdiction and impose civil liability in an original action commenced in the Netherlands and predicated solely upon U.S. federal securities laws.

You may have difficulty enforcing your rights against the Issuer due to general defenses available to debtors under Dutch law and an appeal by the Issuer on the transgression of its corporate interests. Under Dutch law, receipt of any payment under the Notes may be affected by (i) the standards of reasonableness and fairness (maatstaven van redelijkheid en billijkheid); (ii) force majeure (niet-toerekenbare tekortkoming) and unforeseen circumstances (onvoorziene omstandigheden); and (iii) the other general defenses available to debtors under Dutch law in respect of the validity, binding effect and enforceability of such Notes. Other general defenses include claims that the Notes should be avoided because the underlying agreement was entered into through undue influence (misbruik van omstandigheden), fraud (bedrog), duress (bedreiging)orerror(dwaling).

53 The validity and enforceability of the Notes, and any other transaction entered into by the Issuer at any time in connection with the Notes may also be successfully contested by the Issuer (or its trustee in bankruptcy in bankruptcy) on the basis of the ultra vires provisions of section 2:7 of the Dutch Civil Code (Burgerlijk Wetboek). These provisions give legal entities the right to invoke the nullity of a transaction if such transaction entered into by such entity cannot serve to realize the objects of such entity and the other parties to such transaction knew, or without independent investigation, should have known, that such objects and purposes have been exceeded. In determining whether the granting of the Notes is in furtherance of the objects and purposes of the Issuer, a court will consider (i) the text of the objects clause in the articles of association of such company; (ii) whether the granting of such Notes is in the company’s corporate interests (vennootschappelijk belang) and to its benefit and (iii) whether or not the subsistence of such company is jeopardized by the granting of such Notes. The mere fact that a certain legal act (rechtshandeling) is explicitly mentioned in a Dutch company’s objects clause, may not be conclusive evidence to state that such legal act is not ultra vires. Rather, a transaction must be in the corporate interest of a Dutch company in order to withstand a challenge that it is ultra vires.

The obligations in relation to the Notes and the Notes may be voidable under Dutch fraudulent conveyance laws. Dutch law contains specific provisions dealing with fraudulent conveyance both in and outside of bankruptcy, (actio pauliana provisions). The actio pauliana offers creditors protection against a decrease in their means of recovery. A legal act performed by a person (including, without limitation, an agreement pursuant to which it guarantees the performance of the obligations of a third party and any other legal act having similar effect) can be challenged in or outside bankruptcy of the relevant person and may be nullified by the trustee in a bankruptcy of the relevant person or by any of the creditors of the relevant person outside bankruptcy, if (i) the person performed such acts without an obligation to do so (onverplicht), (ii) the creditor concerned was or, in the case of the person’s bankruptcy, the creditors were prejudiced in their means of recovery as a consequence of the act and (iii) at the time the act was or the acts were performed both the person and the counterparty to the transaction knew or should have known that its creditors (existing or future) would be prejudiced in their means of recovery, unless the act was entered into for no consideration (om niet) in which case such knowledge of the counterparty is not necessary for a successful challenge on grounds of fraudulent conveyance. Knowledge of prejudice is however presumed by law for all transactions performed within one year of an adjudication of bankruptcy when it can also be established that one of the conditions mentioned in article 43 of the Dutch Bankruptcy Act (Faillissementswet) or article 46 of book 3 of the Dutch Civil Code (Burgerlijk Wetboek) is fulfilled. These conditions include: (i) transactions in which the debtor received substantially less than the value given by the debtor; (ii) payment of, or granting of, security for debts which are not yet due; (iii) transactions entered into by the debtor with certain relatives; (iv) transactions entered into by the debtor- company with its managing director, a member of the board, certain relatives of these directors or certain shareholders; (v) transactions by the debtor company with an affiliated legal entity or (vi) transactions by the debtor company with a group company. If a Dutch court found that the issuance of the Notes by the Issuer, or any other transaction entered into by the Issuer at any time in connection with the Notes involved a fraudulent conveyance that did not qualify for any defense under Dutch law, then the issuance of the Notes by the Issuer or any other transaction entered into by the Issuer at any time in connection with the Notes, could be nullified. As a result of such a successful challenge, Noteholders may not enjoy the benefit of the Notes or any of the other transactions entered into by the Issuer at any time in connection with the Notes. The value of any consideration that Noteholders received with respect to the Notes could also be subject to recovery from such Noteholders and possibly from subsequent transferees. In addition, under such circumstances, Noteholders might be held liable for any damages incurred by prejudiced creditors of the Issuer as a result of the fraudulent conveyance.

Risks Related to Taxation of the Notes

A withholding tax may be imposed upon the disposal of the Notes in Russia which could adversely affect the value of the Notes. Where proceeds from a disposition of the Notes are received from a source within Russia by a non-resident Noteholder who is an individual, such gross proceeds may be subject to personal income tax at a rate of 30.0% of the proceeds from such disposal of the Notes less any available documented cost deductions (including the acquisition cost of the Notes). Russian withholding tax is subject to relief under the relevant double tax treaty, however, there is no assurance that double tax treaty relief would be granted to non-resident Noteholders who are individuals, and obtaining a refund can involve considerable practical difficulties. Furthermore, even though the Tax Code is typically interpreted in such a way that only a licensed broker or an

54 asset manager or other party that is a Russian legal entity or an organization, or any other person, including a foreign company with a separate subdivision in the Russian Federation, or an individual entrepreneur registered in the Russian Federation who carry out operations under an asset management agreement, brokerage service agreement, agency agreement, a commission agreement or commercial mandate agreement should withhold the tax from payments associated with disposition of securities made to a non-Russian individual, there is no guarantee that other Russian companies or separate subdivisions of foreign companies in the Russian Federation or an individual entrepreneur located in the Russian Federation would not seek to withhold the tax under these circumstances. The imposition or possibility of imposition of this withholding tax could adversely affect the value of the Notes. For more information, see the section of this prospectus entitled “Tax Considerations.” In addition, while some Noteholders might be eligible for an exemption from or a reduction in Russian withholding tax under applicable double tax treaties, there is no assurance that such exemption or reduction will be available in practice under these circumstances.

Payments required under the Guarantees may be subject to Russian withholding tax. Russian tax legislation in respect of withholding tax on guarantee payments to non-residents is complex and unclear. Non-resident Noteholders that are legal entities or individuals should consult their own tax advisors with respect to the tax consequences of the receipt of payments under the Guarantees, including applicability of any available double tax treaty relief. In general, payments of Russian source income made by a Russian legal entity to a Non-Resident Noteholder who is an individual or to a Non-Resident Noteholder that is a legal entity with no registered presence and no permanent establishment in the Russian Federation would be subject to Russian withholding tax at prescribed tax rates, unless withholding tax is reduced or eliminated under an applicable double tax treaty. Due to the lack of clarity in Russian tax legislation and the vague wording of the Russian withholding income tax provisions, the part of payments under the Guarantees related to interest on the Notes, and, to a lesser extent, payments related to principal amounts due under the Notes, may be regarded as Russian source income and therefore become subject to withholding tax at a rate of 20% if payment under a Guarantee is made to a Non-Resident Noteholder that is a legal entity which is not organized under Russian laws and which does not hold and dispose of the Notes through a permanent establishment in Russia. The 20% withholding tax would apply in such a case unless the withholding tax is reduced or eliminated pursuant to the terms of an applicable double tax treaty. A Russian legal entity (such as the Guarantor) (or a foreign organization that operates in Russia through a permanent establishment) paying income to a foreign legal entity (such as a Non-Resident Noteholder) is required to withhold the tax on each payment, except for interest payments made on debt obligations where two conditions are simultaneously met: (i) the debt obligation on which interest payments are made arises in connection with the issuance by a foreign legal entity of traded bonds; and (ii) the foreign legal entity that receives interest payments duly confirms its tax residency as of the date of receiving the interest payments in a jurisdiction that has a double tax treaty in effect with the Russian Federation. The exemption from this withholding obligation is applied retrospectively from January 1, 2007, and with respect to traded bonds issued until January 1, 2014, which would include the Notes. A debt obligation is treated as connected with the issuance of traded bonds by foreign legal entity if it is explicitly stated in the agreement governing the relevant debt obligation, and/or in the terms and conditions, and/ or the prospectus for issuance of traded bonds, or if this fact is confirmed by the actual transfer of funds upon the issuance of traded bonds. “Traded bonds” are defined as bonds and other debt obligations listed and/or traded on one or several foreign stock exchanges and/or rights to which are recorded by recognized depository-clearing organizations, provided that such foreign stock exchanges and depository-clearing organizations are specified in the list approved by the Federal authority for securities markets in consultation with the Ministry of Finance of Russia. Such list was approved by the Federal Authority for Securities Markets on October 25, 2012. The Irish Stock Exchange, Euroclear, Clearstream, Luxembourg and DTC are included in this list. The fact that bonds are traded should be confirmed by Russian companies based on information provided by foreign stock exchanges, depository-clearing organizations, prospectus or other documents relating to the issue of the bonds and publicly available information. Therefore, it appears that the Notes should qualify for treatment as traded bonds under the Russian Tax Code, although as noted above there is no certainty in this area of Russian taxation. In order to confirm tax residence in a jurisdiction that has a double tax treaty in effect with the Russian Federation, recipients of interest income that are legal entities are required to file a residency certificate issued by the competent tax authority of the relevant treaty country. This certificate (apostiled or legalized and, translated

55 into Russian) is then required to be filed in the Russian Federation with the payer of interest income, in its role as a withholding tax agent, before the payment under debt obligation is made. These conditions for the release of Russian companies from the obligation to withhold Russian withholding tax should also apply to guarantee payments made in respect of traded bonds or corresponding debt obligations, provided that such guarantee payments are envisaged by the terms of the debt obligations. In case guarantee payments are not envisaged by the terms of the debt obligations, there is a risk that no relief from withholding tax obligation would be available. However, the Tax Code may potentially be interpreted in such a way that such relief would still be available if Guarantee payments are envisaged by the terms and conditions of the Notes, or the Prospectus and/or funds (i.e. Note proceeds) are actually transferred to the Guarantor. Release from the duty to act as a withholding tax agent effectively means that, in practice, withholding tax on interest payments should not arise in Russia, because currently there is no mechanism or requirement for non-resident legal entities to self-assess and pay the tax. However, there can be no assurance that such rules will not be introduced in the future, which may result in the obligation of non-resident legal entities to self-assess and pay the tax. If Guarantee payments are payable to, or to the order of the Trustee pursuant to the Trust Deeds, there is uncertainty if the Guarantor will be released from obligation to withhold the Russian withholding tax from guarantee payments made to the Trustee. In such a case, the part of the Guarantee payments relating to interest on the Notes, and to a lesser extent, principal of the Notes, may be subject to Russian withholding tax at a rate of 20%, or such other rate as may be effective at the time of payment, where the payee is a Trustee. It is not expected that the Trustee will, or will be able to, claim a withholding tax exemption or reduction under the applicable double tax treaty under such circumstances. In such cases, the Noteholders may seek the reduction or elimination of Russian withholding tax or a refund of the tax under applicable double taxation treaties entered into between their countries of residence and the Russian Federation. There is no assurance, however, that the respective treaty relief will be available to them in practice under these circumstances. If, on the other hand, Guarantee payments are payable to the Noteholders, Russian withholding income tax may be reduced or eliminated under provisions of a double tax treaty, if the Noteholders are residents in countries having effective double tax treaties with the Russian Federation, and the requirements established by the applicable treaty are met. While some Noteholders may be eligible for an exemption from or reduction on Russian withholding tax under the applicable double tax treaty there is no assurance that such relief will be available in practice, especially if the payments under the Trust Deeds are made to the non-resident Noteholders who are individuals or in a case when the tax is withheld and a tax refund is claimed. Where Russian source income is paid to a non-resident Noteholder who is an individual, the list of Russian source income subject to Russian personal income tax is defined by Article 208 of the Tax Code. It is not clear from the provisions of the Tax Code whether payments made by Guarantor under the Guarantees should be classified as income received from sources within or outside the Russian Federation. If payments made by the Guarantor under the Guarantees to the individual who is not tax residents of the Russian Federation are classified as income received from source in the Russian Federation, these payments may be subject to withholding tax at a rate of 30% on the gross proceeds subject to reduction or elimination under any available double tax treaty provided that conditions for application of treaty relief established by such corresponding treaty and Russian tax legislation are met. Where a guarantee payment made to a non-resident Noteholder who is an individual is subject to Russian personal income tax but no Russian withholding tax is withheld at source by the Guarantor, the non-resident Noteholder who is an individual would be required to file a tax return individually. The applicable tax would then have to be paid by such individual on the basis of the filed tax return. Notwithstanding the possible exemptions discussed above, if any payments required under the Guarantees are subject to Russian withholding tax, OJSC VimpelCom will be required to increase the amount payable under the Guarantees by the amount of withholding tax (except in circumstances specified in “Terms and Conditions of the Notes—Condition 8 Taxation”). As a result, OJSC VimpelCom could incur expenses significantly in excess of the amount of interest and principal due to the Noteholders. We cannot be certain that OJSC VimpelCom would have sufficient funds to make any payment required under the Guarantees or to pay the additional amounts associated with the withholding tax. Further, we can give no assurance that OJSC VimpelCom’s obligation to pay the additional amounts associated with the withholding tax is enforceable under Russian law. Any payment under the Guarantees made by the Guarantor should not be subject to Russian value added tax.

56 Payments under the Notes may be subject to withholding tax under European Commission regulations. Under Directive 2003/48/EC on the Taxation of Savings Income in the Form of Interest Payments, European Union Member States are required to provide to the tax authorities of other Member States details of interest payments (or similar income) paid by a person within its jurisdiction to, or collected by such a person for, an individual resident in such other Member State. Member States that choose not to disclose information in accordance with the directive are required to operate a withholding system in relation to such payments, which could allow for withholding tax at a rate of up to 35.0% on applicable payments. Agreements creating similar disclosure or tax withholding arrangements have been reached between Member States and a number of non-European Union countries or certain dependent or associated territories of Member States. The European Commission has proposed certain amendments to this Directive which may, if implemented, amend or broaden the scope of the requirements described above. If an interest payment were to be made or collected through a Member State which has opted for a withholding system, such interest payments could be subject to withholding tax, and none of the Issuer, the Guarantor, the Paying Agent, nor any other person would be required to pay to such Noteholder any additional amounts in respect of such interest payment.

57 USE OF PROCEEDS The fees and expenses associated with the Offer are estimated to be approximately US$8.9 million. We expect the aggregate net proceeds of the issuance of the USD Notes to be approximately US$1,592.3 million and the aggregate net proceeds of the issuance of the RUB Notes to be approximately RUB11,96 billion. We will use the aggregate net proceeds from the issuance of the Notes for repaying existing indebtedness of OJSC VimpelCom and for other general corporate purposes. None of the proceeds from the issuance of the Notes will be used to fund, finance or facilitate any activity, business or transaction that is the subject of a sanctions regime administered or enforced by the U.S. Department of Treasury’s OFAC, the UN Security Council, the European Union or other relevant sanctions authorities.

58 CAPITALIZATION The following table sets forth our cash and cash equivalents balance and our capitalization as of September 30, 2012. As of September 30, 2012 (In millions of U.S. dollars) Cash and cash equivalents ...... 1,370 Short-term and long-term deposits ...... 681 Current debt: Bonds, bank loans, capital lease and other loans ...... 1,652 Long term debt: Bonds, bank loans, capital lease and other loans ...... 10,991 Total debt ...... 12,643 Outstanding Promissory Note ...... 12,905 Stockholders’ equity: Issued capital ...... 20 Capital Surplus ...... 274 Treasury shares ...... (1) Other capital reserves ...... 136 Retained earnings ...... (3,084) Accumulated other comprehensive loss ...... (637) Total VimpelCom Holdings B.V. stockholders’ equity ...... (3,292) Non-controlling interest ...... (10) Total equity ...... (3,302) Total capitalization ...... US$22,246

Other than the changes in certain of our other outstanding indebtedness subsequent to September 30, 2012 described in the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities—Recent Financing Activities,” there have been no material changes to the consolidated capitalization of our company since September 30, 2012. As of September 30, 2012, the Issuer had negative total equity of US$3.3 billion. For more information about the negative total equity, see the section of this prospectus entitled “Description of the Issuer—Negative Total Equity.”

59 SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data for the three years ended December 31, 2011 is derived from our historical consolidated financial statements which have been audited by Ernst & Young Accountants LLP, an independent registered public accounting firm, for the years ended December 31, 2011 and 2010, and by Ernst & Young LLC, an independent registered public accounting firm, for the year ended December 31, 2009. The selected consolidated financial data for the nine-month periods ended September 30, 2012 and 2011 is derived from unaudited financial statements. The data should be read in conjunction with our audited consolidated financial statements and related notes and our unaudited condensed consolidated interim financial statements and related notes included elsewhere in this prospectus and the financial information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As a result of the VimpelCom Ltd. Transaction, the Issuer is the accounting successor to OJSC VimpelCom, and accordingly, accounting data and disclosures relating to periods prior to April 21, 2010 represent accounting data and disclosures of OJSC VimpelCom, except for equity which was restated to reflect the capital structure of the Issuer. We omit selected financial information for the earliest two years of the five year period ended December 31, 2011 because we adopted IFRS in 2010 and accordingly have only three years of selected consolidated financial data prepared in accordance with IFRS as issued by the IASB. Nine Months Ended September 30, Year Ended December 31, 2012 2011 2011 2010 2009 (In millions of U.S. dollars) Service revenues ...... 8,911 8,792 11,727 10,303 8,691 Sale of equipment and accessories ...... 261 201 322 194 110 Other revenues ...... 14 10 14 16 12 Total operating revenues ...... 9,186 9,003 12,063 10,513 8,813 Operating expenses Service costs ...... 1,918 2,118 2,860 2,250 1,895 Cost of equipment and accessories ...... 245 247 390 217 111 Selling, general and administrative expenses ...... 2,933 2,719 3,701 3,129 2,482 Depreciation ...... 1,224 1,227 1,643 1,404 1,190 Amortization ...... 389 460 613 618 440 Impairment loss ...... – – 526 – – Loss on disposals of non-current assets ...... 121 50 77 48 77 Total operating expenses ...... 6,830 6,821 9,810 7,666 6,195 Operating profit ...... 2,356 2,182 2,253 2,847 2,618 Finance costs ...... 1,216 941 1,259 620 603 Finance income ...... (290) (182) (269) (82) (58) Other non-operating losses/(gains) ...... 25 99 171 5 69 Shares of loss/(profit) of associates and joint ventures accounted for using the equity method ...... (62) (33) (63) (90) (3) Net foreign exchange loss ...... (67) (170) (161) 14 404 Profit before tax ...... 1,534 1,527 1,316 2,380 1,603 Income tax expense ...... 528 532 675 522 431 Profit for the period ...... 1,006 995 64 1,858 1,172 Attributable to: The owners of the parent ...... 968 967 779 1,810 1,142 Non-controlling interest ...... 38 28 (138) 48 30 1,006 995 641 1,858 1,172

60 At September 30, At December 31, 2012 2011 2010 2009 (In millions of U.S. dollars) Consolidated balance sheets data: Cash and cash equivalents ...... 1,370 767 851 1,451 Working capital (deficit)(1) ...... (413) (1,678) (1,000) (562) Property and equipment, net ...... 8,309 8,188 7,296 5,861 Intangible assets and Goodwill ...... 8,907 9,061 9,212 4,843 Total assets ...... 25,290 23,712 20,147 14,618 Total liabilities ...... 28,592 28,065 25,244 10,416 Total equity ...... (3,302) (4,353) (5,097) 4,202

(1) Working capital is calculated as current assets less current liabilities.

61 SELECTED OPERATING DATA The following selected operating data as of September 30, 2012 and as of December 31, 2011, 2010, 2009, 2008 and 2007 has been derived from internal company sources and from independent sources that we believe to be reliable. The selected operating data set forth below should be read in conjunction with our consolidated financial statements and their related notes included elsewhere in this prospectus and the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our subscriber data, mobile ARPU and mobile MOU for all periods indicated in the table below and mobile churn figures for the years 2009, 2010 and 2011 and the first nine months of 2012 in the table below are reported on the basis of active subscribers. The historical operating data for periods prior to April 21, 2010, the date on which the VimpelCom Ltd. Transaction was completed, represents the historical operating data of OJSC VimpelCom and excludes the historical operating data of Kyivstar. As of September 30, As of December 31, 2012 2011 2010 2009 2008 2007 Selected industry operating data: Estimated population:(1) Russia ...... 139,893,000 139,893,000 140,128,248 140,681,500 142,008,800 142,008,800 Ukraine ...... 45,183,000 45,183,000 45,306,567 45,813,764 46,192,300 46,192,300 Kazakhstan ...... 15,860,000 15,860,000 15,807,055 15,704,000 15,571,500 15,571,500 Tajikistan ...... 7,182,000 7,182,000 7,143,494 7,011,000 7,215,700 7,215,700 Uzbekistan ...... 28,087,000 28,087,000 27,960,495 28,381,000 27,100,000 27,100,000 Armenia ...... 3,090,000 3,090,000 3,095,279 2,990,000 3,230,100 3,230,100 Georgia ...... 4,170,000 4,170,000 4,205,647 4,318,000 4,500,000 4,500,000 Kyrgyzstan ...... 5,616,000 5,616,000 5,580,940 – – – Cambodia ...... 15,289,000 15,289,000 15,183,540 15,097,000 – – Laos ...... 6,554,000 6,554,000 –––– Estimated mobile subscribers:(2) Russia ...... 233,875,920 229,341,900 220,384,130 209,206,000 187,830,000 172,870,000 Ukraine ...... 55,060,100 52,620,400 49,969,900 55,251,400 55,793,102 55,596,318 Kazakhstan ...... 25,762,400 22,002,780 17,279,900 16,581,000 14,437,927 12,692,511 Tajikistan ...... 9,405,413 7,247,150 5,532,150 4,334,900 3,428,061 2,131,103 Uzbekistan ...... 28,012,600 24,387,240 20,995,500 16,569,900 12,276,098 5,931,796 Armenia ...... 3,803,200 3,725,920 3,694,000 2,616,700 2,561,280 1,868,571 Georgia ...... 5,298,000 4,967,000 4,422,000 3,894,800 3,757,055 2,690,405 Kyrgyzstan ...... 5,856,180 5,714,830 5,027,000 – – – Cambodia ...... 21,164,945 16,901,085 8,930,200 5,477,100 – – Laos ...... 4,418,171 4,644,820 –––– Mobile penetration rate:(3) Russia ...... 167.2% 163.9% 157.3% 148.7% 132.3% 121.7% Ukraine ...... 121.9% 116.5% 110.3% 120.6% 120.8% 120.4% Kazakhstan ...... 162.4% 138.7% 109.3% 105.6% 92.7% 81.5% Tajikistan ...... 131.0% 100.9% 77.4% 61.8% 47.5% 29.5% Uzbekistan ...... 99.7% 86.8% 75.1% 58.4% 45.3% 21.9% Armenia ...... 123.1% 120.6% 119.3% 87.5% 79.3% 57.8% Georgia ...... 127.1% 119.1% 105.1% 90.2% 83.5% 59.8% Kyrgyzstan ...... 104.3% 101.8% 90.1% – – – Cambodia ...... 138.4% 110.5% 58.8% 36.3% – – Laos ...... 67.4% 70.9% –––– Selected company operating data:(4) End of period mobile subscribers: Russia ...... 56,181,099 57,223,518 52,020,000 50,886,127 47,676,844 42,221,252 Ukraine ...... 25,220,719 24,776,208 24,389,838 2,004,729 2,052,493 1,941,251 Kazakhstan ...... 8,595,765 8,408,682 6,867,000 6,135,275 6,269,927 4,603,300 Tajikistan ...... 947,402 964,807 786,600 743,140 624,624 339,393 Uzbekistan ...... 9,229,360 6,361,040 4,821,700 3,514,516 3,636,243 2,119,612 Armenia ...... 802,788 765,417 672,300 545,201 544,271 442,484 Georgia ...... 990,932 832,600 560,200 399,161 225,055 72,655 Kyrgyzstan ...... 2,418,747 2,370,613 1,904,300 – – – Cambodia ...... 1,020,000 1,013,000 651,000 367,474 – – Laos ...... 337,000 405,000–––– Total mobile subscribers .... 105,743,812 103,120,885 92,672,938 64,595,623 61,029,457 51,739,947

62 As of September 30, As of December 31, 2012 2011 2010 2009 2008 2007 Mobile MOU(5) Russia ...... 271.5 243.3 218.5 211.4 219.1 192.1 Ukraine ...... 491.2 467.0 378.4 208.7 231.8 163.2 Kazakhstan ...... 204.4 147.5 120.3 93.1 104.3 94.6 Tajikistan ...... 235.3 228.8 178.5 172.9 238.9 220.6 Uzbekistan ...... 455.7 425.2 385.7 314.0 287.8 274.0 Armenia ...... 267.5 256.7 294.3 237.8 152.1 169.9 Georgia ...... 234.5 206.9 136.7 138.3 113.6 102.5 Kyrgyzstan ...... 278.2 302.9 257.7 – – – Cambodia ...... 552.0 411.3 331.1 78.2 – – Laos ...... 59.4 233.3 – – – – Mobile ARPU(6) Russia ...... US$ 10.6 US$ 11.1 US$ 10.8 US$ 10.1 US$ 13.9 US$ 12.6 Ukraine ...... US$ 5.0 US$ 5.1 US$ 4.8 US$ 4.7 US$ 7.6 US$ 4.7 Kazakhstan ...... US$ 7.6 US$ 8.3 US$ 9.2 US$ 8.1 US$ 11.7 US$ 13.1 Tajikistan ...... US$ 8.4 US$ 8.8 US$ 6.5 US$ 7.1 US$ 9.5 US$ 9.7 Uzbekistan ...... US$ 4.3 US$ 4.1 US$ 4.1 US$ 4.7 US$ 6.4 US$ 7.1 Armenia ...... US$ 6.9 US$ 8.1 US$ 10.3 US$ 13.2 US$ 14.6 US$ 16.7 Georgia ...... US$ 6.7 US$ 6.8 US$ 7.5 US$ 8.9 US$ 9.0 US$ 7.4 Kyrgyzstan ...... US$ 5.5 US$ 5.5 US$ 5.3 – – – Cambodia ...... US$ 1.6 US$ 2.9 US$ 3.5 US$ 1.4 – – Laos ...... US$ 5.4 US$ 5.1 – – – – Mobile churn rate(7) Russia ...... 47.7% 62.8% 50.8% 42.8% 34.6% 32.9% Ukraine ...... 21.6% 22.3% 29.5% 81.0% 84.0% 61.8% Kazakhstan ...... 41.1% 47.4% 38.1% 46.3% 31.5% 23.5% Tajikistan ...... 55.6% 67.4% 79.9% 52.9% 42.8% 4.6% Uzbekistan ...... 45.0% 59.7% 39.4% 63.7% 55.6% 61.7% Armenia ...... 61.7% 87.6% 55.3% 58.6% 106.2% 49.7% Georgia ...... 55.8% 70.1% 30.1% 46.6% 47.2% 1.0% Kyrgyzstan ...... 52.3% 52.3% 63.3% – – – Cambodia ...... 148.3% 73.0% 167% n/a – – Laos ...... 115.4% 258.0% – – – – Number of GSM base stations:(8) Russia ...... 48,436 42,940 33,535 28,718 26,633 22,088 Ukraine ...... 14,770 14,691 15,394 3,039 3,015 2,294 Kazakhstan ...... 5,763 4,688 3,546 3,191 3,119 2,291 Tajikistan ...... 1,097 929 661 523 494 326 Uzbekistan ...... 3,361 2,936 1,972 1,625 1,573 928 Armenia ...... 954 891 735 518 503 379 Georgia ...... 1,151 1,085 809 609 514 215 Kyrgyzstan ...... 1,424 1,281 946 – – – Cambodia ...... 1,456 1,356 958 552 – – Laos ...... 774 712 – – – – End of period broadband subscribers:(9) Russia ...... 4,800,698 4,611,270 3,348,000 2,110,881 1,181,916 – Ukraine ...... 550,723 397,338 200,438 71,000 24,147 – Kazakhstan ...... 4,677,812 4,365,550 12,000 1,342 154 – Uzbekistan ...... 4,216,007 2,820,025 37,300 9,029 5,766 – Armenia ...... 506,662 454,790 75,000 26,196 9,234 – Total broadband subscribers ...... 14,751,902 12,648,973 3,672,738 2,218,448 1,221,217 –

(1) Informa Telecoms & Media does not provide estimated population statistics as of September 30, 2012, and therefore data as of December 31, 2011 has been provided for the purposes of this table. Estimated population statistics as of December 31, 2011 and 2010 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media). Estimated population statistics as of December 31, 2009 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media), except for the statistics on Ukraine, which were provided by AC&M, a management consulting and research agency specializing in the telecommunications industry in Russia and the CIS. Estimated population statistics for the years ended December 31, 2008 and 2007 for all countries were published by the Interstate Statistical Committee of the CIS.

63 (2) Estimated mobile subscriber statistics by country as of September 30, 2012 and December 31, 2011 and 2010 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media). Estimated mobile subscriber statistics by country as of December 31, 2009 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media), except for the statistics on Ukraine, which were provided by AC&M. For the years December 31, 2008 and 2007, estimated mobile subscriber statistics for all countries were provided by AC&M. (3) Estimated mobile penetration rate statistics as of September 30, 2012 and December 31, 2011 and 2010 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media). Estimated mobile penetration rate statistics as of December 31, 2009 were provided by Informa Telecoms & Media (©2013 Informa Telecoms & Media), except for the statistics on Ukraine, which were provided by AC&M. For the years ended December 31, 2008 and 2007, estimated mobile penetration statistics for all countries were provided by AC&M. (4) Operating data for Ukraine does not include figures associated with Kyivstar’s operations prior to April 21, 2010, when Kyivstar’s operations were integrated into the group. (5) MOU is calculated by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile subscribers during the period and dividing by the number of months in that period. (6) ARPU is calculated by dividing our mobile service revenue during the relevant period, including roaming revenue and interconnect revenue, but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of our mobile subscribers during the period and dividing by the number of months in that period. (7) Churn rate is based on active subscribers. We define our churn rate of mobile subscribers as the total number of churned mobile subscribers over the reported period expressed as a percentage of the average of our mobile subscriber base at the starting date and at the ending date of the period. The total number of churned mobile subscribers is calculated as the difference between the number of new subscribers who engaged in a revenue generating activity in the reported period and the change in the mobile subscriber base between the starting date and the ending date of the reported period. Migration between prepaid and contract forms of payment and between tariff plans may technically be recorded as churn, which contributes to our churn rate even though we do not lose those subscribers. Churn rates have seasonal fluctuations and typically increase in the last quarter of the year due to churn of new subscribers obtained in the summer months of the year. Policies regarding the calculation of churn differ among operators. (8) Including 3G base stations. (9) Broadband subscribers are those subscribers in the registered subscriber base who were a party to a revenue generating activity in the past three months. Such activities include monthly Internet access using fiber-to-the-building, or FTTB, xDSL and WiFi technologies as well as mobile internet access via USB modems using 3G/HSDPA technologies.

64 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our consolidated financial statements and their related notes included elsewhere in this prospectus. This discussion contains forward looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward looking statements as a result of numerous factors, including the risks discussed in the section of this prospectus entitled “Risk Factors” and elsewhere in this prospectus. Our consolidated financial statements included elsewhere in this prospectus are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Our consolidated financial statements for the three years ended December 31, 2011 are the first audited consolidated financial statements that we have prepared in accordance with IFRS; our audited consolidated financial statements for the years ended December 31, 2010 and 2009 were prepared in accordance with U.S. GAAP. Accordingly, our audited consolidated IFRS financial statements included elsewhere in this prospectus contain reconciliations from U.S. GAAP to IFRS as issued by the IASB to inform investors about the changes in the basis of presentation from our U.S. GAAP consolidated financial statements for the years ended December 31, 2010 and 2009. The reconciliations from our U.S. GAAP financial statements are summarized in note 4 to our audited consolidated financial statements, and there were no material differences. In addition, IFRS 1 on first time adoption allows certain exemptions from retrospective application of IFRS in the opening statement of financial position. Where these exemptions have been used, they are explained in note 4 to our audited consolidated financial statements.

Overview We are a holding company for telecommunications operators, providing voice and data services through a range of mobile, fixed and broadband technologies. The Issuer and its subsidiaries include companies operating in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Cambodia and Laos. The operations of these companies cover a territory with a total population of approximately 271 million. Our group is part of a larger group of companies consisting of VimpelCom Ltd. and its subsidiaries, or the “VimpelCom Ltd. Group.” This discussion and analysis does not include the financial condition, or results of operations, of the VimpelCom Ltd. Group companies that are not members of our group, including Wind Telecom and its subsidiaries in Algeria, Bangladesh, Pakistan, Burundi, Zimbabwe, Central African Republic and Italy and VimpelCom Ltd.’s indirect equity shareholding in Canadian operations. Our total operating revenues were US$9,186 million for the nine months ended September 30, 2012, compared to US$9,003 million for the nine months ended September 30, 2011. Our operating profit was US$2,356 million for the nine months ended September 30, 2012, compared to US$2,182 million for the nine months ended September 30, 2011. Profit for the period attributable to the owners of the parent was US$968 million for the nine months ended September 30, 2012, compared to US$967 million for the nine months ended September 30, 2011. The Issuer is a wholly owned indirect subsidiary of VimpelCom Ltd. The Issuer holds a direct interest in OJSC VimpelCom consisting of 100% of OJSC VimpelCom’s shares less one share, which is held by VimpelCom Ltd. The Issuer also holds an effective stake of 99.9961% in Kyivstar, through its direct ownership of 73.8038% of Kyivstar’s shares and Kyivstar’s ownership of 26.1922% of its own shares as a result of its merger with its former shareholder Storm LLC, with Kyivstar as the surviving company. The remainder of Kyivstar is owned 0.0039% by VimpelCom Ltd. For more information regarding Kyivstar’s ownership structure, see the section of this prospectus entitled “Business—Organizational Structure.” The Issuer’s consolidated IFRS financial statements as of December 31, 2011 and September 30, 2012, show that the Issuer had negative total equity of US$4.4 billion and US$3.3 billion, respectively. Our total equity position is negative due to accounting rules applicable to the Issuer’s acquisition of the assets and liabilities of OJSC VimpelCom, which was required to be accounted for as a transaction under common control whereby the assets and liabilities acquired were recorded on the Issuer’s financial statements at their historical carrying value on OJSC VimpelCom’s financial statements. If the assets and liabilities of OJSC VimpelCom were to be accounted for at their fair value, the consolidated total equity of the Issuer would be a positive amount. For more information regarding the Issuer’s negative equity, see the section of this prospectus entitled “Description of the Issuer—Negative Total Equity.” The Issuer is as of April 21, 2010 and the close of the VimpelCom Ltd. Transaction, the accounting successor to OJSC VimpelCom, and, accordingly, accounting data and disclosure related to the period prior to April 21, 2010 in its consolidated financial statements represent accounting data and disclosures of OJSC VimpelCom except for equity which was restated to reflect the capital structure of the Issuer.

65 We use the U.S. dollar as our reporting currency. The functional currencies of our group are the Russian rouble in Russia, the Ukrainian hryvnia in Ukraine, the Kazakh tenge in the Republic of Kazakhstan, the Armenian dram in the Republic of Armenia, the Georgian lari in Georgia, the Kyrgyz som in Kyrgyzstan, the Lao kip in Laos and the U.S. dollar in Tajikistan, Uzbekistan and Cambodia. Due to the significant fluctuation of the non-U.S. dollar functional currencies against the U.S. dollar in the periods covered by this discussion and analysis, changes expressed in our consolidated operating results in functional currencies may differ from changes expressed in our consolidated operating results in reporting currencies during some of these periods. In the following discussion and analysis, we have indicated our consolidated operating results in functional currencies and the devaluation or appreciation of functional currencies where it is material to explaining our consolidated operating results. For more information about exchange rates relating to our functional currencies, see “—Certain Factors Affecting our Financial Position and Results of Operations—Foreign Currency Translation” below. Reportable Segments We present our reportable segments based on economic environments and stages of development in different geographical areas, requiring different investment and marketing strategies. In 2010, primarily due to the acquisition by VimpelCom Ltd. of OJSC VimpelCom and Kyivstar and in connection with their consolidation into the VimpelCom Ltd. Group, we began to define our operating segments based on the business activities in different geographical areas. Accordingly, our reporting segments consist of Russia, Ukraine, CIS (including Georgia) and “All other.” Russia includes the operating results of all mobile and fixed line (including wireline telecommunication services, broadband and consumer Internet) operations in Russia. The Ukraine segment includes the operating results of Kyivstar and OJSC VimpelCom’s subsidiaries in Ukraine, URS and Golden Telecom LLC. CIS includes the operating results of all operations in Kazakhstan, Tajikistan, Uzbekistan, Georgia, Armenia and Kyrgyzstan. Although Georgia is no longer a member of the CIS, consistent with our historic reporting practice, we continue to include Georgia in our CIS reporting segment. The “All other” segment includes the operating results of our subsidiaries in Cambodia, Laos and (prior to its disposal in April 2012) Vietnam, and headquarters expenses. The segment information for prior periods was adjusted again in 2011 to reflect further changes to segment reporting. For more information on our reportable segments, please see note 5 to our unaudited condensed consolidated interim financial statements included elsewhere in this prospectus. Factors Affecting Comparability of Prior Periods Our selected operating and financial data, unaudited condensed consolidated interim financial statements and related notes included elsewhere in this prospectus, audited consolidated financial statements and related notes included elsewhere in this prospectus and the following discussion and analysis reflect the contribution of the operations we acquired from their respective dates of acquisition or consolidation, and, as a result, include results for our consolidated subsidiaries VimpelCom Lao Co., Ltd. (formerly Millicom Lao Co., Ltd.), our subsidiary in Laos, since March 9, 2011, Kyivstar since April 21, 2010, and Sky Mobile, our subsidiary in Kyrgyzstan, since January 1, 2010. As of April 26, 2011, we began to consolidate the results of GTEL-Mobile, our subsidiary in Vietnam, which was previously accounted for using the equity method, but we disposed of our interests in GTEL-Mobile in April 2012. We do not provide comparable financial information for periods preceding the date on which we acquired, consolidated or commenced operations in a particular country or segment. For more information, see “—Liquidity and Capital Resources—Investing Activities” and “—Recent Developments and Trends” below. The following table shows the percentage of our total operating revenues from external customers (excluding intersegment revenues) represented by each reportable segment’s total operating revenues for the periods indicated: Nine Months Ended September 30, Year Ended December 31, 2012 2011 2011 2010 2009(1) (in %) Russia ...... 73.5 74.8 74.5 77.2 84.3 CIS ...... 13.0 12.0 12.2 12.1 13.8 Ukraine ...... 12.9 12.8 12.8 10.5 1.8 All other ...... 0.6 0.4 0.5 0.2 0.1 Total ...... 100.0 100.0 100.0 100.0 100.0 In addition, as of September 30, 2012, Sotelco was classified in our financial statements as held for sale. As a result, Sotelco’s assets and associated liabilities were listed as held for sale in our interim condensed financial position as of September 30, 2012. This classification had no effect on consolidation of Sotelco’s revenues or on our interim condensed consolidated income statement for the nine months ended September 30, 2012.

66 Trends The mobile markets in Russia, Ukraine, Kazakhstan, Armenia, Tajikistan, Kyrgyzstan, Cambodia and Georgia have reached mobile penetration rates exceeding 100%, and the mobile market in Uzbekistan has a mobile penetration rate of approximately 99.7%. As a result, we will focus less on subscriber market share growth and more on revenue market share growth in each of these markets. The key components of our growth strategy in these markets will be to increase our share of the high value subscriber market, increase usage of value added services and improve subscriber loyalty. Our management expects revenue growth in our mobile business to come primarily from data services and in our fixed-line business from broadband and business and corporate services.

Recent Developments The following is a discussion of material transactions and developments since September 30, 2012. On October 9, 2012, OJSC VimpelCom signed a facility agreement with HSBC Bank PLC and Nordea Bank AB (publ) for a Russian rouble denominated Swedish export credit facility supported by the EKN for a total principal amount of the Russian rouble equivalent of US$200.0 million. The purpose of the facility is to finance equipment and services provided to OJSC VimpelCom by Ericsson on a reimbursement basis. The facility bears interest at a rate of MosPRIME (Moscow indicative independent interbank offered rate) plus 1.00% p.a. On October 23, 2012, OJSC VimpelCom drew down RUR 6,151 million (the equivalent to US$200.0 million as of such date). On December 6, 2012, we acquired an additional 0.1% of Euroset Holding N.V., which owns 100.0% of the shares of Euroset, one of the leading mobile handset retailers and dealers for major mobile network operators in Russia, thereby increasing our ownership interest in Euroset to 50.0%. We also amended the terms of our shareholding in Euroset to increase our governance rights. For more information on our interests in Euroset and related risks, see “—Liquidity and Capital Resources—Investing Activities—Acquisitions and Disposals” below and “Risk Factors—Risks Related to Our Business—The return on, and benefits from, our recent additional investment in Euroset might be affected by disagreements among Euroset shareholders.”

Certain Performance Indicators The following discussion analyzes certain operating data, such as mobile and broadband subscriber data, mobile ARPU, mobile MOU, and churn rates of our mobile subscribers that are not included in our financial statements. We provide this operating data because our management regularly reviews this information and believes that it is useful in evaluating our performance from period to period. In particular, our management believes that presenting such information about mobile and broadband subscriber data and mobile ARPU and mobile MOU is useful in assessing the usage and acceptance of our mobile and broadband products and services, and that presenting our mobile churn rate is useful in assessing our ability to retain mobile subscribers.

Mobile Subscriber Data We offer both contract and prepaid services to mobile subscribers. As of September 30, 2012, the number of mobile subscribers of our group reached approximately 105.7 million, compared to approximately 101.6 million as of September 30, 2011. Mobile subscribers are subscribers in the registered subscriber base as of a measurement date who have engaged in a revenue generating activity at any time during the three months prior to the measurement date. Such activity includes any incoming and outgoing calls, subscriber fee accruals, debits related to service, outgoing SMS and MMS, data transmission and receipt sessions, but does not include incoming SMS and MMS or abandoned calls. Our total number of mobile subscribers also includes subscribers using mobile Internet service via USB modems. For more information on how we calculate active subscribers, see the section of this prospectus entitled “Presentation of Financial and Other Information.”

67 The following table indicates our mobile subscriber figures, as well as our prepaid mobile subscribers as a percentage of our total mobile subscriber base, for the periods indicated:

As of September 30, As of December 31, 2012 2011 2011 2010 2009 Russia ...... 56,181,099 56,824,295 57,223,518 52,020,000 50,886,127 Ukraine ...... 25,220,719 24,747,379 24,776,208 24,389,838 2,004,729 Kazakhstan ...... 8,595,765 8,251,754 8,408,682 6,867,000 6,135,275 Tajikistan ...... 947,402 936,686 964,807 786,600 743,140 Uzbekistan ...... 9,229,360 5,688,196 6,361,040 4,821,700 3,514,516 Armenia ...... 802,788 760,805 765,417 672,300 545,201 Georgia ...... 990,932 792,847 832,600 560,200 399,161 Kyrgyzstan ...... 2,418,747 2,281,463 2,370,613 1,904,300 – Cambodia ...... 1,020,000 800,000 1,013,000 651,000 367,474 Laos ...... 337,000 500,000 405,000 – – Total number of subscribers(1) ...... 105,743,812 101,583,425 103,120,885 92,672,938 64,595,623 Percentage of prepaid subscribers ...... 94.1% 94.7% 94.9% 94.4% 96.0%

(1) Excludes Vietnam.

Russia As of September 30, 2012, we had approximately 56.2 million mobile subscribers in Russia, representing a decrease of 1.1% from approximately 56.8 million mobile subscribers as of September 30, 2011. Our subscriber base decreased in all regions of Russia except Moscow and the Caucasus. In the regions outside the Moscow license area our subscriber base decreased to 43.1 million from 44.1 million as of September 30, 2011. The decrease outside Moscow was primarily due to focusing our sales efforts on high value subscribers.

Ukraine As of September 30, 2012, we had approximately 25.2 million mobile subscribers in Ukraine, an increase of 2.0% from approximately 24.7 million mobile subscribers as of September 30, 2011. The increase in our subscriber base in Ukraine was due to promotion of our bundled service offerings, introduction of a regionalized sales strategy, as well as a new, more effective commission policy with dealers.

CIS Kazakhstan. As of September 30, 2012, we had approximately 8.6 million mobile subscribers in Kazakhstan, an increase of 4.2% from approximately 8.3 million mobile subscribers as of September 30, 2011. The increase in our subscriber base in Kazakhstan was primarily due to the introduction of attractive tariffs at competitive prices for voice and data services and the expansion of our 3G mobile network coverage in Kazakhstan. Tajikistan. As of September 30, 2012, we had approximately 950,000 mobile subscribers in Tajikistan, an increase of 1.1% from approximately 940,000 mobile subscribers as of September 30, 2011. The increase in our subscriber base in Tajikistan was primarily due to the introduction of attractive tariffs at competitive prices and increased sales efforts in the migrant labor market in Tajikistan. Uzbekistan. As of September 30, 2012, we had approximately 9.2 million mobile subscribers in Uzbekistan, an increase of 62.3% from approximately 5.7 million mobile subscribers as of September 30, 2011. The increase in our subscriber base in Uzbekistan was primarily due to the addition of new subscribers after the leading operator’s license was suspended as well as the expansion of our mobile network coverage and capacity in Uzbekistan. Armenia. As of September 30, 2012, we had approximately 800,000 mobile subscribers in Armenia, an increase of 5.5% from approximately 760,000 million mobile subscribers as of September 30, 2011. The increase in our subscriber base in Armenia was primarily due to the introduction of new tariffs at competitive prices. Georgia. As of September 30, 2012, we had approximately 1.0 million mobile subscribers in Georgia, an increase of 25.0% from approximately 0.8 million mobile subscribers as of September 30, 2011. The increase in our subscriber base in Georgia was primarily due to the introduction of attractive tariffs at competitive prices and the expansion of our mobile network coverage in Georgia. Kyrgyzstan. As of September 30, 2012, we had approximately 2.4 million mobile subscribers in Kyrgyzstan, an increase of 6.0% from approximately 2.3 million mobile subscribers as of September 30, 2011.

68 The increase in our subscriber base in Kyrgyzstan was primarily due to the introduction of new tariffs at competitive prices and expansion of our 3G mobile network coverage in Kyrgyzstan.

All other Cambodia. As of September 30, 2012, we had approximately 1.0 million mobile subscribers in Cambodia, an increase of 27.5% from approximately 0.8 million mobile subscribers as of September 30, 2011. The increase in our subscriber base in Cambodia was primarily due to the launch of attractive promotions and marketing campaigns. Laos. We launched commercial operations in Laos in April 2011 and as of September 30, 2012, we had approximately 0.3 million mobile subscribers, representing a decrease of 32.6% from approximately 0.5 million mobile subscribers as of September 30, 2011. The decrease in our subscriber base in Laos was primarily due to limitations imposed by the Laos Government on the commercial activities of our subsidiary in Laos.

Mobile MOU Mobile MOU measures the monthly average minutes of voice service use per mobile subscriber. We calculate mobile MOU by dividing the total number of minutes of usage for incoming and outgoing calls during the relevant period (excluding guest roamers) by the average number of mobile subscribers during the period and dividing by the number of months in that period. The following table shows our mobile MOU for the periods indicated:

Nine Months Ended Year Ended December September 30, 31, 2012 2011 2011 2010 2009 Russia ...... 271.5 237.8 243.3 218.5 211.4 Ukraine ...... 491.2 461.7 467.0 378.4 208.7 Kazakhstan ...... 204.4 140.9 147.5 120.3 93.1 Tajikistan ...... 235.3 228.8 228.8 178.5 172.9 Uzbekistan ...... 455.7 412.5 425.2 385.7 314.0 Armenia ...... 267.5 255.1 256.7 294.3 237.8 Georgia ...... 234.5 202.9 206.9 136.7 138.3 Kyrgyzstan ...... 278.2 306.9 302.9 257.7 – Cambodia ...... 552.0 369.9 411.3 331.1 78.2 Laos ...... 59.4 237.0 233.3 – –

Russia In the first nine months of 2012, our mobile MOU Russia increased by 14.2% to 271.5 from 237.8 in the first nine months of 2011, primarily as a result of the implementation of our strategy on actively promoting bundled price plans.

Ukraine In the first nine months of 2012, our mobile MOU in Ukraine increased by 6.4% to 491.2 from 461.7 in the first nine months of 2011, due to active introduction of bundled tariffs with “free” on-network minutes.

CIS Kazakhstan. In the first nine months of 2012, our mobile MOU in Kazakhstan increased by 45.1% to 204.4 from 140.9 in the first nine months of 2011, due to the introduction of tariff plans designed to increase usage of voice services and development of loyalty programs. Tajikistan. In the first nine months of 2012, our mobile MOU in Tajikistan increased by 2.8% to 235.3 from 228.8 in the first nine months of 2011, due to the introduction of attractive tariff plans at lower prices to stimulate usage. Uzbekistan. In the first nine months of 2012, our mobile MOU in Uzbekistan increased by 10.5% to 455.7 from 412.5 in the first nine months of 2011 due to high usage by newly acquired subscribers. Armenia. In the first nine months of 2012, our mobile MOU in Armenia increased by 4.9% to 267.5 from 255.1 in the first nine months of 2011, due to growth of usage from the introduction of attractive tariff plans at lower prices.

69 Georgia. In the first nine months of 2012, our mobile MOU in Georgia increased by 15.6% to 234.5 from 202.9 in the first nine months of 2011, due to the expansion of the network and improvement of network quality, together with the introduction of new tariff plans at competitive prices. Kyrgyzstan. In the first nine months of 2012, our mobile MOU in Kyrgyzstan decreased by 9.4% to 278.2 from 306.9 in the first nine months of 2011, due to an increase in prices following the overall market trend in Kyrgyzstan.

All other Cambodia. In the first nine months of 2012, our MOU in Cambodia increased by 49.2% to 552.0 from 369.9 in the first nine months of 2011, due to a lower average price per minute. Laos. In the first nine months of 2012, our MOU in Laos decreased by 74.9% to 59.4 from 237.0 in the first nine months of 2011, due to limitations imposed by the Lao Government on certain marketing and sales activity.

Mobile ARPU Mobile ARPU measures the monthly average revenue per mobile user. We calculate mobile ARPU by dividing our mobile service revenue during the relevant period, including data revenue, roaming revenue and interconnect revenue, but excluding revenue from connection fees, sales of handsets and accessories and other non-service revenue, by the average number of our mobile subscribers during the period and dividing by the number of months in that period. The following table shows our mobile ARPU for the periods indicated (excluding our Vietnam business, which we sold in April 2012): Nine Months Ended September 30, Year Ended December 31, 2012 2011 2011 2010 2009 (In U.S. dollars) Russia ...... 10.6 10.9 11.1 10.8 10.1 Ukraine ...... 5.0 5.1 5.1 4.8 4.7 Kazakhstan ...... 7.6 8.4 8.3 9.2 8.1 Tajikistan ...... 8.4 9.0 8.8 6.5 7.1 Uzbekistan ...... 4.3 4.0 4.1 4.1 4.7 Armenia ...... 6.9 8.3 8.1 10.3 13.2 Georgia ...... 6.7 6.8 6.8 7.5 8.9 Kyrgyzstan ...... 5.5 5.5 5.5 5.3 – Cambodia ...... 1.6 3.2 2.9 3.5 1.4 Laos ...... 5.4 5.3 5.1 – –

Russia In the first nine months of 2012, our mobile ARPU in Russia decreased by 2.8% to US$10.6 from US$10.9 in the first nine months of 2011, primarily due to depreciation of the Russian rouble versus the U.S. dollar (in functional currency terms our mobile ARPU in Russia increased by 3.1%).

Ukraine In the first nine months of 2012, our mobile ARPU in Ukraine decreased by 2.0% to US$5.0 from US$5.1 in the first nine months of 2011, primarily due to organic migration of high-ARPU customers to lower cost bundled service offerings.

CIS Kazakhstan. In the first nine months of 2012, our mobile ARPU in Kazakhstan decreased by 10.1% to US$7.6 from US$8.4 in the first nine months of 2011, primarily due to increased price competition, which had a negative impact on ARPU that was greater than the positive impact from an increase in MOU over the period. Tajikistan. In the first nine months of 2012, our mobile ARPU in Tajikistan decreased by 6.0% to US$8.4 from US$9.0 in the first nine months of 2011, primarily due to continuing price competition and our launch of attractive tariff plans at lower prices that was partially offset by an increase in MOU. Uzbekistan. In the first nine months of 2012, our mobile ARPU in Uzbekistan increased by 8.3% to US$4.3 from US$4.0 in the first nine months of 2011, primarily due to an increase in MOU and introduction of monthly fees on all tariff plans, as well as the migration of subscribers with high ARPU to our network as a result of the suspension of the GSM license of another leading operator.

70 Armenia. In the first nine months of 2012, our mobile ARPU in Armenia decreased by 17.5% to US$6.9 from US$8.3 in the first nine months of 2011, primarily due to lower prices per minute resulting from the introduction of new tariff plans to address increased competition which was not fully offset by an increase in MOU. Georgia. In the first nine months of 2012, our mobile ARPU in Georgia decreased by 2.5% to US$6.7 from US$6.8 in the first nine months of 2011, primarily due to a decrease in prices as a result of the introduction of new tariff plans that was almost fully offset by increase in MOU. Kyrgyzstan. In the first nine months of 2012, our mobile ARPU in Kyrgyzstan decreased by 0.7% to US$5.5 from US$5.5 in the first nine months of 2011, primarily due to a decrease in MOU that was only partially offset by an increase in the average price per minute.

All other Cambodia. In the first nine months of 2012, our mobile ARPU in Cambodia decreased by 49.3% to US$1.6 from US$3.2 in the first nine months of 2011, primarily due to an increase in the proportion of lower ARPU subscribers. Laos. In the first nine months of 2012, our mobile ARPU in Laos increased by 3.5% to US$5.4 from US$5.3 in the first nine months of 2011, primarily due to a decrease in the number of low-ARPU subscribers.

Mobile churn rate We define our mobile churn rate as the total number of churned mobile subscribers over the reported period expressed as a percentage of the average of our mobile subscriber base at the starting date and at the ending date of the period. The total number of churned mobile subscribers is calculated as the difference between the number of new subscribers who engaged in a revenue generating activity in the reported period and the change in the mobile subscriber base between the starting date and the ending date of the reported period. Migration between prepaid and contract forms of payment and between tariff plans may technically be recorded as churn, which contributes to our churn rate even though we do not lose those subscribers. Churn rates have seasonal fluctuations and typically increase in the last quarter of the year due to churn of new subscribers obtained in the summer months of the year. We do not annualize quarterly amounts of churn and, as a result, quarterly figures are generally lower than the annual figures. The following table shows our mobile churn rates for the periods indicated: Nine Months Ended September 30, Year Ended December 31, 2012 2011 2011 2010 2009 Russia ...... 47.7% 45.8% 62.8% 50.8% 42.8% Ukraine ...... 21.6% 15.8% 22.3% 29.5% 81.0% Kazakhstan ...... 41.1% 34.0% 47.4% 43.5% 46.3% Tajikistan ...... 55.6% 48.5% 67.4% 82.8% 52.9% Uzbekistan ...... 45.0% 46.6% 59.7% 54.2% 63.7% Armenia ...... 61.7% 63.4% 87.6% 67.6% 58.6% Georgia ...... 55.8% 48.3% 70.1% 94.1% 46.6% Kyrgyzstan ...... 52.3% 39.0% 52.3% 61.9% – Cambodia ...... 148.3% 144.7% 73.0% 167.0% – Laos ...... 115.4% 200.6% 258.0% – – Russia. In the first nine months of 2012, our mobile churn rate in Russia increased to 47.7% compared to 45.8% for the first nine months of 2011 primarily as a result of changes to our tariff structures that led to migration of seasonal subscribers to other operators. Ukraine. In the first nine months of 2012, our mobile churn rate in Ukraine increased to 21.6% compared to 15.8% for the first nine months of 2011 due to an increasing share of lower quality subscribers resulting from higher levels of gross additions and the merger of Kyivstar with URS resulting in abandonment by URS subscribers of their second SIMs.

CIS Kazakhstan. In the first nine months of 2012, our mobile churn rate in Kazakhstan increased to 41.1% compared to 34.0% for the first nine months of 2011 due to increased competition that was only partially mitigated by measures to reduce churn.

71 Tajikistan. In the first nine months of 2012, our mobile churn rate in Tajikistan increased to 55.6% compared to 48.5% for the first nine months of 2011 due to continuing competition that was only partially mitigated by measures to reduce churn. Uzbekistan. In the first nine months of 2012, our mobile churn rate in Uzbekistan decreased to 45.0% compared to 46.6% for the first nine months of 2011 due to an increase in subscriber quality as a result of measures introduced to reduce churn and the migration of high quality subscribers to our network as a result of the suspension of the GSM license of another leading operator. We also introduced additional measures to reduce churn through network quality improvements. Armenia. In the first nine months of 2012, our mobile churn rate in Armenia decreased to 61.7% compared to 63.4% for the first nine months of 2011 due to an increase in the number of high quality subscribers. Georgia. In the first nine months of 2012, our mobile churn rate in Georgia increased to 55.8% compared to 48.3% for the first nine months of 2011 due to a significant increase in the number of tourists in Georgia due to simplified visa requirements. Kyrgyzstan. In the first nine months of 2012, our mobile churn rate in Kyrgyzstan increased to 52.3% compared to 39.0% for the first nine months of 2011 due to increased competition that was only partially mitigated by measures introduced to reduce churn.

All other Cambodia. In the first nine months of 2012, our mobile churn rate in Cambodia increased to 148.3% compared to 144.7% for the first nine months of 2011 due to our competitors’ promotion of attractive tariffs. Laos. In the first nine months of 2012, our mobile churn rate in Laos decreased to 115.4% compared to 200.6% for the first nine months of 2011 due to the change in the period over which we measure churn in Laos (from 60 to 90 days, to conform to the measurements normally employed by our group).

Broadband subscribers Broadband subscribers are subscribers in the registered subscriber base who were engaged in a broadband revenue generating activity in the three-month period prior to the measurement date. Such activity includes Internet access using FTTB, xDSL and WiFi technologies, as well as mobile internet access via USB modems using 3G/HSDPA technologies.

Russia As of September 30, 2012, we had approximately 4.8 million broadband subscribers in Russia, representing an increase of approximately 13.8% over the approximately 4.2 million broadband subscribers as of September 30, 2011. The increase was mainly due to our active sales policy, active promotion of USB modems and launch of FTTB services in new cities. The fixed-line broadband subscribers in Russia are primarily represented by FTTB subscribers. As of September 30, 2012, we had approximately 2.2 million FTTB subscribers in Russia, representing an increase of approximately 24.8% over the approximately 1.8 million FTTB subscribers as of September 30, 2011 due to higher sales as a result of active promotions in regional markets. As of September 30, 2012, we had also approximately 2.5 million mobile broadband subscribers (subscribers using USB modems) in Russia, representing an increase of approximately 5% over the approximately 2.4 million mobile broadband subscribers as of September 30, 2011 due to active promotion of USB modems.

Ukraine As of September 30, 2012, we had approximately 550,000 broadband subscribers in Ukraine, compared to approximately 324,000 broadband subscribers as of September 30, 2011. The 70% increase was mainly due to the further expansion of our broadband services and rollout of the FTTB network.

CIS As of September 30, 2012, we had approximately 277,000 broadband subscribers in the CIS, compared to approximately 166,000 broadband subscribers as of September 30, 2011. The 67% increase was mainly due to the continuing expansion of our FTTB network coverage.

All other We did not have a significant number of broadband subscribers in the “All other” segment as of September 30, 2012.

72 Revenues The following discussion of our revenues and expenses is intended to provide background to the discussion of our results of operations that follows these sections. During the nine months ended September 30, 2012 and the three years ended December 31, 2011, we generated revenues from providing voice, data and other telecommunication services through a range of wireless, fixed and broadband Internet services, as well as selling equipment and accessories. Our primary sources of revenues consisted of:

Service Revenues Our service revenues included revenues from airtime charges from contract and prepaid subscribers, monthly contract fees, interconnect fees from other mobile and fixed-line operators, roaming charges and charges for value added services such as messaging, data and infotainment. Roaming revenues include both revenues from our customers who roam outside their home country networks and revenues from other wireless carriers for roaming by their customers on our network. Roaming revenues do not include revenues from our own subscribers roaming while traveling across Russia within our network (referred to as “intranet roaming”).

Sales of Equipment and Accessories and Other Revenues Revenue is also generated through the sale of mobile handsets, equipment and accessories to our subscribers. Our other revenues included, among other things, the rental of base station sites to other operators.

Expenses Operating Expenses During the nine months ended September 30, 2012 and the three years ended December 31, 2011, we had two categories of operating expenses directly attributable to our revenues: service costs and the costs of equipment and accessories. Please see “Business—Strategy” for more information on measures we are taking to improve our operational efficiency by focusing on operational cost management. Service Costs. Service costs include interconnection and traffic costs, channel rental costs, telephone line rental costs, roaming expenses and charges for connection to special lines for emergencies. Costs of Equipment and Accessories. Our costs of equipment and accessories sold represent the amount that was payable for these goods, net of VAT. We purchased handsets, equipment and accessories from third party manufacturers for resale to our subscribers for use on our networks. In addition to service costs and the costs of equipment and accessories, during the nine months ended September 30, 2012 and the three years ended December 31, 2011, our operating expenses included: Selling, general and administrative expenses. Our selling, general and administrative expenses include: • dealers’ commissions; • salaries and outsourcing costs, including related social contributions required by law; • marketing and advertising expenses; • repair and maintenance expenses; • rent, including lease payments for base station sites; • utilities; • stock price-based compensation expenses; and • other miscellaneous expenses, such as insurance, operating taxes, license fees, and accounting, audit and legal fees. Depreciation and amortization expense. We depreciated the capitalized costs of our tangible assets, which consist mainly of telecommunications equipment including software and buildings that we own. We amortize our intangible assets, which consist primarily of telecommunications licenses, telephone line capacity for local numbers and customer relations acquired in business combinations. We expect depreciation and amortization expenses to increase in line with the growth of our capital expenditures. Impairment Loss. Impairment loss represents losses from impairment of long-lived assets, including goodwill.

73 Loss on Disposals of Non-current Assets. Loss on disposal of non-current assets represents losses from disposal of non-current assets when they are sold or written off. In addition to operating expenses, during the nine months ended September 30, 2012 and the three years ended December 31, 2011, our other significant expenses included:

Finance Costs We incur interest expense on our vendor financing agreements, loans from banks, bonds, capital leases and other borrowings net of amounts capitalized. Our interest bearing liabilities carry both fixed and floating interest rates. On our borrowings with a floating interest rate, the interest rate is linked either to LIBOR, EURIBOR, AB SEK or MosPRIME. Our interest expense depends on a combination of prevailing interest rates and the amount of our outstanding interest bearing liabilities.

Finance Income Finance income represents income earned on cash deposited in banks and on loans provided to other parties.

Other Non-operating (Gains)/Losses Our other non-operating (gains)/losses primarily include the effect of change of fair value of derivatives over non-controlling interest.

Shares of (Profit)/Loss of Associates and Joint Ventures Accounted for Using the Equity Method Shares of (profit)/ loss of associates and joint ventures accounted for using the equity method represent our share in profit and loss of our joint ventures and associates accounted under the equity method.

Net foreign exchange (loss)/gain The functional currencies of our group are the Russian rouble in Russia, the Ukrainian hryvnia in Ukraine, the Kazakh tenge in Kazakhstan, the Armenian dram in Armenia, the Georgian lari in Georgia, the Kyrgyz som in Kyrgyzstan, the Lao kip in Laos, and the U.S. dollar in Tajikistan, Uzbekistan, Cambodia and, until its disposal in April 2012, Vietnam. Monetary assets and liabilities denominated in foreign currencies are translated into our respective functional currencies on the relevant balance sheet date. We record changes in the values of such assets and liabilities as a result of changes in exchange rates relative to the U.S. dollar in our results of operations under the line item net foreign exchange (loss)/gain.

Income tax expense The statutory income tax rate in Russia, Kazakhstan, Armenia and Cambodia in the first nine months of 2012 and in 2011 was 20.0%. The statutory income tax rate in Ukraine was 21.0% in the first nine months of 2012 and averaged 23.0% in 2011 (25.0% during the first quarter and 23.0% thereafter). The statutory tax rate in Tajikistan was 25.0% in the first nine months of 2012 and in 2011. The statutory income tax rate in Georgia was 15.0% in the first nine months of 2012 and in 2011. In Uzbekistan the statutory income tax rate was 9.0% in the first nine months of 2012 and in 2011. The statutory income tax rate in Kyrgyzstan in the first nine months of 2012 and in 2011 was 10.0%. The statutory income tax rate in Laos was 35.0% in the first nine months of 2012 and in 2011. The statutory income tax rate in the Netherlands was 25.0% in the first nine months of 2012 and in 2011. The statutory income tax rates in the respective countries in 2010 were the same as those in 2011 except in Ukraine where the rate was 25.0% in 2010. The New Tax Code of Ukraine significantly changed the rules for tax base calculation and provided for gradual decrease in tax rates from 23.0% to 16.0% over the next few years.

74 Results of Operations The table below shows, for the periods indicated, the consolidated statement of operations expressed as a percentage of consolidated total operating revenues: Nine Months Ended September 30, Year Ended December 31, 2012 2011 2011 2010 2009 Operating revenues: Service revenues ...... 97% 98% 97% 98% 99% Sale of equipment and accessories ...... 3% 2% 3% 2% 1% Other revenues ...... 0% 0% 0% 0% 0% Total operating revenues ...... 100% 100% 100% 100% 100% Operating expenses: Service costs ...... 21% 24% 24% 21% 22% Cost of equipment and accessories ...... 3% 3% 3% 2% 1% Selling, general and administrative expenses ...... 32% 30% 31% 30% 28% Depreciation ...... 13% 14% 14% 13% 14% Amortization ...... 4% 5% 5% 6% 5% Impairment loss ...... – – 4% 0% 0% Loss on disposals of non-current assets ...... 1% 1% 1% 0% 1% Total operating expenses ...... 74% 76% 81% 73% 70% Operating profit ...... 26% 24% 19% 27% 30% Other income and expenses: Finance costs ...... 13% 10% 10% 6% 7% Finance income ...... -3% -2% -2% -1% -1% Other non-operating losses/(gains) ...... 0% 1% 1% 0% 1% Shares of profit of associates and joint ventures accounted for using the equity method ...... -1% 0% -1% -1% 0% Net foreign exchange (gain)/ loss ...... -1% -2% -1% 0% 5% Total other income and expenses ...... 9% 7% 8% 4% 12% Profit before tax ...... 17% 17% 11% 23% 18% Income tax expense ...... 6% 6% 6% 5% 5% Profit for the period ...... 11% 11% 5% 18% 13% Profit for the period attributable to the owners of the parent .. 11% 11% 6% 17% 13% Profit for the period attributable to non-controlling interest ...... 0% 0% -1% 0% 0%

The tables below show for the periods indicated selected information about the results of operations in each of our reportable segments. For more information regarding our segments, see note 5 to our unaudited condensed consolidated interim financial statements and note 9 to our audited consolidated financial statements included elsewhere in this prospectus.

Russia Nine Months Ended September 30, Year Ended December 31, % % % 2012 2011 Change 2011 2010 Change 2010 2009 Change (US$ in millions, except % change) Total operating revenues from external customers ...... 6,752 6,730 0% 8,983 8,115 11% 8,115 7,425 9% Intersegment revenues ...... 67 61 10% 82 47 74% 47 24 96% Total operating revenues (including intersegment revenues) ...... 6,819 6,791 0% 9,065 8,162 11% 8,162 7,449 10% Adjusted EBITDA ...... 2,901 2,797 4% 3,641 3,775 -4% 3,775 3,696 2%

75 Ukraine Nine Months Ended September 30, Year Ended December 31, % % % 2012 2011 Change 2011 2010 Change 2010 2009 Change (US$ in millions, except % change) Total operating revenues from external customers ...... 1,186 1,152 3% 1,548 1,109 40% 1,109 163 580% Intersegment revenues ...... 58 72 -19% 93 76 22% 76 40 90% Total operating revenues (including intersegment revenues) ...... 1,244 1,224 2% 1,641 1,185 38% 1,185 203 484% Adjusted EBITDA ...... 632 663 -5% 873 629 39% 629 36 1,647%

CIS Nine Months Ended September 30, Year Ended December 31, % % % 2012 2011 Change 2011 2010 Change 2010 2009 Change (US$ in millions, except % change) Total operating revenues from external customers ...... 1,198 1,081 11% 1,470 1,267 16% 1,267 1,220 4% Intersegment revenues ...... 70 89 -21% 119 87 37% 87 54 61% Total operating revenues (including intersegment revenues) ...... 1,268 1,170 8% 1,589 1,354 17% 1,354 1,274 6% Adjusted EBITDA ...... 578 532 9% 704 615 14% 615 640 -4%

All other Nine Months Ended September 30, Year Ended December 31, % % % 2012 2011 Change 2011 2010 Change 2010 2009 Change (US$ in millions, except % change) Total operating revenues from external customers ...... 50 40 25% 62 22 182% 22 5 340% Intersegment revenues ...... – – N/A – – N/A – – N/A Total operating revenues (including intersegment revenues) ...... 50 40 25% 62 22 182% 22 5 340% Adjusted EBITDA ...... (10) (56) (NM) (76) (35) (NM) (35) (38) (NM)

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011

Total Operating Revenues Our consolidated total operating revenues increased by 2.0% to US$9,186 million during the first nine months of 2012 from US$9,003 million during the first nine months of 2011 primarily due to an increase in total operating revenues in the CIS. The following discussion of revenues by reportable segments includes intersegment revenues. Our management assesses the performance of each reportable segment on this basis as it believes the inclusion of intersegment revenues better reflects the true performance of each segment on a stand- alone basis.

Russia Our total operating revenues in Russia increased by 0.4% to US$6,819 million during the first nine months of 2012 from US$6,791 million during the first nine months of 2011. Our Russia total operating revenues consist primarily of service revenues. Our mobile total operating revenues in Russia decreased by 0.2% to US$5,648 million during the first nine months of 2012 from US$5,658 million during the first nine months of 2011, primarily due to exchange rate fluctuations. In functional currency terms, our mobile total operating revenues increased by 8.0% during the first nine months of 2012 compared to the same period in 2011. During the first nine months of 2012, we generated US$2,918 million of our service revenues in the Russia segment from airtime charges from mobile contract and prepaid subscribers, including a portion of monthly contract fees, or 51.7% of mobile total operating revenues in the Russia segment, compared to

76 US$3,167 million, or 56.1% of mobile total operating revenues in the first nine months of 2011. The 7.9% decrease in voice service revenues was primarily caused by depreciation of the Russian rouble against the U.S. dollar. In functional currency terms, our voice service revenues from airtime charges from mobile contract and prepaid subscribers, including monthly contract fees, in our Russia segment decreased slightly by 0.2% in the first nine months of 2012 compared to the first nine months of 2011 due to a decrease in active subscribers. During the first nine months of 2012, we generated US$1,411 million of our service revenues in the Russia segment from value added services including data revenue, or 25.0% of mobile total operating revenues in the Russia segment, compared to US$1,169 million, or 20.7% of mobile total operating revenues in the first nine months of 2011. The 20.8% increase in our value added services revenues was the result of an increase in mobile subscribers using Internet access and overall consumption of Internet services due to increasing demand for data. During the first nine months of 2012, we generated US$858 million of our service revenues in the Russia segment from interconnect, or 15.2% of mobile total operating revenues in the Russia segment, compared to US$869 million, or 15.4% of mobile total operating revenues in the first nine months of 2011. The 1.3% decrease in interconnect revenues was primarily due to the devaluation of the Russian rouble relative to the U.S. dollar. In functional currency terms, revenues from interconnect increased by 6.9%. During the first nine months of 2012, we generated US$237 million of our service revenues in our Russia segment from roaming fees generated by our Russian mobile subscribers and roaming fees received from other mobile services operators for providing roaming services to their subscribers, or 4.2% of mobile total operating revenues in our Russia segment, compared to US$285 million or 5% of mobile total operating revenues in the first nine months of 2011. The 16.7% decrease in service revenues from roaming fees during the first nine months of 2012 compared to the first nine months of 2011 was primarily due to decreasing revenue from guest roaming as a result of lower prices for such services. In functional currency terms, our Russia segment service revenues from roaming decreased by 9.6% during the first nine months of 2012 compared to the first nine months of 2011. Our total operating revenues in the Russia segment also included revenues from sales of equipment and accessories. During the first nine months of 2012, revenues from sales of equipment and accessories increased by 34.4% to US$213 million from US$159 million during the first nine months of 2011 and increased to 3.1% of total operating revenues in the first nine months of 2012 from 2.3% in the first nine months of 2011, as a result of increased sales of devices (such as iPhones and USB modems). In functional currency terms, sales of equipment and accessories in our Russia segment sales increased by 44.7% during the first nine months of 2012 compared to the first nine months of 2011. During the first nine months of 2012, revenues from our fixed-line services in Russia increased by 3.5% to US$1,172 million from US$1,132 million in the first nine months of 2011. Our revenues from fixed-line services in Russia in the first nine months of 2012 consisted of US$473 million generated from business operations, US$398 million generated from wholesale operations and US$300 million generated from residential operations. In functional currency terms, our total operating revenues from our Russia fixed-line services increased by 11.8% during the first nine months of 2012 compared to the first nine months of 2011, primarily due to the expansion of FTTB operations.

Ukraine Our Ukraine total operating revenues increased by 2% to US$1,244 million during the first nine months of 2012 from US$1,224 million during the first nine months of 2011, as a result of growth in both mobile and fixed-line revenue streams. Our mobile total operating revenues in Ukraine increased by 1% to US$1,143 million during the first nine months of 2012 from US$1,135 million during the first nine months of 2011, primarily due to growth in value added services. During the first nine months of 2012, we generated US$706 million of our service revenues in the Ukraine segment from airtime charges from mobile contract and prepaid subscribers, including a portion of monthly contract fees, or 62% of mobile total operating revenues in our Ukraine segment, compared to US$732 million, or 64% of mobile total operating revenues in the first nine months of 2011. The 4% decrease was primarily due to a corresponding decline in mobile ARPU resulting from the organic migration of high-ARPU customers to lower-cost bundled offerings. During the first nine months of 2012, we generated US$164 million of our service revenues in the Ukraine segment from value added services, including data revenue, or 14% of mobile total operating revenues in our Ukraine segment, compared to US$147 million, or 13% of mobile total operating revenues in the first nine months of 2011. The 12% increase in our value added services revenues was primarily due to the increase in mobile subscribers and overall growth consumption of internet and messaging services.

77 During the first nine months of 2012, we generated US$206 million of our service revenues in the Ukraine segment from interconnect, or 18% of mobile total operating revenues in the Ukraine segment, compared to US$197 million, or 17% of mobile total operating revenues in the first nine months of 2011. The 5% increase was primarily due to the growth in incoming traffic volume. During the first nine months of 2012, we generated US$41 million of our service revenues in our Ukraine segment from roaming fees generated by our Ukraine mobile subscribers and roaming fees received from other mobile services operators for providing roaming services to their subscribers, or 4% of mobile total operating revenues in our Ukraine segment, compared to US$52 million or 5% of our mobile total operating revenues in the first nine months of 2011. The 21% decrease in service revenues from roaming fees during the first nine months of 2012 compared to the first nine months of 2011 was primarily due to decreasing revenue from guest roaming on the back of new agreements with roaming partners in 2012, under which tariffs were decreased simultaneously by our Ukraine segment for guest roamers and by our partners for our Ukraine subscribers in roaming. Our total operating revenues in the Ukraine segment also included revenues from sales of equipment and accessories. During the first nine months of 2012, revenues from sales of equipment and accessories increased to US$21 million from US$2 million during the first nine months of 2011 and increased to 1.7% of total operating revenues in the first nine months of 2012 from 0.2% in the first nine months of 2011, primarily as a result of increased sales of smartphones. Our total operating revenues in the Ukraine segment also included other revenues which decreased slightly to US$0.9 million during the first nine months of 2012 from US$1.0 million in the first nine months of 2011. Our revenues from fixed-line services in Ukraine increased by 11% to US$100 million in the first nine months of 2012 from US$90 million in the first nine months of 2011, mainly due to an increase in the residential revenue stream. Our revenues from fixed-line services in the first nine months of 2012 consisted of US$36 million generated from business operations, US$39 million generated from wholesale operations and US$25 million generated from residential operations, increasing by 13%, decreasing by 7% and increasing by 67% in comparison with the first nine months of 2011, respectively. The significant increase in residential revenue was driven by corresponding growth in the residential broadband (including FTTB) subscriber base.

CIS Our CIS total operating revenues increased by 8.4% to US$1,268 million during the first nine months of 2012 from US$1,170 million during the first nine months of 2011. Our CIS total operating revenues consist of revenues from providing mobile services as well as fixed-line services. In the CIS segment, revenues from mobile services increased by 10.5% to US$1,154 million during the first nine months of 2012 from US$1,044 million during the first nine months of 2011 primarily due to an increase in voice revenue and revenue from interconnection fees. During the first nine months of 2012, we generated US$751.4 million of our service revenues in the CIS segment from airtime charges from mobile contract and prepaid subscribers, including a portion of monthly contract fees and roaming fees, and roaming fees received from other mobile service operators for providing roaming services to their subscribers, or 65.1% of our mobile total operating revenues in the CIS segment, compared to US$692.8 million, or 66.3% of our mobile total operating revenues in the CIS in the first nine months of 2011. The 8.5% increase during the first nine months of 2012 compared to the first nine months of 2011 was primarily due to an increase in voice revenue as a result of subscriber base growth. During the first nine months of 2012, we generated US$206.6 million of our service revenues in the CIS segment from interconnect fees, or 17.9% of our mobile total operating revenues in the CIS segment, compared to US$187.6 million, or 18.0% of our mobile total operating revenues in the CIS segment in the first nine months of 2011. The 10.1% increase in the first nine months of 2012 compared to the first nine months of 2011 was primarily due to an increase in inbound traffic in all CIS countries. During the first nine months of 2012, we generated US$181.8 million of our service revenues in the CIS segment from value added services, including data revenue, or 15.8% of mobile total operating revenues in the CIS segment, compared to US$138.6 million, or 13.3% of mobile total operating revenues in the CIS segment in the first nine months of 2011. The 31.1% increase in the first nine months of 2012 compared to the first nine months of 2011 was primarily due to a 64.6% increase in data revenue.

78 Our mobile total operating revenues in the CIS also included revenues from sales of equipment and accessories and other revenues. During the first nine months of 2012, revenues from sales of equipment and accessories and other revenues decreased to US$13.9 million from US$25.2 million during the first nine months of 2011 primarily due to a decrease in sales of equipment and accessories in line with our strategy to decrease the volume of sales of devices with low margins. Our total operating revenues from fixed-line services in the CIS decreased by 9.4% to US$113.7 million in the first nine months of 2012 from US$125.6 million in the first nine months of 2011. The decrease was primarily due to a decrease in revenues in the wholesale operations. In the first nine months of 2012, US$31.2 million of CIS fixed revenues were generated from our business operations, US$28.8 million from wholesale operations and US$53.7 million from residential operations, increasing by 25.6% in business operations, decreasing by 44.4% in wholesale operations and increasing by 9.8% in residential operations in comparison with the first nine months of 2011, respectively. Residential revenues increased primarily due to an increase in fixed- line broadband subscribers.

All other In the first nine months of 2012, total operating revenues in the “All other” segment were US$48 million compared to US$45 million in the first nine months of 2011. Our “All other” operating revenues consist mostly of operating revenues in Cambodia, Laos and Vietnam (until its disposal in April 2012). During the first nine months of 2012, in the “All other” segment US$20 million of our service revenues, or 41.7% of our mobile total operating revenues in the “All other” segment, were from airtime charges from mobile prepaid subscribers and a portion of monthly contract fees, compared to US$17.4 million, or 38.7% of mobile total operating revenues in the segment in the first nine months of 2011. The 14.9% increase during the first nine months of 2012 compared to the first nine months of 2011 was primarily due to increase in airtime charges from mobile prepaid subscribers and monthly contact fees from subscribers of our subsidiary in Laos. During the first nine months of 2012, in the “All other” segment US$12.2 million of our service revenues, or 25.4% of our mobile total operating revenues in the segment, were from interconnect fees, compared to US$11.9 million, or 26.4% of total operating revenues in the segment in the first nine months of 2011. The 2.5% increase during the first nine months of 2012 compared to the first nine months of 2011 was primarily due to an increase in interconnect fees at our subsidiary in Laos. During the first nine months of 2012, US$13.6 million of our service revenues, or 28.3% of our total operating revenues in the “All other” segment, were from other services, including connection charges, value added services, data revenue and roaming revenue, compared to US$13.6 million, or 30.2% of our total operating revenues in the segment in the first nine months of 2011. During the first nine months of 2012, revenues from sales of equipment and accessories were US$1.8 million or 3.8% of total operating revenues in the “All other” segment, compared to US$1.4 million, or 3.1% of total operating revenues in the segment in the first nine months of 2011. The 28.6% increase during the first nine months of 2012 compared to the first nine months of 2011 was primarily due to an increase in sales of equipment and accessories in Vietnam prior to our disposal of the Vietnamese business in April 2012.

Total Operating Expenses Our consolidated total operating expenses increased by 0.1% to US$6,830 million during the first nine months of 2012 from US$6,821 million during the first nine months of 2011, and represented 74% and 76% of total consolidated operating revenues in the first nine months of 2012 and the first nine months of 2011, respectively. This increase was primarily due to an increase in operating expenses in Russia, Ukraine and the CIS.

Service costs Our consolidated service costs decreased by 9.4% to US$1,918 million during the first nine months of 2012 from US$2,118 million during the first nine months of 2011. As a percentage of consolidated total operating revenues, our service costs decreased to 21% during the first nine months of 2012 from 24% during the first nine months of 2011. Service costs in Russia increased by 2.3% to US$1,886 million in the first nine months of 2012 from US$1,843 million in the first nine months of 2011 primarily due to growth in traffic and sales of content as well as the expansion of our network. In functional currency terms, our total service costs in Russia increased by 11% during the first nine months of 2012 compared to the first nine months of 2011 primarily due to increase in off-net traffic.

79 Service costs in Ukraine increased by 6.0% to US$212 million in the first nine months of 2012 from US$200 million in the first nine months of 2011. The increase was primarily due to higher mobile interconnect cost driven by increased volume of outgoing off-network voice traffic. Service costs in the CIS segment increased by 6.5% to US$297 million in the first nine months of 2012 from US$279 million in the first nine months of 2011. The increase was primarily due to an increase in interconnect costs driven by higher outgoing traffic. In the first nine months of 2012, service costs in our “All other” segment decreased by 0.7% to US$14.2 million from US$14.3 million in the first nine months of 2011. The decrease was insignificant.

Cost of equipment and accessories Our consolidated cost of equipment and accessories decreased by 0.8% to US$245 million in the first nine months of 2012 from US$247 million in the first nine months of 2011. This decrease was primarily due to an decrease in sales of equipment and accessories in the CIS.

Selling, general and administrative expenses Our consolidated selling, general and administrative expenses increased by 7.9% to US$2,933 million during the first nine months of 2012 from US$2,719 million during the first nine months of 2011. This increase was primarily due to an increase in expenses in the Russia segment. As a percentage of consolidated total operating revenues, our consolidated selling, general and administrative expenses increased to 32% in the first nine months of 2012 from 30% in the first nine months of 2011. Selling, general and administrative expenses in the Russia segment decreased by 6.5% to US$1,793 million in the first nine months of 2012 from US$1,917 million in the first nine months of 2011. As a percentage of total operating revenues in the Russia segment, selling, general and administrative expenses decreased by 1.9 percentage points in the first nine months of 2012 compared to the first nine months of 2011. This overall decrease was driven by a lower level of sales and sales expenses for mobile operations. Selling, general and administrative expenses in the Ukraine segment increased by 6% to US$376 million in the first nine months of 2012 from US$355 million in the first nine months of 2011. As a percentage of total operating revenues in the Ukraine segment, selling, general and administrative expenses increased by 1.2% in the first nine months of 2012 compared to the first nine months of 2011. The overall increase in selling, general and administrative expenses was mainly due to higher technical costs as a result of increased frequency fees and inflation, and increased sales and marketing costs driven by higher sales. Selling, general and administrative expenses in the CIS segment increased by 13.7% to US$361.4 million in the first nine months of 2012 from US$317.8 million in the first nine months of 2011. As a percentage of total operating revenues in the CIS segment, selling, general and administrative expenses increased by 1.2 percentage points in the first nine months of 2012 compared to the first nine months of 2011. This overall increase was driven primarily by higher sales and marketing costs due to increase in sales and by technical costs due to an increase in number of base station sites. Selling, general and administrative expenses in the “All other” segment decreased by 48.1% to US$43.9 million in the first nine months of 2012 from US$84.6 million in the first nine months of 2011. As a percentage of total operating revenues in the “All other” segment, selling, general and administrative expenses decreased by 96.5% in the first nine months of 2012 compared to the first nine months of 2011. The overall decrease in selling, general and administrative expenses was driven by higher 2011 costs related to the consolidation of GTEL-Mobile starting in April 2011.

Adjusted EBITDA and Adjusted EBITDA Margin Our consolidated adjusted EBITDA increased by 4.4% to US$4,090 million during the first nine months of 2012 from US$3,919 million during the first nine months of 2011, primarily due to increase of adjusted EBITDA in Russia and CIS.

Russia Our Russia adjusted EBITDA increased by 3.7% to US$2,901 million during the first nine months of 2012 from US$2,797 million during the first nine months of 2011. In functional currency terms, our Russia adjusted EBITDA increased by 12.2%, primarily as a result of improved gross margin which was partially offset by a slight increase in sales, general and administrative expenses. In functional currency terms, adjusted EBITDA margin in the first nine months of 2012 in Russia was 1.4 percentage points above adjusted EBITDA margin in the first nine months of 2011, primarily due to a substantial decrease in sales, general and administrative expenses as a result of measures we introduced as part of our operational excellence program to reduce costs.

80 Ukraine Our Ukraine adjusted EBITDA decreased by 5% to US$632 million during the first nine months of 2012 from US$663 million during the first nine months of 2011, primarily due to 6% higher service cost and growth in selling, general and administrative expenses driven by higher network-related electricity costs and frequency fees. In the first nine months of 2012, adjusted EBITDA margin in our Ukraine segment was 51%, which was 3.3 percentage points lower than in the first nine months of 2011.

CIS Our CIS adjusted EBITDA increased by 8.6% to US$578 million during the first nine months of 2012 from US$532 million during the first nine months of 2011, primarily due to organic growth in the CIS market. CIS adjusted EBITDA margin was 45.6% in the first nine months of 2012, 0.1 percentage points higher than in the first nine months of 2011, primarily due to cost control efforts to maintain operational efficiency.

All other Our adjusted EBITDA in our “All other” segment was negative US$10.0 million during the first nine months of 2012 compared to negative US$55.8 million during the first nine months of 2011. The decrease in negative adjusted EBITDA was primarily due to 2011 costs related to the acquisition of an additional stake in GTEL-Mobile in April 2011.

Depreciation and amortization expenses Our consolidated depreciation and amortization expenses decreased by 4.4% to US$1,613 million in the first nine months of 2012 from US$1,687 million in the first nine months of 2011. The overall decrease in depreciation and amortization expenses was primarily the result of depreciation of local currencies, mainly in Russia.

Impairment Loss Our consolidated impairment loss was nil in the first nine months of 2012 and 2011.

Loss on Disposals of Non-current Assets Our consolidated loss on disposals of non-current assets increased by 142% to US$121 million during the first nine months of 2012 from US$50 million during the first nine months of 2011 primarily due to dismantling of equipment in Russia as well as Ukraine as part of the merger of Kyivstar and URS.

Operating Profit Our consolidated operating profit increased by 8.0% to US$2,356 million in the first nine months of 2012 from US$2,182 million in the first nine months of 2011 primarily as a result of increased operating revenues which more than offset an increase in operating expenses. Our total operating profit as a percentage of total operating revenues in the first nine months of 2012 increased to 26% from 24% in the first nine months of 2011, primarily as a result of the decreased total operating expenses as a percentage of total operating revenues.

Other Non-operating Profits and Losses Finance costs and finance income. Our consolidated finance costs increased by 29.2% to US$1,216 million in the first nine months of 2012 from US$941 million in the first nine months of 2011, primarily due to an increase of the interest rate on the Outstanding Promissory Note. Our consolidated finance income increased by 59.3% to US$290 million in the first nine months of 2012 from US$182 million in the first nine months of 2011, primarily due to an increase in the loans granted to VimpelCom Ltd. Group companies that are not members of our group. Other non-operating losses. We recorded US$25 million in losses during the first nine months of 2012 compared to US$99 million loss during the first nine months of 2011. The change was primarily due to the Crowell loan remeasurement and provisions for other contingencies. For a description of the Crowell loan, please refer to note 2 to our audited consolidated financial statements included elsewhere in this prospectus. Shares of profit of associates and joint ventures accounted for using the equity method. We recorded a gain of US$62 million from our equity in associates in the first nine months of 2012 compared to a gain of US$33 million in for the first nine months of 2011. The increase was primarily due to an increase in income recognized from Euroset.

81 Net foreign exchange (loss)/gain. We recorded a US$67 million foreign currency exchange gain in the first nine months of 2012 compared to a US$170 million foreign currency exchange gain in the first nine months of 2011. The change was primarily due to the appreciation of Russian rouble against the U.S. dollar during the first nine months of 2011. Income tax expense. Our consolidated income tax expense decreased by 0.8% to US$528 million in the first nine months of 2012 from US$532 million in the first nine months of 2011. The decrease in income taxes was primarily due to a decrease in the income tax rate in Ukraine. This also led to the decrease in our effective income tax rate (calculated as income tax expense divided by profit before tax) to 34% in the first nine months of 2012 from 35% in the first nine months of 2011. Our effective income tax rate for the first nine months of 2011 was 35% compared to an effective tax rate 51% for full year 2011 due to recognition of an impairment expense with respect to our operations in Vietnam and Cambodia as a result of an impairment test performed during the fourth quarter of 2011.

Profit for the Period Attributable to Non-controlling Interest Our profit for the period attributable to non-controlling interest was US$38 million in the first nine months of 2012 compared to US$28 million in the first nine months of 2011, primarily due to an increase in profit for the period attributable to the non-controlling interest in Kazakhstan.

Profit for the Period Attributable to the Owners of the Parent In the first nine months of 2012, consolidated profit for the period attributable to the owners of the parent was US$968 million compared to US$967 million in the first nine months of 2011.

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010 Our consolidated total operating revenues increased by 14.7% to US$12,063 million during 2011 from US$10,513 million during 2010 primarily due to the acquisition of Kyivstar in April 2010. The following discussion of revenues by reportable segments includes intersegment revenues. Our management assesses the performance of each reportable segment on this basis as it believes the inclusion of intersegment revenues better reflects the true performance of each segment on a stand-alone basis.

Russia Our total operating revenues in Russia increased by 11.1% to US$9,064 million during 2011 from US$8,161 million during 2010. Our Russia total operating revenues consist primarily of service revenues. Our mobile total operating revenues in Russia increased by 10.6% to US$7,550 million during 2011 from US$6,826 million during 2010, primarily due to an increase in voice service revenue, value added services and revenue from interconnect. During 2011, we generated US$4,166 million of our voice service revenues in the Russia segment from airtime charges from mobile contract and prepaid subscribers, including monthly contract fees, or 55.2% of our mobile total operating revenues in our Russia segment, compared to US$4,028 million, or 59% of our mobile total operating revenues in 2010. The 3.4% increase in voice service revenues was primarily caused by the appreciation of the Russian rouble against the U.S. dollar in 2011. In functional currency terms, our voice service revenues from airtime charges from mobile contract and prepaid subscribers, including monthly contract fees, in our Russia segment decreased by 0.2% in 2011 compared to 2010. During 2011, we generated US$1,597 million of our service revenues in the Russia segment from value added services, or 21.2% of our mobile total operating revenues in our Russia segment, compared to US$1,281 million, or 18.8% of our mobile total operating revenues in 2010. The 24.7% increase in our value added services revenues was due to an increase in mobile subscribers using Internet access and overall consumption of Internet services due to increasing demand for data. During 2011, we generated US$1,152 million of our service revenues in the Russia segment from interconnect, or 15.3% of our mobile total operating revenues in the Russia segment, compared to US$987 million, or 14.5% of our mobile total operating revenues in 2010. The 16.7% increase in interconnect revenues was primarily due to growth in inbound traffic and an appreciation of the Russian rouble against the U.S. dollar. During 2011, we generated US$356 million of our service revenues in the Russia segment from roaming fees generated by our Russian mobile subscribers and roaming fees received from other mobile services operators for providing roaming services to their subscribers, or 4.7% of our mobile total operating revenues in our Russia segment, compared to US$344 million or 5% of our mobile total operating revenues in 2010. The 3.5% increase in service revenues from roaming fees during 2011 compared to 2010 was primarily due to the

82 appreciation of the Russian rouble against the U.S. dollar. In functional currency terms, our Russia segment service revenues from roaming decreased by 0.5% during 2011 compared to 2010. Our mobile total operating revenues in the Russia segment also included revenues from sales of equipment and accessories. During 2011, revenues from sales of equipment and accessories increased by 48.0% to US$253 million from US$171 million during 2010 and increased to 3.4% of our mobile total operating revenues in 2011 from 2.5% in 2010, as a result of increased sales of devices (including iPhones). In functional currency terms, sales of equipment and accessories in our Russia segment increased by 44.4% during 2011 compared to 2010. During 2011, revenues from our fixed-line services in Russia increased by 13.3% to US$1,514 million from US$1,336 million in 2010. Our revenues from fixed-line services in Russia in 2011 consisted of US$636 million generated from business operations, US$540 million generated from wholesale operations and US$338 million generated from residential operations. In functional currency terms, our total operating revenues from our Russia fixed-line services increased by 9.8% during 2011 compared to 2010, primarily due to increases in FTTB operations.

Ukraine Our Ukraine total operating revenues increased by 38.5% to US$1,641 million during 2011 from US$1,185 million during 2010, primarily due to the full year of consolidation of Kyivstar’s operations in 2011 in comparison with partial year consolidation in 2010 due to the acquisition of Kyivstar in April 2010, as well as improvement in mobile and fixed-line operations. Our revenues from mobile services in Ukraine increased by 39.3% to US$1,519 million during 2011 from US$1,090 million during 2010, primarily due to full year of consolidation of Kyivstar’s mobile operations in 2011 in comparison with partial year consolidation in 2010 due to the full year consolidation of Kyivstar starting in April 2010, as well as improvement in all mobile revenue streams. During 2011, we generated US$1,042 million of our service revenues in the Ukraine segment from airtime charges from mobile postpaid and prepaid subscribers, including monthly contract fees and roaming fees, and roaming fees received from other mobile services operators for providing roaming services to their subscribers, or 68.6% of mobile total operating revenues in our Ukraine segment, compared to US$783 million, or 71.8% of mobile total operating revenues in 2010. The 33.1% increase was primarily due to the full year of consolidation of Kyivstar’s mobile operations in 2011 in comparison with partial year consolidation in 2010 due to the acquisition of Kyivstar in April 2010, as well as due to increased use of bundled products, resulting in increased usage and revenue from voice. During 2011, we generated US$199 million of our service revenues in the Ukraine segment from value added services including data revenue, or 13.1% of mobile total operating revenues in our Ukraine segment, compared to US$116 million, or 10.6% of mobile total operating revenues in 2010. The 71.6% increase in our value added services revenues was primarily due to the full year of consolidation of Kyivstar’s mobile operations in 2011 in comparison with partial year consolidation in 2010 due to the acquisition of Kyivstar in April 2010, as well as increase in mobile subscribers using internet access and overall consumption of internet services due to increasing demand for data. During 2011, we generated US$265 million of our service revenues in the Ukraine segment from interconnect, or 17.4% of mobile total operating revenues in the Ukraine segment, compared to US$185 million, or 17.0% of mobile total operating revenues in 2010. The 43.2% increase was primarily due to the full year of consolidation of Kyivstar’s mobile operations in 2011 in comparison with partial year consolidation in 2010 due to the acquisition of Kyivstar in April 2010, as well as a result of increased incoming traffic. Our mobile total operating revenues in the Ukraine segment also included revenues from sales of equipment and accessories and other revenues. During 2011, revenues from sales of equipment and accessories and other revenues increased to US$8 million from US$4 million during 2010 and increased to 0.5% of mobile total operating revenues in 2011 from 0.4% in 2010, primarily as a result of the full year of consolidation of Kyivstar’s operations in 2011 in comparison with partial year consolidation in 2010 due to the acquisition of Kyivstar in April 2010, as well as increased equipment sales. Our revenues from fixed-line services in Ukraine increased by 28.4% to US$122 million in 2011 from US$95 million in 2010, primarily due to an increase in wholesale and residential revenue streams. Our revenues from fixed-line services in 2011 consisted of US$44 million generated from business operations, US$57 million generated from wholesale operations and US$21 million generated from residential operations, increasing by 7.3%, 39.0% and 61.5% in comparison with 2010, respectively. Wholesale revenues increased primarily due to a higher volume of expensive international traffic, and residential revenues increased due to almost doubling the number of broadband subscribers.

83 CIS Our CIS total operating revenues increased by 17.4% to US$1,589 million during 2011 from US$1,354 million during 2010. Our CIS total operating revenues consist of revenues from providing mobile services as well as fixed-line services. In the CIS segment, revenues from mobile services increased by 18.8% to US$1,425 million during 2011 from US$1,200 million during 2010. During 2011, we generated US$923 million of our service revenues in the CIS segment from airtime charges from mobile contract and prepaid subscribers, including monthly contract fees and roaming fees, and roaming fees received from other mobile service operators for providing roaming services to their subscribers, or 64.8% of our mobile total operating revenues in the CIS segment, compared to US$841 million, or 70.1% of our mobile total operating revenues in the CIS in 2010. The 9.8% increase during 2011 compared to 2010 was primarily due to an increase in the number of mobile subscribers, partially offset by a decrease in mobile ARPU. During 2011, we generated US$260 million of our service revenues in the CIS segment from interconnect fees, or 18.2% of our mobile total operating revenues in the CIS segment, compared to US$209 million, or 17.4% of our mobile total operating revenues in the CIS segment in 2010. The 24.4% increase in 2011 compared to 2010 was primarily due to an increase in inbound traffic in all CIS countries. During 2011, we generated US$195 million of our service revenues in the CIS segment from value added services, including data revenue, or 13.7% of our mobile total operating revenues in the CIS segment, compared to US$142 million, or 11.8% of our mobile total operating revenues in the CIS segment in 2010. The 37.3% increase in 2011 compared to 2010 was primarily due to increase in mobile subscribers using internet access and overall consumption of internet services due to the increased demand for data. Our mobile total operating revenues in the CIS also included revenues from sales of equipment and accessories and other revenues. During 2011, revenues from sales of equipment and accessories and other revenues increased to US$47 million from US$7 million during 2010 primarily due to an increase of sale of devices to encourage higher use of our services. Our total operating revenues from fixed-line services in the CIS increased by 6.5% to US$164 million in 2011 from US$154 million in 2010. The increase was primarily due to an increase in revenues from residential operations. In 2011, US$33 million of CIS fixed revenues were generated from our business operations, US$65 million from wholesale operations and US$66 million from residential operations, increasing by 3.1%, 0.0% and 15.8% in comparison with 2010, respectively. Residential revenues increased primarily due to an increase in the number of fixed-line broadband subscribers.

All other In 2011, total operating revenues in the “All other” segment were US$62 million compared to US$22 million in 2010. Our “All other” operating revenues consist mostly of operating revenues in Cambodia, Laos and Vietnam. During 2011, in the “All other” segment US$26 million of our service revenues, or 42% of our total operating revenues in the “All other” segment, were from airtime charges from mobile prepaid subscribers and partly of monthly contract fees, compared to US$15 million, or 68% of total operating revenues in the segment in 2010. The 73% increase during 2011 compared to 2010 was primarily due to our acquisition of VimpelCom Lao (Laos) and an increase in our ownership stake in GTEL-Mobile (Vietnam) leading to our consolidation of its operations. During 2011, in the “All other” segment US$16 million of our service revenues, or 24% of our mobile total operating revenues in the “All other” segment, were from interconnect fees, compared to US$4 million, or 18% of our mobile total operating revenues in the segment in 2010. The 300% increase during 2011 compared to 2010 was primarily due to our acquisition of VimpelCom Lao (Laos) and an increase in our ownership stake in GTEL-Mobile (Vietnam) leading to our consolidation of its operations. During 2011, US$21 million of our service revenues, or 34% of our mobile total operating revenues in the “All other” segment, were from other services, including connection charges, data revenue, roaming and value added services, compared to US$3 million, or 14% of total operating revenues in the segment in 2010. The 600% increase during 2011 compared to 2010 was primarily due to our acquisition of VimpelCom Lao (Laos) and an increase in our ownership stake in GTEL-Mobile (Vietnam) leading to our consolidation of its operations. During 2011, revenues from sales of equipment and accessories were US$5 million or 8% of total operating revenues in the “All other” segment, compared to US$1 million, or 5% of total operating revenues in

84 the segment in 2010. The 400% increase during 2011 compared to 2010 was primarily due to our acquisition of VimpelCom Lao (Laos) and an increase in our ownership stake in GTEL-Mobile (Vietnam) leading to our consolidation of its operations.

Total Operating Expenses Our consolidated total operating expenses increased by 28.0% to US$9,810 million during 2011 from US$7,666 million during 2010, and represented 81% and 73% of total consolidated operating revenues in 2011 and 2010, respectively. This increase was primarily due to recognition during 2011 of an impairment charge in relation to our operations in Vietnam and Cambodia, and increase during 2011 of service costs, cost of equipment and accessories, selling, general and administrative expenses and depreciation compared to 2010 as a result of the consolidation of Kyivstar starting in April 2011.

Service costs Our consolidated service costs increased by 27.1% to US$2,860 million during 2011 from US$2,250 million during 2010. As a percentage of consolidated total operating revenues, our service costs increased to 24% during 2011 from 21% during 2010 primarily due to an increase in service costs in Russia. Service costs in Russia increased by 29.3% to US$2,478 million in 2011 from US$1,917 million in 2010 primarily due to growth of traffic. In functional currency terms, our total service costs in Russia increased by 24.9% during 2011 compared to 2010. Service costs in Ukraine increased by 159% to US$223 million in 2011 from US$86 million in 2010. The increase was primarily due to the full year consolidation of Kyivstar, which was acquired in April 2010. Service costs in the CIS increased by 18.1% to US$382.7 million in 2011 from US$324.1 million in 2010. The increase was primarily due to development in CIS market resulted in an increase in the scale of our CIS operations. In 2011, service costs in our “All other” segment increased by 100% to US$20 million from US$10 million in 2010. The increase in service costs was primarily due to our acquisition of VimpelCom Lao (Laos) and an increase in our ownership stake in GTEL-Mobile (Vietnam) leading to our consolidation of its operations.

Cost of equipment and accessories Our consolidated cost of equipment and accessories increased by 79.7% to US$390 million in 2011 from US$217 million in 2010. This increase was primarily due to an increase in sales of equipment and accessories (especially USB modems and branded phones) in Russia.

Selling, general and administrative expenses Our consolidated selling, general and administrative expenses increased by 18.3% to US$3,701 million during 2011 from US$3,129 million during 2010. This increase was primarily due to an increase in selling, general and administrative expenses in the Russia segment. As a percentage of consolidated total operating revenues, our consolidated selling, general and administrative expenses increased to 31% in 2011 from 30% in 2010. Selling, general and administrative expenses in the Russia segment increased by 16.2% to US$2,592 million in 2011 from US$2,230 million in 2010. As a percentage of total operating revenues in the Russia segment, selling, general and administrative expenses increased by 1.3% in 2011 compared to 2010. This overall increase was driven by growth of payroll tax rates and increased sales. Selling, general and administrative expenses in the Ukraine segment increased by 38% to US$464 million in 2011 from US$336 million in 2010. As a percentage of total operating revenues in the Ukraine segment, selling, general and administrative expenses decreased by 0.1% in 2011 compared to 2010. The overall increase in selling, general and administrative expenses was primarily due our acquisition of Kyivstar in April 2010 as well as higher technical support expenses as a result of increased statutory frequency fee and inflation. Selling, general and administrative expenses in the CIS segment increased by 11.6% to US$443.0 million in 2011 from US$397.1 million in 2010. As a percentage of total operating revenues in the CIS segment, selling, general and administrative expenses decreased by 1.4% in 2011 compared to 2010. This overall decrease was driven by a cost optimization program in our operating companies. Selling, general and administrative expenses in the “All other” segment increased by 147% to US$116 million in 2011 from US$47 million in 2010. As a percentage of total operating revenues in the “All other” segment, selling, general and administrative expenses decreased by 27% in 2011 compared to 2010. The overall increase in selling, general and administrative expenses was driven by our acquisition of VimpelCom Lao (Laos) and an increase in our ownership stake in GTEL-Mobile (Vietnam) leading to our consolidation of its operations.

85 Depreciation and amortization expenses Our consolidated depreciation and amortization expenses increased by 11.6% to US$2,256 million in 2011 from US$2,022 million in 2010. The overall increase in depreciation and amortization expenses was primarily the result of the consolidation of Kyivstar starting in April 2010.

Impairment Loss Our consolidated impairment loss was US$526 million in 2011 in comparison with no impairment in 2010. The loss primarily related to our businesses in Cambodia and Vietnam. We recorded goodwill impairment of US$126 million and impairment of property and equipment of US$223 million and telecommunication licenses of US$143 million as well as other assets of US$34 million.

Loss on Disposals of Non-current Assets Our consolidated loss on disposals of non-current assets increased by 60.4% to US$77 million during 2011 from US$48 million during 2010 primarily due to an increase in equipment dismantling in Russia.

Adjusted EBITDA and Adjusted EBITDA Margin Our consolidated adjusted EBITDA increased by 2.9% to US$5,115 million during 2011 from US$4,970 million during 2010, primarily due to an increase in operating revenues which more than offset the increase in service costs, cost of equipment and accessories and selling, general and administrative expenses.

Russia Our Russia adjusted EBITDA decreased by 3.6% to US$3,641 million during 2011 from US$3,775 million during 2010. In functional currency terms, our Russia adjusted EBITDA decreased by 6.9%, primarily as a result of flat gross margin and increased selling, general and administrative expenses. In functional currency terms, adjusted EBITDA margin in 2011 in Russia was 6.1 percentage points lower than in 2010, primarily due to an increase in selling, general and administrative expenses.

Ukraine Our Ukraine adjusted EBITDA increased by 38.8% to US$873 million during 2011 from US$629 million during 2010, primarily due to the full year of consolidation of Kyivstar’s mobile operations in 2011 in comparison with partial year consolidation in 2010 due to the acquisition of Kyivstar in April 2010. In 2011, adjusted EBITDA margin in our Ukraine segment was 53.2%, which was in line with 2010.

CIS Our CIS adjusted EBITDA increased by 14.3% to US$703 million during 2011 from US$615 million during 2010, primarily due to organic growth in the CIS market. CIS adjusted EBITDA margin was 44.2% in 2011, 1.2 percentage points lower than in 2010, primarily due to an increase in growth of low-margin handset sales to stimulate the usage of services and a decrease in prices in response to increased competition.

All other In 2011, our adjusted EBITDA in the “All other” segment was negative US$76 million compared to negative US$35 million in 2010. The change in negative adjusted EBITDA was caused by our continued development of our business in South-East Asia, including network roll-out, sales, marketing activities and consolidation of GTEL-Mobile operations with negative EBITDA in 2011.

Operating Profit Our consolidated operating profit decreased by 20.9% to US$2,253 million in 2011 from US$2,847 million in 2010 primarily as a result of the increase in operating expenses, which grew at a faster rate than operating revenues. Our total operating profit as a percentage of total operating revenues in 2011 decreased to 19% from 27% in 2010, primarily due to recognition of an impairment charge in relation to our operations in Vietnam and Cambodia in 2011.

Other Non-operating Profits and Losses Finance costs and finance income. Our consolidated finance costs increased by 103.1% to US$1,259 million in 2011 from US$620 million in 2010, primarily due to the interest expenses on the notes issued during 2011 and the interest expense on the Original Promissory Note and the Outstanding Promissory Note. Our consolidated finance income increased by 228% to US$269 million in 2010 from US$82 million in 2010, primarily due to interest income from VimpelCom Ltd. and the increase in bank deposits.

86 Other non-operating losses. We recorded US$171 million in losses during 2011 compared to a US$5 million loss during 2010. The change was primarily due to recycling of accumulated translation losses and loss on remeasurement of the previously held investment in GTEL-Mobile as a result of obtaining control over GTEL-Mobile and consolidation in 2011. Shares of profit of associates and joint ventures accounted for using the equity method. We recorded a gain of US$63 million from our equity in associates in 2011 compared to a gain of US$90 million in for 2010. The change was primarily due to a decrease in Euroset’s profitability in 2011. Net foreign exchange (loss)/gain. We recorded a US$161 million foreign currency exchange gain in 2011 compared to a US$14 million foreign currency exchange loss in 2010. Our foreign currency exchange gain in 2011 compared to loss in 2010 was primarily due to accelerated depreciation of the Russian rouble against the U.S. dollar during 2011 as compared to 2010 in combination with a changed net U.S. dollar exposure within Russia. Income tax expense. Our consolidated income tax expense (calculated as income tax expense divided by profit before tax) increased by 29.3% to US$675 million in 2011 from US$522 million in 2010. The increase in income taxes was primarily due to a change in recognition of deferred tax assets in 2011, increase in payments of withholding tax and recognition of an impairment charge in relation to our operations in Vietnam and Cambodia in 2011. These factors also led to the increase in our effective income tax rate to 51% in 2011 from 22% in 2010.

Profit for the Period Attributable to Non-controlling Interest Our loss for the period attributable to the non-controlling interest was US$138 million in 2011 compared to profit of US$48 million in 2010, primarily due to recognition of the impairment charge in relation to our operations in Vietnam and Cambodia in 2011.

Profit for the Period Attributable to the Owners of the Parent In 2011, consolidated profit for the period attributable to the owners of the parent was US$779 million compared to US$1,810 million in 2010 primarily due to recognition of the impairment charge in relation to our operations in Vietnam and Cambodia in 2011.

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009 Total Operating Revenues Our consolidated total operating revenues increased by 19.3% to US$10,513 million during 2010 from US$8,813 million during 2009 primarily due to the acquisition of Kyivstar’s operations in April 2010, appreciation of our functional currency in Russia, changes in our contract terms for value added services in Russia and increased traffic on our mobile networks as a result of an increase in our mobile subscribers. The following discussion of revenues by reportable segments includes intersegment revenues. Our management assesses the performance of each reportable segment on this basis as it believes the inclusion of intersegment revenues better reflects the true performance of each segment on a stand-alone basis.

Russia Our Russia total operating revenues increased by 9.6% to US$8,162 million during 2010 from US$7,448 million during 2009. Our mobile total operating revenues in Russia increased by 10.6% to US$6,826 million during 2010 from US$6,170 million during 2009. During 2010, we generated US$4,372 million of our service revenues in the Russia segment from airtime charges from mobile contract and prepaid subscribers, including monthly contract fees and roaming fees, and roaming fees received from other mobile services operators for providing roaming services to our subscribers, or 64.0% of mobile total operating revenues in our Russia segment, compared to US$4,250 million, or 68.9% of mobile total operating revenues in 2009. The 2.9% increase was primarily due to appreciation of the functional currency. In functional currency terms, our voice service revenues in our Russia segment decreased by 0.9% in 2010 compared to 2009 primarily due to lower average price per minute which was partially offset by growth of our subscriber base and increased traffic volume. During 2010, we generated US$1,281 million of our service revenues in the Russia segment from value added services, or 18.8% of mobile total operating revenues in our Russia segment, compared to US$926 million, or 15.0% of mobile total operating revenues in 2009. The 38.5% increase in our mobile value added services revenues was primarily due to a change in our contract terms in Russia for such services which caused us to

87 recognize revenue from value added services on a gross basis and reflect the commissions paid to the content provider in the cost of service rather than deducting it from revenue. During 2009, we deducted US$104 million of commission from total operating revenues. Growth of our subscriber base, increased revenue from sales of infotainment and appreciation of the functional currency also contributed to the increase. In functional currency terms, our Russia segment service revenues from value added services increased by 33.0% during 2010 compared to 2009, primarily due to the change in contract terms for value added services, as well as due to an increase in our subscriber base and increased revenue from sales of infotainment. During 2010, we generated US$987 million of our service revenues in the Russia segment from interconnect, or 14.5% of mobile total operating revenues in the Russia segment, compared to US$861 million, or 13.9% of mobile total operating revenues in 2009. The 14.7% increase was primarily due to the appreciation of the functional currency and increased traffic on our network. In functional currency terms, our Russia segment service revenues from interconnect increased by 10.1% during 2010 compared to 2009 due to increased incoming traffic from the subscribers of our competitors. The latter increased due to higher churn of our own subscribers in 2010 caused by aggressive competition in the mobile market which also contributed to the decrease in our voice service revenues in functional currency terms. Our mobile total operating revenues in the Russia segment also included revenues from sales of equipment and accessories and other revenue. During 2010, revenues from sales of equipment and accessories and other revenue increased by 55.0% to US$185 million from US$120 million during 2009 and increased to 2.7% of mobile total operating revenues in 2010 from 1.9% in 2009, primarily as a result of appreciation of our functional currency and sales of iPhones and Beeline brand phones. In functional currency terms, our Russia segment sales of equipment and accessories increased by 47.6% during 2010 compared to 2009. In 2010, revenues from our fixed-line services in Russia increased by 4.5% to US$1,336 million from US$1,278 million in 2009. Revenues from our fixed-line services in Russia in 2010 consisted of US$617 million generated from business operations, US$491 million generated from wholesale operations and US$227 million generated from residential operations. The increase in revenues for our fixed services in Russia in 2010 compared to 2009 was primarily due to appreciation of the functional currency which more than offset a decrease in network traffic volume and lower prices as a result of price pressure from competitors. In functional currency terms, our total operating revenues from fixed services increased by 0.2% during 2010 compared to 2009. Ukraine Our Ukraine total operating revenues increased by 483.7% to US$1,185 million during 2010 from US$203 million during 2009, primarily due to the consolidation of Kyivstar’s operations starting in April 2010. Our revenues from our mobile services in Ukraine increased by 888.6% to US$1,090 million during 2010 from US$110 million during 2009, primarily due to the consolidation of Kyivstar’s operations starting in April 2010. During 2010, we generated US$783 million of our service revenues in the Ukraine segment from airtime charges from mobile contract and prepaid subscribers, including monthly contract fees and roaming fees, and roaming fees received from other mobile services operators for providing roaming services to our subscribers, or 71.8% of our mobile total operating revenues in our Ukraine segment, compared to US$63 million, or 57.0% of mobile total operating revenues in 2009. The significant increase was primarily due to the consolidation of Kyivstar’s operations starting in April 2010. During 2010, we generated US$116 million of our service revenues in the Ukraine segment from value added services (including data revenue), or 10.7% of mobile total operating revenues in our Ukraine segment, compared to US$10 million, or 9.3% of mobile total operating revenues in 2009. The significant increase in our value added services revenues was primarily due to the consolidation of Kyivstar’s operations starting in April 2010. During 2010, we generated US$185 million of our service revenues in the Ukraine segment from interconnect, or 16.9% of mobile total operating revenues in the Ukraine segment, compared to US$36 million, or 32.2% of mobile total operating revenues in 2009. The 420.3% increase was primarily due to the acquisition of Kyivstar’s operations in April 2010. Our mobile total operating revenues in the Ukraine segment also included revenues from sales of equipment and accessories and other revenues. During 2010, revenues from sales of equipment and accessories and other revenues increased to US$4 million from US$1 million during 2009 and decreased to 0.4% of mobile total operating revenues in 2010 from 0.5% in 2009, primarily as a result of the acquisition of Kyivstar’s operations in April 2010. Our revenues from our fixed-line services in Ukraine increased by 2.4% to US$95 million in 2010 from US$93 million in 2009, primarily due to the consolidation of Kyivstar’s operations starting in April 2010.

88 CIS Our CIS total operating revenues increased by 6.3% to US$1,354 million during 2010 from US$1,274 million during 2009. Our CIS total operating revenues consist of revenues from providing mobile services as well as fixed-line services. Our revenues from mobile services in the CIS increased by 6.1% to US$1,200 million during 2010 from US$1,131 million during 2009. During 2010, we generated US$841 million of our service revenues in the CIS segment from airtime charges from mobile contract and prepaid subscribers, including monthly contract fees and roaming fees, and roaming fees received from other mobile services operators for providing roaming services to our subscribers, or 70.1% of our mobile total operating revenues in the CIS segment, compared to US$822 million, or 72% of mobile total operating revenues in 2009. The 2.3% increase during 2010 compared to 2009 was primarily due to an increase in our mobile subscriber base. During 2010, we generated US$209 million of our service revenues in the CIS mobile segment from interconnect fees, or 17.4% of our mobile total operating revenues in the CIS segment, compared to US$182 million, or 16.1% of our mobile total operating revenues in the CIS segment in 2009. The 8.3% increase in 2010 compared to 2009 was primarily due to increase in traffic in all countries. During 2010, we generated US$142 million of our service revenues in the CIS segment from value added services, or 11.9% of mobile total operating revenues in the CIS segment, compared to US$121 million, or 10.5% of mobile total operating revenues in the CIS segment in 2009. The 17.4% increase in 2010 compared to 2009 was primarily due to increase in subscriber base and increased consumer spending on value added services. Our mobile total operating revenues in the CIS segment also included revenues from sales of equipment and accessories and other revenues. During 2010, revenues from sales of equipment and accessories and other revenues increased to US$7 million from US$6.0 million during 2009, primarily due to increase in sales of devices to stimulate usage of mobile services. Our revenues from fixed-line services in the CIS increased by 7.7% to US$154 million in 2010 from US$143 million in 2009. The increase was primarily due to the growth of interconnect revenues in Tajikistan, interconnect and internet revenues in Armenia and revenues from rent of channel in Kazakhstan, partially offset by a decrease in voice revenues in Armenia. In 2010, US$32 million of CIS fixed-line revenues were generated from our business operations, US$65 million from wholesale operations and US$57 million from residential operations.

All other In 2010, our total operating revenues for our “All other” segment, which only included our operations in Cambodia, were US$22 million compared to US$5 million in 2009. During 2010, US$18 million of our mobile service revenues, or 81.8% of our total operating revenues in Cambodia, were from airtime charges from mobile prepaid subscribers, including roaming fees, and roaming fees received from other mobile services operators for providing roaming services to our subscribers, US$4 million of our mobile service revenues, or 18.2% of our total operating revenues in Cambodia, were from interconnect fees. During 2010, there were no significant revenues from sales of equipment and accessories.

Total Operating Expenses Our consolidated total operating expenses increased by 23.7% to US$7,666 million during 2010 from US$6,195 million during 2009, and represented 72.9% and 70.3% of total consolidated operating revenues in 2010 and 2009, respectively. This increase was primarily due to the consolidation of Kyivstar starting in April 2010. Due to the adverse economic environment in 2009, we focused on maintaining our consolidated operating profit margin by controlling our operating expenses. With the improvement of the economic environment in 2010, we increased operating expenses to support growth of our operations. As a result of the increased operating expenses as a percentage of total operating revenues, our consolidated operating profit margin for 2010 was 27.1% compared to 29.7% in 2009.

Service Costs Our consolidated service costs increased by 18.7% to US$2,250 million during 2010 from US$1,895 million during 2009, primarily as a result of the acquisition of Kyivstar operations in April 2010. As a percentage of consolidated total operating revenues, our service costs decreased slightly to 21.4% during 2010 from 21.5% during 2009.

89 Cost of Equipment and Accessories Our consolidated cost of equipment and accessories increased by 95.5% to US$217 million in 2010 from US$111 million in 2009. This increase was primarily due to the introduction of Beeline brand phones in Russia in the summer of 2010.

Selling, General and Administrative Expenses Our consolidated selling, general and administrative expenses increased by 26.1% to US$3,129 million during 2010 from US$2,482 million during 2009. This increase was primarily due to the acquisition of Kyivstar operations in April 2010, as well as higher sales and marketing expenses in Russia and increase in headquarter expenses. As a percentage of consolidated total operating revenues, our consolidated selling, general and administrative expenses increased to 29.8% in 2010 from 28.2% in 2009 as a result of the increased level of expenses to support the growth of our operations.

Depreciation and Amortization Expenses Our consolidated depreciation and amortization expenses increased by 24.0% to US$2,022 million in 2010 from US$1,630 million in 2009. The overall increase in depreciation and amortization expenses was primarily the result of the acquisition of Kyivstar operations in April 2010.

Impairment Loss Our consolidated impairment loss was nil in 2010, as in 2009.

Loss on Disposals of Non-current Assets Our consolidated loss on disposals of non-current assets decreased by 37.7% to US$48 million during 2010 from US$77 million during 2009.

Adjusted EBITDA and Adjusted EBITDA Margin Our consolidated adjusted EBITDA increased by 14.7% to US$4,970 million during full year 2010 from US$4,334 million during full year 2009, primarily due to the acquisition of Kyivstar operations in April 2010 and growth of adjusted EBITDA in our Russian operations.

Russia Our Russia adjusted EBITDA increased by 2.1% to US$3,775 million during 2010 from US$3,696 million during full year 2009, primarily due to appreciation of functional currency. Russia adjusted EBITDA in functional currency terms decreased by 1.9%. Adjusted EBITDA margin in 2010 was 3.3 percentage points less than in 2009 primarily due to decreased average price per minute and increased volume of customer equipment sales with negative margin. In functional currency terms, Russia adjusted EBITDA margin decreased by 3.4 percentage points compared to 2009.

Ukraine Our Ukraine adjusted EBITDA increased to US$629 million during 2010 from US$36 million during 2009, primarily due to the acquisition of Kyivstar operations in April 2010.

CIS Our CIS adjusted EBITDA decreased by 3.9% to US$615 million during 2010 from US$640 million during 2009, primarily due to increased competition that led to a decrease in prices in Armenia and Uzbekistan, partially offset by organic growth in Kazakhstan, Tajikistan and Georgia.

All other Our adjusted EBITDA in our “All other” segment was negative US$49 million during 2010 in comparison with negative US$38 million during 2009, primarily due to the commencement of commercial operations in 2009.

Operating Profit Our consolidated operating profit increased by 8.7% to US$2,847 million in 2010 from US$2,618 million in 2009, primarily as a result of increased operating revenues which offset the increase in operating expenses. Our consolidated operating profit as a percentage of total operating revenues in 2010 decreased to 27.1% from 29.7% in 2009, primarily as a result of the increased operating expenses as a percentage of total operating revenues.

90 Other Non-operating Profits and Losses Finance Costs and Finance Income. Our consolidated finance costs increased by 2.8% to US$620 million in 2010 from US$603 million in 2009, primarily due to an increase in interest expenses related to the Outstanding Promissory Note. Our consolidated finance income increased by 41.4% to US$82 million in 2010 from US$58 million in 2009, primarily due to the increase in our bank deposits. Other Non-operating Losses/(Gains). We recorded a US$5 million loss during 2010 compared to US$69 million losses during 2009. The decrease was primarily due to a loss contingency in relation to cash rights for shares of Golden Telecom. Shares of Loss/(Profit) of Associates and Joint Ventures Accounted for Using the Equity Method. We recorded a profit of US$90 million from our equity in associates in 2010 compared to a gain of US$3 million in 2009, primarily due to a gain in our equity in Morefront which was partially offset by a loss in our equity in GTEL-Mobile. Net Foreign Exchange Loss. We recorded a US$14 million foreign currency exchange loss in 2010 compared to a US$404 million foreign currency exchange loss in 2009. The losses were primarily due to the devaluation of the Russian rouble against the U.S. dollar at the revaluation date which resulted in a corresponding revaluation of our U.S. dollar denominated financial liabilities, including our loan agreements. Our foreign currency exchange loss decreased in 2010 compared to 2009, primarily due to the lower rate of devaluation of the Russian rouble against the U.S. dollar of 0.8% in 2010 compared to 2.9% in 2009, as well as a decrease in the percentage of total debt represented by U.S. dollar-denominated debt to 50.3% as of December 31, 2010 from 64.8% as of December 31, 2009. Income Tax Expense. Our consolidated income tax expense (calculated as income tax expense divided by profit before tax) increased by 21.1% to US$522 million in 2010 from US$431 million in 2009. The increase in income taxes was primarily due to the increase in income before income taxes. Our effective income tax rate was 21.9% in 2010 compared to 26.9% in 2009. The decrease in the effective income tax rate was primarily due to the tax effect of the change in the statutory income tax rate in Ukraine in accordance with the New Tax Code of Ukraine which significantly changed the rules for tax based calculation and provided for a gradual decrease in tax rates from 25% to 16% over the next few years.

Profit for the Year Attributable to Non-controlling Interest Our profit for the year attributable to non-controlling interest was US$48 million in 2010 compared to a profit of US$30 million in 2009, primarily due to the increase in profit for the year based on abovementioned factors.

Profit for the Year Attributable to the Owners of the Parent In 2010, consolidated profit for the year attributable to the owners of the parent was US$1,810 million compared to US$1,142 million in 2009.

Liquidity and Capital Resources Consolidated Cash Flow Summary The following table shows our cash flows for the nine months ended September 30, 2012 and 2011 and for the years ended December 31, 2011, 2010 and 2009 (in millions of U.S. dollars): Nine Months Ended September 30, Year Ended December 31, 2012 2011 2011 2010 2009 Consolidated Cash Flow Net cash flows from operating activities ...... 3,295 3,130 3,622 3,728 3,602 Net cash flows used in investing activities ...... (2,534) (7,985) (6,074) (1,886) (1,524) Net cash flows from/(used in) financing activities ...... (146) 5,680 2,411 (2,419) (1,563) Net foreign exchange difference ...... (12) (46) (43) (23) 1 Net increase/(decrease) in cash and cash equivalents ...... 615 825 (41) (577) 515 During the nine months ended September 30, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009, we generated positive cash flow from our operating activities and had negative cash flow from investing activities. The negative cash flow from investing activities during the nine months ended September 30, 2012, was a result of the impact of the FAS claim on cash deposited in bank accounts in the amount of US$568 million. For more information on the FAS claim, see the section of this prospectus entitled “Business—Legal Proceedings— FAS claim.” The negative cash flow from investing activities during the nine months ended September 30, 2011, was a result of loans provided to VimpelCom Ltd. to assist in funding the Wind Telecom Transaction.

91 Cash flow from financing activities was negative during the nine months ended September 30, 2012, positive during the nine months ended September 30, 2011, positive during 2011, negative during 2010 and negative during 2009. The negative cash flow from financing activities during the nine months ended September 30, 2012 was mostly due to repayments of our existing debt facilities, which exceeded new borrowings. The positive cash flow from financing activities during the nine months ended September 30, 2011 was primarily the result of the receipt of proceeds from borrowings primarily used to assist VimpelCom Ltd. in funding the Wind Telecom Transaction. The negative cash flows from financing activities during 2010 was mostly due to repayments of our existing debt facilities, which exceeded new borrowings. The negative cash flows from financing activities in 2009 was primarily the result of repayments of our existing debt facilities and our payment of cash dividends of US$316 million. As of September 30, 2012, we had negative working capital of US$413 million, compared to negative working capital of US$1,678 million as of December 31, 2011. We define working capital as current assets less current liabilities. The change in our working capital as of September 30, 2012 compared to December 31, 2011, was mainly due to increase of trade and other receivables, cash and short-term deposits. Our management monitors our working capital on a regular basis and expects to repay our debt as it becomes due from our operating cash flows or through additional borrowings. Current financial liabilities payments are distributed over the twelve-month period following September 30, 2012, and the majority of our current financial liabilities will become due in the second quarter of 2013. Our management expects to make these payments as they become due. Our management believes that our working capital together with cash to be generated within the twelve-month period following September 30, 2012, are sufficient to meet our present operational requirements.

Operating Activities During the first nine months of 2012, net cash flows from operating activities was US$3,295 million, a 5.3% increase over the US$3,130 million of net cash flows from operating activities during the first nine months of 2011. The increase in net cash flows from operating activities was primarily the result of lower investment in working capital, increase in interest received offset by an increase of interest paid. During 2011, net cash flows from operating activities was US$3,622 million, a 2.8% decrease over the US$3,728 million of net cash flows from operating activities during 2010. The decrease in net cash flows from operating activities was primarily the result of increase in interest and income tax paid offset by increase in operating profit before working capital changes, positive working capital changes and an increase in interest received. During 2010, net cash flows from operating activities was US$3,728 million, a 3.5% increase over the US$3,602 million of net cash provided by operating activities during 2009. The increase in net cash provided by operating activities during 2010 as compared to 2009 was primarily the result of an increase in profit for the year to US$1,858 million in 2010 from US$1,172 million in 2009 and working capital management.

Financing Activities During the first nine months of 2012, we repaid US$1,399 million of indebtedness. Since September 30, 2012 through the date of this prospectus, we have repaid US$1,040 million of indebtedness. During 2011, we repaid US$4,450 million of indebtedness, including the refinancing of debt through the offering by the Issuer of an aggregate principal amount of $2,200 million in June 2011.

92 The following table provides a summary of the Issuer’s outstanding indebtedness (excluding the amount due to related parties under the Outstanding Promissory Note held by VimpelCom Amsterdam B.V.) with an outstanding principal balance exceeding US$10.0 million as of September 30, 2012. The aggregate principal amount outstanding under the Outstanding Promissory Note as of September 30, 2012 was US$12,905 million. Many of the agreements relating to this indebtedness contain various restrictive covenants, including change of control restrictions and financial covenants. In addition, certain of these agreements subject our subsidiaries to restrictions on their ability to pay dividends or repay debts to us. For additional information on this indebtedness, please refer to the notes to our unaudited condensed consolidated interim financial statements and our audited consolidated financial statements included elsewhere in this prospectus. For information relating to our outstanding indebtedness subsequent to September 30, 2012, see “—Recent Financing Activities” below. For a description of some of the risks associated with certain of our indebtedness, please refer to the section of this prospectus entitled “Risk Factors.”

Type of debt/ Outstanding debt Borrower lender Interest rate (In millions) Maturity date Guarantor Security VimpelCom Holdings Notes 3 month US$200.0 June 29, 2014 OJSC None B.V...... LIBOR VimpelCom plus 4.0% VimpelCom Holdings Notes 6.2546%(1) US$500.0 March 1, 2017 OJSC None B.V...... VimpelCom VimpelCom Holdings Notes 7.5043%(2) US$1,500.0 March 1, 2022 OJSC None B.V...... VimpelCom OJSC VimpelCom ...... Loan from Sberbank 9.00% US$2,273.4 April 11, 2018 None None (RUR 70,285.7) OJSC VimpelCom ...... Loan from VIP 7.748% US$1,000.0 February 2, 2021 None None Finance Ireland Limited (funded by the issuance of loan participation notes by VIP Finance Ireland) OJSC VimpelCom ...... Loan from VIP 9.125% US$1,000.0 April 30, 2018 None None Finance Ireland (funded by the issuance of loan participation notes by VIP Finance Ireland) OJSC VimpelCom ...... Loan from VIP 8.375% US$800.6 April 30, 2013 None None Finance Ireland (funded by the issuance of loan participation notes by VIP Finance Ireland) OJSC VimpelCom ...... RUBdenominated 8.85% US$808.6 March 8, 2022(3) None None bonds (RUR 25,000.0) OJSC VimpelCom ...... Loan from VC-Invest 8.3% US$646.9 October 13, 2015 OJSC None (funded by the RUB (RUR 20,000.0) VimpelCom denominated bonds by VC-Invest) OJSC VimpelCom ...... Loan from UBS 8.25% US$600.0 May 23, 2016 None None (Luxembourg) S.A. (funded by the issuance of loan participation notes by UBS (Luxembourg) S.A.) OJSC VimpelCom ...... Loan from VIP 6.493% US$500.0 February 2, 2016 None None Finance Ireland (funded by the issuance of loan participation notes by VIP Finance Ireland)

93 Type of debt/ Outstanding debt Borrower lender Interest rate (In millions) Maturity date Guarantor Security OJSC VimpelCom ...... Loan from VC-Invest 9.25% US$323.4 July 19, 2013 OJSC None (funded by the RUR (RUR 10,000.0) VimpelCom denominated bonds by VC-Invest)

OJSC VimpelCom ...... RUBdenominated 8.85% US$323.4 March 14, 2022(4) None None bonds (RUR 10,000.0) OJSC VimpelCom ...... Loan from Sberbank 9.25% US$161.7 April 30, 2013 None None (RUR 5,000.0) OJSC VimpelCom ...... Loan from VC-Invest 7.4% US$323.4 July 8, 2014 OJSC None (funded by the RUB (RUR 10,000.0) VimpelCom denominated bonds by VC-Invest) OJSC VimpelCom ...... Loan from Sberbank 9.25% US$72.3 February 13, 2013 None None (RUR 2,235.8) OJSC VimpelCom ...... Loan from Sberbank 8.75% US$248.4 December 16, 2015 None None (RUR 7,679.7) OJSC VimpelCom ...... Loans from HSBC 3 month US$140.1 November 30, 2017 EKN None Bank PLC MosPRIME (RUR 4,330.7) plus 1.05% OJSC VimpelCom ...... Loans from Unicredit AB SEK Rate US$58.5 June 15, 2016 EKN None Bank AG plus 0.75% OJSC VimpelCom ...... Loan from Cisco 7.95% US$42.6 February 15, 2015 None None Systems Finance (RUR 1,316.4) International OJSC VimpelCom ...... Loans from Unicredit AB SEK Rate US$30.4 December 15, 2015 EKN None Bank AG plus 0.75% OJSC VimpelCom ...... Loan from Cisco 7.35% US$26.6 May 3, 2014 None None Systems Finance (RUR 823.1) International OJSC VimpelCom ...... Loan from HSBC 6 month US$14.8 March 30, 2014 EKN None Bank plc MosPRIME (RUR 457.1) plus 0.08% VimpelCom Lao ...... Loan from ANZ 3.5% US$17.2 February 28, 2013 None Cash Bank (Lao) Ltd. collateral Other loans, equipment financing and capital lease obligations ...... – – US$48.0(5)(6) –––

(1) Effective from June 29, 2011, this fixed interest rate was subject to interest rate swap arrangements to effectively swap the fixed interest rate for a floating interest rate based on three-month U.S. dollar LIBOR. The weighted average spread over LIBOR for the notes was 4.187%. In August 2012, we unwound our interest rate swaps related to these notes, resulting in a reduction of the effective interest rate on the notes due March 2017 of approximately 1.5%. As a result of the unwind, the company received a cash amount of approximately US$35 million including accrued interest. (2) Effective from June 29, 2011, this fixed interest rate was subject to interest rate swap arrangements to effectively swap the fixed interest rate for a floating interest rate based on three-month U.S. dollar LIBOR. The weighted average spread over LIBOR for the notes was 4.375%. In August 2012, we unwound our interest rate swaps related to a principal amount of US$1,300 million of these notes, and in November 2012 we unwound the interest rate swaps related to the remaining US$200 million principal amount, resulting in a reduction of the effective interest rate on these notes of approximately 2.0%. As a result of the unwinds, the company received a cash amount of approximately US$218 million including accrued interest. (3) These bonds are subject to an investor put option at March 17, 2015. (4) These bonds are subject to an investor put option at March 23, 2015. (5) This amount excludes a principal amount of US$23.2 million of debt owed by our Cambodian subsidiary Sotelco under equipment finance facilities from China Construction Bank, which are guaranteed by Sinosure (the Chinese export credit agency) and OJSC VimpelCom. These facilities bear interest at a rate of LIBOR plus 2.1% and mature in June 2016. This amount also excludes a principal amount of US$11.5 million of debt owed by Sotelco under a loan facility from VimpelCom Amsterdam B.V., which bears interest at a rate of 4.0% per annum and matures on June 8, 2015. Sotelco is classified as held for sale in our unaudited condensed consolidated interim financial statements as of September 30, 2012, and therefore its assets and liabilities are not included in our statement of financial position as of September 30, 2012. (6) This amount excludes a principal amount of US$201.4 million of debt owed by the lssuer to VimpelCom Amsterdam Finance B.V., a subsidiary of VimpelCom Amsterdam B.V. that is not part of our group. The note bears interest at a rate of 8.78% and is payable on demand.

94 Recent Financing Activities On October 9, 2012, OJSC VimpelCom signed a facility agreement with HSBC Bank PLC and Nordea Bank AB (publ) for a Russian rouble denominated Swedish export credit facility supported by the EKN for a total principal amount of the Russian rouble equivalent of US$200.0 million. The purpose of the facility is to finance equipment and services provided to OJSC VimpelCom by Ericsson on a reimbursement basis. The facility bears interest at a rate of MosPRIME (Moscow indicative independent interbank offered rate) plus 1.00% p.a. On October 23, 2012, OJSC VimpelCom drew down RUR 6,151 million (the equivalent to US$200 million as of October 23, 2012). We may from time to time seek to purchase our outstanding debt through cash purchases and/or exchanges for new debt securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Investing Activities Our investing activities included payments related to the purchase of equipment, telephone line capacity, buildings and other assets as a part of the ongoing development of our mobile networks and fixed-line business. In the first nine months of 2012, our total payments for purchases of property and equipment, intangible assets, software and other assets were US$1,575 million compared to US$1,824 million in the first nine months of 2011. In 2011, our total payments for purchases of property and equipment, intangible assets, software and other assets were US$2,774 million compared to US$1,812 million during 2010 and US$1,022 million during 2009. In the first nine months of 2012, we paid US$2 million for the acquisition of subsidiaries net of cash acquired. In 2011, we paid US$545 million for the acquisition of subsidiaries net of cash acquired, including Open Joint Stock Company “New Telephone Company” (“NTC”). In 2010, we paid US$52 million for the acquisition of subsidiaries net of cash acquired, including Closed Joint Stock Company Foratec Communication (“Foratec”) and US$144 million to a former Golden Telecom shareholder in connection with a litigation related to the tender offer pursuant to which our company acquired Golden Telecom. We also acquired Kyivstar in 2010 in exchange for 301,653,080 VimpelCom Ltd. shares. For more information, see note 7 to our audited consolidated financial statements included elsewhere in this prospectus. In 2009, we did not have any payments in respect of acquisitions.

Acquisitions and disposals Our significant acquisitions and disposals during the nine months ended September 30, 2012 and the three years ended December 31, 2011 are summarized below. On July 8, 2008, OJSC VimpelCom and our wholly owned direct subsidiary, Ararima Enterprises Limited (Cyprus), signed a Joint Venture and Shareholders Agreement (“JVA”) with Global Telecommunications Corporation (“GTEL”), a Vietnamese state-owned enterprise and GTEL TSC, a subsidiary of GTEL, to establish a mobile telecommunications joint venture in Vietnam under the name of GTEL-Mobile Joint Stock Company. Ararima received a 40.0% voting and economic interest in GTEL-Mobile in consideration for an equity investment of US$266.7 million. In April 2011, under a refinancing plan with the JVA parties, we increased our stake to 49.0% (minus one share) for a total consideration of US$196.0 million, as a result of which we began to consolidate GTEL-Mobile’s results of operations. On April 23, 2012, we completed the sale of our entire indirect 49% (minus one share) stake in GTEL-Mobile to GTEL Transmit and Infrastructure Service One Member Company Limited, a related party of GTEL, for cash consideration of US$45.0 million. As of completion of the sale, we have no further obligations or liabilities to GTEL or GTEL Mobile, and GTEL Mobile is obligated to discontinue the use of the Beeline trademark after a six-month transition period. On October 23, 2008, we acquired 49.9% of Morefront which owned 100.0% of Euroset, a leading mobile handset retailer and dealer for major mobile network operators in Russia, for a total consideration of US$226.0 million. The total consideration was reduced to US$201.0 million as the result of a settlement in our litigation with Creative Retail Management Limited, the former shareholder of Morefront. After a restructuring of the Euroset group was completed on March 17, 2011, we owned directly 49.9% of the shares of Euroset Holding N.V., which owns 100.0% of the shares of the Euroset. This acquisition allowed us to significantly enhance our distribution capabilities. On December 6, 2012, we acquired an additional 0.1% of Euroset Holding N.V., thereby increasing our ownership interest in Euroset to 50.0%. We also amended the terms of our shareholding in Euroset to increase our governance rights. As part of the same transaction, Lefbord Investments Limited, a Cyprus company owned by Megafon and Garsdale Services Investment Ltd., a BVI Company, beneficially owned by A. Usmanov, purchased the other 50.0% of Euroset Holding N.V. from Alpazo Limited, a Cyprus company. On July 29, 2010, OJSC VimpelCom acquired 100.0% of the share capital of Foratec, one of the leading alternative fixed-line providers in the Urals region of Russia. The total purchase price was the RUR equivalent of US$37.1 million (based on the exchange rate of the Central Bank of Russia as of July 29, 2010).

95 In March 2011, we formed a joint venture with a local partner in Kazakhstan to combine our 100% interest in LLP SA-Telecom and the local partner’s 100% interest in LLP 2Day Telecom, both of which are Kazakhstan entities engaged in the provision of fixed-line telecommunications services. We hold a 59.0% interest in the joint venture and the local partner holds a 41.0% interest. In August 2011, LLP SA Telecom was merged into LLP 2Day Telecom, with LLP 2Day Telecom as the surviving entity. On January 21, 2011, we acquired 100.0% of the share capital of CJSC “ELTEL,” one of the leading alternative fixed-line providers in St. Petersburg. The total value of the transaction amounted to RUR 1,000.0 million (equivalent to US$33.4 million as of January 21, 2011). The excess of the purchase consideration over the fair value of the identifiable net assets of Eltel amounting to US$20.1 million was recorded as goodwill. On March 9, 2011, we completed acquisition of Millicom Holding Laos B.V. (Netherlands), which holds a 78% interest in Millicom Lao. The remaining 22% of Millicom Lao is owned by the Government of the Lao PDR, as represented by the Ministry of Finance. The purchase price for the acquisition is US$88 million including equity, repayment of debt, repayment of shareholder loan and intra-group indebtedness. The excess of the purchase consideration over the fair value of the identifiable net assets of Millicom Lao amounting to US$74.6 million was recorded as goodwill. On May 4, 2011, OJSC VimpelCom signed agreements with KT Corporation and Summit Telecom Global Management B.V. (a subsidiary of Sumitomo Corporation) to acquire 99.99% of the shares of NTC, a leading mobile operator in the Primorskiy krai in the Far East super-region of Russia, with the purchase price based on an enterprise value of US$420.0 million. On June 7, 2011, we acquired 89.99% of the shares. We launched a mandatory tender offer under Russian law to acquire 10.00% of the remaining outstanding shares in August 2011 and completed it on October 21, 2011 followed by a squeeze out of the remaining 0.01% of outstanding shares under Russian law in December 2011. We completed the acquisition of the remaining 0.01% shares on February 27, 2012.

Other acquisitions and disposals On August 24, 2011, OJSC VimpelCom completed a transaction with Crowell to combine our respective shareholdings in Limnotex Developments Limited (“Limnotex”), the sole shareholder of KaR-Tel, and Menacrest, the sole shareholder of Sky Mobile. As a result of the transaction, Menacrest became a wholly owned subsidiary of Limnotex in exchange for the issuance of new shares in Limnotex to VimpelCom Finance B.V., our wholly owned subsidiary, and Crowell. As a result of the restructuring, OJSC VimpelCom holds a 71.5% stake in Limnotex and Crowell owns the remaining 28.5%. In connection with the restructuring, our call option to acquire 49.9% of the issued share capital of Menacrest was terminated, and Crowell’s put and VimpelCom’s call options for 25.0% of Limnotex were amended. As a result of the amendments, Crowell holds two put options for Limnotex shares. The first Crowell put option is for 13.5% and is exercisable during 2013 at a fixed price of US$297.0 million and the second Crowell put option is for 15% and is exercisable during 2017 at a fixed price of US$330.0 million. In turn, we hold two call options for Limnotex shares (for 13.5% and 15.0%) and both are exercisable during the period between April 2012 and May 2018 at a variable price determined by reference to EBITDA. As a part of the transaction, VimpelCom terminated the loan agreement with Crowell and was released from its commitment to exercise its call option for the 25.0% of Limnotex shares. On July 30, 2010, we increased our ownership interest in Tacom from 80.0% to 90.0% by acquiring an additional 10.0% ownership interest for US$10.3 million. During 2010 and 2011, we completed several immaterial acquisitions of fixed-line providers in Russia.

Other investing activities On February 13, 2008, we advanced to Crowell a loan in the principal amount of US$350.0 million. The loan agreement was entered into after Crowell acquired the entire issued share capital of Menacrest, which is the parent company of Sky Mobile, a mobile operator in Kyrgyzstan. Crowell granted us two call options over the entire issued share capital of Menacrest. The loan was recorded in long-term loans receivable and accrued interest of US$26.7 million was recorded in other non-current assets. On October 20, 2010, we exercised one of the call options and acquired 50.1% of the issued share capital of Menacrest. The purchase price was US$150.3 million and was paid by set off against part of the debt of Crowell to our company under the Crowell Loan Agreement. As part of the restructuring of our shareholdings in Kazakhstan and Kyrgyzstan, as described in “—Other acquisitions and disposals” above, our second call option to acquire 49.9% of Menacrest was terminated and the Crowell Loan Agreement was terminated.

96 Future Liquidity and Capital Requirements Telecommunications service providers require significant amounts of capital to construct networks, improve network quality and attract subscribers. In the foreseeable future, our further expansion will require significant investment activity, including the purchase of equipment and possibly the acquisition of other companies. In addition, we have commitments under our 4G/LTE licenses to invest the equivalent of approximately US$470 million annually from July 2012 through December 2019. Our capital expenditures include purchases of new equipment, new construction, upgrades, software, other long lived assets and related reasonable costs incurred prior to intended use of the noncurrent assets, accounted at the earliest event of advance payment or delivery. Our capital expenditures during the first nine months of 2012 were US$1,439 million compared to US$1,767 million during the first nine months of 2011. During 2011, our capital expenditures were US$3,002 million compared to US$2,224 million during 2010 and US$821 million during 2009. The increase in capital expenditures in the first nine months of 2012 compared to the first nine months of 2011 was primarily due to the decreased requirements for additional 2G equipment in Russia and the selective approach applied by CIS management in capital investment decisions with a focus on long-term profitability. The increase in capital expenditure in 2011 compared to 2010 was mainly due to a more aggressive plan to build out 2G and 3G infrastructure in Russia, including development of the transport network, as well as active development of the network in the CIS compared to relative underinvestment in 2010. The higher capital expenditure in 2010 compared to 2009 was mainly due to adverse economic conditions and historical traffic trends during 2009 in response to which our management took a more cautious approach to capital investments and to internal targets for return on capital investments. Our capital expenditures do not include investments made through acquisition of interests in other entities or long-lived assets acquired in business combinations. Our capital expenditures for the last three months of 2012 mainly consisted of investments in the further expansion of the mobile network in Russia and the CIS including the continued development of our 4G/LTE network. In the nine months ended September 30, 2012 and the years ended December 31, 2011, 2010 and 2009, our capital expenditures were 15.7%, 24.9%, 21.2% and 9.3% of our consolidated total operating revenues, respectively. The actual amount of our capital expenditures (excluding acquisitions) for 2013 will depend on market development and our performance. Our management anticipates that the funds necessary to meet our current capital requirements and those to be incurred in the foreseeable future (including with respect to any possible acquisitions) will come from: • cash we currently hold; • operating cash flows; • export credit agency guaranteed financing; • borrowings under bank financings, including credit lines currently available to us; • syndicated loan facilities; and • debt financings from Russian and international capital markets. Our management believes that funds from a number of these sources, coupled with cash on hand, will be sufficient to meet our projected capital requirements for the next twelve months. As of January 31, 2013, we had approximately US$500 million available to us under existing credit lines. Our management expects positive cash flows from operations will continue to provide us with internal sources of funds. The availability of external financing is difficult to predict because it depends on many factors, including the success of our operations, contractual restrictions, availability of guarantees from export credit agencies, the financial position of international and local banks, the willingness of international banks to lend to our companies and the liquidity of international and local capital markets. The actual amount of debt financing that we will need to raise will be influenced by our financing needs, the actual pace of traffic growth over the period, network construction, our acquisition plans and our ability to continue revenue growth and stabilize ARPU. For related risks, see the section of this prospectus entitled “Risk Factors—Risks Related to Our Business—Substantial leverage and debt service obligations may materially adversely affect our cash flow” and “Risk Factors—Risks Related to Our Business—We may not be able to raise additional capital.”

97 Contractual Obligations As of December 31, 2011, we had the following contractual obligations, including long-term debt arrangements, equipment financing, capital leases, and commitments for future payments under non-cancellable lease arrangements and purchase obligations. We expect to meet our payment requirements under these obligations with cash flows from our operations and other financing arrangements. For information relating to our outstanding indebtedness subsequent to December 31, 2011, see “—Financing Activities” above. Payments due by period (in millions of U.S. dollars) Less than More than Total 1 year 1-3 years 3-5 years 5 years Contractual Obligations(1) Long-term and short-term debt(2) ...... 15,018 1,615 3,700 3,952 5,751 Equipment financing(3) ...... 462 133 199 102 28 Capital lease obligations(3) ...... – – – – – Non-cancellable lease obligations ...... 451 155 106 85 105 Purchase obligations(4) ...... 142 125 13 4 – Other long-term liabilities ...... – – – – – Total ...... 16,676 2,028 4,018 4,143 5,884

(1) Debt payments could be accelerated upon violation of debt covenants. (2) Long-term and short-term debt includes only principal amounts but excluding the amount due to related parties under the Outstanding Promissory Note held by VimpelCom Amsterdam B.V. For further information on interest rates on our long-term debt, see “—Financing Activities” above. Loans from UBS (Luxembourg) S.A. and VIP Finance Ireland (funded by the issuance of loan participation notes by UBS (Luxembourg) S.A. and VIP Finance Ireland, respectively) are included under long-term debt. (3) Amounts include principal and accrued interest. (4) Purchase obligations primarily include our material contractual legal obligations for the future purchase of equipment and services. On March 31, 2011, OJSC VimpelCom and Apple signed an amendment to the agreement to purchase iPhones. Under the amendment, 958,540 iPhone handsets (being the difference between 1,500,000 iPhone handsets per the original agreement and the amount actually purchased by OJSC VimpelCom from Apple through March 31, 2011) should be purchased starting April 1, 2011 and before March 31, 2013. If OJSC VimpelCom does not comply with the newly agreed schedule and certain other terms of amendments, then according to the agreement it could become liable for the shortfall in orders of iPhone handsets that existed as of March 31, 2011, less any iPhone units actually purchased by OJSC VimpelCom after this date. The purchase obligations amounts do not include our obligation to purchase iPhones under our agreement with Apple as we are unable to estimate the amount of such obligation. Other than the long-term debt obligations described in the above under “—Financing Activities,” in the nine months ended September 30, 2012 we have not had any material changes outside the ordinary course of our business in the specified contractual obligations.

Basis of Presentation of Financial Results The Issuer maintains its records and prepares its statutory financial statements in accordance with Dutch law and tax legislation. Our subsidiaries outside of the Netherlands record and prepare their statutory financial statements in accordance with local accounting principles and tax legislation and in accordance with IFRS, as applicable. Our audited consolidated financial statements have been prepared in accordance with IFRS, as issued by the IASB. They differ from our financial statements issued for statutory purposes. The principal differences relate to: • revenue recognition; • recognition of interest expense and other operating expenses; • valuation and depreciation of property and equipment; • foreign currency translation; • deferred income taxes; • capitalization and amortization of telephone line capacity; • valuation allowances for unrecoverable assets; • stock based compensations; and • business combinations. Our unaudited condensed consolidated interim financial statements set forth elsewhere in this prospectus include the accounts of the Issuer and its consolidated subsidiaries. All inter-company accounts and transactions

98 have been eliminated. We have used the equity method of accounting for companies in which we have significant influence. Generally, this represents voting stock ownership of at least 20.0% and not more than 50.0%. We and our subsidiaries paid taxes computed on income reported for local statutory tax purposes. We based this computation on local statutory tax rules, which differ substantially from IFRS. Certain items that are capitalized under IFRS are recognized under local statutory accounting principles as an expense in the year paid. In contrast, numerous expenses reported in the financial statements prepared under IFRS are not tax deductible under local legislation. As a consequence, our effective tax charge was different under local tax rules and under IFRS.

Certain Factors Affecting Our Financial Position and Results of Operations Our financial position and results of operations for the first nine months of 2012 as reflected in our unaudited condensed consolidated interim financial statements included elsewhere in this prospectus have been influenced by the following additional factors:

Inflation As our biggest market, Russia has experienced periods of high levels of inflation since the early 1990s. In 2006, we introduced a number of Russian rouble-denominated tariff plans, which could expose us to additional inflationary risk. Please also see the section of this prospectus entitled “Risk Factors—Risks Related to Our Business—Sustained periods of high inflation may materially adversely affect our business.” Inflation affects the purchasing power of our mass market subscribers, as well as corporate clients. For the nine months ended September 30, 2012 and the years ended December 31, 2011, 2010 and 2009, Russia’s inflation rates were 6.1%, 5.2%, 8.8% and 8.8%, respectively. For the nine months ended September 30, 2012 and the years ended December 31, 2011, 2010 and 2009, inflation rates in Ukraine were 0.3%, 4.6%, 9.1% and 12.3%, respectively, in Kazakhstan 4.9%, 7.4%, 7.8% and 6.2%, respectively, in Uzbekistan 3.3%, 4.5%, 12.1% and 7.4%, respectively, in Kyrgyzstan 1.3%, 5.7%, 8% and 7%, respectively, in Armenia 2.3%, 4.7%, 9.4% and 3.4%, respectively, in Tajikistan were 5.5%, 9.3%, 13.1% and 5.0%, respectively, and in Georgia were -0.1%, 6.0%, 11.2% and 3.0%, respectively. Source: http://cisstat.org

Foreign Currency Translation Our unaudited condensed consolidated interim financial statements and audited consolidated financial statements included elsewhere in this prospectus are presented in U.S. dollars. Amounts included in these financial statements were presented in accordance with IAS21, The Effects of Changes in Foreign Exchange Rates, using the current rate method of currency translation with the U.S. dollar as the reporting currency. The current rate method assumes that assets and liabilities measured in the functional currency are translated into U.S. dollars at exchange rates prevailing on the balance sheet date; whereas revenues, expenses, gains and losses are translated into U.S. dollars at historical exchange rates prevailing on the transaction dates. We translate income statement amounts using the average exchange rates for the period. Translation adjustments resulting from the process of translating financial statements into U.S. dollars are reported in accumulated other comprehensive income, a separate component of equity. Russia. The national currency of Russia is the Russian rouble. We have determined that the functional currency of our subsidiaries in Russia is the Russian rouble as it reflects the economic substance of the underlying events and circumstances of the company. As of September 30, 2012 and December 31, 2011, 2010 and 2009, the official Central Bank of Russia Russian rouble-U.S. dollar exchange rates were 30.92, 32.20, 30.48 and 30.24 Russian roubles per U.S. dollar, respectively. During the nine months ended September 30, 2012, the average Russian rouble-U.S. dollar exchange rate was 8.1% higher than the average Russian rouble-U.S. dollar exchange rate during the nine months ended September 30, 2011. During 2011, the average Russian rouble-U.S. dollar exchange rate was 3.3% lower than the average Russian rouble-U.S. dollar exchange rate during 2010. During 2010, the average Russian rouble-U.S. dollar exchange rate was 4.4% higher than the average Russian rouble-U.S. dollar exchange rate during 2009. Ukraine. The national currency of Ukraine is the Ukrainian hryvnia. We have determined that the functional currency of our subsidiaries in Ukraine is the Ukrainian hryvnia, as it reflects the economic substance of the underlying events and circumstances of the company. The Ukrainian hryvnia is not a convertible currency outside Ukraine. As of September 30, 2012 and December 31, 2011, 2010, and 2009, the official National Bank of Ukraine hryvnia-U.S. dollar exchange rates were 7.990, 7.989, 7.962 and 7.985 Ukrainian hryvnia per U.S. dollar, respectively. During the nine months ended September 30, 2012, the average Ukrainian hryvnia-U.S. dollar exchange rate was 0.3% higher than the average Ukrainian hryvnia-U.S. dollar exchange rate during the nine

99 months ended September 30, 2011. During 2011 the average Ukrainian hryvnia-U.S. dollar exchange rate was 3.5% higher than the average Ukrainian hryvnia-U.S. dollar exchange rate during 2009. During 2010 the average Ukrainian hryvnia-U.S. dollar exchange rate was 1.7% higher than the average hryvnia-U.S. dollar exchange rate during 2009. Kazakhstan. The national currency of the Republic of Kazakhstan is the Kazakh tenge. We have determined that the functional currency of our subsidiaries in Kazakhstan is the Kazakh tenge, as it reflects the economic substance of the underlying events and circumstances of the company. The Kazakh tenge is not a convertible currency outside Kazakhstan. As of September 30, 2012 and December 31, 2011, 2010 and 2009, the official National Bank of Kazakhstan tenge-U.S. dollar exchange rates were 149.86, 148.4, 147.50 and 148.36 Kazakh tenge per U.S. dollar, respectively. During the nine months ended September 30, 2012, the average Kazakh tenge-U.S. dollar exchange rate was 1.7% higher than the average Kazakh tenge-U.S. dollar exchange rate during the nine months ended September 30, 2011. During 2011 the average Kazakh tenge-U.S. dollar exchange rate was 0.5% lower than the average Kazakh tenge-U.S. dollar exchange rate during 2010. During 2010 the average Kazakh tenge-U.S. dollar exchange rate was 1.7% higher than the average Kazakh tenge- U.S. dollar exchange rate during 2009. Tajikistan. The national currency of Tajikistan is the Tajik somoni. We have determined that the functional currency of our subsidiary in Tajikistan is the U.S. dollar, as it reflects the economic substance of the underlying events and circumstances of the company. The Tajik somoni is not a convertible currency outside Tajikistan. Uzbekistan. The national currency of Uzbekistan is the Uzbek sum. We have determined that the functional currency of our subsidiary in Uzbekistan is the U.S. dollar, as it reflects the economic substance of the underlying events and circumstances of the company. The Uzbek sum is not a convertible currency outside Uzbekistan. Armenia. The national currency of Armenia is the Armenian dram. We have determined that the functional currency of our subsidiary in Armenia is the Armenian dram, as it reflects the economic substance of the underlying events and circumstances of the company. The Armenian dram is not a convertible currency outside Armenia. As of September 30, 2012 and December 31, 2011, 2010 and 2009, the official Central Bank of Armenia Armenian dram-U.S. dollar exchange rates were 406.25, 385.77, 363.44 and 377.89 Armenian drams per U.S. dollar, respectively. During the nine months ended September 30, 2012, the average Armenian dram-U.S. dollar exchange rate was 8.2% higher than the average Armenian dram-U.S. dollar exchange rate during the nine months ended September 30, 2011. During 2011 the average Armenian dram-U.S. dollar exchange rate was 0.3% lower than the average Armenian dram-U.S. dollar exchange rate during 2009. During 2010 the average Armenian dram-U.S. dollar exchange rate was 2.9% lower than the average Armenian dram- U.S. dollar exchange rate during 2009. Georgia. The national currency of Georgia is the Georgian lari. We have determined that the functional currency of our subsidiary in Georgia is the Georgian lari, as it reflects the economic substance of the underlying events and circumstances of the company. The Georgian lari is not a convertible currency outside Georgia. As of September 30, 2012 and December 31, 2011, 2010 and 2009, the official Georgian lari—U.S. dollar exchange rates were 1.66, 1.67, 1.77 and 1.69 lari per U.S. dollar, respectively. During the nine months ended September 30, 2012, the average Georgian lari-U.S. dollar exchange rate was 2.8% lower than the average Georgian lari-U.S. dollar exchange rate during the nine months ended September 30, 2011. During 2011, the average Georgian lari-U.S. dollar exchange rate was 5.6% lower than the average Georgian lari-U.S. dollar exchange rate during 2010. During 2010, the average Georgian lari-U.S. dollar exchange rate was 6.7% lower than the average Georgian lari-U.S. dollar exchange rate during 2009. Kyrgyzstan. The national currency of Kyrgyzstan is the Kyrgyz som. We have determined that the functional currency of our subsidiary in Kyrgyzstan is the Kyrgyz som, as it reflects the economic substance of the underlying events and circumstances of the company. The Kyrgyz som is not a convertible currency outside Kyrgyzstan. As of September 30, 2012 and December 31, 2011, 2010 and 2009, the official Kyrgyz som-U.S. dollar exchange rates were 47.15, 46.48, 47.10, 44.09 som per U.S. dollar, respectively. During the nine months ended September 30, 2012, the average Kyrgyz som-U.S. dollar exchange rate was 1.7% higher than the average Kyrgyz som-U.S. dollar exchange rate during the nine months ended September 30, 2011. During 2011, the average Kyrgyz som-U.S. dollar exchange rate was 0.4% higher than the average Kyrgyz som-U.S. dollar exchange rate during 2010. During 2010, the average Kyrgyz som-U.S. dollar exchange rate was 7.1% higher than the average Kyrgyz som-U.S. dollar exchange rate during 2009. Cambodia. We have determined that the functional currency of our subsidiary in Cambodia is the U.S. dollar, as it reflects the economic substance of the underlying events and circumstances of the company.

100 Laos. The national currency of Laos is the Lao kip. We have determined that the functional currency of our subsidiary in Laos is the Lao kip, as it reflects the economic substance of the underlying events and circumstances of the company. The Lao kip is not a convertible currency outside Laos. As of September 30, 2012 and December 31, 2011 and 2010, the official Lao kip-U.S. dollar exchange rate was 8,003, 8,005 and 8,058 Lao kip per U.S. dollar, respectively. During the nine months ended September 30, 2012, the average Lao kip-U.S. dollar exchange rate was 0.3% lower than the average Lao kip-U.S. dollar exchange rate during the nine months ended September 30, 2011. During 2011, the average Lao kip-U.S. dollar exchange rate was 2.7% lower than the average Lao kip-U.S. dollar exchange rate during 2010. Conversion of foreign currencies that are not convertible outside the applicable country to U.S. dollars or other foreign currency should not be construed as a representation that such currency amounts have been, could be, or will be in the future, convertible into U.S. dollars or other foreign currency at the exchange rate shown, or at any other exchange rates. We have implemented a number of risk management activities to minimize currency risk and exposure in certain of the countries in which we operate, as further described below under “—Quantitative and Qualitative Disclosures About Market Risk.”

Recent Accounting Pronouncements See note 6 to our audited consolidated financial statements included elsewhere in this prospectus.

Off-balance Sheet Arrangements From time to time, we may enter into guarantee arrangements on behalf of our parent companies, including debt guarantees. These guarantee arrangements enhance the credit standing of our parent companies, enabling our parent companies to borrow money for general corporate and other purposes. As such, these guarantee arrangements may involve elements of performance and credit risk for our company, which will not be included on our consolidated balance sheets. The possibility of us having to perform under any guarantee we issue on behalf of our parent companies is largely dependent upon the future performance of our parent, investees and other third parties, or the occurrence of certain future events. Issuance of these guarantees is not required for our operations. Thus, if we do not enter into these guarantee arrangements, there would not be a material impact to our consolidated results of operations, cash flows or financial condition. However, any guarantees issued by us on behalf of our parent companies may increase our potential exposure in the event of a default by our parent companies, which could have a material adverse effect on our future financial condition and results of operations, as well as a negative impact on our liquidity. See the section of this prospectus entitled “Certain Transactions” for information about guarantees by OJSC VimpelCom and the Issuer of the obligations of VimpelCom Amsterdam B.V. Except as described in this prospectus, our group does not have any off-balance sheet arrangement that have had or are reasonably likely to have a material effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk from adverse movements in foreign currency exchange rates and changes in interest rates on our obligations. The largest currency exposure risks for the group as a whole are in relation to the Russian rouble, the Ukrainian hryvnia and Kazakh tenge, because the majority of our cash flows from operating activities in Russia, Ukraine and Kazakhstan are denominated in these functional currencies, respectively, while our debt is partly denominated in U.S. dollars. We hold part of our readily available cash in subsidiaries in U.S. dollars in order to hedge against the risk of functional currency devaluation, and OJSC VimpelCom enters into short-term forward and zero-cost collar agreements with various banks in order to hedge its U.S. dollar-denominated short-term financial and non- financial obligations against adverse U.S. dollar-Russian rouble movement. We also hold part of our debt in Russian roubles to manage part of this risk. Nonetheless, if the U.S. dollar value of the Russian rouble, Ukrainian hryvnia or Kazakh tenge were to dramatically decline, it could negatively impact our ability to repay or refinance our U.S. dollar denominated indebtedness. Fluctuations in the value of the Russian rouble, Ukrainian hryvnia or Kazakh tenge against the U.S. dollar could adversely affect the Issuer’s financial condition and results of operations due to potential revaluation of U.S. dollar denominated indebtedness affecting net income through foreign exchange gain/loss.

101 Our treasury function has developed risk management policies that establish guidelines for limiting foreign currency exchange rate risk. For more information on risks associated with currency exchange rates, see the section of this prospectus entitled “Risk Factors—Risks Related to Our Business—We are exposed to foreign currency exchange loss and convertibility risks.” The Issuer has been and is exposed to interest rate fluctuations primarily on the floating rate Original Promissory Note issued to its direct parent, VimpelCom Amsterdam B.V., which note was refinanced by the Outstanding Promissory Note (which also bears a floating rate). For more information on the Original Promissory Note and the Outstanding Promissory Note, see the section of this prospectus entitled “Risk Factors—Risks Related to Our Business—The Issuer’s substantial Outstanding Promissory Note held by VimpelCom Amsterdam B.V. will rank pari passu with the Notes until the Issuer’s insolvency, when it becomes subordinated to the Notes, but until the Issuer’s insolvency it may be prepaid in whole or in part, potentially diverting funds from payment of the Notes to payment of the Outstanding Promissory Note or reducing the assets of the Issuer available upon insolvency for application to the Notes.” It is our intention to increase the floating rate share of our external debt portfolio over time in order to improve the funding cost profile of the company as a whole. The following table summarizes information, as of September 30, 2012, about the maturity of our financial instruments that are sensitive to foreign currency exchange rates, primarily represented by foreign currency denominated debt obligations (in millions of U.S. dollars, excluding the Outstanding Promissory Note): Fair Value as Aggregate nominal amount of total debt denominated in of foreign currency outstanding as of December 31, September 30, 2012 2013 2014 2015 2016 2017 2012 Total debt (excluding the Outstanding Promissory Note): Fixed Rate (US$) ...... 3,937.9 3,119.0 3,112.0 3,112.0 2,012.0 2,012.0 4,271.5 Average interest rate ...... 8.1% 8.0% 8.1% 8.1% 8.4% 8.4% – Variable Rate (US$) ...... 77.3 54.0 30.6 7.3 – – 93.7 Average interest rate ...... 2.7% 2.7% 2.7% 2.7% – – – 4,015.2 3,173.0 3,142.6 3,119.3 2,012.0 2,012.0 4,365.2 In accordance with our policies, we do not enter into any treasury management transactions of a speculative nature.

102 BUSINESS Overview We are a holding company for integrated telecommunications services operators, providing voice and data services through a range of traditional and broadband mobile and fixed technologies. Our group includes companies operating in Russia, Ukraine, Kazakhstan, Uzbekistan, Armenia, Tajikistan, Georgia, Kyrgyzstan, the Kingdom of Cambodia and Laos. The operations of these companies cover a territory with a total population of approximately 271 million. We are incorporated and existing under the laws of the Netherlands and are the parent company of a number of operating subsidiaries and holding companies in various jurisdictions. The Issuer is a wholly owned indirect subsidiary of VimpelCom Ltd. We currently operate our telecommunications services in Russia, Kazakhstan, Armenia, Tajikistan, Uzbekistan, Georgia, Kyrgyzstan, Cambodia and Laos primarily under the “Beeline” brand name. In Ukraine, we primarily provide services under the “Kyivstar”, “Kyivstar Business” and “djuice” brands. Our total operating revenues were US$12,063.0 million for the year ended December 31, 2011, compared to US$10,513.0 million for the year ended December 31, 2010 and US$8,813.0 million for the year ended December 31, 2009, and US$9,186.0 million for the nine months ended September 30, 2012 compared to US$9,003.0 million for the nine months ended September 30, 2011. Our operating profit was US$2,253.0 million for the year ended December 31, 2011, compared to US$2,847.0 million for the year ended December 31, 2010 and US$2,618.0 million for the year ended December 31, 2009, and US$2,356.0 million for the nine months ended September 30, 2012 compared to US$2,182.0 million for the nine months ended September 30, 2011. Profit for the period attributable to the owners of the parent was US$779.0 million for the year ended December 31, 2011, compared to US$1,810.0 million for the year ended December 31, 2010 and US$1,142.0 million for the year ended December 31, 2009, and US$968.0 million for the nine months ended September 30, 2012 compared to US$967.0 million for the nine months ended September 30, 2011. As of September 30, 2012, our total number of mobile subscribers was 105.7 million (including 56.2 million in Russia, 25.2 million in Ukraine, 8.6 million in Kazakhstan, 9.2 million in Uzbekistan, 0.8 million in Armenia, 0.9 million in Tajikistan, 1.0 million in Georgia, 2.4 million in Kyrgyzstan, 1.0 million in Cambodia and 0.3 million in Laos). As of September 30, 2012, we had approximately 3.1 million residential broadband subscribers. As of September 30, 2011, our total number of mobile subscribers was 101.6 million (including 56.8 million in Russia, 24.7 million in Ukraine, 8.3 million in Kazakhstan, 5.7 million in Uzbekistan, 0.8 million in Armenia, 0.9 million in Tajikistan, 0.8 million in Georgia, 2.3 million in Kyrgyzstan, 0.8 million in Cambodia and 0.5 million in Laos). As of September 30, 2011, we had approximately 2.3 million residential broadband subscribers. As of December 31, 2011, our total number of mobile subscribers was 103.1 million (including 57.2 million in Russia, 24.8 million in Ukraine, 8.4 million in Kazakhstan, 6.4 million in Uzbekistan, 0.8 million in Armenia, 1.0 million in Tajikistan, 0.8 million in Georgia, 2.4 million in Kyrgyzstan, 1.0 million in Cambodia and 0.4 million in Laos). As of December 31, 2011, we had approximately 2.7 million residential broadband subscribers. As of December 31, 2010, our total number of mobile subscribers was 92.7 million (including 52.0 million in Russia, 24.4 million in Ukraine, 6.9 million in Kazakhstan, 4.8 million in Uzbekistan, 0.7 million in Armenia, 0.8 million in Tajikistan, 0.6 million in Georgia, 1.9 million in Kyrgyzstan and 0.7 million in Cambodia). As of December 31, 2010, we had approximately 3.7 million residential broadband subscribers. As of December 31, 2009, our total number of mobile subscribers was 64.6 million (including 50.9 million in Russia, 2.0 million in Ukraine, 6.1 million in Kazakhstan, 3.5 million in Uzbekistan, 0.5 million in Armenia, 0.7 million in Tajikistan, 0.4 million in Georgia and 0.4 million in Cambodia). As of December 31, 2009, we had approximately 2.2 million residential broadband subscribers.

History and Development In November 1996, OJSC VimpelCom became the first Russian company since 1903 to list shares on the NYSE. As discussed below, on May 14, 2010, OJSC VimpelCom’s ADSs, were delisted from the NYSE as a result of the completion of the acquisition of its shares, including shares represented by ADSs, by VimpelCom Ltd. For more information regarding the acquisition of OJSC VimpelCom’s shares and the delisting of its ADSs from the NYSE, see the notes to our audited consolidated financial statements included elsewhere in this prospectus.

103 In 1997, Kyivstar was granted a 900 MHz GSM cellular license for operation in Ukraine, which was reissued and amended in 2001, authorizing it to provide services using both 900 MHz GSM and 1800 MHz GSM frequency ranges throughout the territory of Ukraine. Kyivstar was also granted 900 MHz GSM and 1800 MHz GSM radio frequency licenses for operation in defined regions of Ukraine. In addition, Kyivstar was granted other licenses that give it the right to develop and operate wireless, long distance and local wire networks, and a data transfer network throughout Ukraine. In December 1998, Telenor, Norway’s leading telecommunications company became a strategic partner in OJSC VimpelCom. That same year, OJSC VimpelCom became the first major mobile telecommunications services provider in Russia to offer prepaid tariff plans to our subscribers. To accelerate the development of OJSC VimpelCom’s regional GSM license portfolio, in May 2001, OJSC VimpelCom signed an agreement with Alfa Group which purchased strategic ownership interests in OJSC VimpelCom. Telenor also participated in the transaction. OJSC VimpelCom’s expansion into Russia accelerated in 2003. In April 2003, OJSC VimpelCom launched operations in St. Petersburg and by the end of that year had 55 regional networks in commercial operation and a total subscriber base in Russia exceeding 10.0 million. In August 2004, OJSC VimpelCom began to implement its strategic plan to expand its operations into the CIS by acquiring 50.0% plus one share of KaR-Tel, a mobile telecommunications services provider with a national GSM license in Kazakhstan. OJSC VimpelCom has since increased its stake and restructured its interest so that it currently holds 71.5% of KaR-Tel. OJSC VimpelCom continued its growth strategy throughout 2005 and 2006 by acquiring 100.0% of URS in Ukraine in November 2005, 60.0% of Limited Liability Company Tacom in Tajikistan in December 2005, 100.0% of each of Bakarie Uzbekistan Telecom Limited Liability Company (“Buztel”) and Limited Liability Company Unitel in Uzbekistan in January and February 2006, respectively, 51.0% of Limited Liability Company Mobitel in Georgia in July 2006 and 90.0% of CJSC “ArmenTel” in Armenia in November 2006. In July 2006, OJSC VimpelCom merged Buztel into Unitel. In November 2004 and May 2005, respectively, we completed the mergers of OJSC VimpelCom subsidiaries, Open Joint Stock Company “VimpelCom-Region” and Open Joint Stock Company “KB Impuls” into OJSC VimpelCom. In April and May 2006, we completed the mergers of the following wholly owned subsidiaries into OJSC VimpelCom: Closed Joint Stock Company “Sotovaya Company”, Closed Joint Stock Company “StavTeleSot”, Closed Joint Stock Company “Vostok-Zapad Telecom”, Open Joint Stock Company “Orensot”, Open Joint Stock Company “Dal Telecom International”, Closed Joint Stock Company “Extel”, and Open Joint Stock Company “Beeline-Samara”. In September 2005, OJSC VimpelCom acquired 89.6% of Closed Joint Stock Company “Sakhalin Telecom Mobile” (“STM”) which holds a GSM-1800 license covering the Russian territory of Sakhalin. In December 2006, we increased our stake in Tacom to 80.0%, and in April 2007, we increased our stake in ArmenTel to 100.0%. In August 2007, we acquired 100.0% of Closed Joint Stock Company “Corporation Severnaya Korona” (“CSK”) a mobile telecommunications service provider in the Irkutsk region of Russia. On January 18, 2008, OJSC VimpelCom’s indirect wholly owned subsidiary Lillian Acquisition, Inc. commenced a tender offer to purchase any and all outstanding shares of Golden Telecom’s common stock. Golden Telecom was a leading facilities-based provider of integrated telecommunications and Internet services in major population centers throughout Russia and other countries of the CIS. The acquisition of 100.0% of Golden Telecom was completed in February 2008. Following the acquisition, OJSC VimpelCom was able to offer a broad portfolio of services in both the fixed-line and mobile markets. In June 2008, we completed our acquisition of 49.0% of Closed Joint Stock Company “Cortec” operating under the trademark “Corbina,” from Inure Enterprises Ltd. for approximately US$404.0 million. Corbina owns a fibre-optic network which provides FTTB broadband Internet services in Russia. As a result of this acquisition, together with OJSC VimpelCom’s subsidiary Sovintel, we owned 100.0% of the shares of Corbina. On March 5, 2009, we completed the merger of Corbina into Closed Joint Stock Company “Investelectrosvyaz”. On November 24, 2010, Sovintel and Investelectrosvyaz merged with and into OJSC VimpelCom. In December 2010, OJSC VimpelCom filed applications with the relevant authorities to re-issue to it the licenses that were previously held by Sovintel, its subsidiaries and Investelectrosvyaz and, to date, all necessary licenses and frequencies were re-issued. On October 23, 2008, Ararima acquired 49.9% of Morefront, which owned 100.0% of Euroset, the leading mobile handset retailer and dealer for major mobile network operators in Russia, for total consideration of US$226.0 million. The total consideration was reduced to US$201.0 million as the result of a settlement in our

104 litigation with Creative Retail Management Limited, the former shareholder of Morefront. On March 17, 2011, the Euroset group was restructured. As a result of the restructuring, we owned directly 49.9% of the shares of Euroset Holding N.V., which owned 100.0% of the shares of Euroset. This acquisition allowed us to significantly enhance our distribution capabilities. On December 6, 2012, Ararima acquired an additional 0.1% of Euroset Holding N.V., increasing our indirect ownership to 50.0%. As a result of this transaction, Ararima and Lefbord have equal economic interests and corporate governance rights. As part of the same transaction, Lefbord Investments Limited, a Cyprus company in which OJSC Megafon and Garsdale Services Investment Ltd. (a BVI Company) are shareholders purchased the other 50.0% of Euroset Holding N.V. from Alpazo Limited, a Cyprus company. On October 30, 2008, OJSC VimpelCom completed the merger of the following wholly owned subsidiaries into OJSC VimpelCom: Closed Joint Stock Company “RTI Service-Communications”, Closed Joint Stock Company “IMPULS-KB”, Closed Joint Stock Company “MSS-start”, Closed Joint Stock Company “Karachaevo-CherkesskTeleSot” and Closed Joint Stock Company “Corporation Severnaya Korona”. On February 6, 2009, OJSC VimpelCom completed the merger of Closed Joint Stock Company “Kabardino-Balkarskiy GSM” into OJSC VimpelCom. In October 2009, Telenor ASA, the parent company of the Telenor Group, and Altimo Holdings, a member of the Alfa Group and the parent company of Eco Telecom Limited, announced that they agreed to combine their ownership of OJSC VimpelCom and Kyivstar, under a new company called VimpelCom Ltd. Kyivstar is a Ukrainian mobile operator, 56.5% of which was owned by subsidiaries of Telenor and 43.5% of which was owned by subsidiaries of Altimo. We refer to the combination in this prospectus as the “VimpelCom Ltd. Transaction.” The VimpelCom Ltd. Transaction involved a series of transactions, including an exchange offer by VimpelCom Ltd. comprising (i) an offer to all holders resident in the United States (including its territories and possessions) of shares of OJSC VimpelCom’s common and preferred stock and to all holders of OJSC VimpelCom’s ADSs, wherever located, referred to in this prospectus as the “U.S. Offer,” and (ii) a separate voluntary tender offer to all holders of shares of OJSC VimpelCom’s common and preferred stock, wherever located, referred to in this prospectus as the “Russian Offer.” The Russian Offer and the U.S. Offer are collectively referred to in this prospectus as the “VimpelCom Ltd. Exchange Offers.” Completion of the VimpelCom Ltd. Exchange Offers was conditioned upon greater than 95.0% of OJSC VimpelCom’s shares, including those represented by ADSs, being validly tendered and not withdrawn, in addition to other conditions. On April 21, 2010, all conditions of the VimpelCom Ltd. Exchange Offers were satisfied, and VimpelCom Ltd. acquired approximately 98.0% of OJSC VimpelCom’s outstanding shares, including shares represented by ADSs. Immediately following completion of the VimpelCom Ltd. Exchange Offers, subsidiaries of Telenor and Altimo caused their direct and indirect interests in Kyivstar to be transferred to us. On April 16, 2010, VimpelCom Ltd’s shares were listed on the NYSE. On May 14, 2010, OJSC VimpelCom’s ADSs were delisted from the NYSE, and on June 2, 2010, OJSC VimpelCom’s shares were excluded from the list of traded securities at the Russian Trading System. On August 6, 2010, VimpelCom Ltd. completed the acquisition of all of OJSC VimpelCom’s shares, including those represented by ADSs, from OJSC VimpelCom’s remaining minority shareholders by way of a squeeze-out process under Russian law commenced on May 25, 2010. On October 20, 2010, we exercised our call option to acquire from Crowell 50.1% of the issued share capital of Menacrest, which is the parent company of Sky Mobile, a mobile operator in Kyrgyzstan holding GSM and 3G licenses to operate over the entire territory of Kyrgyzstan. The purchase price for the transaction was US$150.3 million, which was set off against part of the outstanding loan we made to Crowell in 2008. For more information relating to our loan to Crowell, see the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Investing Activities—Other Investing Activities.” The remaining 49.9% of Menacrest, over which we have a call option, is owned by Crowell. On November 24, 2010, OJSC VimpelCom completed the merger of the following wholly owned subsidiaries into OJSC VimpelCom: Closed Joint Stock Company “EDN Sovintel”, Closed Joint Stock Company “Investelectrosvyaz”, Closed Joint Stock Company “Comincom-Chernozemie”, Closed Joint Stock Company “Bryansktel”, Closed Joint Stock Company “Tatarstan Intellectual Communications”, Closed Joint Stock Company “Company TeleCom-Samara”, Closed Joint Stock Company “Company TeleCom-Kubanelectrosvyaz”, Closed Joint Stock Company “Comtel”, Closed Joint Stock Company “Telecommunications agency”, Closed Joint Stock Company “SOCHITELECOM” and Closed Joint Stock Company “FORATEC COMMUNICATION”. In March 2011, we formed a joint venture with a local partner in Kazakhstan to combine our 100% interest in LLP SA-Telecom and the local partner’s 100% interest in LLP 2Day Telecom, both of which are Kazakhstan entities engaged in the provision of fixed-line telecommunications services. We hold a 59.0%

105 interest in the joint venture and the local partner holds a 41.0% interest. In August 2011, LLP SA Telecom was merged into LLP 2Day Telecom, with LLP 2Day Telecom as the surviving entity. On April 15, 2011, our indirect parent, VimpelCom Ltd. completed the acquisition of Wind Telecom S.p.A., an international provider of mobile and fixed-line telecommunications and Internet services with operations in Europe (primarily Italy), North America, Africa, the Middle East and Asia. The acquisition of Wind Telecom is referred to in this prospectus as the “Wind Telecom Transaction.” Weather II, the former owner of Wind Telecom, received 325,639,827 newly issued VimpelCom Ltd. common shares, 305,000,000 newly issued VimpelCom Ltd. convertible preferred shares and US$1,495.0 million in cash. The issuance of new VimpelCom Ltd. shares for the acquisition was approved by VimpelCom Ltd. shareholders at a special general meeting on March 17, 2011. As part of the Wind Telecom Transaction, certain assets were demerged from the Wind Telecom group and transferred back to Weather II. As a result of the Wind Telecom Transaction, VimpelCom Ltd. acquired operations of Wind Telecom in Algeria, Bangladesh, Pakistan, Burundi, Central African Republic, Italy and equity shareholdings in Canadian and Zimbabwean operations. Wind Telecom’s businesses and operations are not included in the discussion of our businesses and operations that follows because Wind Telecom is held by our parent company and is therefore not part of our group. On June 7, 2011, OJSC VimpelCom signed an agreement with KT Corporation and Summit Telecom Global Management B.V. (a subsidiary of Sumitomo Corporation) to acquire 89.99% of the shares of OJSC NTC, a leading mobile operator in the Primorskiy krai in the Far East super-region of Russia, with a purchase price based on an enterprise value of US$420.0 million. We acquired an additional 10.0% interest in OJSC NTC on October 21, 2011 pursuant to a mandatory tender offer required under Russian law and the remaining 0.01% interest in OJSC NTC on February 27, 2011 pursuant to a squeeze out under Russian law. On August 24, 2011, OJSC VimpelCom completed a transaction with Crowell to combine our respective shareholdings in Limnotex, the sole shareholder of KaR-Tel, and Menacrest, the sole shareholder of Sky Mobile. As a result of the transaction, Menacrest became a wholly owned subsidiary of Limnotex in exchange for the issuance of new shares of Limnotex to one of our wholly owned subsidiaries, and Crowell. As a result of the restructuring, we hold a 71.5% stake in Limnotex and Crowell owns the remaining 28.5%. On April 25, 2012, OJSC VimpelCom completed the merger of the following wholly owned subsidiaries into OJSC VimpelCom: Closed Joint Stock Company “Altaigrif”, Closed Joint Stock Company “Business Communications Agency”, Closed Joint Stock Company “Informtechnology”, Closed Joint Stock Company “Belgorod Digital Lines”, Open Joint Stock Company “SeverTransCom”, Open Joint Stock Company “POLARCOM” and Closed Joint Stock Company “ELTEL”. For more information on our recent acquisitions, see the sections of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments and Trends” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Investing Activities.” Our capital expenditures include purchases of licenses, new equipment, new construction, upgrades, software, other long-lived assets and related reasonable costs incurred prior to intended use of the noncurrent assets, accounted at the earliest event of advance payment or delivery. Long-lived assets acquired in business combinations are not included in capital expenditures. For more information on our principal capital investments and investing activities, including acquisitions and divestitures of interests in other companies, and method of financing, see the sections of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Investing Activities” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Future Liquidity and Capital Requirements.”

106 Organizational Structure The table below sets forth our operating and significant subsidiaries, including those subsidiaries that hold our principal telecommunications licenses, and our percentage ownership interest, direct and indirect, in each subsidiary as of September 30, 2012. Our percentage ownership interest is identical to our voting power in each of the subsidiaries. Country of Percentage Subsidiary Incorporation Ownership Interest OJSC VimpelCom ...... Russia 100% minus one share(1) Limnotex Developments Limited ...... Cyprus 71.5%(2) Kyivstar ...... Ukraine 99.9961%(3) LLP “KaR-Tel” ...... Kazakhstan 71.5%(4) LLC “Tacom” ...... Tajikistan 98.0%(5) PJSC “Ukrainian RadioSystems” ...... Ukraine 100%(6) LLC “Golden Telecom” ...... Ukraine 100%(7) LLC “Unitel” ...... Uzbekistan 100%(8) LLC “Mobitel” ...... Georgia 51.0%(9) CJSC “ArmenTel” ...... Armenia 100% “Sotelco” Ltd...... Cambodia 90.0%(10) LLC “Sky Mobile” ...... Kyrgyzstan 50.1%(11) VimpelCom Lao Co. Ltd...... LaoPDR 78.0%(12)

(1) One share is owned by VimpelCom Ltd. (2) OJSC VimpelCom holds 71.5% indirectly through a wholly owned holding company. (3) The Issuer also holds an effective stake of 99.9961% in Kyivstar, through its direct ownership of 73.8038% of Kyivstar’s shares and Kyivstar’s ownership of 26.1922% of its own shares as a result of its merger with its former shareholder Storm LLC, with Kyivstar as the surviving company. The remaining 0.0039% of Kyivstar’s shares are owned by VimpelCom Ltd. Although the shares in Kyivstar held by Kyivstar are accounted for calculation of aggregate ownership percentage by the Ukrainian securities depositary, these shares are not taken into account for the purposes of paying dividends and determining quorum or voting at Kyivstar shareholders meetings. By law, Kyivstar is required to either sell or cancel its shares that it owns. As of the date of this prospectus, Kyivstar has not yet made a decision whether it will sell or cancel such shares, because certain regulatory procedures related to cancellation of shares acquired by issuers in corporate reorganizations have not been adopted. There are no financial penalties or explicit liability associated with Kyivstar’s failure to sell or cancel the shares. (4) Limnotex Developments Limited holds 100% directly. (5) We hold 98.0% indirectly through a wholly owned BVI holding company. (6) Kyivstar holds 100% directly. (7) OJSC VimpelCom holds 100% indirectly through a number of its wholly owned subsidiaries. (8) OJSC VimpelCom holds 100% indirectly through wholly owned Dutch and BVI holding companies. (9) OJSC VimpelCom holds 51.0% indirectly through a wholly owned BVI holding company. (10) OJSC VimpelCom holds 90.0% through a wholly owned Cypriot holding company and a 90.0% owned BVI holding company. (11) Limnotex Developments Limited holds 100% through its wholly owned Cypriot subsidiary. (12) OJSC VimpelCom holds 78.0% indirectly through two wholly owned Dutch holding companies.

Description of Our Business Our Mobile Telecommunications Business We generally offer the following mobile telecommunications services to our subscribers: • mobile telecommunications services under contract and prepaid plans for both corporate and consumer segments; • value added and call completion services; • our value added services include messaging services, content/infotainment services, data access services, financial value added services (which help customers manage their credit balances), location based services (which monitor subscriber locations), media and content delivery channels; • access to both national and international roaming services, which allow our subscribers and subscribers of other mobile operators to receive and make international, local and long distance calls while outside of their home network; • wireless Internet access; and • other services.

107 Our Fixed-Line Telecommunications and Our Fixed Internet Business We offer voice, data and Internet services to corporations, operators and consumers using our metropolitan overlay network in major cities throughout Russia, Ukraine and the CIS. In our fixed/mobile integrated business structure in Russia, Ukraine and the CIS, fixed-line telecommunications use intercity fiber optic and satellite-based networks. Our fixed business in Russia, Ukraine and the CIS is organized into three categories: • Business and Corporate Services, providing a wide range of telecommunications and information technology and data center services to companies and high-end residential buildings; • Carrier and Operator Services, which provide consolidated management of our relationship with other carriers and operators. The two main areas of focus in this line of business are: • generating revenue by provisioning a specific range of telecommunications services to other mobile and fixed-line operators and ISPs in Russia and worldwide; and • optimizing costs and ensuring the quality of our long distance voice, Internet and data services to and from subscribers of other telecommunications operators and service providers worldwide by means of interconnection agreements; and • Consumer Internet Services, which provide fixed-line telephony, Internet access and home phone services (on a VoIP and copper wire basis) to customers in Russia, Ukraine, Uzbekistan, Armenia and Kazakhstan. For a description of our operations in Russia, Ukraine, the CIS and Southeast Asia, see the sections below entitled “—Description of Operations in Russia,” “—Description of Operations in Ukraine,” “—Description of Operations in the CIS” and “—Other Operations.”

Strategy Our strategy focuses on increased cash flows, and our businesses combine mature, strong cash-generating companies with emerging growth opportunities in a number of regions. We combine strong and growing positions in mobile broadband businesses with a selective presence in fixed-line, which is expected to further support our growth strategy as mobile and broadband services continue to expand across our markets. Through our decentralized business model, we seek to capture profitable growth in mobile data, fixed data and mobile voice, by tailoring our strategy in each individual market according to its local characteristics. We believe that subscribers will increasingly rely on mobile broadband as the primary means of accessing the Internet and other data services and, in the medium term, the principal technology for such access will be LTE. As such, our strategy is primarily mobile-based and we seek to prioritize resources and investment allocation to mobile capacity and coverage. In particular, our focus will be on capturing growth in mobile data services by moving away from unlimited plans to tiered pricing, rationally managing traffic and differentiating our services through more sophisticated offerings. This broader view of the business provides the basis for VimpelCom Ltd.’s strategy, or “Value Agenda,” which is focused on increasing net cash from operating activities. The Value Agenda is based on delivering excellence to our subscribers and implementing a passionate, performance oriented culture with a key focus on operations and execution at the business unit level. As part of this strategy, which is focused on increasing net cash from operating activities, we have identified four key strategic initiatives that we will seek to implement within each of our business units:

• Profitable Growth. We aim to drive revenue growth that leads to higher profitability by focusing on gaining share in mobile data revenues and capitalizing on areas such as mobile financial services and partnerships with over-the-top (“OTT”) players, while limiting cost of traffic. We seek to increase mobile data revenues by driving smartphone and tablet penetration through strong local distribution. We will also be introducing value-based commissioning, promoting tiered pricing for speed and time of data, partnering with internet players and improving network quality. We believe effective deployment of integrated bundles will allow us to monetize the strong growth in mobile data.

• Customer Excellence. We are committed to creating a superior customer experience, optimizing distribution and developing superior pricing capabilities. We plan to undertake a systematic effort involving dedicated analytics and research to continuously optimize the customer experience and

108 drive superior pricing through integrated bundles that combine traditional voice with SMS and, most importantly, data. This will provide value to the customer while at the same time protect our revenue stream from cannibalization among various services, such as SMS and Instant Messaging (“IM”). In order to optimize our distribution, we will focus on the most efficient distribution channels in each market. We expect these actions to reduce churn and limit our retention and commercial costs. • Operational Excellence. Operational excellence and operational cost management represents a company-wide strategy and we seek to implement this strategy at all levels of our organization by taking a holistic approach at both our group and business unit levels and implementing a continuous culture of improvement across our businesses. • Capital Efficiency. Our goal is to ultimately reduce the ratio of our capital expenditure to revenues over time by deploying capital more efficiently through increased network sharing and continued business portfolio optimization and capital structure optimization. An important element of this strategy is network outsourcing and sharing in order to improve both network utilization and quality. We derive advantages from the VimpelCom Ltd. Group’s procurement model and systematic approach to managing working capital and optimizing our capital structure. Within the VimpelCom Ltd. Group’s broad priorities, we pursue the following specific objectives: driving value capture in the mature voice business in core markets, emerging as a leader from the transition to a data- centric world and selectively building scale. • Drive value capture in the mature voice business in core markets. • We recognize that our industry is one where the prices of the traditional products and services that we provide are generally falling over time, despite price elasticity being significantly below one. In contrast, many of the costs of delivering these products and services experience significant inflationary pressures. To address this imbalance, we continuously focus on cost efficiency, especially on optimizing business support costs. We also strive to design our go-to-market actions thoughtfully, with the dual ambition of ensuring that we remain a highly attractive choice for consumers at all times, while at the same time promoting responsible industry conduct. • We also see that the telecommunications market is highly heterogeneous, consisting of a significant number of sub-segments with partially unique needs. Therefore, we selectively, but aggressively seek to capture opportunities in the B2C (consumer) and B2B (business) sub-segments, especially in those areas where we can leverage the fact that we have both, fixed and mobile assets, or where our international footprint can be a source of competitive advantage. • We believe that the shift away from the traditional voice- and SMS-centric telephone company world and towards a data-centric world is fundamental and we therefore carefully scrutinize any investment in legacy infrastructure that does not also support our future data business, while ensuring that we remain able to deliver a set of core traditional telephone company services that fully meet customer expectations. • Emerge as leader from the transition to a data-centric world. • We believe that the move towards a data-centric world is the single biggest industry change that our core mobile business has experienced so far. We also see that a key success factor over the coming few years for any telecommunications operator with a significant mobile business will be to manage pricing approaches well. We therefore spend considerable time and effort to ensure that we offer a pro-active and customer-centric transition from legacy voice pricing to data-centric pricing with bundled tariff plans, with the ambition to retain and ultimately grow ARPU. • We see that data offerings are already becoming a significant operator decision parameter for certain customer segments, and we expect this trend to broaden further. To ensure that we are the natural consumer choice in the data-centric world we aim to provide the best “value-for- money” data product portfolio while staying highly price-competitive at all times. • We recognize that a data network is more complex to manage than a voice network and that the optimization potential in a data network is significant. We therefore aim to drive smart cost efficiency in technology investments, including traffic management and off-loading as well as content compression.

109 Competitive Strengths We believe that we are well positioned to capitalize on opportunities in all our mobile, fixed-line and broadband telecommunications markets. We seek to differentiate ourselves from our competitors by innovative products, high-quality mobile, fixed-line and broadband telecommunications service offerings, specialized customer care and strong, recognized brand names, providing unified technological and IT-procurement.

• Recognized local brand names. We market our mobile services under local names in each of our markets. Our “Beeline” brand name is incumbent for eight countries (Russia, Kazakhstan, Uzbekistan, Armenia, Tajikistan, Georgia, Kyrgyzstan and Cambodia). Primarily as a result of our innovative marketing and brand licensing efforts, our “Beeline” brand name is among the most recognized brand names in business unit Russia and business unit CIS. We market our mobile services primarily under the “Kyivstar”, “Kyivstar Business”, “djuice” brands in Ukraine. Each of these brands are very well known in their markets and have high top of mind brand awareness.

• Product and service innovation. In our mobile business, we continue to seek out new products and services to provide our subscribers with faster access and easier usage to be competitive in the markets in which we operate. We continue to develop services oriented towards our prepaid consumer segment. • Pricing. Acknowledging differences in competitive situations and consumer behavior across markets, we undertake a systematic effort involving dedicated analytics and research to develop an optimal pricing structure. This pricing approach is designed to ensure that we maximize value from all segments and lets us offer different tariffs and solutions to all market segments and types of companies, including special tariff options and bundles for voice, messaging and data services. • Data Services. We believe data services are driving market growth and we are focusing our efforts at winning this segment. We are actively developing data services in all markets as part of our pre- paid and post-paid tariff proposals. We also offer USB dongles (for GPRS and 3G use) to all customer segments with a separate price plans targeted to large screen users. We now offer a broad portfolio of competitive services in both the fixed-line and mobile corporate data markets that are designed to match the needs of our customers. For our business and corporate clients, we offer a wide range of data services, including wireless office internet solutions and high bandwidth corporate Internet access. • Specialized customer care. We provide specialized customer service to our different subscriber segments. We believe that our ability to provide specialized customer service has helped us maintain a high level of subscriber satisfaction with our products and services and control churn. We also believe that we have provided particularly strong customer service to our corporate subscribers. • Broad distribution network. We have large distribution network for mobile and fixed services in markets of our operation. The network is used both for sale purpose as well as for the purpose of customer care thus providing higher standards of customer service. Our network consists of our own branded shops as well as franchise network, simple retail agreements with local retail players and networks of our strategic retail partners. Proper mix of these channels secures our position in the market at a proper cost and provides us with a platform for new business growth which is beyond our core business of mobile and fixed. • Unified, sophisticated mobile network. We are able to provide uniform mobile products and services that we develop and launch on an international rather than local basis due to our centralization of IT platform which operates throughout our unified mobile network system. We believe that our level of centralization and standardization is unique in the license areas where we operate and that this gives us a competitive advantage and efficiency in developing and rolling out new services. We build our mobile networks with advanced technology from the world’s leading mobile telecommunications equipment suppliers, such as Alcatel-Lucent, Ericsson, Nokia-Siemens Networks, and Huawei in order to provide our subscribers with high-quality, dependable networks capable of offering enhanced VAS and features.

110 Description of Operations in Russia Mobile Business in Russia Description of Mobile Services in Russia In Russia, we primarily offer our mobile telecommunications services to our subscribers under two types of payment plans: postpaid plans and prepaid plans. As of September 30, 2012, approximately 1.5% of our subscribers in Russia were on postpaid plans and approximately 98.5% of our subscribers in Russia were on prepaid plans.

Call Completion and Value Added Services We provide all of our customers with a variety of call completion services and value added services, including the following: • Call Completion Services. Our call completion services include two groups of services: “Possibilities with zero” services and “Basic VAS” services, which allow us to increase voice traffic and revenue without causing average price per minute to decrease. Our “Possibilities with zero” group of services helps our prepaid subscribers stay connected even in the event that they have a zero balance in their account with services that include, among others, “Receiving Party Pays,” “Call Me Back” and “Fill Up My Balance.” Our “Basic VAS” services include, among others, caller-ID, voicemail, call forwarding, conference calling, call blocking and call waiting. • Value Added Services. Our value added services include messaging services, content/infotainment services, data access services (on GPRS and 3G basis), financial value added services (which help customers manage their credit balances), location based services (which monitor subscriber locations) media and content delivery channels. Our messaging portfolio includes SMS, MMS (which allows subscribers to send pictures, audio and video to mobile phones and to e-mail), voice messaging and mobile instant messaging. Different price offers for messaging services are offered to different segments of our customers. We offer our subscribers various types of content/infotainment services, including: • SMS services (including information services such as news, weather, entertainment chats and friend finder); • voice services (including referral services); • content downloadable to telephone (including music, pictures, games and video) and • ringback tone (“RBT”) (customized ringtones). Our data access services are offered on a GPRS and 3G basis and include access to the Internet. In partnership with Opera Software ASA, we offer unlimited Internet browsing through the Opera Mini and Opera Turbo web browsers. Our media and content delivery channels include the following: • RBT, Chameleon (service based on CellBroadcast technology providing free information content such as news, weather and sports), dating services and location-based services (such as the ability to locate subscribers or nearby facilities), information and content services (such as weather forecasts or horoscopes), mobile television and video streaming. Google Play Carrier Billing (offering certain Google products and payment through a subscriber’s mobile account), unstructured supplementary services data (“USSD”) menu (a self-help and entertainment portal), Dynamic SIM Toolkit (DSTK) portal (a self-help and entertainment portal), Interactive Voice Response (IVR) portal (information and content services portal), SMS services, Bee Number requests (information and content services provider) and mobile portal (browsing, entertainment and information services provider); and • SMS, voice and USSD technology through which third party content is provided. Roaming As of September 30, 2012, our operations in Russia had active roaming agreements with 571 GSM networks in 213 countries, respectively, in Europe, Asia, North America, South America, Australia and Africa. In addition, as of September 30, 2012, we provided to our Russian subscribers GPRS roaming with 427 networks, in 172 countries. Roaming agreements for our operations in Russia now cover all major roaming destinations, and we continue developing roaming services for our Russian subscribers.

111 Generally, each agreement with roaming partners provides that the operator hosting the roaming call sends us a bill for the roaming services used by our subscriber while on the host’s network. We pay the host operator for the roaming services and then bill the amount due for the provision of roaming services on our subscriber’s monthly bill. In 2003, OJSC VimpelCom became the first Russian mobile company to launch a customized application for mobile network enhanced logic (“CAMEL”), an intranetwork prepaid roaming service. This service allows prepaid subscribers to automatically receive access to roaming services provided they have a positive account balance. The CAMEL service allows us to implement real time cost control, provide more dynamic service to our clients and reduce the number of delinquent subscriber accounts caused by roaming. As of September 30, 2012, we provided our Russian subscribers CAMEL roaming through 224 operators in 128 countries. As of September 30, 2012, we also had domestic roaming agreements with 12 regional GSM providers in Russia, which provide roaming for subscribers in more than 10 cities across Russia, including small towns and settlements.

Wireless Internet Access We provide our prepaid customers with wireless Internet access through GPRS/EDGE and 3G/HSPA (high-speed packet access). We launched 3G Internet services commercially in September 2008 in Russia. We currently offer Internet access through USB modems in every region of Russia, and our subscribers benefit from 3G speeds in all regions (including 1,084 cities) in Russia as of September 30, 2012. We offer special wireless Plug&Play-USB modems, which provide our customers with a convenient tool for Internet access.

Mobile Telecommunications Licenses in Russia LTE License In July 2012, OJSC VimpelCom was awarded a mobile license, a data transmission license, a voice transmission license and a telematic license for the provision of LTE services in Russia. For information regarding the other operators holding LTE licenses with whom we compete, see the section of this prospectus entitled “— Competition—Mobile Business in Russia.” LTE is the next step in wireless technology and is expected to be the mobile broadband platform for new services and innovation for the future, which in practice will provide subscribers with significantly faster data rates for both uploading and downloading content, a greater number of mobile TV channels and better image quality. These licenses will allow OJSC VimpelCom to provide services using radio-electronic devices in Russia via networks that use LTE standard equipment within any of the following frequency bands: 735-742.5/776-783.5 Mhz; 813.5-821/854.5-862 Mhz; 2550-2560/2670-2680 Mhz. The three channels (one channel (10 MHZ) in frequency duplex in 2500-2690 MHZ and two channels (7.5 MHZ) in frequency duplex for 720-862 MHZ), allocated to us in accordance with the licenses, have restrictions in use. To remove restrictions we have to perform certain organizational technical measures including, among others, radio frequency bands releasing spectrum conversion, re-farming and re-allocation between operators. We expect that the roll out of the LTE network will occur using a phased approach based on a pre-defined schedule pursuant to the requirements of the license. Under the phased approach, OJSC VimpelCom is required to launch LTE services by June 1, 2013. OJSC VimpelCom is then required to extend services to six regions in Russia by the end of 2013 and a specified number of additional regions in each year until December 1, 2019 when services must cover all of Russia. OJSC VimpelCom is required to comply with the following conditions among others under the terms of the license: (i) invest at least RUB 15 billion in each calendar year (including the period from July 12, 2012 to December 1, 2013) in the construction of its federal LTE network until the network is completed, which must occur before December 1, 2019; (ii) provide certain data transmission services in all secondary and higher educational institutions in specified areas; and (iii) provide interconnection capability to telecommunications operators that provide mobile services using virtual networks in any five regions in Russia not later than July 25, 2012.

112 GSM Licenses We hold super-regional GSM licenses for seven out of the eight Russian super-regions. In total, our super-regional GSM licenses cover approximately 96.0% of Russia’s population and permit us to operate a unified dual band GSM-900/1800 network. The following tables summarize the principal terms of our GSM licenses, including the license areas and expiration dates. We have filed or will file applications for renewal for all of our licenses that expire in 2013. See also “Risk Factors—Legal and Regulatory Risks—Our licenses and frequency permissions are granted for specified periods and they may not be extended or replaced upon expiration.” Expiration Date Moscow ...... April 28, 2013 Central and Central Black Earth ...... April 28, 2013 North Caucasus ...... April 28, 2013 North-West(1) ...... September 12, 2017 Siberian ...... April 28, 2013 Ural(2) ...... November 14, 2017 Volga ...... April 28, 2013

(1) Our GSM license for the North-West super-region stipulates which GSM standard applies to the territories covered by the license. The GSM-900/1800 standard applies to the following territories: the city of Saint Petersburg and Leningrad region. The GSM-1800 standard applies to the following territories: Kareliya Republic, Nenetskiy Autonomous Region, Arkhangelsk region, Vologda region, Kaliningrad region, Murmansk region, Novgorod region and Pskov region. (2) Our GSM license for the Ural super-region stipulates which GSM standard applies to the territories covered by the license. The GSM-900/1800 standard applies to the following territories: Komi Republic, Udmurtskaya Republic, Kirov region, Kurgan region, Sverdlovsk region, Yamal Nenets autonomous district, the city of Kudymkar, Kudymkar metropolitan region, Yus’vinsky metropolitan region, Yurlinsky metropolitan region, Kochevsky metropolitan region, Kossinsky metropolitan region and Gaynsky metropolitan region of Permskiy Krai. The GSM-1800 standard applies to the following territories: Orenburg region, Tyumen region, Chelyabinsk region, Hanty-Mansiysky autonomous district—Yugra and Permskiy Krai (not including the city of Kudymkar, Kudymkar metropolitan region, Yus’vinsky metropolitan region, Yurlinsky metropolitan region, Kochevsky metropolitan region, Kossinsky metropolitan region and Gaynsky metropolitan region). We do not currently hold a GSM super-regional license for the Far East super-region of Russia. We currently hold GSM licenses in the following regions of the Far East super-region: Amur region (GSM-900/1800), Kamchatka Krai (excluding Koryakskiy Autonomous Region) (GSM-1800), Khabarovsk Krai (GSM-1800), Sakhalin region (GSM-1800), Irkutsk region (GSM-900/1800) (excluding Ust-Ordynskiy Buryatskiy autonomous region, an administrative-territorial unit of special status), Koryakskiy Okrug of Kamchatka Krai (GSM-1800), Chukotskiy autonomous region (GSM-1800), Ust’-Ordynskiy Okrug of Irkutsk region (GSM-900/1800), Evreyskaya autonomous region (GSM-900/1800), Sakha Republic-Yakutiya (GSM-1800), Magadan region (GSM-1800), Primorskiy Krai (GSM-900/1800) and Zabaykalskiy Krai (GSM-900). These licenses expire on various dates between 2016 and 2021 and we plan to file applications for renewal of all of our licenses prior to expiration. In addition to the seven super-regional GSM licenses, we hold GSM licenses for the Kaliningrad region, which is located within the North-West super-region, and the Orenburg region, which is located within the Ural super-region.

3G Licenses On April 20, 2007, the Federal Communications Agency announced that OJSC VimpelCom was awarded one of three UMTS licenses in Russia. The license was issued on May 21, 2007. We have met the license condition for installing at least 6,096 3G base stations throughout Russia by the end of the fifth year from the date of issuance of the license. The license expires on May 21, 2017. For certain risks related to the 3G license award, see “Risk Factors—Risks Related to Our Business—Our failure to keep pace with technological changes and evolving industry standards could harm our competitive position and, in turn, materially adversely affect our business.”

Competition—Mobile Business in Russia The Russian mobile telecommunications industry has grown rapidly over the past decade as a result of increased demand by individuals and newly created private businesses. Increased demand for mobile telecommunications services is largely due to the expansion of the Russian economy and a corresponding increase in disposable income; declining tariffs and costs of handsets and accessories, which have made mobile telecommunications services more affordable to the mass market subscriber segment; advertising, marketing and distribution activities, which have led to increased public awareness of, and access to, the mobile telecommunications market; and improved service quality and coverage.

113 The table below indicates the estimated number of mobile subscribers, mobile penetration rates and annual subscriber growth rates in Russia. Annual Subscribers Penetration Subscriber Period (in millions) Rate Growth As of September 30, 2012 ...... 233.9 167.2% 2.0% As of December 31, 2011 ...... 229.3 163.9% 4.1% As of December 31, 2010 ...... 220.4 157.0% 5.4% As of December 31, 2009 ...... 209.0 148.3% 11.0%

(1) Growth rate as compared to year end 2011. Source: For subscribers, subscriber growth and penetration rates, Informa Telecoms & Media. © 2013 Informa Telecoms & Media. All rights reserved. The Russian mobile telecommunications market is highly concentrated. Informa Telecoms & Media estimates that the top three mobile operators, MTS, MegaFon and OJSC VimpelCom, collectively held approximately 81.1% of the mobile market in Russia as of September 30, 2012. As a result of increased competition, mobile providers are utilizing new marketing efforts, including aggressive price promotions, to retain existing subscribers and attract new ones. Competition for subscribers in Russia is intense as a result of greater market penetration, consolidation in the industry, the growth of current operators and new technologies, products and services. For example, we compete with other operators for licenses that allow us to utilize new technology, including LTE licenses. Prior to July 2012, LTE services had been launched in Russia using USB-modems only because LTE technology in the frequencies offered in Russia was not supported by smartphones. Scartel was granted a license to provide LTE services in the 2.5 to 2.7 Mhz range, the same frequencies in which it had provided WiMax services before. As of December 31, 2012, Scartel provided such services in 18 regions of Russia. MTS had also launched LTE services using frequencies from previously provided WiMax services and TDD technology. Megafon had launched services on Scartel’s LTE network under an MVNO agreement. As described above under “—Mobile Telecommunications Licenses in Russia—LTE License,” in July 2012, the Russian government issued new LTE licenses to operators, including OJSC VimpelCom and MTS, Megafon and Rostelecom, with which OJSC VimpelCom competes. These and other operators are developing LTE networks to provide services using 4G technology, which can be utilized on smartphones and other mobile devices. We compete with at least one other mobile operator in each of our license areas, and in many license areas we compete with two or more mobile operators. Competition is based primarily on local tariff prices, network coverage, quality of service, the level of customer service provided, brand identity and the range of value-added and other subscriber services offered. The following table shows our and our primary mobile competitors’ respective subscriber numbers in Russia as of September 30, 2012: Subscribers in Russia Operator (in millions) MTS...... 70.7 MegaFon ...... 62.8 OJSC VimpelCom ...... 56.2 Tele2 ...... 22.3

Source: For all companies except OJSC VimpelCom, Informa Telecoms & Media. © 2013 Informa Telecoms & Media. All rights reserved. MTS. One of our primary competitors in Russia is MTS. According to Informa Telecoms & Media, as of September 30, 2012, MTS had approximately 70.7 million subscribers in Russia, representing a market share of 30.2%. It has a greater share of the high value subscriber market and more frequency allocations than we do, which provides MTS with a potential advantage in the quality of its GSM-900/1800/HSPA services. MTS reports that it holds licenses to operate mobile networks in almost all of the regions in Russia. MegaFon. In addition to MTS, we also compete with MegaFon, the second largest mobile operator in Russia in terms of the number of subscribers. According to Informa Telecoms & Media, as of September 30, 2012, MegaFon had approximately 62.8 million subscribers in Russia, representing a market share of 26.8%. MegaFon holds GSM-900/1800 licenses to operate in all regions of Russia. Tele2. Tele2 has been operating in Russia since 2003 and is now considered to be a significant player in the Russian telecommunications market. According to Informa Telecoms & Media, as of September 30, 2012, Tele2 had approximately 22.3 million subscribers in Russia, representing a market share of 9.6%. It currently

114 provides GSM mobile services in 39 regions of Russia, including St. Petersburg, Leningrad, Arkhangelsk, Belgorod, Bryansk, Vladimir, Vologda, Voronezh, Kaliningrad, Kaluga, Kemerovo, Kirov, Kostroma, Kursk, Lipetsk, Murmansk, Nizhny Novgorod, Novgorod, Novosibirsk, Omsk, Orel, Pskov, Rostov, Ryazan, Smolensk, Tambov, Tver, Tomsk, Tula, and Chelyabinsk, as well as the Krasnodar Territory and the republics of Adygei, Komi, Udmurtia, Karelia, Sakhalin, Evreyskaya AO, Kamchatka and Magadan. Rostelecom. In 2011, the Russian government completed the first phase of the reorganization of the state- controlled telecommunications companies Svyazinvest and Rostelecom, by transferring to Rostelecom the fixed- line subsidiaries of Svyazinvest. These subsidiaries include, among others, Uralsvyazinform, Volgatelecom and Sibirtelecom. In July 2012, Rostelecom completed the acquisition of 100% of Sky Link, a mobile data and voice operator from Syazinvest. As a result of these transactions, Rostelecom is currently the largest fixed-line operator and fifth largest mobile operator in Russia. According to public reports, during the second phase of the reorganization, which is expected to be completed in 2013, several regional state-controlled operators will be consolidated under Svyazinvest, which will be merged into Rostelecom. We compete with Rostelecom in the Ural, Siberia, Volga, South and Far East super-regions. Other Competitors in Russia. In addition to MTS and MegaFon, which operate in all of the regions where we operate, and Tele2, we compete with a number of local telecommunications companies. We also compete with Closed Joint Stock Company “Middle Volga Interregional Association of Radio and Telecommunication Systems,” or “SMARTS,” a company that holds licenses, either directly or indirectly through joint ventures, for GSM-900 or GSM-1800 networks, and telecommunications group “MOTIV” in the Volga license area and SMARTS in the Ural super-region.

Marketing and Distribution—Mobile Business in Russia In Russia, we offer our subscribers several national prepaid and contract tariff plans, each offering a different benefit and targeting a certain type of subscriber (such as business users, high-ARPU subscribers, families or young, active subscribers). We also offer a number of local tariff plans. Our tariff plans in Russia are almost exclusively Russian rouble-based, but there are a limited number of U.S. dollar-linked price plans (based on a fixed exchange rate). We divide our primary target subscribers in Russia into four groups: • key/national accounts, for which monthly revenue from mobile and fixed line services exceeds US$10,000; • large accounts, for which monthly revenue from mobile and fixed line services exceeds US$2,000 or companies having high revenue potential; • SME subscribers, for which monthly revenue from mobile and fixed line services is less than US$2,000; and • mass market subscribers. We also offer specific business value added services and voice tariff plans with discounts and special pricing for our key/national accounts, which include all multi-regional companies and government institutions. The typical corporate subscriber pays on a contract basis for our fixed and mobile services. We provide our corporate subscribers with a range of additional value added services, including specialized customer service, tailored pricing arrangements and access to sophisticated technological options, such as individual corporate wireless networks. For USB-modem customers, we offer special tariffs that were developed for Internet users, which do not include voice services. Tariffs differ by subscriber needs. In regions in which we use a 3G network, subscribers benefit from lower tariffs and higher speeds. We also offer several unlimited tariffs, primarily to USB modem users, and tariffs with discounted initial payments to all data services subscribers.

Customer Loyalty Programs We recognize the need to continuously build and increase the loyalty of our customers. In 2012, we expanded our “Customer Experience Program,” which covers all main elements of our customers’ interaction with us. We implemented long-term and short-term initiatives that focus on improving the quality of our main products and services and increasing customer satisfaction. We continuously invest in network optimization, the roll-out of our own branded stores, competence of our staff and motivation to deliver the best customer experience for customers. We also develop product offerings tailored to different customer needs based on the comprehensive analysis of our customer segments that we completed last year. We actively use targeted

115 marketing to increase customer loyalty and ARPU in all segments of mobile and FTTB mass marketing services. We apply data mining analysis to predict the propensity of churn for each subscriber, which allows us to increase efficiency of churn reduction by means of targeted marketing campaigns. In Russia, our loyalty programs are designed to retain our existing subscribers, thereby reducing churn, and increasing customer spending, both in B2C and B2B. In 2006, we launched a loyalty family program called “Malina” in the Moscow license area with other vendors and service providers. Through a variety of incentives, this program aims to decrease churn among our mass market subscribers, increase usage of “Beeline” services and attract target market subscribers from our competitors. We also launched the Data Warehouse program, which allows us to provide cross-partner programs in which we analyze Malina members’ activities with other program partners. In 2007, Hi-Light Club, our loyalty program for high ARPU clients (launched in March 2005) became a nationwide program and is being developed as a centralized program managed from Moscow. Hi-Light Club offers benefits to its members in 37 cities. In 2008, we launched the “My company” loyalty campaign, which offers corporate subscribers’ employees benefits such as decreased rates and other services when using mobile services personally, to decrease churn among our business clients. At the end of 2011, we launched a pilot of “new year MMS for your partners”. It was targeting a proposed 20MMS for free. We also launched two loyalty programs in 2012 for our B2B clients—the “Thank you” program for target audiences in all regions, where we proposed one month of free calls, 20SMS and 20Mb; and the “20sms, 20mms, 20Mb” program launched on the occasion of Beeline’s 20th anniversary, a program of 20SMS, 20MMS and 20Mb for free.

Fixed Business in Russia Description of Fixed Services in Russia Business and Corporate Services In Russia, we provide a wide range of telecommunication and information technology and data center services, such as network access and hardware and software solutions, including configuration and maintenance, software as a service (“SaaS”) and an integrated managed service. We operate a number of competitive local exchange carriers (“CLECs”) that own and operate fully digital overlay networks in a number of major Russian cities. Our services cover all major population centers in Russia. Our customers range from large multinational and Russian corporate groups to Russian small and medium enterprises and high-end residential buildings in major cities throughout Russia. Local Access Services. We provide business customers with local access services by connecting the customers’ premises to its fiber network, which interconnects to the local public switched telephone network (“PSTN”) in major metropolitan areas in Russia. International and Domestic Long Distance Services. We offer international long distance (“ILD”) services to its customers via its Federal Transit Network (“FTN”), which covers the entire territory of Russia and also includes eight international communications transit nodes across Russia. We provide domestic long distance (“DLD”) services primarily through its FTN, proprietary and leased capacity between major Russian cities and through interconnection with zonal networks and incumbent networks. We also offer very small aperture terminal (“VSAT”) satellite services to customers located in remote areas. Dedicated Internet and Data Services. We provide our business customers with dedicated access to the Internet through our access and backbone networks. We also offer traditional and high-speed data communications services to business customers who require wide area networks (“WANs”) to link geographically dispersed computer networks. In addition, our company provides private line channels that can be used for both voice and data applications. We offer IP virtual private network (“IP VPN”) service (based on multiprotocol label switching (“MPLS”) which is one of the most popular data services on the corporate market. We also offer customers the ability to enter into service level agreements, which ensure the quality of our service. Leased Channels. We provide corporate clients with the ability to rent channels with different high speed capacities. These “leased channels” are dedicated lines of data transmission. Value Added Services. We offer an increasing range of value added services, including data center services, such as co-location, web hosting, audio conference, service level agreement (“SLA”) and toll free (800) numbers, domain registration and corporate mail services. We also offer access to a variety of financial information services, including access to S.W.I.F.T., Reuters, Bloomberg and all Russian stock exchanges. Fixed Mobile Convergence. Based on our fixed and mobile networks, we offer fixed-mobile convergence services to corporate clients providing use of their mobile phone as an extension of their PBX. In 2010, we also signed a contract with Open Joint Stock Company “Russian Railways,” Russia’s national railway corporation for

116 fixed mobile technological network (“FMTN”) services. During 2012, we continued the expansion of our fixed- mobile convergence services into seven new cities in Russia, including Tomsk, Orenburg and Naberezhnye Chelny, increasing the total number of cities in which we provide these services to 74. Corporate Services. We also offer to our corporate customers IPTV services, certain Microsoft Office packages (including SaaS), videoconferencing services and sale, rental and technical support for telecommunications equipment. We are the only telecommunications operator in Russia authorized by Microsoft to sell its MS Office 365 software. Managed Services. We offer our corporate clients packages of integrated services that include fixed telephony and Internet access, along with the additional services such as virtual PBX, and security services, such as firewall, distributed denial of service (“DDos”) protection and local area network (“LAN”). This product allows customers to access their systems from various locations. Equipment Sales. We offer and sell equipment manufactured by Cisco Systems, Alcatel-Lucent, Avaya, Panasonic, Nokia, Motorola, Apple, BlackBerry and other manufacturers. As part of our turnkey approach, we also offer custom solutions and services for the life cycle of the equipment, including its design, configuration, installation, consulting and maintenance. Mobile VPN. We offer to our corporate clients secure remote access to corporate information, databases and corporate applications. Remote access is available from different mobile devices, including USB modems, tablets and smartphones. In 2012, mobile VPN usage grew due to increased employee mobilization. IP Addresses. We provide to our corporate customers IP address services, which help to identify devices connected to mobile Internet or corporate network.

Carrier and Operator Services in Russia Our carrier and operator services division in Russia provides a range of carrier and operator services, including voice, Internet and data transmission over our own networks. In an effort to create a single unified transport network for our mobile and fixed telecommunications services, we transferred the majority of our international and domestic long distance voice traffic to our own backbone from other Russian long distance carriers in 2008. This allowed us to reduce long distance voice traffic termination cost rate by 3.0% in 2010 as compared to 2009 and by 2.4% in 2009 as compared to 2008. In 2011 long distance cost rate increased by 1.9% as compared to 2010 due to significant change in traffic mix. In 2011, approximately 99.0% of our long distance traffic was routed via our own backbone. In the first nine months of 2012 compared to the first nine months of 2011, the average cost of long distance cost rates remained stable. Historically, we have provided high volumes of international and domestic voice call termination for Russian telecommunications operators, as well as voice call termination to Russia, Ukraine, the CIS and Baltic states for international telecommunications operators. After the demonopolization of the long distance telephony market in Russia in 2006, we received a new type of license for international and national communications services and built an FTN of 11 new international and domestic long distance voice switches to meet regulatory requirements for the activation of the new license. By the end of 2008, our FTN had expanded, consisting of eight international and 21 domestic long distance switches. This allowed us to improve our status on the international and domestic long distance markets in Russia by providing services that are competitive with those offered by leading telecommunications providers in Russia. This infrastructure has allowed us to achieve significant traffic growth. International traffic volumes transferred by our FTN increased did not change in the first nine months of 2012 compared to the first nine months of 2011, but increased by 16.0% in 2011 as compared to 2010, by 14.0% in 2010 as compared to 2009 and by more than 25.0% in 2009 as compared to 2008. Regulatory changes in 2006 introduced new models of inter-operator tariffs to the Russian voice traffic transmission market. There are three types of fixed-line voice services operators (local, zonal and long distance), which are determined in accordance with licenses held by an operator. According to regulations, every long distance voice call originating from a fixed-line subscriber in Russia and/or terminating with a fixed-line subscriber in Russia should be transmitted via all three levels of voice network. Every long distance call that originates or terminates with a mobile user must be transmitted on at least two levels of voice network. As a universal carrier and service provider, we combine all three levels of licenses and voice networks within Russia. We have a number of our own zonal networks and our own local networks in the most populated regions of Russia. Our carrier and operator services division also provides domestic and international IP transit services to ISPs in Russia, Ukraine, the CIS and Baltic states. A smaller ISP can connect to our IP backbone and then use its network to access the Internet. Our IP backbone is a IP/MPLS network with 220 Gbps infrastructure and more than 130 access points in Russia. Top Russian content providers such as “Mail.ru” and “Odnoklassniki.ru” have

117 facilities, which are located in our data centers and have Internet access via our IP backbone. More than 450 ISPs have an IP exchange with our network as full IP transit customers. We have global traffic exchange points in London, Frankfurt, Amsterdam, Stockholm and New York. These factors allow us to provide ISPs with hi-level bandwidth and connectivity to both Russian and global Internet segments. Our carrier and operator services customers include foreign and Russian telecommunications operators and carriers. Voice Services. For international operators, including traditional incumbents, mobile and VoIP operators, we provide call termination to fixed and mobile destinations in Russia, Ukraine, and the CIS and Baltic states. For Ukrainian and CIS operators, we provide call termination to Russian and international fixed and mobile destinations. For Russian operators we provide international, domestic, zonal and local voice call transmission services. Internet Services. Our carrier and operator services division provides IP transit service to Russia, Ukraine, and the CIS and Baltic states and other operators throughout the world. Russian, Ukrainian and CIS operators require global Internet connectivity. International operators require connectivity to the Russian Internet segment. In addition, our carrier and operator services division provides data services in our data centers to content providers. Data Services. We offer three types of data services: private networks, local access, and domestic and international channels. We have our own local network nodes in the majority of business and trade centers in the largest cities of Russia. Other operators access those business and trade centers by ordering from our local channels that connect to their network nodes. We have interconnection agreements with international global data network operators who provide one-stop shopping for worldwide data network services for multinational companies. Under these interconnection agreements we provide MPLS-based IP VPN, local, domestic and international private lines, equipment and equipment maintenance in Russia. We also provide high-speed domestic and international channels to international and Russian operators to sell excess backbone network capacity.

Consumer Internet Services in Russia In Russia, we offer fixed-line broadband and wireless Internet access. One of our strategic goals is to develop broadband services based on the most up-to-date engineering solutions.

Additional FTTB Services FTTB IPTV. We launched the FTTB IPTV service in Russia in January 2009. In May 2009, we enhanced and relaunched the product under the “Beeline TV” brand. Currently the Beeline TV product is run in 36 regions. In 102 cities of the 36 regions, we provide IPTV service. As of September 30, 2012, we had approximately 789,100 IPTV subscribers. Our service has two unique market features: first, all set-top-boxes (“STBs”) are high definition (“HD”) technology compatible which allows us to broadcast HD content to every one of our customers. Second, we provide STBs with digital video recorder (“DVR”) functions, which allow users to watch TV content on-demand and to pause and rewind live television. Wireless Broadband Internet Access. On March 1, 2007, Golden Telecom launched commercial operation of its WiFi network, offering prepaid Internet access to the mass market under the “Golden WiFi” brand. Since September 22, 2008, the service has been provided under “Beeline WiFi” brand. According to iKS Consulting, Beeline WiFi is the world’s largest metropolitan wireless network and includes the greater part of Moscow’s city center and many other areas of the city. As of September 30, 2012, our company had installed more than 12,000 WiFi access nodes in Moscow. Our most recognized partners in providing WiFi services are Domodedovo and Sheremetyevo Airports, McDonalds, Starbucks, Coffee-House, MEGA and IKEA trade centers. We also provide EDGE technology wireless broadband services through Kyivstar’s GSM network in Ukraine.

118 Licenses for Fixed Business in Russia The table below sets forth the principal terms of the fixed-line, data and long distance licenses which are important to our fixed business in Russia. We have filed or will file applications for renewal for all of our licenses that expire in 2013. License Type Region Expiration Dates (Earliest/Latest) Local Communications Services Moscow ...... March 9, 2017 / August 30, 2016 excluding local communications St. Petersburg ...... May23,2013 / March 9, 2017 services using payphones and Ekaterinburg ...... February 16, 2016 multiple access facilities Nizhny Novgorod ...... March 9, 2017 Khabarovsk ...... October 31, 2015 Novosibirsk ...... March 9, 2017 Rostov-on-Don ...... March 9, 2017 Krasnodar ...... December 31, 2014/March 9, 2017 Local Communications Services Moscow ...... September 21, 2016 using multiple access facilities St. Petersburg ...... September 21, 2016 Novosibirsk ...... March 9, 2017 Nizhny Novgorod ...... March 9, 2017 Khabarovsk ...... March 9, 2017 Ekaterinburg ...... July 20, 2015 Rostov-on-Don ...... March 26, 2013 Krasnodar ...... April 18, 2013/April 28, 2016 Leased Communications Circuits Moscow ...... August 28, 2013 /November 9, 2016 Services St. Petersburg ...... October 4, 2016/October 4, 2017 Novosibirsk ...... November 12, 2013 / July 5, 2016 Nizhny Novgorod ...... November 12, 2013 / July 5, 2016 Rostov-on-Don ...... November 12, 2013 / July 5, 2016 Khabarovsk ...... August 25, 2015 / July 5, 2016 Ekaterinburg ...... November 12, 2013 Krasnodar ...... April 17, 2013 / July 5, 2016 Voice Communications Services in Moscow ...... May25,2016/March 15, 2016 Data Transmission Networks St. Petersburg ...... August 1, 2017 Novosibirsk ...... August 1, 2017 Ekaterinburg ...... September 5, 2013 Nizhny Novgorod ...... August 1, 2017 Rostov-on-Don ...... August 1, 2017 Khabarovsk ...... April 18, 2013 Krasnodar ...... April 18, 2013/August 1, 2017 International and National Russian Federation ...... December 13, 2019 Communications Services Moscow ...... November 21, 2015/July 5, 2016 Telematic Services St. Petersburg ...... November 21, 2015/August 1, 2017 Novosibirsk ...... August 1, 2017 Nizhny Novgorod ...... August 1, 2017 Rostov-on-Don ...... August 1, 2017 Khabarovsk ...... June 26, 2017 Ekaterinburg ...... September 5, 2013 Krasnodar ...... September 14, 2015 / August 1, 2017 Intra-zonal Communications Moscow ...... October 24, 2016 Services St. Petersburg ...... October 24, 2016 Novosibirsk ...... February 16, 2016 Ekaterinburg ...... February 16, 2016 Nizhny Novgorod ...... February 16, 2016 Rostov-on-Don ...... February 16, 2016 Khabarovsk ...... February 16, 2016 Krasnodar ...... December 12, 2015/ February 16, 2016 Data Transmission Services Moscow ...... July 5, 2016/April 17, 2014 St. Petersburg ...... August 1, 2017 / April 17, 2014 Ekaterinburg ...... September 5, 2013 Novosibirsk ...... August 1, 2017 Nizhny Novgorod ...... August 1, 2017 Rostov-on-Don ...... August 1, 2017 Khabarovsk ...... September 14, 2015 Krasnodar ...... April 17, 2013 / August 1, 2017

119 License Type Region Expiration Dates (Earliest/Latest) Communications Services for the Moscow ...... December 6, 2017 Purposes of Cable Broadcasting St. Petersburg ...... December 6, 2017 Novosibirsk ...... December 6, 2017 Ekaterinburg ...... December 6, 2017 Nizhny Novgorod ...... December 6, 2017 Rostov-on-Don ...... December 6, 2017 Khabarovsk ...... December 6, 2017 Krasnodar ...... August 27, 2017/December 6, 2017 Communications Services for the Krasnodar ...... September 14, 2016 Purposes of TV Broadcasting

Competition—Fixed Business in Russia Business and Corporate Services Our fixed telecommunications business marketed as “Beeline Business” competes principally on the basis of unique convergent services and bundles, installation time, network quality, geographical network reach, customer service, range of services offered and price. We face significant competition from other service providers, including: • Rostelecom, a subsidiary of Svyazinvest, the state-controlled telecommunications company, for services in St. Petersburg and all of Russian regional cities; • Comstar-UTS, which was merged into MTS in April 2011, for services to corporate customers and the SME market; • TransTelecom, owned by the Russian Railways, for corporate data networking services across Russia; • Synterra, which owns Peterstar (one of the leading fixed-line operators in St. Petersburg, providing convergent mobile and fixed services, which merged with MegaFon in February 2011); and • a number of other small operators in the regions. Carrier and Operator Services For voice services, our main competitors are long distance carriers Rostelecom, TransTelecom and OJSC “Multiregional TransitTelecom.” For IP transit and capacity services, our main competitors are Rostelecom, TransTelecom and MegaFon. In wholesale data networking we also compete with Orange.

Consumer Internet Services In terms of end-user Internet penetration, the consumer Internet access business in Russia is already saturated and end user Internet penetration is high. The basic technologies of Internet access in Russia include: fixed broadband Internet access (comprising asymmetric digital subscriber line (“ADSL”), Ethernet, FTTB/FTTH, GPON/EPON, Docsis and other regional home networks) and wireless broadband Internet access (including WiFi, WiMax, 3G, CDMA). Competition for subscribers in Russia is intense and we expect it to increase in the future as a result of wider market penetration, consolidation of the industry, current operators growth and appearance of new technologies, products and services. As a result of increasing competition, Internet providers are utilizing new marketing efforts (for example, aggressive price promotions) in order to retain existing subscribers and attract new ones. Our main competitors in the fixed broadband market in Russia are Rostelecom, MTS and its subsidiaries, Acado, Er-Telecom and various local home network providers. Competition is based primarily on network coverage, local tariff prices, Internet connection speed, services quality, customer service level, brand identity and the range of value added and other subscriber services offered.

Marketing and Distribution—Fixed Business in Russia Business and Corporate Services We utilize a direct sales force in Moscow, operating both with fixed and mobile corporate customers and supported by specialists in technical sales support, marketing, customer service and end-user training. In addition, we employ a team of regional sales managers and a dedicated sales force in each of our regional branch offices, in addition to having sales incentive plans with our regional partners.

120 We train our employees to provide a high level of customer service. We typically aim to offer our services at competitive prices in comparison with incumbent local and national operators and other alternative operators in the market. We base our pricing on research results, market price level, competition in all regions and customer expectations learned through direct feedback from our new and existing clients. Additionally, we monitor price levels for similar services in other countries around the world. Our large customers may be eligible for volume discounts at defined revenue thresholds. We also apply a discount policy within cross-sales (selling convergent fixed and mobile services to the same client). While pricing competition remains a factor, especially for voice and Internet access services, many corporate data networking customers place more value on network coverage, reliability and the ability to design, install and maintain LANs and WANs. These customers often require integrated solutions, including connections to offices located in different cities. To meet these requests, we currently offer a range of services aimed at providing installation and maintenance of customers’ equipment and local networks in Moscow and other regions. We currently provide full network support for a number of key clients, and we are actively working on new products, which we believe will allow us to provide a whole range of managed services, including managed IP VPN, managed PBX, managed customer premises equipment (“CPE”), managed security, cloud services (including IaaS (infrastructure as a service), SaaS (software as a service), PaaS (platform as a service), virtual machines, dedicated servers, disaster recovery and virtual data center services) and virtual desktop infrastructure (a type of managed workplace), managed storage and other value added services.

Consumer Internet Services Fixed Broadband Internet Access. We offer a wide range of FTTB services tariffs targeted to different customer segments. There are four unlimited tariff plans with monthly fees but different speeds for active Internet users. There is also a special tariff for mobile customers with certain preferences. We also provide a range of value added services such as static IP address, trusted payment, antiviruses (Kasperskiy and Dr.WEB) and WiFi routers. FTTB IPTV. TV service is provided on a monthly fee basis. STBs can be rented or bought by customers. We have launched the following value added services for TV: Video On Demand (with a library of more than 3,000 items), web-on-TV (together with Yandex, which is the largest Russian web portal), Facebook, Rutube and other services, such as a recommendation engine (a STB reminds a customer about the start of a customer’s regularly viewed TV shows). STB can also record TV shows that may be interesting for the customer based on their viewing history. xDSL Services. For xDSL services, our company offers an unlimited tariff plan and tariff plans that depend on traffic volume and connection speed. Wireless Broadband Internet Access. We offer WiFi tariff plans that include unlimited usage plans and plans that charge by usage. We also offer special prices for mobile and FTTB users. Pay TV (cable TV) Services. We offer two tariff plans: “Social” for customers who need basic TV channels, which includes 10-12 TV channels and “Commercial,” which includes 45-55 TV channels. As of September 30, 2012, we had approximately 107,000 cable TV subscribers. Fixed Telephony. We offer two telephony services for residential users: traditional time division multiplexing (also referred to as TDM) access in 39 Russian cities and VoIP-based services through FTTB technology in six Russian cities. All services offer fixed numbering and have competitive prices for local, zonal, international long distance and domestic long distance calls. As of September 30, 2012, we had approximately 195,000 fixed telephony subscribers.

Description of Operations in Ukraine Mobile Business in Ukraine Description of Mobile Services in Ukraine Mobile Voice Services As of September 30, 2012, approximately 8.0% of our subscribers in Ukraine were on postpaid plans and approximately 92.0% of our subscribers in Ukraine were on prepaid plans.

Call Completion and Value Added Services In Ukraine, we offer the same call completion and value added services as in Russia. For a description of these services, see “—Description of Operations in Russia—Mobile Business in Russia—Description of Mobile Services in Russia—Call Completion and Value Added Services.”

121 Roaming As of September 30, 2012, Kyivstar provided voice roaming on 414 partner networks in 195 countries, GPRS roaming on 305 networks in 153 countries and CAMEL roaming on 130 networks in 94 countries.

Wireless Internet Access In Ukraine, we provide our subscribers with wireless Internet access through GPRS/EDGE networks. The service, which was commercially launched in 2008 offers subscribers special wireless USB modems, which provide a simple way to access the Internet throughout Ukraine without access to fixed-line broadband or a long- term contract. Subscribers receive a discounted USB modem and SIM card with a pre-installed special Internet rate data plan.

Mobile Telecommunications Licenses in Ukraine In Ukraine, we hold 900 MHz GSM and 1800 MHz GSM cellular licenses to provide telecommunications services throughout the territory of Ukraine. These licenses were received on October 5, 2011 for a term of 15 years each and will expire on October 4, 2026. We have also obtained a range of national and regional radio frequency licenses for use of radio frequency resource (“RFR”) in the referred standards and in specified standards—RRL and WiMax. In addition, we provide local, long-distance and international fixed telecommunications services throughout Ukraine. Our network covers all large and small cities and areas outside of these cities, together, covering territory where approximately 99.97% of the Ukraine’s population lives.

Competition—Mobile Business in Ukraine Despite repeated requests from the leading Ukrainian operators, including Kyivstar, the launch of 3G services in Ukraine had been blocked by the Ukrainian regulators since 2005, when the Ukrainian government issued its first and only 3G license to Ukrtelecom, Ukraine’s state-owned fixed-line operator. The license is now held by Ukrtelecom’s Subsidiary Trimob. Kyivstar, MTS and Astelit were refused 3G licenses by the Ukrainian government in 2006. The Ukrainian government subsequently announced plans to hold a tender to auction one 3G license. However, the proposed auction has been postponed indefinitely. According to Informa Telecoms & Media, as of September 30, 2012, there were approximately 55.1 million subscribers in Ukraine, representing a penetration rate of approximately 121.9%. There are currently three mobile operators with national coverage in Ukraine: Kyivstar, Mobile TeleSystems—Ukraine (“MTS Ukraine”) and LLC Astelit. Kyivstar and URS, were unified under the brand Kyivstar following the VimpelCom Ltd. Transaction. The following table shows our and our primary mobile competitors’ respective subscribers in Ukraine as of September 30, 2012: Subscribers Operator (in millions) Kyivstar (VimpelCom) ...... 25.2 MTS Ukraine ...... 19.8 Astelit ...... 8.2

Source: Informa Telecoms & Media for all companies except Kyivstar. © 2013 Informa Telecoms & Media. All rights reserved.

Kyivstar and MTS Ukraine Kyivstar competes primarily with MTS Ukraine, which had a market share of 36.0% as of September 30, 2012 according to Informa Telecoms & Media. MTS Ukraine, which is 100.0% owned by MTS, operates a GSM-900/1800 network in Ukraine. MTS Ukraine also received a CDMA-450 license in 2006.

Other Competitors in Ukraine Kyivstar also competes with Astelit, which operates throughout Ukraine and which had approximately 8.2 million subscribers as of September 30, 2012 according to Informa Telecoms & Media, representing a market share of 14.9%. We also compete with Trimob, a company which was separated from Ukrtelecom to provide services under 3G license, which, according to Informa Telecoms & Media, had approximately 1.0 million subscribers as of September 30, 2012, representing a market share of 1.8%, and with other small CDMA players.

Marketing and Distribution—Mobile Business in Ukraine In Ukraine, we offer several prepaid and contract tariff plans, each one targeted at a different type of subscriber.

122 We divide our primary target subscribers into three large groups: • youth; • business (subdivided into SME subscribers and large business subscribers) and • mass market subscribers. The Ukrainian mobile market operates primarily on prepaid plans. However, contract subscribers tend to generate higher average revenues for our company than prepaid subscribers generate. To attract more contract subscribers, we have differentiated our service levels to provide higher customer service to our contract subscribers, such as direct access to customer service agents on a dedicated contract subscriber customer service line, in addition to our initiatives to increase the flexibility and accessibility of the payment methods offered to contract subscribers.

Customer Loyalty Programs In Ukraine, to promote brand loyalty we use program “Kyivstar club,” which provides a monthly bonus, which is a percent of the amount spent by the subscriber’s usage per month and the length of time the subscriber has been a Kyivstar subscriber.

Fixed Business in Ukraine Description of Fixed Services in Ukraine Business and Corporate Services We have constructed and own a 26,157 kilometer fiber optic network, including 5,070 kilometers in cities of Ukraine and 1,207 kilometers in the Kyiv region, which is interconnected to the local PSTN in Kyiv, to other major metropolitan areas in Ukraine and to our gateway. We provide data and Internet access services in approximately 97 metropolitan cities in Ukraine. Our fixed-line services include corporate Internet access, VPN services, data center, contact center, fixed telephony and number of value added services. Internet access services include connection to the Internet via ADSL, symmetrical and ethernet interfaces at speeds ranging from 256 kbps to 10 Gbps. We provide standard and advanced fixed telephony value added services, such as convergent fixed-mobile closed user groups. Fixed voice services are available in 28 major cities of Ukraine. In order to reduce our dependency on other fixed-line operators, we have been building our own transmission capacity between the base station network and the mobile switching centers, consisting of fiber optic cable and radio links. Between our base stations and base station controllers, we use mini links operating at 8 and 23 GHz, where capacity is not constrained. We have built dedicated fiber optic networks in larger cities, such as Kyiv, Kharkiv, Odesa, Dnipropetrovsk, Lviv, Donetsk, Vinnytsya, Khmelnytskyy, Zaporizhzhya, Simferopol and Mykolaiv. As of September 30, 2012, we owned approximately 26,157 kilometers of fiber optic cable and leased a negligible amount. For the last two years, we have had our own fiber optic cable network that is sufficient to meet most of our transmission requirements without any leased capacity. Local Access Services. We provide local access services to corporate customers by connecting their premises to our fiber optic network, which interconnects to the local PSTN in 28 major Ukrainian cities. International and Domestic Long Distance Services. We provide outgoing international voice services to business customers through its international gateway and direct interconnections with major international carriers. DLD services are primarily provided through our own intercity transmission network and through interconnection with Ukrtelecom’s and other operators’ networks. We also hold an international license that enables it to provide international voice and data services to its business and corporate customers. Dedicated Internet and Data Services. We provide a VPN service that has an integrated voice and data ISDN connection, frame relay, broadband digital subscriber line and dedicated Internet services. Information Services. We provide telecommunications services to financial and banking companies, such as S.W.I.F.T., access to processing centers, news services to companies such as Reuters, as well as conduits to airline reservation systems in Ukraine. Our data center provides server co-location and hosting services for news agencies and financial and entertainment services providers. Call Center Services. We launched our call center services in 2002 and are one of the main market players in providing hotline, telemarketing and other call center services for corporate clients in Ukraine. In 2012, we launched additional call center services, including multimedia messaging and software bundle rentals.

123 Mass Market Services. We offer telephone and Internet broadband access services (through FTTB or ADSL) for mass market customers.

Carrier and Operator Services Our joint carrier and operator services division in Ukraine provides local, international and intercity long distance voice traffic transmission services to Ukrainian fixed-line and mobile operators on the basis of our proprietary DLD/ILD network as well as IP transit and data transmission services through our own domestic and international fiber optic backbone and IP/MPLS data transmission network. We derive most of our carrier and operator services revenue in Ukraine from voice call termination services to our own mobile network, and other local and international destinations. We have more than 100 national interconnections in cities in Ukraine through which we terminate traffic of our subscribers and generate revenues from call termination on our networks. We have 39 international interconnections with international partners for voice call termination and IP transit services.

Consumer Internet Services In Ukraine, we offer the same spectrum of fixed-line and wireless Internet access and dial-up services as in Russia. We began providing fixed broadband services in Ukraine in 2008 and as of September 30, 2012 provided services in 138 cities in Ukraine. In connection with this service, we have been engaged in project to install FTTB for fixed broadband services in approximately 547,500 residential buildings in 138 cities, providing over 66,400 access points.

Licenses for Fixed Business in Ukraine The table below sets forth the principal terms of the licenses which are important to our fixed business in Ukraine.

License Type Region Expiration Date International communication All territory of Ukraine August 18, 2019 Long-distance communication All territory of Ukraine August 18, 2019 Local communication All territory of Ukraine August 29, 2015

Competition—Fixed Business in Ukraine Business and Corporate Services In the voice services market for business customers, we compete with Ukrtelecom, Datagroup, Vega, and a number of other small operators. The provision of Internet and data services to the end consumers is not licensed in Ukraine. As a result, there is a high level of competition, with more than 400 ISPs in Ukraine. Our main competitors in the corporate market for data are Ukrtelecom, Volia, Vega and Datagroup. In the fast growing residential broadband Internet market, we compete with Ukrtelecom and Volya-Cable in Kyiv, as well as with strong local players in other cities.

Carrier and Operator Services In Ukraine, carrier and operator services market competitors include Ukrtelecom, Ucomline (Farlep- Optima), Velton, MTC, Astelit and Datagroup.

Consumer Internet Services Our main competitors for provision of consumer Internet services in Ukraine are Volia and Ukrtelecom. From December 31, 2010 to December 31, 2011, we significantly increased the number of broadband subscribers in Ukraine by 98% from 200,438 to 397,338 subscribers. As of September 30, 2012, we had 550,000 broadband subscribers in Ukraine.

Marketing and Distribution—Fixed Business in Ukraine Business and Corporate Services Our company emphasizes high customer service quality and reliability for its corporate large accounts while at the same time focusing on the development of its SME offerings. We sell to corporate customers through a direct sales force and various alternative distribution channels such as IT servicing organizations and business center owners, and to the SME through dealerships, direct sales, own retail and agent networks.

124 We use a customized pricing model for large accounts, which includes, among other things, service or tariff discounts, volume discounts, progressive discount schemes and volume lock pricing. We use standardized and campaign-based pricing for SME customers.

Consumer Fixed Internet Services Our marketing strategy is focused on attracting new subscribers. We offer several tariff plans, each one targeted at a different type of subscriber. In 2011 and the first quarter of 2012, our consumer fixed Internet services business was supported by ATL (above the line) campaigns, in which we advertised on TV, press, radio and the Internet in order to raise awareness of Kyivstar as a fixed broadband Internet provider. Since May 2012, our advertising focus shifted to BTL (below the line) activities, including leaflets distribution, in areas were the service is provided. These efforts are supplemented by limited ATL as well as by direct sales conducted on door- to-door basis in buildings in which broadband service is available.

Fixed Broadband Internet Access. We offer a wide range of FTTB services tariffs targeted to different customer segments. There are four unlimited tariff plans with monthly fees, which offer different speeds up to 80 Mbps for active Internet users.

xDSL Services. Revenue generated from xDSL service is insignificant and shows a steady decrease as this technology is being replaced by newer technologies.

Description of Operations in the CIS Mobile Business in the CIS Description of Mobile Services in the CIS Mobile Voice Services As of September 30, 2012, approximately 2% of our subscribers in the CIS were on postpaid plans and approximately 98% of our subscribers in the CIS were on prepaid plans. Call Completion and Value Added Services. In the CIS, we offer the same call completion and value added services as in Russia (except for location based services). For a description of these services, see “—Description of Operations in Russia—Mobile Business in Russia—Description of Mobile Services in Russia—Call Completion and Value Added Services.” Roaming. In the CIS, we have roaming arrangements with a number of other networks, which vary by country of our operations. • In Kazakhstan, as of September 30, 2012, we provided voice roaming on 422 networks in 172 countries, GPRS roaming on 242 networks in 101 countries and CAMEL roaming on 143 networks in 81 countries. • In Uzbekistan, as of September 30, 2012, we provided voice roaming on 426 partner networks in 173 countries, GPRS roaming on 250 networks in 116 countries and CAMEL roaming on 158 networks in 79 countries. • In Armenia, as of September 30, 2012, we provided voice roaming on 382 partner networks in 168 countries, GPRS roaming on 238 networks in 121 countries and CAMEL roaming on 165 networks in 87 countries. • In Tajikistan, as of September 30, 2012, we provided voice roaming on 161 networks in 74 countries, GPRS roaming on 95 networks in 58 countries and CAMEL roaming on 60 networks in 40 countries. • In Georgia, as of September 30, 2012, Mobitel provided roaming on 110 partner networks in 61 countries, GPRS roaming on 73 networks in 44 countries and CAMEL roaming on 48 networks in 36 countries. • In Kyrgyzstan, as of September 30, 2012, we provided roaming on 428 partner networks in 154 countries, GPRS roaming on seven networks in six countries and CAMEL roaming on 29 networks in 244 countries.

USB Modems We have partnered with Opera Software to offer a “Beeline” branded version of the Opera Mini browser under a framework agreement that provides for the provision of such services in Kazakhstan, Armenia, Georgia and Tajikistan. Under this agreement, we have already begun to provide services in Kazakhstan and Tajikistan and expect to begin to provide services in Armenia and Georgia in 2013.

125 In Kazakhstan, we provide subscribers wireless Internet access over GPRS/EDGE/UMTS networks. Our UMTS/HSPA network was commercially launched in January 2011. The wireless Internet services that we offer include small screen Internet (data services and options in regular voice price plans) and large screen Internet (special internet price plans bundled with USB modem or without a modem for PC and note/netbooks). In Uzbekistan, we provide subscribers with wireless Internet access over GPRS/EDGE/UMTS networks. The UMTS/HSPA services were commercially launched in 2008 and the majority of the network was constructed in 2010. As of September 30, 2012, we provided UMTS services in 150 cities with a population of more than 50,000 each. We provide Internet services both for smartphones and featurephones as well as for USB dongles and tablet computers. For small screen subscribers, we have begun to integrate mobile services of popular social networks, including, for example, Twitter and Facebook. USB modems are locked for the Beeline network so that they only work within our network. In Armenia, we provide subscribers with wireless Internet access over GSM/GPRS/EDGE/UMTS networks. UMTS services were commercially launched in 2009. For small screen subscribers, we launched data bundles for Internet access for a daily fee with unlimited data usage and a limit on speed only after a certain amount of usage per day and began to integrate mobile services of popular social networks, including, Twitter and Facebook. USB modems were commercially launched in July 2009. Subscribers receive a USB modem and SIM card with a pre-installed special Internet rate data plan. In Tajikistan, USB modems were launched in January 2008. We provide our subscribers with wireless Internet access via GSM/EDGE and UMTS networks. We provide Internet services for smartphones and featurephones as well as for USB dongles. In the first three quarters of 2012, the usage of non-voice services GPRS Internet megabytes increased due to new Internet tariffs that Tacom offered. In Georgia, USB modems were commercially launched for prepaid customers in June 2009 and modem traffic exceeded 12 million megabytes during the first three quarters of 2012. In Kyrgyzstan, we provide our subscribers with wireless Internet access through GPRS/EDGE/UMTS/HSPA+ networks. Our UMTS/HSPA+ network in Kyrgyzstan was launched in December 2010. USB-modems were commercially launched for prepaid and contract customers in November 2009. We launched Plug&Play technology, which we call “Hi-Link,” in Kyrgyzstan in July 2012. We were the first operator in the CIS countries to offer such a service.

Mobile Telecommunications Licenses in the CIS In Kazakhstan, we hold a national GSM-900/1800 UMTS license for the entire territory of Kazakhstan, which has an unlimited term. The license can be terminated in certain circumstances, including voluntarily by the operator and in case of liquidation of the operator. In Uzbekistan, we hold a national license for GSM-900/1800, UMTS and LTE covering the entire territory of Uzbekistan. This license expires on August 6, 2016. In Armenia, we hold a GSM-900/1800 UMTS license for the entire territory of Armenia. This license is scheduled to expire on March 3, 2013. The Armenian telecommunications regulator has issued a resolution, which will come into force on March 3, 2013 and will extend the term of the license to March 3, 2028. In Tajikistan, we hold national GSM-900/1800, UMTS and LTE licenses for the entire territory of Tajikistan. These licenses expire on June 18, 2014, July 13, 2015 and December 9, 2015, respectively. In Georgia, we hold two GSM-1800 frequency licenses and one E-GSM frequency license for the entire territory of Georgia. These licenses expire on July 23, 2013. January 26, 2017 and January 25, 2018, respectively. We have filed an extension for our GSM-1800 license expiring on July 23, 2013. In Kyrgyzstan, we hold national GSM-900/1800 and UMTS licenses for the entire territory of Kyrgyzstan. These licenses expire on May 30, 2016 and October 23, 2015, respectively.

Competition—Mobile Business in the CIS Kazakhstan According to Informa Telecoms & Media, there were approximately 25.8 million subscribers in Kazakhstan as of September 30, 2012, representing a penetration rate of approximately 162.4%.

126 The following table shows our and our primary mobile competitors’ respective subscriber numbers in Kazakhstan as of September 30, 2012: Subscribers Operator (in millions) GSM Kazakhstan ...... 12.8 KaR-Tel (VimpelCom) ...... 8.6 AlTel ...... 1.4 Mobile Telecom Service (Tele2) ...... 3.1

Source: Informa Telecoms & Media for all companies except KaR-Tel. © 2013 Informa Telecoms & Media. All rights reserved.

Uzbekistan According to Informa Telecoms & Media, as of September 30, 2012, there were approximately 28.0 million subscribers in Uzbekistan, representing a penetration rate of approximately 99.7%. The following table shows our and our primary mobile competitors’ respective subscribers in Uzbekistan as of September 30, 2012: Subscribers Operator (in millions) MTS-Uzbekistan ...... 8.5 Ucell ...... 9.6 Unitel (VimpelCom) ...... 9.2 UzbekMobile ...... 0.1

Source: Informa Telecoms & Media for all companies except Unitel. © 2013 Informa Telecoms & Media. All rights reserved.

Armenia According to Informa Telecoms & Media, as of September 30, 2012, there were approximately 3.8 million subscribers in Armenia, representing a penetration rate of approximately 123.1%. The following table shows our and our primary mobile competitor’s respective subscribers in Armenia as of September 30, 2012: Subscribers Operator (in millions) K-Telecom ...... 2.4 ArmenTel (VimpelCom) ...... 0.8 Orange Armenia ...... 0.7

Source: Informa Telecoms & Media for all companies except ArmenTel. © 2013 Informa Telecoms & Media. All rights reserved.

Tajikistan According to Informa Telecoms & Media, as of September 30, 2012, there were approximately 9.4 million subscribers in Tajikistan, representing a penetration rate of approximately 131.0%. The following table shows our and our primary mobile competitors’ respective subscribers in Tajikistan as of September 30, 2012: Subscribers Operator (in millions) Babilon Mobile ...... 3.1 Indigo ...... 2.9 Tacom (VimpelCom) ...... 0.9 TK Mobile ...... 0.6 TT-Mobile ...... 1.8

Source: Informa Telecoms & Media for all companies except Tacom. © 2013 Informa Telecoms & Media. All rights reserved.

Georgia According to Informa Telecoms & Media, as of September 30, 2012, there were approximately 5.3 million subscribers in Georgia, representing a penetration rate of approximately 127.1%.

127 The following table shows our and our primary mobile competitors’ respective subscribers in Georgia as of September 30, 2012: Subscribers Operator (in millions) Geocell ...... 2.0 Magticom ...... 1.6 Mobitel (VimpelCom) ...... 1.0 Aquafone ...... 0.4 A-Mobile ...... 0.3

Source: Informa Telecoms & Media for all companies except Mobitel. © 2013 Informa Telecoms & Media. All rights reserved.

Kyrgyzstan According to Informa Telecoms & Media, as of September 30, 2012, there were approximately 5.9 million subscribers in Kyrgyzstan, representing a penetration rate of approximately 104.3%. The following table shows our and our primary mobile competitors’ respective subscribers in Kyrgyzstan as of September 30, 2012: Subscribers Operator (in millions) Alfa Telecom (MegaCom) ...... 2.4 Sky Mobile (VimpelCom) ...... 2.4 AkTel ...... 0.9

Source: Informa Telecoms & Media for all companies except Sky Mobile. © 2013 Informa Telecoms & Media. All rights reserved.

Marketing and Distribution—Mobile Business in the CIS All our mobile operations in CIS divide their primary target subscribers into five large groups: • large account corporate subscribers (business market); • SME subscribers (business market); • high ARPU subscribers (consumer market); • youth segment (consumer market) and • mass market subscribers. In Kazakhstan, we offer more than ten different regional and nationwide tenge-based tariff plans for the consumer market and more than ten different tenge-based tariff plans for our business segment, each targeted at a different type of subscriber. In order to promote further growth of our subscriber base, we seek to offer a number of advanced services to corporate and mass market subscribers with high ARPU, while at the same time providing lower priced services for the more cost-sensitive mass market subscribers. In Uzbekistan, we offer different prepaid tariff plans in two currencies (U.S. dollars and Uzbek soms), each one offering a different benefit and targeting a certain type of subscriber. Through our GSM network in Uzbekistan, we offer a number of advanced services to corporate and high-value subscribers, while at the same time providing low-priced services for the more cost-sensitive mass market subscribers. In Armenia, we offer several dram-based prepaid and contract tariff plans, each one targeted at a different type of subscriber. As of September 30. 2012, 19.8% of ArmenTel subscriber base use postpaid plans. In order to promote growth of our subscriber base, we have implemented a regional program using alternative marketing strategies, such as door-to-door sales, and offering special tariff plans. In Tajikistan, we offer several U.S. dollar-based and Tajik somoni-based prepaid and contract tariff plans, each one targeted at a different type of subscriber. In Georgia, we offer 13 national lari-based prepaid tariff plans and 18 contract-based postpaid tariff plans for our SME and large account corporate customers. In Kyrgyzstan, we offer 15 som-based price plans for our mass market subscribers and 20 price plans for SME and large account subscribers.

128 Customer Loyalty Programs We have loyalty programs in each of the CIS countries in which we operate, except Tajikistan where we plan to launch our loyalty program in the first half of 2013. These programs allow subscribers to collect and redeem points for basic privileges from our partners and us. As of December 31, 2012, we had more than 8.0 million subscribers participating in these programs in the CIS. We used target marketing campaigns in order to reduce churn. For example, in Kazakhstan, we launched a subscriber retention program in which we contacted more than a 100,000 subscribers per month who we pereceived to be at risk of churn. In other CIS countries in which we operate, we launched approximately 10 targeted marketing campaigns monthly for churn prevention.

Fixed Business in the CIS Description of Fixed Services in CIS Business and Corporate Services Kazakhstan. We focus on small and medium businesses, offering services, including, high-quality, high-speed Internet, fixed voice and data transmission. We also offer specialized services for multi-national corporations and financial institutions. We provide the following services for corporate customers: • hi-speed Internet access (including fiber optic lines, wireless technology, WiMax and satellite technology); • local, long-distance, international fixed voice services (including traditional telephony, IP and session initiation protocol (“SIP”) telephony); • local, intercity and international channels (including leased lines and IP VPN through fiber optic, wireless, WiMax and satellite technologies) and • organizational services for integrated corporate networks (including integrated network voice and data services). Uzbekistan. Our company is an integrated provider of a large range of telecommunication services available on the Uzbek market, such as network access and hardware and software solutions, including configuration and maintenance. Our company has its own basic fiber-optical digital network in the cities of Tashkent, Samarkand, Bukhara, Zarafshan and Uchkuduk, which is longer than 200 kilometers and copper cables, which are longer than 250 kilometers that allow users to connect and to render services practically in any region of Uzbekistan. We provide the following services for corporate and individual customers: • hi-speed Internet access (including fiber optic lines and xDSL), telephony, and long distance and international long distance telephony on prepaid cards; • telephone communication services, based on copper wires and the modern digital fiber optic network; • dedicated lines of data transmission and • dedicated line access and fixed mobile convergence. Armenia. Our company is an integrated provider of a large range of telecommunication services available on the Armenian market, such as PSTN-fixed and IP telephony, Internet, data transmission and network access, as well as domestic and international voice termination, TCP/IP (transmission control protocol/Internet protocol) international transit traffic services. We operate a national network. We provide the following services for corporate and individual customers: • local telephony services; • international and domestic long distance services; • dedicated Internet and data services (including ADSL and fiber optic lines) and • voice over data services. Carrier and Operator Services Kazakhstan. We have several interconnection agreements with mobile and fixed-line operators in Kazakhstan under which KaR-Tel provides traffic termination services. Our subsidiary, TNS-Plus, has international interconnection agreements with operators in Russia, Uzbekistan and Kyrgyzstan and provides international voice traffic transit and international line rental services for Kazakh and international operators.

129 Uzbekistan. We have interconnection agreements with Uzbektelecom, the incumbent fixed and mobile services provider in Uzbekistan, through which all national and international traffic is routed, and other operators in Uzbekistan. Armenia. Our subsidiary ArmenTel is the Armenian incumbent mobile and fixed-line operator. ArmenTel operates a national network and local networks in every city of Armenia. In Armenia, we provide domestic and international voice termination, intercity and local leased channels and IP transit. Tajikistan. In Tajikistan, we have interconnection agreements with 15 local operators. Under the interconnection agreements, we provide voice call termination to our own network. We also have a license to provide international communications in Tajikistan which allows our subsidiary there to interconnect with OJSC VimpelCom directly. Georgia. In Georgia, our subsidiary Mobitel has interconnection agreements with ArmenTel and OJSC VimpelCom, and 24 agreements with local operators. Under these agreements Mobitel provides voice call termination to its own network.

Consumer Internet Services in the CIS In Kazakhstan, Uzbekistan and Armenia, we offer the same spectrum of fixed-line broadband and wireless Internet access as in Russia. For more information, see “—Description of Operations in Russia—Fixed Business in Russia—Consumer Internet Services in Russia.” In Armenia, we offer PSTN-fixed and IP telephony services, as well as fixed broadband Internet access based on ADSL technology and dial-up services and wireless Internet access based on CDMA technology. In Kazakhstan, and Tajikistan, we have launched a co-branded version of Opera Software’s Opera Mini web browser and offer unlimited browsing services to our subscribers. In Kazakhstan, Armenia, Georgia, Tajikistan and Uzbekistan, we have launched various mobile Facebook services and have plans to launch others. We believe that our partnerships with Opera Software and Facebook give us competitive advantages and promote growth of small screen data users and their data ARPU.

Licenses—Fixed Business in CIS The table below sets forth the principal terms of the fixed-line, data and long distance licenses that are important to our fixed business in the CIS. We have filed or will file applications for renewal for all of our licenses that expire in 2013. License Type Countries, Companies Expiration Date Local Communication Services Uzbekistan, “Buzton” July 5, 2016 Kyrgyzstan, “Sky Mobile” April 20, 2017 Armenia, “Armentel’ March 3, 2013 International and National Armenia, “Armentel” March 3, 2013 Communications Services Uzbekistan, “Buzton” January 15, 2015 Uzbekistan, “Unitel” March 28, 2026 Uzbekistan, “Unitel” April 24, 2026 Kyrgezstan, “Sky Mobile” May, 30, 2016 Tajikistan, “TAKOM” August 11, 2016 Tajikistan, “TAKOM” September 7, 2016 Telematic Services Tajikistan, “TAKOM” July 24, 2012 Kyrgezstan, “Sky Mobile” August 04, 2015 Data Transmission Services Uzbekistan, “Buzton” August 30, 2016 Uzbekistan, “Unitel” July 22, 2015 Tajikistan, ‘TAKOM” December 12, 2015 Kyrgezstan, “Sky Mobile” May, 30, 2016

Competition—Fixed Business in the CIS Business and Corporate Services Kazakhstan. We are a fast growing alternative Internet service provider in Kazakhstan, where we compete primarily with state-owned provider, Kazakhtelecom (whose group includes Nursat, Sygnum, Kepter Telecom, Online.kg, Radio Tell, and Vostok Telecom), KazTransCom owned by TeliaSonera, TransTelecom, owned by the Kazakhstan Temir Zholy (a railway company), Astel (a leader in the provision of satellite services) and several other small operators in the regions.

130 Uzbekistan. We operate large independent fixed-line services in Uzbekistan, where we offer a full spectrum of integrated telecommunication services. In Uzbekistan, we compete with the state-owned provider, Uzbektelecom, East Telecom, Sarkor Telecom, Sharq Telecom and EVO. There is a high level of competition in the capital city of Tashkent. The fixed line Internet market in the regions remains undeveloped. Armenia. We are the largest fixed-line services operator in Armenia, where we offer a broad spectrum of fixed-line services to government, corporate and private customers across Armenia. There are more than 14 active operators in Armenia. The largest operators are U!Com, “Armenian Datacom Company” CJSC, GNC-Alfa, CrossNet and FiberNet. There has also been a consolidation of rival companies through strategic partnerships, mergers and acquisitions. For example, in 2011, the largest Russian fixed operator, Rostelecom, acquired telecommunication network services operator GNC-Alfa. U!Com acquired Icon communications and Netsys in 2011 and InteractiveTV in 2012. In 2009, the following 14 companies with which we compete were granted fixed-line technology licenses: (Internet service providers) iCON, Armenian Datacom Company, Cornet-AM, Bionet, Web, Hi-Tech Gateway Inc., Arminco, Softlink, Netsys, Xalt, Crossnet; (restaurant complexes) Complex Dzoraghbyur; AATVQ CJSC and Ardnet LLC. In 2010, the following three companies were also granted fixed-line technology licenses: Griar Telecom, U!Com and GNC-Alfa. In 2010, Crossnet and Arminco began providing fixed-line services.

Consumer Internet Services The basic technologies of Internet access in the CIS include fixed broadband Internet access (comprising ADSL and Ethernet); wireless broadband Internet access (including 3G, CDMA, WiFi); and dial-up. Our main competitor in Kazakhstan is Kazakhtelecom. Our main competitors in Uzbekistan are UzNet, Sarkor, TPS, SharqStream and EVO. Our main competitors in Armenia are U!Com, Orange, VivaCell and Armenian Datacom Company. Rostelecom has announced that it launched fixed-line broadband Internet and telephony services for consumers in Armenia in December 2012 and is planning to launch digital television services in Armenia in the first quarter of 2013. Competition in the CIS is based primarily on penetration, price, included traffic and speed of connection. From September 30, 2011 to September 30, 2012, we significantly increased the number of broadband subscribers in Kazakhstan, Armenia and Uzbekistan by 213.0%, 29.0% and 25.0%, respectively.

Marketing and Distribution—Fixed Business in CIS Kazakhstan. We are focusing our development in Kazakhstan on subscriber base and revenue growth, which we aim to promote by expanding our transport infrastructure, strengthening our position in the market, developing our sales efforts and data services. Uzbekistan. In Uzbekistan, our strategy includes maintaining our current market position by retaining our large corporate clients subscriber base. Armenia. In Armenia, our strategy includes focusing on subscriber retention and ARPU growth by developing new services, including Internet access through a fiber optic network with a guaranteed speed to corporate customers and government organizations.

Other Operations We also have mobile telecommunications operations in Cambodia and Laos, as well as fixed-line operations in Laos. We also had operations through our associate GTEL Mobile in Vietnam until April 23, 2012, when that asset was sold.

Seasonality Our mobile telecommunications business is subject to certain seasonal effects. Specifically, in our biggest markets of Russia and Ukraine sales of our contract and prepaid tariff plans tend to increase during the December and January holiday season, and then decrease in February. These seasonal effects are offset in part by our marketing efforts and by higher roaming revenue due to winter holiday travel by subscribers. During the winter season, roaming revenues are stable, although January shows growth in all types of roaming revenues due to the winter holidays. Messaging services usage tends to increase in December, January, February and March during holidays when friends and family tend to communicate more. Our roaming revenues increase significantly from June to September due to the fact that many of our subscribers travel on vacation to destinations outside of their home countries. Guest roaming revenue on our networks also grows in this period. As with contract and prepaid tariff plans, sales and minutes of use per subscriber also typically decrease in October and November.

131 Our fixed telecommunications business is also subject to certain seasonal effects. Among the influencing factors are periods of vacations. We see relatively low levels of usage from May to August when many of the subscribers in our markets tend to take holiday or relocate outside of cities. Internet services usage tends to increase from September to January due to growth of customer activities such as work and school in this period.

Equipment and Operations Mobile Telecommunications Equipment and Operations Mobile Telecommunications Network Infrastructure GSM and 3G technologies are based on an “open architecture,” which means that equipment from any supplier can be added to expand the initial network. Our GSM/GPRS/EDGE networks, which use Alcatel- Lucent, Ericsson, Huawei and Nokia Siemens Networks equipment, are integrated wireless networks of base station equipment, packet core equipment and digital wireless switches connected by fixed microwave transmission links, fiber optic cable links and leased lines. We manage all major suppliers centrally to leverage the whole group and ensure that we receive on an ongoing basis the best commercial terms possible. We make supplier selection decisions based on a total cost of ownership, seeking to optimize network operations and provide the best value and experience to our customers. We have 3G networks in Russia, Tajikistan, Uzbekistan, Armenia, Kazakhstan and Kyrgyzstan and a TDM/VoIP international gateway in Kazakhstan. The table below sets forth certain information on our network equipment as of September 30, 2012: Base Base Station Territorial Stations(*) Controllers(*) Switches(*) Coverage Sq Kilometers Russia ...... 48,436 730 327 3,285,500 million sq. kilometers Ukraine ...... 14,770 151 59 603,447 thousand sq. kilometers Kazakhstan ...... 5,763 86 24 1,087,235 thousand sq. kilometers Uzbekistan ...... 3,361 39 28 177,899 thousand sq. kilometers Armenia ...... 954 5 4 28,851 thousand sq. kilometers Tajikistan ...... 1,097 8 6 58,390 thousand sq. kilometers Georgia ...... 1,151 13 4 47,396 thousand sq. kilometers Kyrgyzstan ...... 1,424 24 7 53,099 thousand sq. kilometers Cambodia ...... 1,456 6 1 69,000 thousand sq. kilometers Laos ...... 774 7 1 41,000 thousand sq. kilometers

* Includes 3G equipment.

Site Procurement and Maintenance We enter into agreements for the location of base stations in the form of either leases or cooperation agreements that provide us with the use of certain spaces for our base stations and equipment. Under these leases or cooperation agreements, we typically have the right to use premises located in attics or on top floors of buildings for base stations and space on roofs of buildings for antennas.

Telephone Numbering Capacity The Federal Communications Agency allocates all numbering capacity necessary for the operation of communication networks on a non-geographical and geographical basis for all telecommunications providers in Russia. We are required to pay 20.0 Russian roubles per telephone number according to the federal law No. 374 dated December 27, 2009, which came into effect on January 28, 2010 and which amended the tax code in Russia. This payment requirement applies to new numbers allocated after January 28, 2010. Numbering capacity is also allocated to us in the other CIS countries in which we operate by government agencies. For more information about numbering capacity allocation, please see “Regulation of Telecommunications.”

New Technology We continue to move toward a high-speed broadband connection environment deploying new technologies in fixed and mobile networks. We are also introducing new network technologies aiming to improve the service quality, optimize network usage and increase investment efficiency, such as step-by-step migration to next generation architecture, “direct tunneling” (which provides the possibility to cope with fast growing data traffic at a lower cost and smooth evolution to flat All-IP network architecture), tandem free operation (“TFO”), transcorder free operation (“TrFO”) and other related technologies. TFO and TrFO are the technologies that

132 remove voice transcoding operations during the call so the voice quality can be improved and resources in media gateways can be saved. All of these technologies are being implemented in commercial networks in Russia after testing to ensure the quality of the network. In order to comply with the requirements of the 4G/LTE licenses that OJSC VimpelCom was awarded for Russia in July 2012, OJSC VimpelCom must launch LTE services by June 2013 and subsequently meet further requirements, as further described in “Description of Operations in Russia—Mobile Business in Russia—Mobile Telecommunications Licenses in Russia—LTE License.” OJSC VimpelCom is currently expanding and improving its access and transport network in Russia. We also have a license for LTE services in Uzbekistan and have launched three pilot LTE networks in CIS countries (the first full-fledged live market pilots of LTE on post- Soviet territory). We are also implementing 3G HSPA and HSPA+ protocols on our mobile network. To support radio interface expansion, we are continuously upgrading mobile backhaul with high speed IP and hybrid microwaves, connecting NodeBs to fiber. To support rapidly growing data traffic, we have installed dense wavelength division multiplexing (“DWDM”) equipment on our Russian backbone and in some CIS countries. We are also implementing an expansion of our IP backbone network to support movement to an all-IP network architecture. For a discussion of the risks associated with new technology, please see the section of this prospectus entitled “Risk Factors—Risks Related to Our Business—Our failure to keep pace with technological changes and evolving industry standards could harm our competitive position and, in turn, materially adversely affect our business.”

Fixed-line Telecommunications Equipment and Operations Fixed-line Telecommunications Network Infrastructure Russia Our transport network carries voice, data and Internet traffic of mobile network, FTTB and our fixed customers. The backbone of our transport network is our optical cable network. The main fiber ring, Urals ring and optic rings in the Siberian region of our network connect the major cities in the European part of Russia, the Urals and Eastern Siberia. The total length of our optical cable network reaches 33,516 kilometers. Our protected optical line connects Moscow and St. Petersburg, and passes to Stockholm, London and Frankfurt. Two independent optical lines connect our optical networks in Russia and Ukraine. We have also built a third cross boundary line in Kazakhstan, which connects our Russian network to our networks in Kazakhstan, Uzbekistan and to Asian telecommunications operators. Our regional transport networks are based on synchronous digital hierarchy (“SDH”) and metropolitan ethernet network (“MEN”) technology. We have built local SDH networks in more than 100 cities of Russia. We have also built the interregional (also called “zone”) transport networks that connect our sites in small towns and the countryside. The total length of regional fiber cables constructed within the cities is 41,200 kilometers and the total length of our zonal fiber cables is 16,750 kilometers. The MEN network is constructed in more than 82 cities, which provide our customers with IP VPN services, voice services and access to Internet. Our fixed voice network has the following three levels: local, regional and federal. The local voice networks, constructed in 103 cities, provide customers with fixed voice services. Our local network in Moscow is integrated into the telephone network and connected to 142 transit and local nodes of urban telephone network (“UTN”). We have completed construction of zone networks in 52 Russian regions, which helps us to minimize payments to incumbent local operators for voice transit. Our federal transit network consists of eight international transit exchanges, 14 intercity communications transit exchanges installed in each of the federal districts of Russia, and connection points (access nodes) located in each region of Russia. The network provides mobile and fixed customers with long-distance voice services and minimizes our costs of traffic. Our IP/MPLS data network carries mobile network and FTTB IP traffic and allows us to provide our customers with IP VPN services. Our data network core runs at a speed of 400 Gbps. Our Internet network is one of the largest in Russia. We have interconnection agreements with international and Russian ISPs.

Ukraine Our transport network is designed to provide a full spectrum of telecommunication services for corporate and enterprise customers, including: Private Leasing Channel, voice, IP voice, L2VPN, IP VPN, and Internet access.

133 Our transport network is based on our optical cable network utilizing DWDM, SDH and IP/MPLS equipment. The DWDM and SDH networks connect all the main regional and mid-sized cities of Ukraine, including Kiev, Kharkov, Dnepropetrovsk, Donetsk, Zaporozye, Lvov, Odessa, Lugansk, Poltava, Sumy, Kirovograd, Kherson, Chernovtsi, Cherkassi, Vinnitsa, Zhitomir, Nikolaev Chernigov, Kherson, Uzgorod, Lutsk, Rovno, Ivano-Frankovsk, Ternopol, Khmelnitskiy, Simferopol, Sevastopol, Yalta, Kremenchug, Krivoy Rog and Mariupol. All our DWDM and SDH optical networks are fully ring-protected and can be self-healing which is necessary to ensure up time in the telecommunication industry. Our core IP/MPLS network is fully mesh- protected, meaning that the recovery mechanisms which provide different levels of protection or restoration against different failure modes are available for network up time. It connects all the main regional cities of Ukraine. The total length of our fiber optic cables is 44,306 kilometers. We have SDH and Ethernet interconnections with major European carriers in Russia, Poland, Hungary, Romania, Slovakia and Belorussia. Our interregional and metro transport networks are based on our optical cable and microwave systems utilizing SDH, PDH, Ethernet and IP/MPLS technologies. We have deployed metro SDH and IP/MPLS optical networks in more than 138 cities of Ukraine. The total length of fiber cables constructed within the cities is 22,883 kilometers. Our IP/MPLS data network carries mobile network and FTTB IP traffic, allowing us to provide L2VPN, IP VPN and Internet services. We have interconnections with major European ISPs in Poland (Telia), Hungary (Level3), Germany (Telia, L3) and Russia (Sovintel). We are interconnected with Ukrainian local ISPs Volia and Ukrtelecom and have internet exchanges with UA-IX, AMS-IX DE-CIX, Datagroup, Vega, Eurotranstelecom. Kyivstar’s fixed voice network is based on softswitch technology with dual homing for media gateways controllers (“MGCs”) and it has combined local-transit and long-distance functionality. It is possible to use PRI, SIP, H.323 connections for fixed business users and provide local and long-distance transit of voice services. Six media gateways (“MGw”) provide the interconnection with PSTN in 22 cities in most regions of Ukraine through TDM technology. Protected MGC provides voice services for customers by VoIP technology on the entire territory of Ukraine. In addition, MGC is connected to eight international VoIP operators. Similarly, Kyivstar’s fixed core network is connected to 73 TDM and 14 VoIP national operators. International voice services are provided by two international switching centers located in Kyiv and Dnipropetrovsk, which are integrated with the existing Kyivstar mobile network and have established connections with 39 international TDM operators (863xE1). The network provides mobile and fixed customers with long-distance voice services and minimizes our cost of traffic. We also have the separate fixed network of Golden Telecom Ukraine (“GTU”). It has the following three levels: local (class 5), long-distance and transit (class 4) and international. GTU fixed local voice networks, constructed in 29 cities throughout Ukraine, provide customers with fixed voice services. GTU’s local network in Kyiv is integrated into the telephone network and connected to two transit and local nodes of UTN. Similarly, GTU’s fixed network is connected in other regional centers of Ukraine providing 64 connections to transit and local nodes. It is possible to use PRI, SIP and H.323 connections for fixed business users and provide local and long- distance transit of voice services. GTU’s fixed network is connected to 61 TDM and 12 VoIP national operators. International transit of fixed voice services is provided by two Kyivstar ISCs and one own international switching center in Kyiv which is connected to six international TDM operators (45xE1). The network provides mobile and fixed customers with long-distance voice services and minimizes GTU’s costs of traffic. In the future we plan to merge Kyivstar’s and GTU’s fixed networks for local, long-distance and international transit voice services.

Kazakhstan Our subsidiaries TNS-Plus LLP and 2Day Telecom LLP provide a wide spectrum of fixed-line telecommunications services, including Internet access, ADSL, FTTB, WiFi, WiMax, VoIP, VPN and VSAT. TNS-Plus owns more than 11,970 kilometers of fiber optic main lines across Kazakhstan, which are based on Ericsson SDH and Huawei SDH/DWDM equipment. As of September 30, 2012, we had approximately 162,000 subscribers connected via FTTB technology in Kazakhstan.

Uzbekistan Our subsidiary Buzton’s network provides international telephony and Internet access through JSC Uzbektelecom. Buzton’s network consists of 127 nodes situated throughout Uzbekistan. The main technologies of our access networks are ADSL (15,560 ports) and FTTB (1,162 buildings). Our main line in Tashkent is based on fiber-optic equipment. The network also includes long-leased channels and local fiber optic networks in Tashkent, Zarafshan and Uchkuduk.

134 Armenia ArmenTel’s fixed infrastructure covers all districts of Armenia with a full set of equipment (international gateway, digital-analog exchanges, Internet protocol digital subscriber line access multiplexers (“DSLAMs”), copper wire access network, fiber-optic backbone network, data network). Its network consists of 158,719 ADSL ports and 161 exchanges of which 106 are digital. Our company provides interconnection with international operators and national mobile operators in Armenia. ArmenTel’s CDMA Wireless Local Loop network is used to provide fixed telephone services to rural customers.

FTTB Our company is rolling out FTTB networks in Russia, Ukraine and the CIS. Our management has experience in the efficient rollout of fiber optic networks in densely populated metropolitan areas. Technically, FTTB offers higher transmission speed, more bandwidth and better security compared to all existing xDSL and other quasi-broadband solutions. In Russia, where the local loop has not been unbundled and the quality of copper lines is generally poor, construction of fiber networks helps to create alternative high quality access to subscribers’ apartments. As of September 30, 2012, we had approximately 2.2 million subscribers connected to our FTTB network in Russia. The network operates in 148 cities across Russia (124) and the CIS (24). The acquisition of Cortec in 2008 strengthened our company’s position in the broadband Internet market. We have the largest FTTB network in Moscow and the core broadband market in Russia.

Intellectual Property We rely on a combination of trademarks, service marks and domain name registrations, copyright protection and contractual restrictions to establish and protect our technologies, brand name, logos, marketing designs and Internet domain names. We have registered and applied to register certain trademarks and service marks in connection with our mobile telecommunications businesses. We have also registered and applied to register certain trademarks and service marks with the World Intellectual Property Organization in order to protect them in certain countries of the CIS. Our registered trademarks and service marks include our brand name, logos and certain advertising features. Our copyrights are principally in the area of computer software for service applications developed in connection with our mobile and fixed-line network platform. We have copyrights to some of the designs we use in marketing and advertising our mobile services.

Properties We own a series of five buildings consisting of approximately 24,000 square meters that we own at 10, Ulitsa 8 Marta in Moscow. We use these buildings as an administrative office, technical center, warehouse and operating facility. In addition, we own a series of six buildings on Lesnoryadsky Pereulok in Moscow, constituting approximately 15,500 square meters, that are used as an administrative office, warehouse and operating facility. These buildings also house the main switches for our Moscow GSM-900/1800 network and our main and reserve IT centers. We also have offices at 4, Krasnoproletarskaya Street, in the center of Moscow. These consist of three leased administrative buildings of approximately 32,400 square meters. We also own a portion of a building in the center of Moscow on Ulitsa 1st Tverskaya Yamskaya consisting of approximately 3,000 square meters that we use as a subscriber service center, administrative and sales office. We also own office buildings in some of our regional license areas and lease space on an as-needed basis. Kyivstar owns a series of buildings consisting of 34,068 square meters at Degtyarivska, 53 in Kyiv. We use these buildings as offices, print-centers, sales and call centers and switching-off centers. In addition, we own a set of buildings at Gagarina 103 in Dnipropetrovsk, consisting of 16,398 square meters, that we use as a switching-off center, call center, sales center and storage unit; a building at Vyshgorodska, 21 in Kyiv, consisting of 2,364 square meters, that we use as a switching center; a building at Bugaivska, 3 in Odesa, consisting of 8,438.7 square meters, which is currently under rennovation that we plan to use as offices, a switching-off center and data center; a building at Shelushkova, 96 in Zhytomyr, consisting of 1,770.2 square meters, that we use as a switching-office center and offices; a building in Rovno, consisting of 1,426 square meters, that we use as a switching-office center and offices; a building at Gorkogo, 84 in Chernigiv consisting of 1,032 square meters, that we use as a switching- office center and offices; a building at Keletska, 54B in Vinnitsa consisting of 1,500.4 square meters, that we use as a switching-office center and offices; a building at Gogolya, 413 in Cherkasy, consisting of 1,695 square meters (including garage), that we use as a switching-office center and offices and a building at Artema, 169k in Donetsk, consisting of 2,275 square meters, that we use as offices, a switching-off center and a customer service center. We also own office buildings in some of our regional license areas and lease space on an as-needed basis.

135 For a description of certain telecommunications equipment that we own, please see “—Equipment and Operations—Mobile Telecommunications Equipment and Operations—Mobile Telecommunications Network Infrastructure” and “—Equipment and Operations—Fixed-line Telecommunications Equipment and Operations—Fixed-line Telecommunications Network Infrastructure” above.

Legal Proceedings FAS Claim In April 2012, the FAS brought a claim against two of our indirect shareholders at the time, Telenor East and Weather II, in the Moscow Arbitration Court. The FAS named VimpelCom Ltd., the Issuer and OJSC VimpelCom as third parties under the claim. Under Russian law, a person named as a third party to a claim is generally a person potentially interested in the case whose rights and obligations can be affected by the claim. OOO Altimo and Altimo Coöperatief were also named as third parties. The claim was filed by FAS on the alleged basis that Telenor East’s February 15, 2012 purchase (the “Purchase”) of 234 million preferred shares in VimpelCom Ltd. from Weather II violated relevant Russian law because Telenor East, as a company controlled by a foreign state (the Kingdom of Norway), may not exercise control over a Russian entity having strategic importance for the national defense and state security (such as our Russian subsidiary, OJSC VimpelCom). FAS asked the Moscow Arbitration Court to (a) invalidate the share purchase agreement between Telenor East and Weather II of February 15, 2012, which provided for the Purchase; (b) invalidate the option agreement between Telenor East and Weather II of February 15, 2012, which provides for call and put options under which Telenor East could acquire an additional 71 million preferred shares in our company from Weather II extending into January 2016; (c) oblige Telenor East to return the preferred shares to Weather II; and (d) oblige VimpelCom Ltd., Telenor East and Altimo Coöperatief to enter into a shareholders’ agreement on substantially the same terms as the VimpelCom Shareholders Agreement, which terminated on December 10, 2011. In connection with the claim, the Moscow Arbitration Court issued rulings granting injunctive relief, which affected VimpelCom Ltd., the Issuer and OJSC VimpelCom. The injunctions prohibited: (i) VimpelCom Ltd. and VimpelCom Holdings B.V. voting at OJSC VimpelCom general shareholders meetings on matters related to a change of the members of the management bodies, and passing resolutions on approval of major transactions and interested party transactions; (ii) Telenor East and Weather II from changing the composition of VimpelCom Ltd.’s supervisory board; (iii) Telenor and Weather II from exercising their rights under the option agreement dated February 15, 2012; (iv) payment to the shareholders of OJSC VimpelCom of dividends based on OJSC VimpelCom’s 2011 operating results, and transfer of the cash intended for dividend distribution from OJSC VimpelCom accounts to the accounts of VimpelCom Ltd. or other companies with foreign banks; (v) the external auditors elected at the Annual General Shareholders Meeting of VimpelCom Ltd. held on May 21, 2012 from exercising the powers conferred onto them; (vi) the board of directors of OJSC VimpelCom elected at the annual general shareholders meeting of OJSC VimpelCom from exercising their powers pursuant to the charter of OJSC VimpelCom; and (vii) other actions and steps designed to transfer the funds out of OJSC VimpelCom. In November 2012, the FAS withdrew its claim after Altimo increased its stake in VimpelCom Ltd. to 47.85% percent from 41.9% percent by buying the shares of Bertofan Investments Limited, owned by Ukrainian businessman Viktor Pinchuk. This terminated the proceedings in the case and the injunctions issued in the proceedings were subsequently cancelled.

Proceedings Involving OJSC VimpelCom and Its Subsidiaries KaR-Tel Litigation Prior to our acquisition of KaR-Tel, in November 2003, KaR-Tel redeemed for an aggregate of 450,000.0 Kazakhstani tenge (or approximately US$3,100.0 based on the Kazakhstani tenge to U.S. dollar exchange rate as of December 31, 2003) the equity interests of Turkish companies, Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. (together, the “Former Shareholders”) owning an aggregate of 60.0% of the equity interests in KaR-Tel, in accordance with an October 30, 2003 decision of the Review Panel of the Supreme Court of Kazakhstan. The decision was based on the finding that the Former Shareholders inflicted material damage on KaR-Tel by causing KaR-Tel to lose a valuable government tax concession and selling KaR-Tel obsolete and over-priced telecommunications equipment. The redemption process was initiated on April 15, 2002 by a repeated extraordinary general meeting of KaR-Tel shareholders reconvened by a shareholder owning 40.0% of the equity interests in KaR-Tel. In late August 2004, prior to our acquisition, we received letters from the Former Shareholders claiming that they continued to own such interests. The Former Shareholders stated in these letters that subsequent to such redemption, their respective managements were taken over by The Savings Deposit Insurance Fund, a

136 Turkish state agency responsible for collecting state claims arising from bank insolvencies. The Former Shareholders indicated in their letters that they were preparing to put their case before the International Center for the Solution of Investment Disputes (“ICSID”) an independent organization with links to the World Bank. Based on information disclosed by ICSID, an action by the Former Shareholders against the Republic of Kazakhstan, the subject matter of which is “telecommunications enterprise,” was filed in August 30, 2005. While we understand that this action does pertain to the Former Shareholders and their former interests in KaR-Tel, neither VimpelCom nor KaR-Tel is a party to this action. According to ICSID, the arbitration tribunal issued an award in favor of the Former Shareholders on July 29, 2008. Based on information in publicly available sources, the tribunal found that, among other things, the Republic of Kazakhstan expropriated the Former Shareholders’ investment in KaR-Tel without complying with conditions set forth in the Bilateral Investment Treaty between the Republic of Kazakhstan and the Republic of Turkey. However, the tribunal’s award did not address the validity of the decision of the Review Panel of the Supreme Court of Kazakhstan. The tribunal ordered the Republic of Kazakhstan to pay US$125.0 million plus interest to the Former Shareholders. According to ICSID, annulment proceedings were registered on November 7, 2008 and a decision of the appeal committee on the application for annulment was issued on March 25, 2010. Although the ICSID website does not provide any information about the appeal committee’s decision, according to a copy of the decision obtained from a website that does not appear to be associated with ICSID, the appeal committee dismissed the Republic of Kazakhstan’s appeal in its entirety. We cannot assure you that the Former Shareholders or other parties will not pursue any action against us or KaR-Tel in any forum or jurisdiction. If the Former Shareholders or other parties were to prevail in any such action, we could lose ownership of up to 60.0% of our interest in KaR-Tel, be required to reimburse the Former Shareholders for the value of their interests or otherwise suffer monetary and reputational or other damages that cannot currently be quantified. On January 10, 2005, KaR-Tel received an “order to pay” (the “Order to Pay”) issued by the Fund in the amount of approximately US$4.2 billion at the exchange rate as of September 30, 2012 (stated as approximately Turkish lira 7.55 quadrillion and issued prior to the introduction of the New Turkish Lira, which became effective as of January 1, 2005). The Order to Pay, dated as of October 7, 2004, was delivered to KaR-Tel by the Bostandykski Regional Court of Almaty. The Order to Pay does not provide any information regarding the nature of, or basis for, the asserted debt, other than to state that it is a debt to the Turkish Treasury and the term for payment was May 6, 2004. On January 17, 2005, KaR-Tel delivered to the Turkish consulate in Almaty a petition to the Turkish court objecting to the propriety of the Order to Pay and requesting the Turkish court to cancel the Order to Pay and grant a stay of execution proceedings in Turkey. The petition was assigned to the 4th Administrative Court in Turkey for review. On June 1, 2006, KaR-Tel received formal notice of the 4th Administrative Court’s ruling that the stay of execution request was denied. KaR-Tel’s Turkish counsel has advised KaR-Tel that the stay request is being adjudicated separately from the petition to cancel the Order to Pay. KaR-Tel submitted an appeal of the ruling with respect to the stay application. KaR-Tel received the Fund’s response to the petition in June 2006. In its response to KaR-Tel’s petition, the Fund asserts, among other things, that the Order to Pay was issued in furtherance of its collection of approximately Turkish lira 7.55 quadrillion (prior to the introduction of the New Turkish Lira, which became effective as of January 1, 2005) (equivalent to approximately US$4.2 billion at the exchange rate as of September 30, 2012) in claims against the Uzan group of companies that were affiliated with the Uzan family in connection with the failure of T. Imar Bankasi, T.A.S. The Fund’s response to KaR-Tel’s petition asserts that the Uzan group of companies includes the Former Shareholders and KaR-Tel. In June 2006, KaR-Tel submitted a response to the Fund’s defense in which it denied in material part the factual and legal assertions made by the Fund in support of the Order to Pay. In December 2008, KaR-Tel received the Fund’s further response to KaR-Tel’s petition. On December 11, 2008, KaR-Tel received a Decision of the Territorial Court of Istanbul dated December 12, 2007, wherein the court rejected KaR-Tel’s appeal with respect to the stay of execution request. On October 20, 2009, KaR-Tel filed with Sisli 3rd Court of the First Instance in Istanbul a claim to recognize in the Republic of Turkey the decision of the Almaty City Court of the Republic of Kazakhstan dated June 6, 2003 regarding, among other things, compulsory redemption of equity interests in KaR-Tel owned by Rumeli and Telsim, which was confirmed by the Civil Panel of the Supreme Court of the Republic of Kazakhstan on June 23, 2003, as amended, by the resolution of the Review Panel of the Supreme Court of the Republic of Kazakhstan dated October 30, 2003 (the “Recognition Claim”). On October 20, 2009, KaR-Tel also filed with the 4th Administrative Court of Istanbul a petition asking the 4th Administrative Court to treat the recognition of the Kazakhstan court decision as a precedential issue and to stay the proceedings in relation to the Order to Pay.

137 On September 28, 2010, Sisli 3rd Court of the First Instance in Istanbul reviewed the Recognition Claim and ruled in favor of KaR-Tel recognizing the Kazakhstan Court judgments on the territory of the Republic of Turkey. The defendants, Rumeli and Telsim, appealed the decision. KaR-Tel submitted its responses to such motion on appeal on January 20, 2011. On July 11, 2012, the 11th Civil Chamber of the Supreme Court upheld the decision of the Sisli Court of the First Instance finding in favor of KaR-Tel. The defendants then requested a clarification of the Supreme Court’s decision to uphold the Sisli Court of the First Instance’s decision. The Supreme Court rejected the request, making the September 28, 2010 ruling final. On October 25, 2010, the 4th Administrative Court of Istanbul reviewed KaR-Tel’s petition to annul the Order to Pay and ruled in favor of KaR-Tel. The court recognized the Order to Pay as illegal and annulled it. The defendants have appealed the ruling. On February 18, 2011, KaR-Tel submitted its response to the motion on appeal and on April 20, 2011, the Fund submitted its reply to KaR-Tel’s response. The appeal case has been reviewed by the Prosecution Office of the Council of State and sent to the 13th Chamber of Council for review on the merits. As of the date of this prospectus, no decision on the appeal has been rendered. There can be no assurance that claims in relation to our ownership of KaR-Tel will not be brought by the Fund directly against us or our other subsidiaries or that KaR-Tel and/or OJSC VimpelCom or its other subsidiaries will not be required to pay amounts claimed to be owed on the basis of other claims made by the Fund. The adverse resolution of any other matters that may arise in connection with any other claims made by the Fund, could have a material adverse effect on our business, financial condition and results of operations, including an event of default under some or all of our outstanding indebtedness. For more information on these risks, and other risks associated with litigation in which KaR-Tel is involved, please refer to the section of this prospectus entitled “Risk Factors—Legal and Regulatory Risks—We are involved in disputes and litigation with regulators, competitors and third parties.”

Petition for Appraisal On April 18, 2008, Global Undervalued Securities Fund, L.P. timely filed a petition in a Delaware court demanding appraisal of its 1,367,328 shares of Golden Telecom, which it did not tender in the tender offer pursuant to which our company acquired Golden Telecom. On April 23, 2010, the court determined the fair value of Golden Telecom shares to be US$125.49 per share. Interest was to be applied for a period from February 28, 2008 to the date of payment. Golden Telecom filed a motion for reargument which was denied by the court and a final judgment was entered on May 27, 2010. Golden Telecom filed a timely notice of appeal and the petitioners filed a cross-appeal of the judgment in Delaware Supreme Court. We accrued a loss contingency in the amount of US$52.7 million in relation to cash rights for shares of Golden Telecom in 2010.

In June 2010, Golden Telecom and Global Undervalued entered into an agreement pursuant to which in July 2010, Golden Telecom paid to Global Undervalued US$165.5 million based on the US$105.00 per share tender offer price and interest, partially repaying the liability recorded as of June 30, 2010. Pursuant to the agreement, in July 2010 Golden Telecom deposited US$33.2 million into an escrow account. This escrowed amount was based on the difference between the US$105.00 per share tender offer price and the court-determined US$125.49 fair value of each Golden Telecom share plus interest thereon through December 31, 2010. On December 29, 2010, the Delaware Supreme Court rendered a final resolution of the appraisal litigation by affirming the April 23, 2010 decision valuing Golden Telecom shares at US$125.49 per share. Pursuant to the agreement between Golden Telecom and Global Undervalued, on January 13, 2011, the US$33.2 million in the escrow account was released to Global Undervalued to satisfy the remaining portion of appraisal judgment. On January 18, 2011, Golden Telecom paid Global Undervalued US$68.0 million, the amount of interest accrued from January 1, 2011 through January 13, 2011. As of January 18, 2011, the judgment in the appraisal litigation was fully satisfied, resulting in a final conclusion to Global Undervalued’s petition for appraisal.

FAS Antimonopoly Litigation iPhone Proceedings. The FAS commenced proceedings against OJSC VimpelCom and MTS alleging conspiracy with respect to iPhone prices. The penalty for such violations could result in fines of up to 15.0% of the revenues derived from the relevant services. On April 26, 2012, FAS passed a verdict that OJSC VimpelCom and MTS were guilty of concerted action with respect to the pricing of iPhone 4 handsets. Both parties voluntarily discontinued the violations of law in question and the antimonopoly proceedings were terminated. On July 17, 2012, the FAS announced its decision to impose fines of RUR18.2 million (equivalent to approximately US$0.6 million as of July 17, 2012). OJSC VimpelCom did not challenge the decision and paid this fine in full.

138 Sky Mobile Litigation Since November 2006, the chief executive officer and directors of OJSC VimpelCom have received several letters from MTS and its representatives claiming that Sky Mobile’s Kyrgyz telecom business and its assets were misappropriated from Bitel, an MTS affiliate, and demanding that we not purchase Sky Mobile, directly or indirectly, or participate or assist in the sale of Sky Mobile to any other entities. These letters suggested that MTS will take any and all legal action necessary against our company in order to protect MTS’s interest in Bitel and Bitel’s assets. In October 2010, we acquired 50.1% of the share capital of Menacrest, the parent company of Sky Mobile. As of the date hereof, management is not aware of any pending legal action against our company in connection with this matter, except for the litigation against Sky Mobile discussed in the paragraph below. Sky Mobile is a defendant in litigation in the Isle of Man. The litigation was brought by affiliates of MTS against Sky Mobile and various companies and individuals directly or indirectly associated with the Alfa Group and alleges that the Kyrgyz judgment determining that an Altimo affiliate was the rightful owner of interest in the equity of Bitel prior to the asset sale between Sky Mobile and Bitel was wrongfully obtained and that Bitel shares and Sky Mobile assets were misappropriated. The legal proceedings in this matter are pending. At this time the company is unable to assess the likelihood of the ultimate outcome of this litigation and its effect on our operating results and financial position. For the risks related to matters involving Sky Mobile, see “Risk Factors—Legal and Regulatory Risks—We are involved in disputes and litigation with regulators, competitors and third parties.”

Tax Proceedings in Russia On January 21, 2011, OJSC VimpelCom received a report from the tax authorities in relation to a tax audit that was conducted with respect to OJSC VimpelCom’s 2007 and 2008 Russian tax filings asserting claims against OJSC VimpelCom of RUR1.2 billion (equivalent to approximately US$38.5 million at the exchange rate as of September 30, 2012). OJSC VimpelCom challenged the tax audit report in court of the first instance with respect to approximately RUB 0.94 billion (equivalent to approximately US$30.7 million at the exchange rate as of September 30, 2012) of the amount claimed in the audit. The courts of the first and second instance upheld OJSC VimpelCom’s challenge and OJSC VimpelCom paid the RUB 0.25 billion (equivalent to US$8.2 million at the exchange rate as of September 30, 2012) balance of the fine that it had not challenged. The tax inspectorate filed an appeal against the court of the first instance decision to the Court of Cassation and on November 30, 2012, the Court of Cassation upheld the court of the first instance’s decision in favor of OJSC VimpelCom in full. The tax inspectorate may challenge the decision in Supreme Arbitration Court until March 30, 2013.)

Kazakhstan Antimonopoly Proceedings First Roaming Claim. On May 14, 2010, the KAA initiated an investigation into the alleged breach of antimonopoly laws of Kazakhstan by all three Kazakhstan GSM operators (KaR-Tel LLP (Beeline), GSM Kazakhstan OAO Kazakhtelecom LLP (TM KCell, Active), and Mobile Telecom Systems LLP (TM Neo)), claiming these operators had abused their dominant position by the way they determine the threshold (minimum) balances on consumers’ accounts required for switching on and off roaming services. On June 21, 2010, the KAA completed its investigation and alleged that all three Kazakhstan GSM operators abused their dominant position by establishing the threshold (minimum) balances in relation to switching off balances and by switching off a consumer’s roaming services when there is a negative balance on the consumer’s account. On July 3, 2010, the KAA initiated an administrative procedure with respect to all three Kazakhstan GSM operators, including KaR-Tel, and issued a protocol on administrative offence (the “Protocol”). The KAA filed a claim based on the Protocol with the Interregional Administrative Court of Almaty. On July 16, 2010, KaR-Tel filed a claim to recognize as illegal and annul the acts of the KAA that served as a procedural basis for the Protocol. On October 19, 2010, the Interregional Economic Court of Astana ruled in favor of KaR-Tel and recognized as illegal, null and void all acts of the KAA and its territorial branch, which served as the procedural basis for the Protocol. The KAA appealed this decision and on December 13, 2010 the Appeals Chamber of Astana City Court of Appeals affirmed the October 19, 2010 decision in favor of KaR-Tel. On January 17, 2011, the Cassation Chamber of Astana City Court reviewed the cassation petition of the KAA and upheld the October 19, 2010 and December 13, 2010 decisions. The Interregional Economic Court’s October 19, 2010 decision came into force on January 17, 2011. On October 21, 2011, the General Prosecutor of the Republic of Kazakhstan filed a protest to the Supreme Court of Kazakhstan appealing in a supervisory review order the decision of the Interregional Economic Court of Astana of October 19, 2010, which rendered unlawful and void all acts of the KAA, as well as decision of the

139 Appeals Chamber of Astana City Court of December 13, 2010, which upheld the Interregional Economic Court of Astana decision. On October 27, 2011, KaR-Tel received a notice from the Supreme Court of Kazakhstan indicating that the said protest has been accepted for review and the hearing would take place on November 16, 2011. On November 16, 2011, the Supervisory Chamber of the Supreme Court of Kazakhstan issued a decision that overturned the decision of the Interregional Economic Court of Astana of October 19, 2010, and decision of the Appeals Chamber of Astana City Court of December 13, 2010. The Supreme Court sent the case back for the new consideration in administrative proceedings to the Interregional Administrative court of Almaty. On December 26, 2011, the Interregional Administrative Court of Almaty accepted KaR-Tel’s request to discontinue proceedings and to return the Protocol to the KAA for rectification of deficiencies in that the KAA had wrongfully indicated the amount of total revenues received by KaR-Tel for the purpose of calculation of the administrative fines instead of the amount of revenues received from monopolisitc activity. The amended protocol was submitted to and reviewed by the Interregional Administrative Court of Almaty on June 15, 2012. The court determined that KaR-Tel had abused its dominant position by determining the threshold amounts for offline roaming (the roaming which is not billed for in online mode) when CAMEL-roaming (which allows for online roaming) is not available, and calculated fines based solely on revenues received from offline roaming (rather than based on total revenues). The court imposed a fine of 155 million Kazakh tenge (or approximately US$1.0 million at the exchange rate as of June 15, 2012) and KaR-Tel paid the fine in full. If the KAA decides to challenge the amount of the fines, the public prosecutor’s office may appeal the Interregional Administrative Court of Almaty’s decision until June 15, 2013. Second Roaming Claim. The KAA also initiated a second investigation with respect to concerted actions of Kazakhstan and Russian GSM mobile operators on establishing and/or preservation of tariffs, which we refer to in this prospectus as the “Concerted Actions Investigation.” On October 25, 2010, the KAA completed the Concerted Actions Investigation and reclassified alleged concerted actions of KaR-Tel and other Russian and Kazakhstan GSM operators into establishing of monopolistically high tariffs. On November 3, 2010, the KAA initiated an administrative procedure and issued a new protocol on administrative offence, according to which the KAA has found KaR-Tel and the other two Kazakhstan GSM operators liable for abuse of their dominant position on the market by way of establishing monopolistically high roaming tariffs, which we refer to in this prospectus as “the New Protocol.” As required under Kazakhstan law, the KAA has submitted the New Protocol to a Kazakh administrative court, and the court will decide on the merits and on applicable fines. While the company does not agree with the New Protocol and has challenged it, the ultimate resolution of this matter could result in a loss of up to KZT 9.9 billion (equivalent to approximately US$66.2 million at the exchange rate as of September 30, 2012) in excess of the amount accrued. On November 23, 2010, KaR-Tel filed a claim with the Astana Interregional Economic Court against the KAA requesting that the court recognize as illegal and to annul the acts of the KAA preceding the New Protocol. On February 24, 2011, the Interregional Economic Court of Astana ruled in favor of KaR-Tel and recognized as illegal, null and void the acts of the KAA. The court’s decision entered into force on March 30, 2011. On November 25, 2011, the KAA appealed to the Supreme Court of Kazakhstan in a supervisory review order the decision of the Interregional Economic Court of Astana of February 24, 2011, which recognized as illegal, null and void all acts of the KAA. On January 11, 2012, the Supervisory Chamber of the Supreme Court of Kazakhstan reviewed the protest and overturned the decision of the Interregional Economic Court of Astana of February 24, 2011. The Supreme Court sent the case back for new consideration in administrative proceedings to the Interregional Administrative Court of Almaty. On March 1, 2012, the Interregional Administrative Court of Almaty ruled in favor of KaR-Tel and recognized the New Protocol of the KAA as illegal, null and void. The decision will remain subject to appeal for one year.

Dominant Market Position On October 10, 2011, KaR-Tel was recognized by the KAA as dominant in the interconnection market. When a company is recognized as having a dominant position, it becomes subject to special reporting obligations to the national regulatory authority, higher scrutiny in antimonopoly/competition issues and price control and potential price regulation (including, for example, tariff caps). KaR-Tel does not agree with this decision of the antimonopoly authority and filed a claim to the Interregional Economic Court of Astana against the KAA requesting that the court recognize as illegal the decision of the KAA. On December 26, 2011, the court ruled and rejected KaR-Tel’s claim. KaR-Tel appealed the decision, which appeal was rejected by the Court of Appeals on August 8, 2012. KaR-Tel appealed the decision of the Appeals Chambers of Astana City Court to the Cassation Chamber of Astana City Court. On October 18, 2012, the Cassation Chamber rejected KaR-Tel’s appeal and the Interregional Economic Court of Astana’s decision came into effect. On November 12, 2012, KaR-Tel submitted an application to the Supreme Court of Kazakhstan for supervisory review of the December 26, 2011 decision, which was rejected by the court on January 10, 2013. The decision is subject to

140 appeal by the public prospecutor’s office until October 18, 2013, if it deems the decision to be unlawful. KaR-Tel believes that its position is justified and is considering applying for appeal with the public prosecutor’s office.

Proceedings Involving Kyivstar Antitrust Proceedings in Ukraine In December 2012, the UAMC completed two investigations regarding Kyivstar’s and MTS Ukraine’s (i) roaming charges and (ii) other local mobile tariffs. As a result of the investigations, the UAMC issued binding recommendations requiring Kyivstar to reduce roaming charges and take actions to bring other tariffs for mobile services to a level that would exist on a market with significant competition. Recommendations have been implemented with no damage to marketing, tariff policy or plans. The investigations are closed. In addition, the UAMC is investigating an unfair competition case in relation to the alleged distribution by Kyivstar of misleading information on its tariffs. For an unfair competition infringement, the UAMC imposed a fine of 50,000 UAH, which Kyivstar paid in June 2012. In light of recent UAMC investigations, it is possible that the contemplated increase of tariffs for certain telecommunication services by Kyivstar may result in UAMC’s commencing new investigations against the company. If Kyivstar fails to comply with the UAMC’s recommendations, if any, and is found abusing its dominant position, the UAMC can impose a fine in the amount of up to 10.0% of consolidated revenues of VimpelCom Ltd. and its subsidiaries, including Kyivstar, for the last financial year as well as in the amount of up to 300.0% of profits received by VimpelCom Ltd. together with its subsidiaries, including Kyivstar, from the activities carried out in violation of the recommendation and/or competition laws. In addition, a third party can bring an action for damages suffered as a result of such violation and damages may be awarded in the amount of up to two times the actual damages sustained by such third party.

Other Disputes For the risks associated with some of the proceedings in which we are involved, see “Risk Factors—Legal and Regulatory Risks—We are involved in disputes and litigation with regulators, competitors and third parties.” Management cannot make an estimate of the effects of the ultimate resolution of the unresolved matters described above on our consolidated financial statements. Other than the information disclosed above, to date, we have no provision in our accounts.

141 REGULATION OF TELECOMMUNICATIONS

General Regulatory Environment We are generally subject to regulation governing the operation of our business activities. Such regulation typically takes the form of industry specific laws and regulations covering telecommunications services and general competition law applicable to all activities. The following section describes the regulatory framework and the key regulatory developments in Russia, Ukraine, Kazakhstan, Uzbekistan and Armenia. We are also subject to regulations that have a significant impact on our local operations in the other countries in which we operate. However, because approximately 95.0% of our subscribers are located in Russia, Ukraine, Kazakhstan, Uzbekistan and Armenia as of September 30, 2012 and approximately 98.0% of our net operating revenues are derived from our operations in Russia, Ukraine, Kazakhstan, Uzbekistan and Armenia as of September 30, 2012, we believe that the regulations of Tajikistan, Georgia, Kyrgyzstan, Cambodia and Laos are not material to our consolidated business and results of operations.

Regulation of Telecommunications in Russia The Communications Law is the principal legal act regulating the Russian telecommunications industry. The Communications Law sets forth general principles for the regulation of the telecommunications industry, including a description of the institutional framework for the federal government’s involvement in the regulation, administration and operation of the telecommunications industry. The most important aspects of the Communications Law with respect to our business address the federal government’s authority to: • license communications service providers; • allocate radio frequencies; • certify telecommunications equipment; • allocate numbering capacity; • ensure fair competition and freedom of pricing; and • conduct oversight of operators’ compliance with the terms of their licenses and Russian law. In order to establish and commercially launch a wireless telecommunications network, a company must receive, among other things: • a license to provide mobile telephony services using a specific standard and band of radio frequency spectrum; • permission to use radio frequency for its radio electronic devices (“REDs”); • a decision on allocation of radio frequency bands; • registration of its REDs and high frequency equipment; • authorization to put into operation communications networks (including communications facilities); and • a decision on allocation of numbering resources. For the risks related to the regulation governing the operation of communications networks, see the section of this prospectus entitled “Risk Factors—Risks Related to Our Business—We face uncertainty regarding our frequency allocations, equipment permits and network registration, and we may experience limited spectrum capacity for providing wireless services.”

Russian Regulatory Authorities Regulation in the telecommunications area in Russia is conducted by several governmental agencies. These agencies, whose functions are not often clearly defined, form a complex, multi-tier system of regulation and supervision that is subject to frequent revision. The Ministry of Communications and Mass Media (the “Ministry”) is currently the federal body with executive power to regulate the telecommunications industry. The Ministry has the authority to set policy and adopt regulations in the area of communications and make proposals to the President and the Russian Government on issuance of legal acts regarding certain key issues in the area of communications. The Ministry controls and coordinates the activity of the following entities: (i) the Federal Communications Agency (“Rossvyaz”) (ii) the Federal Agency on Press and Mass Media (“Rospechat”) and (iii) the Federal Supervisory Service for Communications, Information Technologies and Mass Media (“Roskomnadzor”).

142 Rossvyaz and Roskomnadzor have functions particularly relevant to our business. Rossvyaz is responsible for allocating numbering resources and certification of communication facilities in accordance with the established procedure. Roskomnadzor is responsible for the licensing of activities in the area of telecommunications, issuing permissions for radio frequency use, control over telecommunications and information technologies, control over radiation of REDs and high frequency devices and the registration of REDs and high frequency devices.

Licensing to Provide Telecommunications Services and Radio Frequency Allocation Under the Federal Law No. 99-FZ of May 4, 2011 “On Licensing of Certain Types of Activities,” the Communications Law, the Regulation of the Russian Government No. 228 dated March 16, 2009 “On the Federal Supervisory Service for Communications, Information Technologies and Mass Media” and the Regulation of the Russian Government No. 8 dated January 12, 2006 “On Approval of the Regulations for Holding a Tender (Auction, Contest) for a License to Provide Communication Services,” Roskomnadzor issues licenses to provide telecommunications services on the basis of an application from an eligible applicant or, when applicable, on the basis of results of a tender or an auction. Licenses are generally issued for a term of three to 25 years and a legal entity or individual person can only render commercial telecommunications services upon issuance of a license. Roskomnadzor has the right to renew an existing license upon application which may be rejected if, as of the date of submission of the application, the operator has been found to have violated the terms of the license and such violations have not been cured. The Communications Law also regulates the procedures for re-issuing a license in the case of a reorganization of the license holder or transfer of communications networks and means to other persons. The Communications Law identifies a limited number of reasons pursuant to which licenses may be suspended by the licensing body, including identification of license violations, cancellation of permissions to use radio frequencies or failure to comply with the requirements of the notice issued by the licensing body within the cure period. Prior to suspension, the licensing body generally issues a warning that the license may be suspended if corrective action is not taken. The Communications Law also provides that a telecommunications license may be cancelled for certain reasons, upon a claim by an interested person or the licensing body, such as provision of inaccurate information when applying for the license, failure to eliminate the circumstances which caused the suspension of the license validity or failure to perform obligations undertaken when receiving the license on the basis of a tender or an auction. The licensing body can also terminate a license in a liquidation or winding up of the license holder. Licenses issued prior to the enactment of the Communications Law and Regulation No. 87 of the Russian Government dated February 18, 2005 “On Approval of the List of the Types of Communications Services and the List of Conditions Included into Licenses,” or “Regulation 87,” generally contain a number of other detailed conditions, including a start-of-service date, requirements for adhering to technical standards and a schedule of the capacity of the network that the licensee must attain. These license conditions also require that the licensee’s services, by specified dates, cover either (i) a specified percentage of the territory for which the license is issued or (ii) a specified number of cities within the territory for which the license is issued. Conditions in licenses issued after the enactment of Regulation 87 must include the period during which the licensee is entitled to provide the relevant services, the start-of-service date, and the territory in which the relevant services are to be provided, as well as certain other conditions depending on the type of the licensed activity, including information on the calculation of compulsory payments into the universal services fund, as described below. In addition to obtaining a license, wireless telecommunications operators have to receive a permit for radio frequency usage for every radio transmitter they operate. The permit for radio frequency usage is issued by Roskomnadzor on the basis of decisions of the State Radio Frequency Commission and the conclusion of the Main Radio Frequency Center examination, which evaluates the electromagnetic compatibility of the REDs and coordinates radio transmitter usage with the Defense Ministry, Federal Protective Service and the Federal Security Service of the Russian Federation. Under the Communications Law, permits for the use of radio frequencies are granted for ten years or a shorter period if such shorter period is indicated in the application. Radio frequency permit duration may be extended if by its expiry no regulations or decisions of the State Radio Frequency Commission are adopted that limit the possibility of such an extension. Radio frequency allocation permission may be suspended or terminated for a number of reasons, including failure to comply with the conditions to which the frequency allocation was subject . The Government Regulation No. 171 of March 16, 2011, “On Establishment of One-Off and Annual Payment Rate for Radio Frequency Spectrum Usage in Russia” (“Regulation 171”) established rules for charging one-off payments and annual payments for radio frequency spectrum usage in Russia. The rules govern all user

143 categories and radio facilities operating in all types of networks. Pursuant to Regulation 171, which came into effect on January 1, 2012 and by Order No. 164 of June 30, 2011 “On approval of calculation procedure of one- off and annual payment for radio frequency usage on the territory of the RF,” the Ministry established the calculation procedure for one-off and annual payments. This calculation procedure was amended by the Order of the Ministry No. 352 of December 22, 2011 “On amendments to calculation procedure of one-off and annual payment for radio frequency spectrum usage on the territory of the RF, which was approved by the Ministry Order of June 30, 2011 No. 164,” which decreased the one-off payment rate and updated the calculation procedure for frequency assignments. The amendment came into effect on February 17, 2012. Pursuant to the amended regulation, the amounts of one-off and annual payments are determined by multiplying the rate by the quantity of frequency assignments indicated in the permit for radio frequency usage and by the index depending on the frequency bandwidth category (civil, governmental, joint use), population within a RED location, frequency range in use, working frequency channel width, the perspective of the radio technology and network social dimension. At present the one-off payment rate is RUB 300 for one frequency assignment. The annual payment rate is RUB 1,400. This calculation procedure was amended by the Order of the Ministry No. 121 of April 20, 2012 “On Amendments to Calculation Procedure of One-Off and Annual Payment for Radio Frequency Spectrum Usage on the Territory of the RF”, approved by the Ministry Order of June 30, 2011 No. 164,” which decreased the population index within a RED location in the city of Moscow and the index of network social dimension for Wi-Fi technology. This amendment came into force on May 13, 2012. Universal Services Fund The Communications Law provides for the establishment of a “universal service fund” into which all telecommunications operators are required to make compulsory payments in order to compensate operators for losses from offering universal services in remote regions of Russia. An operator must make quarterly payments to the universal services fund of 1.2% of its quarterly revenues from communications services provided to subscribers and other users in the public communications network. Amounts paid as value added tax are excluded from the calculation of revenues. Equipment Certification Pursuant to the Communications Law, telecommunications equipment used in Russia requires confirmation of compliance with certain technical requirements in the area of telecommunications and information technologies and must be certified. The regulation of the Russian Government dated June 25, 2009 “On Approval of the List of the Communication Equipment Subject to Mandatory Certification” sets forth the types of communications equipment that are subject to mandatory certification. The Federal Communications Agency is responsible for confirming such compliance. The design, production, sale, use or import of encryption devices, which include some commonly-used digital wireless telephones, requires a license and equipment certification from the Federal Security Service. The decision of the Russian Government No. 539 dated October 12, 2004 “On the Procedure for the Registration of Radio-Electronic Equipment and High-Frequency Devices” (as amended) approved a list of certain high-frequency equipment manufactured or used in the Russian Federation that requires special registration by Roskomnadzor. The registration is specific to the entity that receives them and do not allow the use of the equipment by other parties. Numbering Capacity The regulation of the Russian Government dated July 13, 2004 No. 350 “On Endorsing the Rules for Distribution and Use of Numeration Recourses of the Unified Electric Communication System of the Russian Federation” (as amended) specifies the procedures for allocating numbering capacity and the use of numbering recourses under the Communication Law. The Federal Communications Agency is responsible for allocating numbering resources and for determining whether such resources are limited, and, in cases stipulated by the Communications Law, the Federal Communications Agency may change the allocated numbering capacity or withdraw it in full or in part. Further, the Federal Communications Agency is responsible for re-issuance of decisions on allocation of numbering capacity if an operator is reorganized. Under the Communications Law, an operator is required to pay state duties for the allocation of numbering capacity and access codes for telecommunication services for signal point codes. The amount of these duties is established by Russian tax legislation. A number of new regulations pertaining to certain aspects of the Russian federal numbering system were adopted. The two major areas affected by the regulations are as follows: Numbering capacity usage in the “ABC” codes. Federal telephone numbers using the “ABC” code may be used by mobile subscribers only if they are registered as additional numbers under local communications services provisions. As these additional numbers can only be allocated to subscribers by the local network

144 operators, all numbering capacity in the “ABC” code allocated under our GSM licenses were re-allocated under our license for local communications services. We entered into agreements for the provision of local and wireless communication services with new subscribers whom we provide the numbers in the “ABC” code. Some of our subscribers use other fixed-line operators’ numbers based on our agency agreements with such operators. In order to implement the agency scheme, we have had to enter into new subscriber agreements with certain subscribers in order to add the relevant fixed-line operator as a party to such agreements. Russian system and plan of numbering. A new system and plan of numbering was approved by the Ministry Order of November 17, 2006 No. 142 “On Approval and Introduction of Russian System and Plan of Numbering,” which materially changed the principles of numbering allocation and utilization in Russia. On June 15, 2012, the Ministry issued Order No. 158 “On Amendments to the Russian System and Numbering Plan,” which were approved by the Ministry Order of November 17, 2006 No. 142, which cancelled DEF codes assign to certain communication operators. Under regulations currently in force, the DEF codes for mobile telephone communication network operators are as follows: 900-909, 910-919, 920-929, 930-939, 941, 949, 950- 953, 958, 959, 960-969, 970-979, 980-989, 990-996, 999. For the risks related to the new numbering system, see the section of this prospectus entitled “Risk Factors—Legal and Regulatory Risks—We operate in an uncertain regulatory environment, which could cause compliance to become more complicated, burdensome and expensive and could result in us operating without all of the required permissions or ceasing the affected operation.”

Pricing, Competition and Interconnections The Communications Law generally provides that tariffs for telecommunications services may be negotiated between providers and users, although tariffs for some types of telecommunications services (for example, provision of long distance telephone connections to fixed-line users or provision of local telephone connections to fixed-line users) are regulated by the federal government. Wireless telecommunications operators are free to set their own tariffs. However, the amendments to the Communications Law, which came into effect on July 1, 2006, provide that the users are not to pay for incoming calls. Further, the Communications Law prohibits the use of a dominant position to hinder, limit or distort competition and it requires federal regulatory agencies to promote competition among telecommunications service providers. Under the Communications Law, an operator that, together with its affiliated entities, has at least 25.0% of the overall traffic in a certain geographic area or throughout the Russian Federation is considered an operator occupying a significant position in the communication network of general use (a “Significant Operator”). Significant Operators are subject to greater regulation by the Russian Government. At present, neither we nor our Russian subsidiaries are included in the register of subjects of natural monopolies. Therefore, neither we nor our Russian subsidiaries are subject to these regulations. Russian legislation also prohibits operators of public switched telephone networks to refuse to provide connections or discriminate between operators. However, a regional fixed line operator may charge different interconnection rates to different wireless telecommunications operators, subject to certain limitations.

Compliance with Government Surveillance System The Communications Law provides that telecommunications may be intercepted only pursuant to a court order. Federal Law No. 144-FZ, dated August 12, 1995, “On Operational Investigative Activities,” initiated a surveillance system, known as “SORM,” which is operated partly by the Federal Security Service, a government agency responsible for surveillance. SORM requires telecommunications providers to ensure that their networks are capable of allowing the government to monitor electronic traffic and requires telecommunications providers to finance the cost of additional equipment needed to make their systems compliant. Currently, we believe that we are in compliance with Russian law requirements related to SORM and, accordingly, certain government agencies are able to monitor electronic traffic on our network. Interaction between telecommunications operators and the governmental authorities engaged in surveillance activities is governed by Regulation No. 538 of the Russian Government dated August 27, 2005, “On Approval of the Rules of Interaction between Telecommunications Operators and the Authorized Governmental Bodies Engaged in Surveillance Activities.”

Regulation of Internet Services Regulation 87 requires that an operator providing Internet services has a license for provision of telematic services and a license for data transfer. The procedure for transferring Internet traffic is not determined by regulation. Although currently there is no comprehensive regulatory scheme directly applicable to Internet

145 content, the Russian media has reported that the Russian State Duma has considered the possibility of adopting legislation regarding Internet content. According to the Federal Law of July 27, 2006 No. 149-FZ, the Government Regulation of October 26, 2012 No.1101 and the “Temporal Procedure of Cooperation of the Register Operator with Hosting Provider and the Procedure of Obtaining Access to the Information Contained in the Register by the Communication Operator, Rendering Internet Network Access Services,” of October 25, 2012 approved by Roskomnadzor, all communication operators providing Internet access services beginning from the from November 1, 2012 must limit access to web sites that contain information prohibited to be provided in Russia, which are listed in the Unified Register. Roskomnadzor is responsible for creation and maintenance of this Unified Register.

Regulation of Telecommunications in Ukraine The Law of Ukraine “On Telecommunications,” or the “Telecommunications Law,” which came into effect on December 23, 2003 and the Law of Ukraine “On Radio Frequency Resource,” or the “Frequency Law,” the revised version of which came into effect on August 3, 2004, are the principal legal acts regulating the Ukrainian telecommunications industry. The Telecommunications Law proposed the adoption of various regulations by the Ukrainian Government and other governmental authorities to supplement the legal framework of the telecommunications industry. A majority of the orders and regulations proposed by the Telecommunications Law and Frequency Law have been promulgated. The effective “Plan for Using the Radio Frequency Resource of Ukraine,” which provides directions for the use of radio frequency resources, indicates particular frequency bands and allows for radio technologies, periods of operation and perspective technologies, was adopted on June 9, 2006. In 2008 and 2009, the Cabinet of Ministers approved the changes to the above- mentioned plan, which allow the implementation and usage in Ukraine of such radio technologies as mobile communication of third generation and technologies of broadband access to Internet WiMAX. The Telecommunications Law sets forth general principles for the regulation of the telecommunications industry in Ukraine, including a description of the institutional framework for the government’s involvement in the regulation, administration and operation of the telecommunications industry in Ukraine. The Frequency Law regulates the allocation and use of the frequency bands in Ukraine. The most important aspects of the Telecommunications Law and Frequency Law with respect to our company address the government’s authority to: • license wireless (mobile) telecommunications service providers; • allocate radio frequencies; • certify telecommunications equipment; • allocate numbering capacity; • ensure fair competition and freedom of pricing and • conduct oversight of operators’ compliance with the terms of their licenses and Ukrainian law. In order to establish and commercially launch a wireless telecommunications network, a company must receive, among other things: • a license to provide wireless (mobile) telephony services using a specific standard and band of radio frequency spectrum; • a license to use specified bands of radio frequency for its REDs; • certificates on electromagnetic compatibility and operating permits for its REDs; and • a permit for allocation of numbering resources. In addition, telecommunications operators and providers must use telecommunications equipment that is certified as complying with specified technical requirements.

Regulatory Authorities According to the Telecommunications Law, the Cabinet of Ministers, the Administration of the State Agency for Special Communications and Information Protection (the “Administration”) and the NCCIR are the main governmental authorities managing the telecommunication industry. The Cabinet of Ministers is responsible for forming general policy, ensuring equal rights for developing the forms of ownership, managing state-owned assets and directing and coordinating ministries and other central governmental bodies in the area of telecommunications.

146 The Administration develops state policy proposals in the area of telecommunications and is responsible for their implementation within its authority granted by law. The Administration also has the authority to prepare draft legislation, define the quality requirements for telecommunications services and technical standards for telecommunications equipment. The NCCIR is the main regulatory and controlling body in the area of telecommunications and use of radio frequencies and is authorized by the Telecommunications Law and Frequency Law, as well as by the President of Ukraine Decree “On the National Commission for the State Regulation of Communications and Informatization,” dated November 23, 2011. The NCCIR issues licenses for the provision of licensed telecommunications services and the use of radio frequencies, maintains registries of telecommunications operators and providers, allocates numbering capacity to telecommunications operators and controls the quality of telecommunications services.

Licensing to Provide Telecommunications Services and Radio Frequency Allocation Fixed and wireless telephony services (including technical maintenance, operation of telecommunications network and lease of channels), technical maintenance and operation of television and radio networks are all subject to licensing. Additionally, the use of radio frequencies is subject to licensing. A frequency license includes the radio frequency bands allocated for carrying out a telecommunications activity, the list of regions where the radio frequencies may be used, term of use and the type of radio technology to be utilized. Both telecommunications and frequency licenses can be terminated upon (i) a licensee’s request to terminate the license; (ii) inaccurate information in the license application documents; (iii) the transfer of the license to another legal entity or natural person for carrying out the licensed activity; (iv) the failure of the operator or provider of telecommunications services to implement an administrative order to cure breaches of the license terms; (v) a repeated breach by the licensee of license terms; (vi) an operator’s repeated refusal to cooperate with the NCCIR during inspections or attempts to prevent inspections; or (vii) annulment of state registration of the licensee. Additionally, a frequency license may be terminated if (i) the use of a radio frequency resource allocated by the license is not initiated by the licensee within the established period in the license; (ii) the licensee terminated use of the radio frequency resource, allocated by the license for a period that exceeds one year or (iii) the licensee failed to fully implement the radio frequency resource allocated by the license within the established period. Both telecommunications and frequency licenses must be reissued if there is (i) a change in name of the license holder; (ii) a change of legal address of the licensee; or (iii) a corporate restructuring, including through a change in its legal form, transformation or merger. In addition, a frequency license may be re-issued if, among other things, the operator requests a reduction in the frequency bands or regions covered by the license or if the operator makes a joint application with another operator for re-allocation of frequencies. A telecommunications operator is required to pay a fee for the allocation of numbering capacity. Currently, the fee for obtaining one local telephone number for provision of fixed telephone services is 30 hryvnia (or approximately US$3.75 at the exchange rate as of September 30, 2012) for Kyiv (amounts for other cities vary below 30 hryvnia depending on the population). Since September 1, 2007, the NCCIR has prohibited use of local telephone numbers in wireless networks.

Pricing, Competition and Interconnections The Telecommunications Law allows telecommunications operators, including wireless service operators to establish tariffs for the telecommunications services provided to subscribers, with the exception of tariffs on universal services and data traffic channeling by SMP telecommunications operators. This provides for competition between Ukrainian wireless services operators. Ukrainian law requires operators to publish tariffs established by the operators themselves no less than seven calendar days prior to implementation of the tariff. According to the Telecommunications Law, where a telecommunications operator sets prices on its services pursuant to hourly tariffs and makes settlements with consumers by certain units of time (for example, minutes or seconds), it should take into account only full tariff units of time. Applicable law currently does not establish a limitation on collecting payments for incoming calls by wireless services operators under the mandatory “calling party pays” system. A provision prohibiting collecting payments for incoming calls was adopted on November 21, 2002, but was later abolished after adoption of the Telecommunications Law. The main telecommunications operators have not returned to a system of collecting payment for incoming calls, which was a widespread practice before November 2002.

147 Effective November 1, 2012, the NCCIR introduced new tariffs for provision of commonly accessible (universal) services, including fixed-line local services to fixed line subscribers. As a result, the tariffs for local calls and monthly subscription fees increased. On November 28, 2006, the Ukrainian Parliament approved amendments to the Telecommunications Law that changed the list of the telecommunication service tariffs subject to public regulation. Under the new regulations, tariffs for DLD/ILD and fixed to mobile calls were excluded from the public tariff regulation. As a result of these changes, competition in the DLD/ILD services market has increased. The Telecommunications Law regulates the interconnection of telecommunication networks, including the obligations of wireless service operators, and provides conditions for the conclusion, modification and termination of interconnection agreements. The NCCIR regulates interconnection tariffs charged to access SMP operators’ and dominant operators’ networks, as well as the technical, organizational and economic terms of interconnection agreements involving such operators. On June 24, 2010, the UAMC reaffirmed its prior decision determining mobile operators that are deemed to hold a dominant position on the market and therefore, are subject to certain regulations, including regulations in relation to the technical, organizational and economic terms of the interconnection and tariff regulation. Wireless services operators are not obligated to interconnect with a dominant operator in order to use its facilities to connect to a “backbone.” As a rule, a telecommunications license permits an operator to deploy its own backbone network throughout the country. Interconnection contracts and agreements between telecommunication operators in Ukraine and foreign telecommunication operators are governed by recommendations issued by the International Telecommunications Union (the “ITU”). Effective as of April 13, 2009, the NCCIR amended the licensing conditions for mobile operators by introducing additional requirements. In particular, mobile operators are now required to cover the territory specified in their licenses within the terms and according to the conditions specified in the licensing conditions. Another requirement is to suspend provision of telecommunication services to customers that use mobile handsets without registration of their IMEI-codes in the respective database. According to publicly available information, mobile operators presently do not suspend provision of telecommunication services to their customers using mobile handsets without registration of their IMEI-codes due to several reasons that, among others, include (i) absence of the required technical capabilities and equipment and/or (ii) absence of relevant legislation allowing them to do so. On January 6, 2011, amendments to the Ukrainian Telecommunications Law came into effect and empowered the NCCIR to determine telecommunications services markets, study the competitive environment in the telecommunications market and determine SMP operators and regulate rates of their respective services. Under the law, an operator is presumed to have a SMP if it has share of more than 25% of the total revenues of all telecommunications operators and providers operating on the respective telecommunications services market. On October 20, 2011, the NCCIR determined the SMP operators in the markets for terminating calls on fixed and mobile networks and on December 1, 2011, it approved mandatory interconnection tariffs for the SMP operators in such markets. On January 8, 2013, amendments to the Telecommunications Law came into effect, confirming the NCCIR’s authority to determine the SMP operators in any telecommunications services market. In 2012, the NCCIR developed a draft Law of Ukraine “On Sharing the Infrastructure of Telecommunications Networks,” which provides that the tariffs for access to infrastructure of telecommunications networks owned by operators recognized by the NCCIR as SMP operators in their respective market, should comply with the methodology for setting tariffs for access to telecommunications infrastructure adopted by the NCCIR. On July 1, 2010, the Telecommunications Law was amended to provide a framework for a number portability service and national roaming. Effective as of April 23, 2012, the new “Rules for Providing and Receiving Telecommunication Services” also provide for an obligation of mobile operators to provide a national roaming service and give subscribers the ability to transfer their mobile numbers from one telecommunication network to another (“MNP”). On August 25, 2011, the NCCIR adopted national roaming regulations. On November 1, 2012, the Administration enacted the “Technical Requirements for Ukrainian Telecommunications Networks Enabling Provision of MNP Services and Use of Personal Numbers,” which provide general guidelines as to connection of telecommunications networks to equipment of a centralized database containing ported numbers and their routing details. The “Procedure for the Provision of MNP Services and Use of Personal Numbers” was approved as a draft by the NCCIR and this service is expected to be implemented in 2013. The above mentioned draft procedure provides for the possibility of numbers porting between wireless networks and between fixed networks within one numbering zone. The draft procedure also provides for a company that will administer a centralized database and charge receiving operators a transfer fee.

148 Regulation of Telecommunications in Kazakhstan The Law of the Republic of Kazakhstan No. 567-II “On Communications,” dated July 5, 2004 (the “Kazakhstan Communications Law”), which came into effect on July 10, 2004, is the principal act regulating the telecommunications industry in Kazakhstan and sets forth general principles for the regulation of the telecommunications industry, the authority of each regulatory body, the rules governing telecommunications network cooperation and consumer rights protections. Several additions to the Kazakhstan Communications Law that have stimulated competition in the sphere of DLD and ILD became effective as of January 1, 2006. In accordance with the Kazakhstan Communications Law, the government of Kazakhstan and certain other governmental agencies adopted a number of acts regulating specific aspects of the telecommunication industry, the most important of which are outlined in greater detail below. The Kazakhstan Communications Law grants the Kazakh government broad authority with respect to the telecommunications industry in Kazakhstan. The most important aspects with respect to our business include the government’s authority to: • develop and implement government policy on telecommunications and frequency allocations; • approve allocation of radio frequencies; • approve qualification requirements for ILD operators; • approve procedures for auctions of telecommunications licenses and approve the licensing terms and qualification requirements when granting telecommunications licenses and • set forth the procedures and payment amounts for the ability to provide services with the use of frequencies. The participation of foreign capital in Kazakhstan’s telecommunications market is limited by the Law of the Republic of Kazakhstan No. 527 IV “On National Security” dated January 6, 2012 regulating national security. It is forbidden for foreign legal entities or individuals to control and operate fixed-line networks, to create and operate telecommunications networks whose headquarters are located outside Kazakhstan and to obtain more than 10.0% of voting shares in an ILD operator without governmental consent. In addition, foreign legal entities or individuals are not allowed to possess, use, dispose of or control (directly or indirectly) more than 49.0% of the total voting shares of the ILD operator who possesses surface communication lines (cables, including fiber optic and radio-relay cables).

Kazakhstan Regulatory Authorities Under the Kazakhstan Communications Law, the Ministry for Transport and Communications (the “MTC”) is the central executive body authorized to implement state policy and governmental control with respect to telecommunications and to adopt relevant acts. The MTC acts in accordance with Governmental Decree No. 1232 “The Issues of the Ministry for Transport and Communications,” dated November 24, 2004. MTC is considered to be the successor of the recently reorganized Ministry for Communications and Information (“MCI”) as well as all the relevant orders, rules and regulations adopted by MCI, such as: “On Providing Telecommunications Services,” “On Providing Cellular Telecommunications Services” and “On Connecting Telecommunications Networks to the Public Telecommunications Network.” The primary functions of the MTC relevant to our business include: • issuing permits for the use of radio frequencies in Kazakhstan; • controlling the use of frequencies; • issuing licenses to provide telecommunications services and overseeing compliance of issued licenses; • determining the list of radio-electronic and high-frequency telecommunications equipment permitted to be used and/or imported into Kazakhstan; • issuing (through its local subdivisions) permits for use of telecommunications equipment; • disconnecting any unauthorized equipment and • developing technical regulations in the field of informatization and telecommunications. The Inter-Agency Commission on Radio Frequencies (the “ICR”) is a consultative-advisory agency of the Kazakh government that provides recommendations on government policy regarding frequencies. The National Security Committee and certain other governmental defense bodies also maintain a level of control over the telecommunications industry as part of its investigative operations.

149 Licensing to Provide Telecommunications Services and Radio Frequency Allocation Telecommunications services may only be rendered in Kazakhstan by a valid license holder authorized to provide the relevant services. In accordance with the Kazakhstan Communications Law, the MTC issues licenses to provide telecommunications services on the basis of an application form or, as required, the results of a competitive tender. According to the current edition of the Licensing Law dated January 11, 2007 (as amended on December 24, 2012), a license for activity in the field of communications is required for the following: long distance telephone communication, international telephone communication, satellite mobile communication, mobile communication within a specified standard. The MTC may refuse to grant a telecommunications license if there is a discrepancy in the applicant’s qualifications. A license may be suspended if there is a violation of the licensing standards. A telecommunications license may be revoked only by a court ruling in certain circumstances provided by law. On January 11, 2007, all licenses, including licenses for telecommunication services, became perpetual (meaning that they have no defined term) in accordance with the Law of the Republic of Kazakhstan No. 214-III “On Licensing.” The MTC, together with and subject to the approval of the Ministry of Defense, is responsible for allocating frequencies in Kazakhstan. Frequencies are allocated in accordance with a table establishing frequency allocations in the ranges of 3 kHz to 400 GHz for all types of radio-electronic equipment. The Kazakhstan Communications Law also provides for a schedule of frequency band development and use to be approved by the MCI in accordance with ICR’s recommendations. Frequency allocations may be changed to accommodate the government’s administration, defense or national security. In such cases, the Kazakhstan Communications Law provides for reimbursement of damages to be paid to the operator. The Kazakhstan Communications Law requires that telecommunications equipment and radio-electronic and high-frequency equipment must be certified. Telecommunications equipment falls into two groups with regards to certification: (i) equipment that requires certification in Kazakhstan and (ii) equipment that may be used subject to a declaration of compliance issued by the manufacturer. In March 2010, the Kazakhstan government issued a resolution amending the qualifications for international telecommunications services licenses to require that the licensee maintain ownership rights over the telecommunication line infrastructure through which the licensee provides services. Following the enactment of this resolution, the number of ILD operators decreased from 27 to eight.

Pricing, Competition and Interconnections There are three central state bodies in Kazakhstan that control anti-monopoly legislation compliance in the telecommunications industry: (i) the MTC; (ii) the Kazakhstan Antimonopoly Authority (the “KAA”) and (iii) the Agency for Regulation of Natural Monopolies. The MTC’s powers in the anti-monopoly area include the following: (i) regulating and controlling natural monopolies in the telecommunication industry, (ii) regulating tariffs of the dominant market players and (iii) procuring that there is no discrimination with respect to access to telecommunications services. Currently operators must obtain the MTC’s approval for any increase of tariffs. The list of natural monopolies is determined in a governmental registry and approved, maintained and controlled by the Agency on the Regulation of Natural Monopolies. The KAA oversees the maintenance of anti-monopoly legislation and regulates the market players holding dominant positions in the relevant market in Kazakhstan. As a general rule, to be recognized as a dominant player, an operator must control individually 35.0% or more of the relevant market. The list of dominant players is determined in a governmental registry and approved, maintained and controlled by the KAA. Currently, the list contains two wireless telecommunications operators, KaR-Tel, our operating subsidiary in Kazakhstan, and GSM Kazakhstan LLP, which operates under the brand name “K-Cell.” Since December 2010, the KAA is also the authorized agency responsible for consumer protection. The KAA may introduce additional regulations for dominant market players in accordance with the legislative requirements set forth in the Law No 112-IV “On Competition,” dated December 15, 2008. On December 25, 2008, law No. 112-IV “On Competition” was adopted. The law defines the regulatory basis for the protection of rights of market players and consumers from monopoly activity, anti-competition actions of state bodies and unfair competition. This law is intended to protect competition and its development. The law dated July 9, 1998 No 272-I “On natural monopolies and regulated markets” regulates activity in the

150 spheres of natural monopolies, regulated markets, consumer rights, subjects of natural monopolies and subjects of regulated markets. This law regulates tariffs for the services by market players. In March 2010, the tariff regulation rules were adjusted by introducing government regulation of prices. Telecommunications tariffs of dominant market players are subject to governmental regulation pursuant to Governmental Decree No. 1277, dated December 23, 2006. The Kazakhstan Communications Law states that tariffs must contain equal conditions for all telecommunications subscribers and must be based on reasonable and fair expenses. In December 2010, an order of the MCI “Concerning Approving the Size of Tariffing” was amended to revise the length of the units by which tariffs are measured and in May 2012, MTC issued an order imposing a maximum of 17 tenge per minute for mobile-termination rate for ILD operators. Beginning on January 1, 2006, telecommunications providers are no longer required to use the state- controlled fixed-line operator, Joint Stock Company “Kazakhtelecom,” to interconnect between networks and are now permitted to interconnect directly with other operators in accordance with interconnect agreements. The structure of interconnect agreements is set by the MTC, and dominant operators are required to enter into an interconnect agreements with any operator requesting interconnection. In 2009, the Kazakhstan Communications Law was amended to require all mobile operators to keep a register of IMEI-codes (codes of individual customer mobile terminals), and to lock individual handsets with certain IMEI-codes upon request from customers and public security authorities. In 2011, the MCI by Order No. 364 “About approval of billing units” banned charges for connection and reduced the applicable tariff units to one second for domestic mobile operators’ traffic and 30 seconds for international roaming traffic. The MTC has announced its intention to implement MNP but has not specified the intended date or terms.

Regulation of Telecommunications in Uzbekistan General Overview The main statutes that govern the telecommunications industry in the Republic of Uzbekistan in relation to our company are the laws (i) “On Communications” No. 512-XII, dated January 13, 1992 (as amended); (ii) “On the Radio Frequency Spectrum,” dated December 25, 1998; (iii) Protection of Consumers’ Rights, dated April 26, 1996; (iv) Law on Telecommunications, dated August 20, 1999 (the “Uzbek Telecommunications Law”) and (v) Licensing Certain Types of Business, dated May 25, 2000. These laws determine the general legal and economic basis for organizing communications systems, establishing rights and duties of a company in terms of ownership, use, disposal and management of communications equipment when setting up and operating communications networks and providing communications services. The government authorities responsible for supervising the telecommunications industry in the Republic of Uzbekistan are the Republic of Uzbekistan Cabinet and a specially authorized telecommunications committee. In accordance with the Uzbek Telecommunications Law, businesses offering communications services in the Republic of Uzbekistan may be privately or publicly held by Uzbek or foreign national individuals or legal entities. All owners of telecommunications networks have equal rights and enjoy equal protection guaranteed by the law and the legislation imposes no restrictions on foreign investors.

Uzbek Regulatory Authorities The State Committee for Communications, Information and Telecommunication technologies the “Uzbek Communications Committee” is the specially authorized state administration authority that is responsible for regulating the telecommunications industry in Uzbekistan. The Uzbek Communications Committee is the successor to the Uzbek Agency for Communications and Information, which ceased to exist in accordance with Presidential Decree No. UP-1840, dated October 25, 2012. The Uzbek Communications Committee’s powers are set out in the Uzbek Telecommunications Law and may be supplemented by presidential decrees or cabinet decrees. Regulatory acts promulgated by the Uzbek Communications Committee within its terms of reference are binding on all individuals and legal entities. The Uzbek Communications Committee’s primary functions relevant to our business include the following: • drafting national programs for development of telecommunications; • elaborating standards and rules for telecommunications; • granting licenses, radio frequencies and numbering to legal entities for telecommunications;

151 • regulating tariffs for certain types of telecommunications services and inter-network telecommunications links; • organizing certification of telecommunications equipment and issuing permits for the operation of telecommunications equipment and • drawing up numbering schemes and managing the numbering plan for telecommunications networks. The Uzbek Communications Committee’s structure includes such organizations as the State Communications Inspectorate, the State Radio Frequency Committee, the Centre for Electromagnetic Compatibility, the Centre for Monitoring Mass Communications and the Centre for Scientific and Marketing Research, among others. The State Communications Inspectorate for State Supervision of Postal and Telecommunications Businesses (the “Supervisory Body”) is responsible for monitoring compliance by telecommunications companies with license requirements and conditions.

Licensing to Provide Telecommunications Services and Radio Frequency Allocation

Legal entities and individuals conducting the following activities are subject to licensing: design, construction and operation and provision of telecommunications services for local networks, inter-city networks, international networks, mobile telephony networks, paging networks, data transfer networks, and television and radio broadcasting networks. The Uzbek Communications Committee is responsible for granting licenses relating to the telecommunications industry. A license is also required in order to provide services in terrestrial communications (local, inter-city and international networks). The Uzbek Communications Committee may refuse to issue a license or renew an existing license if: (i) the applicant submits improperly drawn up documents or documents containing inaccurate information or misrepresentations or (ii) the applicant fails to meet licensing requirements and conditions and tender conditions. Refusal to issue a license for other reasons, including that it is inexpedient to do so, is prohibited. The Uzbek Communications Committee may suspend a license for no more than ten business days under certain conditions. A license can only be suspended for more than ten days pursuant to a court order. The Uzbek Communications Committee has the authority to terminate a license by court order where the licensee (a)(i) repeatedly breaches the license requirements and conditions or (ii) commits a single gross breach of the license requirements and conditions and (b) fails within the period specified by the licensing or supervisory body to remedy defects which entail license suspension. Upon a licensee’s request for termination, expiry of the term or winding up of a licensed entity, the licensing authority may also terminate a license. The Uzbek Communications Committee, the Ministry of Defense and the Cabinet’s Government Communications Service all have the right to allocate radio frequencies to public and private operators. The Uzbek Communications Committee is the coordinating body authorized to resolve problems and implement state policy in communications, information and use of the radio frequency spectrum. The Ministry of Defense is responsible for monitoring and supervising the use of radio frequencies in order to secure the defense and security of the Republic of Uzbekistan and the Cabinet’s Government Communications Service is responsible for supervising safe radio navigation for flights and the aeronautical mobile service in the radio bands allocated by the State Radio Frequency Committee (the “GKRCh”). Specific radio frequencies are granted to users in accordance with a national table of radio frequency allocation. The allocation of radio frequencies among users of the radio frequency spectrum may take place on the basis of a tender or the results of an auction. The radio frequency spectrum is allocated to users for a specific term as prescribed in the permit from the radio frequency authority or in the contract for use and use of the radio frequency spectrum must be paid for. Relations between the GKRCh and the Center for Scientific and Marketing Research and radio frequency users arise on a contractual basis. The Uzbek Communications Committee may suspend or restrict the right to use radio frequencies in terms of time and/or geographical area. For commercial purposes, radio frequencies are allocated, as a rule, on a secondary basis, and in case of withdrawal, suspension or restriction of the right to use the radio frequency spectrum no compensation is payable. In accordance with the requirements of the Telecommunications Law, telecommunications equipment, including apparatuses for terminating lines, used in telecommunications networks within Uzbekistan is subject to certification for compliance with established standards and technical specifications. In addition, in Uzbekistan, procedures for obtaining permits for radio equipment (BTS, BSS, SWITCH) are complex.

152 Pricing, Competition and Interconnection Uzbek law provides that state policy for the prevention of monopolistic activity and unfair competition by businesses, state administrative authorities and local state executive authorities is implemented by the State Committee for Demonopolization and Support of Competition and Entrepreneurship (the “Uzbek Antimonopoly Authority”). In addition, the Uzbek Communications Committee is authorized, together with the Uzbek Antimonopoly Authority, to monitor the work of businesses which are natural monopolies in the sphere of telecommunications. A position is said to be dominant where a business or group of persons has a market share of 65.0% or more. If a business holds a market share of between 35 to 65.0%, it may be deemed to have a dominant position, subject to a determination by the Uzbek Antimonopoly Authority based on the size of market share, the stability of the business’s market share, the share taken by competitors, ease of access to the market for new competitors and other criteria relevant to the given market. Currently no mobile network operator has been declared a monopolist or a business with a dominant position in the market for telecommunications services. Under Uzbek law, mobile network operators may fix the tariffs for their telecommunications services independent of approval by the Ministry of Finance on the basis of analyzing the market. Mobile network operators are permitted to arrange interconnections for domestic traffic in accordance with contractual terms and conditions, although there are certain restrictions regarding international traffic. Pursuant to the requirements of Cabinet Decree No. 453, dated September 29, 2004 “Additional Measures for the Privatization of Uzbektelecom AK,” communications operators are entitled to connect to international networks exclusively via the technical resources of Uzbektelecom AK. In January 2009, the Uzbek Communications Committee approved general regulations on the provision of mobile services, which outline the rights and requirements for operators and subscribers. In September 2009, the Uzbek Communications Committee issued decree No. 293, which prohibits the provision of services before a subscriber’s personal data has been registered in the operator’s database.

Regulation of Telecommunications in Armenia General Regulatory Overview Regulation of the Armenian telecommunications industry currently consists of the Law on Electronic Communications, dated July 8, 2005 (effective September 3, 2005) (the “Law on Electronic Communications”) and other laws and decisions of the Commission on Regulation of Public Services of the Republic of Armenia, or the “Regulator,” which is the national regulatory agency. The other relevant government body with respect to the telecommunications sector is the government of the Republic of Armenia (the “AMTC”) as described in more detail below. The primary functions of the Law on Electronic Communications, which was drafted with the technical assistance and recommendations of the Word Bank, the International Telecommunications Union (the “ITU”) and other international organizations, are to: • ensure fair and open competition in the provision of electronic communications services, facilities and equipment; • ensure the availability of electronic communications throughout Armenia; • protect the interests of providers and users of electronic communications services and operators of electronic communications networks; • ensure effective regulation of the electronic communications sector, including effective enforcement of relevant laws and regulations, fair and efficient handling of customer complaints and efficient use of limited resources (which include, for example, radio spectrum, orbital slots and numbering capacity); and • promote the development of the Armenian electronic communications industry by encouraging economically efficient investments in and use of infrastructure to provide electronic communications.

Armenian Regulatory Authorities There are two relevant regulatory authorities in the Republic of Armenia with regards to the telecommunications sector: (i) the AMTC and (ii) the Regulator. The Law on Electronic Communications, authorizes the AMTC to (i) determine policy regarding the development of the telecommunications sector, (ii) prepare general policy and objectives regarding the provision of universal services in Armenia and (iii) allocate particular portions of radio spectrum for specific types of use.

153 Pursuant to the Law on Electronic Communications, the primary functions of the AMTC that are relevant to our business include: • adopting and modifying regulation containing the Armenian Table of Frequency Allocations, which indicates the allocation of frequencies to government and civil services, and establishing the procedure for frequency management coordination committee meetings and discussions; • modifying the Armenian Table of Frequency Allocations to allocate radio spectrum for commercial use; • detecting and locating radio emissions not in conformity with legislation; • investigating and inspecting, when authorized by appropriate warrant, the use of radio transmission equipment; • implementing Armenia’s commitments to international treaties in the electronic communications sector, as appropriate; • representing Armenia in the ITU and other international telecommunications organizations; • adopting technical standards and • issuing certifications authorizing production, import, installation or use of radio transmission equipment. The Regulator is established under the Law on the Public Utility Regulator of the Republic of Armenia. The law defines the scope of the Regulator’s authority and the structure and activities of the Regulator. It grants the Regulator’s decisions full legal force with regard to separate operators and the telecommunications industry as a whole. The primary functions of the Regulator that are relevant to our business include: • implementing competition in the provision of public electronic communications services and networks; • regulating public electronic communications networks and services; • with respect to radio communication, allocating particular portions of the radio spectrum under its control for specific purposes and • adopting justified, fair and transparent resolutions that conform to laws and public interest and establishing procedures for implementation of resolutions. The Regulator has adopted rules regulating the following: rendering VoIP services; publication of tariffs and conditions on rendering data transfer services and Internet access; granting radio frequency use authorizations; licensing of telecommunications networks and services; regulating national numbering plans, lease of local loops owned by fixed network operators with significant market power; providing international roaming services and regulating the exchange of data traffic between data transmission operators and Internet services providers.

Licensing to Provide Telecommunications Services and Radio Frequency Allocation In Armenia, the operation and management of the public electronic communication network, voice and mobile communication services, telegraphic communication services, data communication services, connection to the Internet and television and radio broadcasting services are subject to licensing. A person may own and operate a public electronic communications network in Armenia only if that person holds an operator’s license and a person may provide public electronic communications services only if that person holds either a provider’s license or operator’s license. Under the Law on Licensing dated May 30, 2011, the grant of exclusive rights and privileges to one operator is prohibited. Along with an operator’s license, an operator must also have authorization to use radio frequencies in order to operate and provide an electronic communications network or service. The Regulator issues frequency authorizations to persons to use specific portions of the radio spectrum and is authorized to suspend or terminate frequency authorizations in accordance with the relevant procedures. Following submission of an application by a licensee, the Regulator may renew the frequency authorization for a period equal to the period for which the original authorization was granted. The Regulator may also make a decision to limit the number of frequency authorizations based on availability of radio frequencies. If such a decision has been made, authorizations are awarded on the basis of competitive applications or auction. The Regulator also has the authority to adopt rules allowing (i) granting shared use of limited resources to multiple applicants, and (ii) auctioning of licenses or authorizations absent any limitation on resources if such auction is in the best interests of the people of Armenia.

154 Properly certified terminal equipment may be connected to the operator’s public electronic communications network provided such connection does not cause physical or technical harm to the network. In accordance with the Law of the Republic of Armenia on Compliance Assessment, which was effective as of March 10, 2004, only certificated equipment may be imported and connected. Certification is conducted by commercial organizations that have the required licenses.

Pricing, Competition and Interconnections According to the Law on Protection of the Economic Competition (effective December 15, 2000), ArmenTel is considered a dominant operator of fixed telephony and international data transmission (IP transit) services. All dominant operators must publish information concerning the location and available capacity of their line facilities in accordance with the requirements set by the Regulator under the Law on Electronic Communications. Any dominant operator that owns a line facility must allow any other operator to lease the capacity of such line facility. Each operator shall, upon request, interconnect its public electronic communications network with the public electronic communications network of any other operator. Each dominant operator must provide interconnection for the provision of public electronic communications services and must submit an interconnection offer to the Regulator. In the course of regulating prices, the Regulator must ensure that service providers recover a reasonable rate of return on the value of their investments directed to public services. This may include investments that are not economic or are inefficient, but that are geared towards the advancement of technology or public policy. When determining the rate of return, the Regulator takes into consideration international benchmarks and features distinct to Armenia. The Regulator is responsible for determining the tariffs related to use of specific public electronic communications services provided by the dominant service providers and the Regulator may regulate with respect to tariffs on specific public electronic communication services provided by non-dominant service providers, provided such regulation is necessary to promote competition and the public interest. Tariffs on services of fixed communication are subject to regulation in accordance with a list prepared by the operator and reviewed and approved by the Regulator. Tariffs on services of mobile communication are not regulated with regard to calls made from fixed networks to mobile networks. Subject to reasonable rates and conditions, an operator may provide physical collocation of its equipment with another operator or service provider if it is necessary for interconnection with or access to its public electronic communications network. An operator may only provide for virtual collocation with another operator or service provider if another operator demonstrates that physical collocation is not practical for technical reasons or because of space limitations. Collocation includes provision of space, power and lights as well as cross connections between the collocated equipment and switches or loops designated by the collocating operator or service provider. An operator may make available to any operator or service provider such public electronic communications network infrastructure, technology, information, facilities and functions as may be requested by such operator or service provider for the purpose of enabling them to provide services. In February 2009, regulations on rendering mobile telecommunication services were adopted. These regulations determine, among other things, the order, terms and conditions of rendering and use of mobile telecommunication services, rights and obligations of mobile telecommunication networks operated by dominant operators and of customers, as well as their respective responsibilities. On February 24, 2010 (effective March 1, 2010), the Regulator also approved interconnection tariffs for traffic exchanges between mobile networks and fixed networks using non-geographic codes. Further, on November 11, 2008, the Regulator adopted rules on disclosure of information as to an operator’s network location, free line infrastructure capacity and other technical regulations related to fixed telecommunication operators. On January 1, 2011, a new “Law on Procurement” entered into the force and expanded regulation of procurement to public utilities companies including regulated services of telecommunication operators. The law authorizes the Regulator to adopt procurement rules for operators providing regulated services that are currently limited to landline telephone services ArmenTel. The Additional Requirements Towards the Procurements of “Armentel” CJSC (Decision No. 616 of November 28, 2012) adopted by the Regulator entered into the force on February 1, 2012. The basic requirements include that all procurements exceeding US$50,000 must take place through open tenders with some exceptions, such as emergency procurements, exclusive capacity of venders based on copyrights or other exclusive rights.

155 Another important regulation, the Rules on Provision of Free Capacity of Ducts and Conduits by Dominant Operators (Decision No. 414-N of September 7, 2011) were adopted by the Regulator in accordance with the authority delegated under the Article 25 of the Law on Electronic Communication. Among other things, these rules define circumstances that could justify a dominant operator’s refusal of other operators’ applications for rent of free engineering infrastructure (including ducts and conduits). The Regulator intends to introduce MNP by 2014, which would carry risks of increased competition, increase in churn and loss of market share and revenue in favor of the competitors, as well as additional capital costs.

156 MANAGEMENT

Directors and Senior Management

The following tables set forth certain information with respect to the directors and executive officers of the Issuer and the Guarantor as of January 1, 2013.

The Issuer

Name(1) Age Title Colin Delahay ...... 45 Director Cornelis Hendrik van Dalen ...... 60 Director Jeffrey D. McGhie ...... 43 Director Barbara Nijhuis ...... 34 Director Felix Saratovsky ...... 39 Director

(1) The registered business address of each of the individuals is Claude Debussylaan 88, 1082 MD Amsterdam, The Netherlands.

The Guarantor

Name(1) Age Title Jan Edvard Thygesen ...... 61 Director Jo Olav Lunder ...... 51 Director Kjell-Morten Johnsen ...... 44 Director Cornelis Hendrik van Dalen ...... 60 Director Andrei Baranov ...... 44 Director Anton V. Kudryashov(2) ...... 45 General Director Sergey V. Rubtsov(2) ...... 34 Sales and Customer Care Vice President Dmitry A. Lapitskiy(2) ...... 39 Vice President, Regions Andrey E. Patoka(2) ...... 43 Vice President, Head of B2B Stanislav K. Oleynik(2) ...... 38 Acting Vice President, Chief Strategy Officer, Russia Marina A. Dumina(2) ...... 54 Vice President, Legal Mikhail V. Yakovlev(2) ...... 58 Vice President, Organizational Development, Human Resources and Administrative Issues Dmitry Y. Afinogenov(2) ...... 51 Vice President, Chief Financial Officer Olga N. Turischeva(2) ...... 42 Vice President, Marketing and Business Development Kjersti Wiklund(2) ...... 50 Executive Vice President, Chief Operating Officer, Russia Igor B. Parfenov(2) ...... 47 Vice President, Chief Technical Officer Marina V. Muravieva ...... 41 Internal Auditor

(1) The registered business address of each of the individuals is Open Joint Stock Company “Vimpel-Communications,” 10 Ulitsa 8 Marta, Building 14, Moscow, Russian Federation 127083. (2) Member of the management board.

There are no potential conflicts of interest between any duties of the members of the administrative, management or supervisory bodies of the Issuer or the Guarantor owed to the Issuer or the Guarantor and their own private interests and/or other duties.

Colin Delahay has been a director of the Issuer since January 2013 and has served as Group Director of Accounting, Reporting and Control of VimpelCom Ltd. since November 2010. Prior to joining VimpelCom Ltd., Mr. Delahay held various positions with PwC in the Netherlands from 1991 to 2010, including Audit Partner from 2003 to 2010. Mr. Delahay graduated with a Doctorate degree in Business Economics from Erasmus University Rotterdam in 1992 and received a Post Doctorate degree in Accountancy from the Vrije Universiteit Amsterdam in 1999.

Cornelis Hendrik van Dalen has been a director of the Issuer since October 13, 2010 and of the Guarantor since October 12, 2010. Mr. van Dalen has also served as Chief Financial Officer of VimpelCom Ltd. since September 2010. Mr. van Dalen was Chief Financial Officer and was a member of the board of directors of TNT N.V. from 2006 until 2010. From 2000 until 2006, Mr. van Dalen was a member of the board of management and Chief Financial Officer of Royal DSM N.V. Currently, Mr. van Dalen also serves as a member

157 of the supervisory boards of NIBC bank and Macintosh Retail Group N.V., the board of directors of Nationaal Fonds 4 en 5 mei and the advisory boards of NEVIR, a Dutch association for investor relations, and VEUO. Mr. van Dalen received a degree in Economy and Sociology from the Erasmus University in Rotterdam. Jeffrey D. McGhie has been a director of the Issuer since October 13, 2010 and has served as General Counsel of VimpelCom Ltd. since August 2010. Mr. McGhie held the position of Vice President, General Counsel of the Guarantor from June 2007 until July 2010, and before that he served as the Guarantor’s Chief Legal Officer beginning in March 2006. Prior to joining the Guarantor, he held the position of associate in the Moscow office of Akin Gump Strauss Hauer & Feld L.L.P. from September 2002 until December 2004, and counsel from January 2005 until March 2006. From December 1999 until August 2002, Mr. McGhie was an associate at Kirkland & Ellis in Chicago, Illinois. Mr. McGhie graduated with a B.A. in Russian from Brigham Young University in 1995 and received a J.D. magna cum laude and a M.B.A. from Indiana University (Bloomington) in 1999. Barbara Johanna Nijhuis has been a director of the Issuer since January 1, 2013 and has served as Senior Legal Counsel of VimpelCom Ltd. since October 2010. Ms. Nijhuis has served as director of Silkway Holdings B.V. since January 2012, of VimpelCom Holding Laos B.V. since January 2012 and of VimpelCom Amsterdam B.V. since January 2013. Prior to joining VimpelCom Ltd., Ms. Nijhuis held the position of associate in the Amsterdam and New York offices of Allen & Overy L.L.P. from February 2004 to October 2010. Ms. Nijhuis graduated from the University of Utrecht in 1999, with a Bachelor’s degree in Law, University Autonoma de Barcelona in 2002 with a degree in Law and University of Amsterdam in 2003, with a Master’s degree in Law. Felix Saratovsky has been a director of the Issuer since October 13, 2010 and has served as Deputy General Counsel of VimpelCom Ltd. since August 2010. Prior to joining VimpelCom Ltd., Mr. Saratovsky held the position of associate in the New York, Moscow and London offices of Akin, Gump, Strauss, Hauer & Feld L.L.P. from September 2001 to January 2007 and the position of counsel in the London office from January 2007 to August 2010. Mr. Saratovsky graduated with a B.A. with high honors from Wesleyan University in 1995 and received a J.D. from the University of Michigan Law School in May 2001. Jan Edvard Thygesen joined VimpelCom Ltd. in January 2012 as Deputy Chief Executive Officer and Chief Operating Officer. Mr. Thygesen has been a member of the Guarantor’s board of directors since June 2008. He has served as an Executive Vice President of Telenor since 1999. Since January 2006, he has served as Executive Vice President and Head of Telenor’s Central and Eastern European operations. Since joining Telenor in 1970, Mr. Thygesen has held various positions, including Chief Executive Officer of Sonofon, Chief Executive Officer of Telenor Nordic Mobile, Executive Vice President of Telenor Mobil AS, Chief Executive Officer of Telenor Invest AS, Executive Vice President of Telenor Bedrift AS and Chief Executive Officer of Telenor Networks AS. He also served as Chief Executive Officer of Esat Digifone, Ireland. He is presently serving as chairman of the boards of directors of Telenor Montenegro, Telenor East Inrest AS, Telenor Ukraina I AS, Telenor Ukraina II AS, Telenor Ukraina III AS, Telenor Ukraina IV AS, Nye Telenor Mobile Communications I AS, Nye Telenor Mobile Communications II AS, Nye Telenor Mobile Communications III AS—Norway and Telenor d.o.o. in Serbia. Mr. Thygesen holds a Master of Science degree in Electrical Engineering and Telecommunications from the Norwegian Institute of Technology. Jo Lunder was appointed by VimpelCom Ltd.’s supervisory board as the Chief Executive Officer of VimpelCom Ltd. effective July 2011 and has been a member of the board of directors of the Guarantor from May 2002 to October 2010 and from August 2011 to present. Previously, Mr. Lunder served as a member of the board of directors of VimpelCom Ltd. from April 2010 until June 2011, and was the Chairman of the Board of VimpelCom Ltd. from April 2010 until the time of his appointment as Chief Executive Officer. From October 2003 until June 2005 and from August 2011 to March 2012, Mr. Lunder served as the Chairman of the board of directors of the Guarantor. Prior to serving as Chairman of the board of directors of the Guarantor, Mr. Lunder served as the Guarantor’s Chief Executive Officer as well as its General Director. Since September 1999, Mr. Lunder has also held numerous other positions at the Guarantor, including President and Chief Operating Officer, First Deputy Chief Executive Officer and Chief Operating Officer. From February 2005 to September 2007, Mr. Lunder served as Chief Executive Officer of Atea ASA, one of Europe’s largest IT infrastructure companies. Since September 2007, Mr. Lunder has served as the Executive Vice President of FERD, one of Norway’s largest privately-owned financial and industrial groups. In addition, Mr. Lunder serves as Executive Chairman of the board of directors of the Aibel Group Ltd. and as a member of the board of directors of Orkla ASA. He is Chairman of the board of Elopak AS, and Chairman of the board of Swix Sport AS. He also serves on the board of directors of Pronova Biopharma. From 1993 until August 1999, Mr. Lunder was employed in various capacities for Telenor and its affiliates, including Chief Operating Officer of Telenor Mobile. Mr. Lunder earned a Bachelor’s degree from the Oslo Business School and a M.B.A. degree from Henley Management College in the United Kingdom.

158 Kjell-Morten Johnsen has been a director of VimpelCom Ltd. since June 2011 and a director of the Guarantor since June 2007. Mr. Johnsen is a member of VimpelCom Ltd.’s compensation committee. Mr. Johnsen was appointed Executive Vice President of Telenor’s European Operations in May 2012. From March 2009 to May 2012, Mr. Johnsen was Chief Executive Officer of Telenor Serbia. Before his appointment in Serbia, Mr. Johnsen served as Senior Vice President of Telenor Central & Eastern Europe and Head of Telenor Russia from February 2006. From 2001 to 2006, Mr. Johnsen worked as Vice President of Telenor Networks with responsibility for Telenor ASA’s fixed line activities in Russia and the CIS. From 1996 to 2000, Mr. Johnsen worked with Norsk Hydro, where he held executive positions both as country manager in Ukraine and as manager at the regional headquarters for the CIS, Africa and Latin America, which was based in Paris. Mr. Johnsen served as a member of Golden Telecom, Inc.’s board of directors from December 2003 to February 2008. Mr. Johnsen has a M.B.A. in Strategic Management from the Norwegian School of Economics and Business Administration. Andrei Baranov has been a director of VimpelCom Ltd. since June 2011 and a director of the Guarantor since 2011. He also serves as chairman of VimpelCom Ltd.’s finance committee and a member of VimpelCom Ltd.’s nominating and corporate governance committee. Mr. Baranov has served as a managing director at Altimo since June 2011. He is currently a member for the board of directors of AlfaBank Holding Group, AlfaBank Ukraine and AlfaStrahovanie. From 2002 until 2011, Mr. Baranov was a managing partner of Princeton Partners Group where he managed over 30 projects in Russia and the CIS in strategy, development, corporate restructuring, post-merger management and other initiatives. From 1999 until 2002, Mr. Baranov worked in the New Jersey office of McKinsey and Co., in 1999 at Merrill Lynch in New York, from 1996 to 1997 at Princeton Consultants and from 1992 to 1996 at International Commodity Traders. In addition, Mr. Baranov has served in the past as a member of the board of directors of several companies, including of Volga-Dnepr, Russian Fitness Group, Metinvest and DTEK. Mr. Baranov received a degree from the Tajik State University in Theoretical Physics, a degree in International Business from the Moscow Higher School of Commerce and a MBA from the Wharton School of the University of Pennsylvania. Anton Kudryashov has been Head of the Russia Business Unit of VimpelCom Ltd. and General Director of the Guarantor since January 2012. Mr. Kudryashov has been a member of the Supervisory Board of Euroset Holding N.V. since December 2012. Previously Anton Kudryashov served as Chief Executive Officer of CTC Media since August 2008. Mr. Kudryashov started his professional career at CS First Boston, an international investment bank, where he served in various positions from 1991 to 1995, including as Vice President from 1993 to 1995. In 1995, he became one of the founding partners of Renaissance Capital investment bank. Mr. Kudryashov also held senior executive positions in insurance and private equity. In 1998, Mr. Kudryashov founded Afisha Publishing House and was the Chairman of the Board of Afisha Publishing House until 2005. From 2002 to 2003, he served as the restructuring Chief Executive Officer of NTV-Plus. Mr. Kudryashov graduated with a degree in Economics from Moscow Finance Institute in 1989 and did his post-graduate studies at the London School of Economics in 1991. He is a member of the Russian Television Academy and also a member of the Board of the Russian Union of Industrialists and Entrepreneurs (RSSP). Sergey V. Rubtsov has served as Vice President, Sales and Customer Care of the Guarantor since December 2012. Previously, he served as Sales Director, Russia from May 2011 to December 2012 and as Sales Director of the Moscow Region from December 2008 to May 2011. From 2001 to 2011, he served in various positions with the Guarantor, including Commercial Officer and head of the Partnership Department. Mr. Rubtsov graduated from Moscow State University of Mechanical Engineering (MAMI) with a Master’s degree in Management. Dmitry Lapitskiy has served as Vice President, Regional Development of the Guarantor since July 2012. He served as Chief Commercial Officer of the mass market division of MTS from January 2009 to August 2011. Mr. Lapitskiy served as regional director of the Far East branch of MTS from February 2006 to December 2009 and as Marketing Director of Volga branch of MTS from August 2004 to January 2006. Prior to 2004, he held senior positions in other departments of MTS. Mr. Lapitskiy received a degree in General Medicine from the Omsk Medical University in 1996 and a MBA from the Higher School of International Business of Academy of National Economy under the Government of the Russian Federation in 2008. Andrey E. Patoka has served as Vice President, Business Development of the Guarantor in Russia since 2010. He has served as Deputy General Director and Senior Vice President for international and regional business at Golden Telecom since the Guarantor acquired Golden Telecom in 2008. In September 2003, Mr. Patoka headed the Regional Business Development Department of Sovintel. In March 2004, he became the Head of the Guarantor’s International and Regional Business Development Department in Sovintel. In 1992, he started his career as Sales Manager of “Combellga”. In 2002, he became Commercial Director and headed the Sales Department. Mr. Patoka graduated from Military Krasnoznamenny Institute of the Ministry of Defence with a Master’s degree in Military Translation.

159 Stanislav Oleynik has served as Vice President, Strategy of the Guarantor in Russia since January 2013. Previously, from 2011 to 2012, he served as Corporate Strategy Director and Chief Strategy Officer of the Guarantor. From 2010 to 2011, Mr. Oleynik was Director of Marketing Excellence, Consumer Insights and Marketing Planning for the Guarantor. Prior to joining the Guarantor, he worked as a management consultant for McKinsey & Company from 2008 to 2010 and served as Strategic Marketing & Research Director at Golden Telecom from 2006 to 2008. Mr. Oleynik also worked as a consultant for Monitor Company Europe in London from 2004 to 2005 and served in numerous marketing positions with the Guarantor, including Head of B2B Marketing, from 1996 to 2003. Mr. Oleynik graduated from the Moscow Institute of Physics and Engineering with a Master’s degree in Electronics and received a MBA from Cambridge Business School. Marina A. Dumina joined the Guarantor as Vice President, Legal in June 2010. From 1998 to 2010, she worked in an international law firm Akin Gump Strauss Hauer & Feld L.L.P. Her sphere of expertise includes international litigation and investment projects in telecommunication, oil and other industries and she has participated in a number of projects in the securities and financial markets. In 2006, she became a partner at Akin Gump Strauss Hauer & Feld L.L.P. From 1993 to 1998, she worked as a senior lawyer in the Moscow office of the international law firm Linklaters and Paines. Ms. Dumina graduated from the Moscow State Lumonosov University in 1980 with a degree in International Law. Mikhail V. Yakovlev joined the Guarantor in April 1997. He has served as Vice President, Organizational Development, and Human Resources of the Guarantor since November 1, 2010. He served as Regional Director of the Central region from December 2005 to November 2010, as Commercial Director of the Moscow region from July 2004 to December 2005, as Sales Director from August 1999 to July 2004 and as Commercial Director, Deputy General Director from April 1997 to August 1999. Mr. Yakovlev also served as IT Director in 1999. From 1994 until 1997, Mr. Yakovlev served as General Director of Moscow Telecommunication Company (MTK). Prior to 1994, Mr. Yakovlev served as Deputy Director of Communication and Satellite System Centre of the Ministry of Merchant Marine. Mr. Yakovlev received a Bachelor’s degree in Radiotechnique from the Moscow Telecommunications University. Dmitry Y. Afinogenov has served as Vice President, Chief Financial Officer of the Guarantor since August 2010 and holds certain other management positions with various subsidiaries of the Guarantor. He has also served as the Chief Executive Officer and President of SFMT-CIS, Inc., SFMT-Rusnet, Inc., Golden TeleServices, Inc., Golden Telecom Group, Inc., Golden Holdings. Inc., GTS Finance, Inc., and Golden Telecom Inc. since December 2011. Since 2002, Mr. Afinogenov has held various positions with the Guarantor from Regional Financial Controller to Chief Financial Officer for the CIS countries and international operations. From 1998 until 2002, Mr. Afinogenov worked as the Manager of Financial reporting in PepsiCo Holding Company. From 1993 until 1998, he held the positions of Chief Accountant and Financial Controller at Ernst & Young CIS Limited (Cyprus). Mr. Afinogenov graduated from the Moscow Telecommunications University with a Bachelor’s degree in Engineering and Economics. Olga N. Turischeva has served as Vice President, Marketing and Business Development of the Guarantor since December 2010. She served as Chief Executive Officer of Rambler Media Limited from April 2009 to August 2010. Ms. Turischeva served as Director of Beeline Ventures from July 2007 to April 2009 and as Marketing Director of Beeline from January 2001 until June 2007. From 1998 until 2000, Ms. Turischeva served as Marketing Director of BSH Bosch und Siemens Hausgeräte GmbH Moscow, Russia. Prior to 1998, Ms. Turischeva held senior positions at Merloni Elettrodomestici S.p.A. CIS, Baltic and East Europe Representative Office. Ms. Turischeva has a Master of Science degree in Economics from the Moscow State University. Kjersti Wiklund has been Executive Vice President and COO of the Russia Business Unit since July 2011. Previously, she served as Vice President and Technical Director of Kyivstar and was a member of the Management Board of Kyivstar. From 2007 to 2009, Mrs. Wiklund was Executive Vice President and Technical Director at DiGi Telecommunications (Malaysia). From 2005 to 2007, she served as Executive Vice President and CIO at Telenor Nordic. From 2003 to 2005, she held positions of Executive Vice President/CIO/Technical Director at Telenor Norway and other companies, focusing on strategic network development and general management. Mrs. Wiklund graduated from Chalmer University of Technology (Sweden) and from Norway Business School. Igor Parfenov joined the Guarantor as Vice President and Chief Technical Officer in September 2012. From February 2011 to September 2012, he served as Chief Technical Officer of OJSC “Megafon.” From 2004 to 2011, Mr. Parfenov headed the Moscow branch of OJSC “Megafon”. From 2000 to 2004, he worked in various capacities at JSC “Sonic Duo,” where he served as Deputy Technical Director from 2000 to 2002, when he was appointed to the position of Technical Director. Mr. Parfenov started his career as an engineer in the commercial bank “Soyuz” in 1988. In 1991, he moved to OJSC “Rostelcom” where he served until 1995. Mr. Parfenov graduated from Moscow Aviation Institute and holds an MBA degree from MIRBIS.

160 Marina V. Muravieva has been a member of the Guarantor’s audit commission since December 8, 2010. Ms. Muravieva has been a Director of Internal Audit and Risk Management of the Guarantor since 2002 and is responsible for managing the internal audit function in Russia and CIS. From 2001 to 2002, Ms. Muravieva headed the Investment Department of the Guarantor. Prior to joining the Guarantor, she served as Financial Manager and Treasury Manager of Sprint, Global One Group of companies from 1993 to 2001. Ms. Muravieva graduated from the Faculty of Marketing and Management in Mechanical Engineering of the Moscow Institute of Aviation with a degree in Engineering and Economics. She has been a certified internal auditor (CIA) since 2004 and is a member of the American Institute of Certified Public Accountants (AICPA).

Compensation The Issuer The Issuer did not pay any compensation to its directors in 2011.

The Guarantor The Guarantor paid its directors, senior managers and audit commission members an aggregate of US$7.1 million for services provided during 2011, excluding US$0.5 million in stock-based compensation award payments. In 2009, the Guarantor’s board of directors adopted a stock appreciation rights (“SAR”) plan for the Guarantor’s senior managers and employees. The plan is administered by the Guarantor’s General Director, and the Guarantor’s board of directors determined the aggregate number of stock appreciation rights that were granted. Prior to completion of the VimpelCom Ltd. Transaction, a stock appreciation right, upon vesting, entitled the holder to receive a cash amount per stock appreciation right equal to any excess of the NYSE closing price of one of the Guarantor’s ADSs on the exercise date over the price at which such stock appreciation right was granted, which was the higher of the NYSE closing price on the grant date or the average NYSE closing price over a period of 30 trading days prior to the grant date. In connection with the completion of the VimpelCom Ltd. Transaction and the delisting of the Guarantor’s ADSs from the NYSE, as of April 21, 2010, the Guarantor’s stock appreciation rights plan was amended to provide that the exercise price for stock appreciation right, upon vesting, relates to the NYSE closing price of a VimpelCom Ltd. ADS. The exercise prices of the stock appreciation rights were not changed. The stock appreciation rights granted under the plan vest over a two-year period, as long as the Guarantor meets the plan’s performance targets. In connection with the completion of the VimpelCom Ltd. Transaction, VimpelCom Ltd. has assumed OJSC VimpelCom’s payment obligations under the SARs plan for any OJSC VimpelCom employees who become employees of VimpelCom Ltd. In 2011, no stock appreciation rights were granted under the plan. As of September 30, 2012, 972,100 SARs were outstanding, none of which were exerciseable as of that date. Senior managers and members of the Guarantor’s audit commission are also eligible to participate in the Guarantor’s 2000 stock option plan, as amended, and in the VimpelCom Ltd. 2010 stock option plan. For more information on these stock option plans, please see “—Share Ownership” below. In March 2012, VimpelCom Ltd. adopted the VimpelCom Ltd. Executive Investment Plan (the “EIP”) in which certain members of the senior management of OJSC VimpelCom, Kyivstar and VimpelCom Ltd. are eligible to participate. Under the EIP, participants are invited to personally invest in VimpelCom Ltd.’s common shares. At the same time as their investment, participants will be awarded matching options to acquire a number of matching shares at the end of a specified performance period if, at the end of that performance period, certain performance conditions and other conditions set out in the EIP documents have been met. If all conditions to vesting have been met, the number of matching shares that participants will receive when they exercise their options will be based on a multiple of their initial investment. The EIP is administered by the compensation committee of VimpelCom Ltd.’s supervisory board, which committee determines which members of senior management will receive invitations to participate and the timing of awards. The compensation committee also sets the performance conditions and performance period for the vesting of the matching option. In June 2012, the compensation committee made an offer to certain members of senior management to participate in the EIP. The matching options awarded in connection with this offer will be subject to a two-year performance period and performance conditions set out in the EIP documents, as well as the terms of the EIP. The Guarantor has entered into indemnification agreements with each of its directors, senior managers and members of its audit commission pursuant to which it has agreed to indemnify each of them for all losses, subject to certain limited conditions, incurred in connection with claims, suits or proceedings arising out of his or her performance of his or her duties as a director, senior manager or member of the Guarantor’s audit commission.

161 VimpelCom Ltd. has obtained insurance on behalf of the VimpelCom Ltd. Group’s senior managers, directors and members of the audit commission for liability arising out of their actions in their capacity as a senior manager, director or member of the Guarantor’s audit commission. The Guarantor does not have any pension, retirement or similar benefit plans available to its directors, senior managers or audit commission members. As of December 31, 2011, none of the Issuer’s or the Guarantor’s directors or senior managers beneficially owned more than 1.0% of any class of its capital stock.

Board Practices The Issuer The management board of the Issuer is entrusted with the management of the Issuer. The management board currently has five members. Under the Issuer’s articles of association, the management board is required to have one or more members and the articles do not provide for any specific procedures for nomination of members. At least the majority of the members on the management board must be Dutch residents. Directors are appointed by the body of the Issuer consisting of shareholders entitled to vote and usufructuaries and pledgees with voting rights, or a meeting of persons with meetings rights (vergaderrechten), as the case may be. The members of the Issuer’s current management board were elected by a decision of the sole shareholder, VimpelCom Amsterdam B.V., for an indefinite period starting from October 13, 2010 (except for Mr. Delahay and Ms. Nijhuis who were appointed by a decision of the sole shareholder, VimpelCom Amsterdam B.V., for an indefinite period starting January 11, 2013). All resolutions of the management board must be adopted by more than half of the votes cast. The Issuer has not entered into any service contracts with any of the current members of its management board providing for benefits upon termination of service.

The Guarantor The supreme governing body of the Guarantor is the General Meeting of Shareholders, which is empowered to decide on the issues expressly set forth in the Russian Federal Law on Joint Stock Companies and the Guarantor’s charter, including election of the board of directors. The Guarantor’s board of directors currently consists of five persons. The members of its current board of directors were elected by the annual general meeting of shareholders held on May 21, 2012 and will serve until the next annual general meeting of shareholders unless the board in its entirety is terminated prior to the expiration of its term upon a decision of the Guarantor’s shareholders. The Guarantor has not entered into any service contracts with any of its current directors providing for benefits upon termination of service. The Guarantor is required under Russian law and its charter to maintain an audit commission. The Guarantor’s audit commission assists with oversight responsibility and reviews the Guarantor’s financial reports, its systems of internal controls and its auditing, accounting and financial reporting processes. Under Russian law and the Guarantor’s charter, a member of the Guarantor’s audit commission may not simultaneously serve as a member of the Guarantor’s board of directors or hold a senior management position in the Guarantor. Under the Guarantor’s Charter, the number of members of the audit commission shall be determined by the decision of the general meeting of shareholders. On December 7, 2010, the shareholders determined that the audit commission should consist of one person. The current member of the Guarantor’s audit commission was elected at the May 21, 2012 annual general meeting of the Guarantor’s shareholders and is expected to serve until the Guarantor’s next annual general meeting of shareholders. The Guarantor’s management committee, which is chaired by the Guarantor’s General Director, is an advisory body that assists the General Director with the management of the Guarantor’s day-to-day activities. The management committee comprises certain key members of the Guarantor’s senior management. Recommendations of the management committee remain subject to the approval or veto of the Guarantor’s General Director.

Employees As of September 30, 2012, we had approximately 38,318 employees in Russia, the CIS, Ukraine and other countries. Of our 24,842 employees in Russia, we estimate that 104 are in executive and senior managerial positions, 9,420 are in engineering, construction and information technology, 5,439 are in sales, marketing and other commercial operations, 1,706 are in finance, administration and legal, 5,926 are in customer service, 399 are in site acquisitions, regional projects and security, 1,067 are in procurement and logistics and 781 in other support functions.

162 As of September, 30, 2012, we had approximately 5,335 employees in Ukraine. Of these employees, we estimate that 934 are in executive and managerial positions, 1086 are in engineering, construction and information technology, 557 are in sales, marketing and other commercial operations, 773 are in finance, administration and legal, 1,452 are in customer service, 60 are in site acquisitions, regional projects and security, 141 are in procurement and 76 are in other support functions. As of September 30, 2012, we had approximately 2,021 employees in Kazakhstan. Of these employees, we estimate that seven are in executive and managerial positions, 727 are in engineering, construction and information technology, 657 are in sales, marketing and other commercial operations, 196 are in finance, administration and legal, 304 are in customer service, 22 are in site acquisitions, regional projects and security, 60 are in procurement and 48 are in other support functions. In addition, as of September 30, 2012, we had a total of approximately 5,407 employees in Uzbekistan, Armenia, Tajikistan, Kyrgyzstan, Georgia, Cambodia and Laos. The following chart sets forth the number of our employees at September 30, 2012 and at December 31, 2011, 2010 and 2009:

At September 30, At December 31, 2012 2011 2010 2009 Russia ...... 24,842 31,471 30,059 27,165 Ukraine ...... 5,335 6,134 6,228 2,005 Kazakhstan ...... 2,203 2,213 1,815 1,786 Uzbekistan ...... 1,256 1,261 1,244 1,277 Armenia ...... 2,662 2,703 3,022 3,243 Tajikistan ...... 397 404 390 357 Georgia ...... 347 345 312 262 Kyrgyzstan ...... 745 705 583 — Cambodia ...... 400 428 359 262 Laos ...... 395 283 — — Total ...... 38,582 45,947 44,102 36,357 We have not experienced any work stoppages and consider relations with our employees to be good.

Share Ownership Historically, the Guarantor maintained a stock option plan (the “2000 Stock Option Plan”) under which it granted options to certain of its and its subsidiaries’ affiliates, officers, employees, directors and consultants to acquire shares of common stock of the Guarantor. In connection with the completion of the VimpelCom Ltd. Transaction, as of April 21, 2010, the 2000 Stock Option Plan was transferred to VimpelCom Ltd. and options granted under the 2000 Stock Option Plan, as amended, allow grantees to acquire shares of VimpelCom Ltd. common stock upon exercise of the options. Options are granted by VC ESOP N.V., an indirect wholly owned subsidiary of the Guarantor. The 2000 Stock Option Plan is administered by a committee appointed by the board of directors of VC ESOP N.V., which committee determines to whom options are granted under the plan, the number of options that are granted and the terms and conditions of option grants, including the exercise price per share. The committee appointed to administer the 2000 Stock Option Plan currently comprises the three directors who currently sit on the compensation committee of the supervisory board of VimpelCom Ltd. On April 21, 2010, VimpelCom Ltd. adopted the VimpelCom 2010 stock option plan (the “2010 Stock Option Plan” and together with the 2000 Stock Option Plan, the “Stock Option Plans”) under which certain of the Guarantor’s and the Guarantor’s subsidiaries’ affiliates, officers, employees, directors and consultants are eligible for grants of options to acquire shares of VimpelCom Ltd. common stock. Options under the 2010 Stock Option Plan may be granted by VimpelCom Ltd. or its affiliate. The 2010 Stock Option Plan is administered by the compensation committee of the Supervisory Board of VimpelCom Ltd., which committee determines to whom options are granted under the plan, the number of options that are granted and the terms and conditions of option grants, including the exercise price per share. As of September 30, 2012, options to acquire approximately 2,621,690 shares of VimpelCom Ltd.’s common stock were outstanding under the Stock Option Plans, of which options in respect of approximately 1,326,690 shares of VimpelCom Ltd.’s common stock were exercisable as of such date or are exercisable within 60 days of September 30, 2012. The exercise prices of the options outstanding as of September 30, 2012, ranged from US$10.42 per share to US$16.74 per share. The options granted generally vest at varying rates over a two- or three-year period subject in some instances to the attainment of performance targets and vesting periods for certain employees will be accelerated if certain events specified in the Stock Option Plans occur. The options

163 outstanding as of September 30, 2012 are exercisable until dates ranging from the present date to January 31, 2018. If a plan participant ceases to be an employee of the Guarantor or any of its affiliates (other than due to death or disability or for cause) or ceases to otherwise be eligible to participate in the plan, the individual will generally have the right to exercise vested options upon the later to occur of (a) the date of expiration of his option agreement and (b) the end of the first open trading window period following the effective date of termination of employment. In case of death or permanent disability of a plan participant, his or her beneficiaries will automatically acquire the right to exercise those options that have vested prior to the plan participant’s death or permanent disability for the earlier of (i) 190 days and 90 days in the event of death and permanent disability, respectively, and (ii) December 31, 2015, in the case of options granted under the 2000 Stock Option Plan, and December 31, 2020, in the case of options granted under the 2010 Stock Option Plan. If a plan participant ceases to be an employee of the Guarantor or any of our Guarantor’s affiliates for cause, then the right to exercise options will terminate immediately unless waived by the stock option committee discussed above.

VimpelCom Ltd. Group Under the VimpelCom Ltd. Group’s corporate governance structure, certain significant corporate actions taken by the various VimpelCom Ltd. Group companies, including the Issuer and the Guarantor, require the prior ultimate approval of the VimpelCom Ltd. supervisory board. VimpelCom Ltd.’s bye-laws grant the VimpelCom Ltd. management board authority over certain other matters to be taken by VimpelCom Ltd. Group companies. Accordingly, the following tables set forth certain information with respect to the directors and executive officers of VimpelCom Ltd. As of January 1, 2013, the members of VimpelCom Ltd.’s supervisory board and management board and other senior management were as follows: Name(1) Age Position Alexey M. Reznikovich ...... 44 Chairman of Supervisory Board Andrei Baranov(2) ...... 44 Director Mikhail M. Fridman(2) ...... 48 Director Kjell-Morten Johnsen(3) ...... 44 Director Dr. Hans-Peter Kohlhammer ...... 65 Director Leonid R. Novoselskiy ...... 43 Director Ole Bjørn Sjulstad(3) ...... 51 Director Jon Fredrik Baksaas(3) ...... 58 Director Sergei Tesliuk ...... 34 Director Jo Lunder(4)(5) ...... 51 Group Chief Executive Officer Cornelis Hendrik van Dalen(4) ..... 60 Group Chief Financial Officer Jan Edvard Thygesen(4) ...... 61 Group Deputy Chief Executive Officer and Group Chief Operating Officer Jeffrey D. McGhie(4) ...... 43 Group General Counsel Mikhail Gerchuk(4) ...... 40 Group Chief Commercial and Strategy Officer Rob Conway(4) ...... 61 Group Chief of International Affairs Romano Righetti(4) ...... 51 Group Chief Regulatory Officer Phillip Tohmé(4) ...... 46 Group Chief Technology Officer Anja Uitdehaag(4) ...... 51 Group Director Human Resources Anton Kudryashov(4) ...... 45 Head of the Russia Business Unit Igor V. Lytovchenko(4) ...... 46 Head of the Ukraine Business Unit Dmitry G. Kromskiy(4) ...... 51 Head of the CIS Business Unit Ahmed Abou Doma(4) ...... 44 Head of Africa & Asia Business Unit Maximo Ibarra ...... 44 Head of the Italy Business Unit

(1) The registered business address of each of the individuals is VimpelCom Ltd., Claude Debussylaan 88, 1082 MD Amsterdam, The Netherlands. (2) Altimo nominee. (3) Telenor nominee. (4) Management board member. (5) Jo Lunder took the position Group Chief Executive Officer effective July 1, 2011, following the resignation of the prior Group Chief Executive Officer Alexander Izosimov effective after June 30, 2011.

164 VimpelCom Ltd. Supervisory Board For biographical information on Messrs. Baranov and Johnsen, please see “—Directors and Senior Management” above. Alexey M. Reznikovich has been Chairman of the Supervisory Board since December 2012 and a director of VimpelCom Ltd. since April 2010. He also serves as chairman of VimpelCom Ltd.’s compensation committee. Mr. Reznikovich was a member of the board of directors of the Guarantor from May 2002 until April 2010. Mr. Reznikovich has been Chief Executive Officer of LLC Altimo since April 2005. He has been a director of Alfa Group, Altimo Holdings’s parent company, since 2002, with overall responsibility for business development and management supervision of the Group’s assets. Mr. Reznikovich was a director of Golden Telecom from May 2007 until February 2008. In 2001, Mr. Reznikovich founded EMAX, a new business venture to develop Internet centers in Russia and has been a director of EMAX and of CAFEMAX, an Internet cafe chain, since February 2001. From December 1998 to 2000, Mr. Reznikovich was a partner at McKinsey & Co. Prior to his time at McKinsey, Mr. Reznikovich worked at Procter & Gamble in Italy and Transworld in the United States. He graduated from the Economics Faculty of the Moscow State University and received a M.B.A. from Georgetown University in the United States and INSEAD in France. Mikhail M. Fridman has been a director of VimpelCom Ltd. since April 2010. Mr. Fridman was a member of the board of directors of the Guarantor from July 2001 until April 2010. He currently serves as a member of the board of directors of OJSC Alfa-Bank, as well as Chairman of the supervisory board of Alfa Group Consortium. Mr. Fridman also serves as a member of the Supervisory Board of X5 RETAIL GROUP N.V., and has served as Chairman of the board of directors of TNK—BP Limited since 2003. He is a member of the Public Chamber of the Russian Federation. Since 1989, Mr. Fridman has taken an active role in managing the Alfa Group, which includes Alfa Finance Holdings S.A. (Alfa Bank, Alfa Capital Holdings Limited and Medpoint Limited), Altimo and X5 RETAIL GROUP N.V. In 1988, Mr. Fridman co-founded the Alfa-Foto cooperative. From 1986 until 1988, Mr. Fridman served as an engineer at Elektrostal Metallurgical Works. Mr. Fridman graduated with honors from the Faculty of Non-Ferrous Metals of the Moscow Institute of Steel and Alloys in 1986. Dr. Hans-Peter Kohlhammer has been a director of VimpelCom Ltd. since April 2010. He also serves as chairman of VimpelCom Ltd.’s audit committee and is a member of its compensation committee. Dr. Kohlhammer was a member of the Guarantor’s board of directors from June 2008 until April 2010. He was the founder and has been the Chief Executive Officer of KPC Kohlhammer Consulting, Munich, since August 2006. From 2003 to 2006, he was the Chief Executive Officer and Director General of the telecommunications company SITA SC, Geneva. From 2001 to 2003, he was the President and Chief Executive Officer of Grundig AG, Nuremberg. In 2000 and 2001, he was a self-employed consultant and from 1998 to 2000, he held various management positions in Esprit Telecom plc in London. Dr. Kohlhammer has a PhD in Mathematics from Bonn University. Leonid Novoselskiy has been a director of VimpelCom Ltd. since April 2010. He also serves as a member of VimpelCom Ltd.’s finance committee and chairman of its nominating and corporate governance committee. Mr. Novoselsky was a member of the Guarantor’s board of directors from June 2006 until April 2010. He is a co-founder and the current President of the Gradient Group. Since September 2008, Mr. Novoselskiy has been a member of the board of directors of OJSC “Protec,” one of the largest pharmaceutical distributors in Russia. Mr. Novoselsky graduated from the Moscow Institute of Steel and Alloys in 1993 with a degree in Engineering and in 1999, received a M.B.A. from the Wharton School of the University of Pennsylvania. Ole Bjørn Sjulstad has been a director of VimpelCom Ltd. since April 2010. He also serves as a member of VimpelCom Ltd.’s finance committee, audit committee, nominating and corporate governance committee and chairman of VimpelCom Ltd.’s business review committee. Mr. Sjulstad was a member of the Guarantor’s board of directors from June 2008 until April 2010. Mr. Sjulstad has been the Head of Telenor’s representative office in Russia since 2009. Mr. Sjulstad joined the Telenor Group in 2000 as a Vice President. He then served as Managing Director of Telenor Asia Pte Ltd in Singapore from 2002 until 2004 when he relocated to Norway. He continued focusing on emerging markets in Asia as Senior Vice President and Director of Corporate Development, Asia region of Telenor ASA. In March 2007, he joined Telenor’s Central & Eastern European regional unit. In March 2009, Mr. Sjulstad was appointed Head of Telenor, Russia. Mr. Sjulstad also served on the board of directors of Grameenphone Limited in Bangladesh from 2002 until 2008. Mr. Sjulstad has degrees in Mechanical Engineering and Business Administration from the Kongsberg International Institute (Ingeniørhøgskole), which he received in 1983. Mr. Sjulstad also completed the Program for Executive Development at IMD, Lausanne in October 2008.

165 Jon Fredrik Baksaas has been a director of VimpelCom Ltd. since November 30, 2011, and before his current term, he served as a director of VimpelCom Ltd. from April 2010 to June 2011. Mr. Baksaas has served as the President and Chief Executive Officer of Telenor ASA since June 2002, chairman of the board of directors of Telenor Mobile Holdings AS since 2002, chairman of the board of directors of Telenor Business Partner Invest since 2001, a member of the board of Svenska Handelsbanken AB since 2003 and a member of the board of GSM Association since January 2009. Before joining Telenor in 1989, Mr. Baksaas served as the Chief Financial Officer of Aker AS, Chief Financial Officer of Stolt-Nielsen Seaway and held finance-related positions in Det Norske Veritas in Norway and Japan. Mr. Baksaas holds a Masters of Science degree from the Norwegian School of Economics and Business Administration in Bergen, Norway, and additional qualifications from the International Institute for Management Development in Lausanne, Switzerland. Sergei V. Tesliuk has been director of VimpelCom Ltd. since December 2012 and of VimpelCom Amsterdam B.V. since December 2011. He also serves as a member of VimpelCom Ltd.’s audit committee and business review committee. He served as a director of the Issuer from December 2011 to January 2013. He has served as Vice President of Altimo’s asset management department since October 2011. From 2009 to 2011, Mr. Tesliuk served as an independent advisor to various Russian financial and industrial groups on issues related to strategy, investments and reorganization. From 2002 to 2009, Mr. Tesliuk worked at Princeton Partners Group as a consultant, engagement manager and partner. At Princeton Partners Group he participated in more than 30 projects in Russian, the CIS and Western Europe in the areas of strategy development, corporate governance and restructuring. Mr. Tesliuk graduated from Belarus State University in July 2000 with degrees in Management and Economics. He has a Master’s degree in Economics from Economics Education and Research Consortium in the Belarus State University.

VimpelCom Ltd. Management Board For biographical information on Messrs. van Dalen, McGhie, Lunder, Thygesen and Kudryashov, see “— Directors and Senior Management” above. Mikhail Gerchuk has served as Group Chief Commercial and Strategy Officer since July 2012. From October 2011 to July 2012 he served as the Group Chief Commercial Officer. He has also served as Vice President and Chief Commercial Officer of MTS since December 2008. Mr. Gerchuk joined MTS in August 2007 as the Group Marketing Director. At MTS, he also served on the boards of directors of Comstar, MGTS, MTS Ukraine and several other MTS subsidiaries. Prior to joining MTS, Mr. Gerchuk was Chief Commercial Officer at Vodafone Malta from 2006 to 2007. He held senior marketing positions at Vodafone Group, UK between 2002 and 2006, including Head of Voice Propositions between 2004 and 2006 and Senior Global Marketing Manager between 2002 and 2004. Mr. Gerchuk also worked as an Associate at Booz Allen Hamilton in London from 1999 to 2002 and, before that, as Category Marketing Manager at PepsiCo and Brand Manager at Mars, Inc. Mr. Gerchuk holds an M.B.A. from INSEAD and an M.A. in Economic Geography and English from the Moscow State University. Rob Conway has served as the Chief International Affairs Officer of VimpelCom Ltd. since September 2011, responsible for the regulatory, antitrust, government relations and communications functions of the VimpelCom Ltd. Group. From 1999 to September 2011, Mr. Conway was the Chief Executive Officer of GSMA, the mobile industry trade body based in London. He graduated with a B.A. from Dickinson College in 1974 and with a J.D. from Catholic University of America in 1977. Romano Righetti has served as VimpelCom Ltd. Group Chief Regulatory Officer since January 2012. Mr. Righetti has also served as Deputy Chief Operating Officer since October 2010 and Director of the Regulatory Affairs and Institutional Relations department since January 2006 of Wind Telecomunicazioni S.p.A. From August 1999 until 2005, Mr. Righetti served as Executive Vice President—International Regulatory/Antitrust Affairs and International Organisms of Telecom Italia S.p.A. From 1995 until August 1999, Mr. Righetti, as General Manager of the Ministry of Communications and, during the first half of 1999, as Head of the Regulations department at AGCOM, the Italian telecommunications regulator, directly coordinating the opening up to competition of the telecommunications industry in Italy. From 1990 until 1994, Mr. Righetti was a partner in an Italian consultancy firm and Professor of Business Administration at the University of Rome. From 1986 until 1989, he served as supervisor in the international audit company, Touche Ross. Mr. Righetti graduated from L.U.I.S.S. (University in Rome) in Economics and Commerce in 1984 and received his ITP Certificate from L. Bocconi (Milan) in 1989. Mr. Righetti is a member of AIAF (Italian Financial Analysts Association) and is a Qualified Chartered Accountant and Qualified Accountant Auditor. Philip Tohmé has served as Group Chief Technology Officer of VimpelCom Ltd. since May 2011. Since January 2010, Mr. Tohmé has served as Chief Technology Officer of OTH. Mr. Tohmé joined Wind Italy and served as Network Director and later as Chief Technology Officer from 2006 until 2009. Mr. Tohmé served as

166 Chief Operating Officer of Orascom Telecom Algeria from 2003 to 2004 and Technical Director of MobiNil, OTH’s subsidiary in Egypt, from 2000 to 2002. Prior to joining the OTH group, Mr. Tohmé worked in several technical positions as part of the launch of mobile operators, MobilRom (Romania) from 1977 to 1999 and France Telecom Mobile Lebanon during 1995 and 1996. Mr. Tohmé earned a Bachelor’s degree in Electrical Engineering from the American University of Beirut in 1989 and a Master’s degree in Electrical Engineering from Virginia Polytechnic Institute and State University in 1991. Anja Uitdehaag has served as Group Director Human Resources of VimpelCom Ltd. since January 2011. Before joining VimpelCom Ltd., Ms. Uitdehaag served as Manager/Director Human Resources for Philip Morris International in Kazakhstan, Romania, Switzerland, the Caucasus, Ukraine, Indonesia, South Korea and the Netherlands from 1995 to 2010. Ms. Uitdehaag received a degree in Human Resources Management from Rotterdam University. Igor Lytovchenko has headed VimpelCom Ltd.’s Ukraine business unit since June 2010. Mr. Lytovchenko was a co-founder and Chief Executive Officer of Kyivstar from November 1997 until June 2010. From 1992 to 1996, he was a director of Private Company LOTOS, Kyiv in Ukraine. Mr. Lytovchenko holds a Master’s degree in History from Kyiv National Taras Shevchenko University of Kyiv, Ukraine and a Ph.D in Economics from the A.S. Popov Odessa National Academy of Telecommunications Odessa, Ukraine. He is a corresponding member of the Academy of Communications of Ukraine, member of the International Academy of Communications and a corresponding member of the International Informatization Academy. He is a member of the Council of Entrepreneurs of Ukraine within the Cabinet of Ministers of Ukraine. Ahmed Abou Doma has served as Group Executive Vice President and Head of the Africa & Asia Business Unit of VimpelCom Ltd. since May 2011. He has also served as Chief Executive Officer of OTH since May 2011. Previously, Mr. Abou Doma served as the Chief Executive Officer of Banglalink, a subsidiary of OTH in Bangladesh, from January 2009 to May 2011. Mr. Abou Doma was Marketing Director of Mobinil, an Egyptian subsidiary of OTH, from October 2003 to December 2008. He joined Mobinil in 1998 as a Market Development Manager and from 2000 until 2003, Mr. Abou Doma was Senior Market Manager for Planning and Development and Senior Manager for Market Strategy and Analysis. Before joining Mobinil, Mr. Abou Doma worked for IBM and Datum IDS. Mr. Abou Doma earned a B.S. in Electronics and Communication Engineering from Cairo University in 1992 and completed the International Executive Program at INSEAD Business School in Singapore and France. Dmitry G. Kromskiy has served as Head of the CIS business unit of VimpelCom Ltd. since June 2010. He served as Vice President, CIS Business Development of the Guarantor from December 2009 until June 2010. Since January 2006, he has been General Director of KaR-Tel. Starting in June 2007, he also served as Executive Director of the Guarantor responsible for the development of other acquired companies in the CIS. Mr. Kromskiy is currently the Chairman of the Supervisory Boards of Mobitel LLC and Unitel LLC (since 2010) and Sky Mobile LLC (since 2011). He is also a member of the Supervisory Board of KaR-Tel, LLP since 2010 and TNS-Plus LLP as well as a member of the Board of Directors of Buzton LLC (since 2010). He came to the Guarantor in 2002 as the Central region director. Mr. Kromskiy has also headed several mobile operators in various regions of Russia and, from January 2001 until December 2002, he held the position of Vice President of Operations in the Moscow office of the American company MCT Corp. From July 1994 until May 1995, he worked in the Moscow office of Samsung Electronics; from May until October 1995, he worked at Telmos company and from October 1995 until December 2000, he worked as Regional Director in Vostok Mobile B.V. Holding. Mr. Kromskiy graduated with a Master’s degree in Automatics & Electronics from the Moscow Institute of Electronic Technology. Maximo Ibarra has served as Head of the Italy Business Unit since May 2012. Mr. Ibarra has served as Chief Executive Officer and General Director of Wind Telecommunicazioni—Italy since May 2012 and prior to that served as its Consumer Director. He also served as Marketing Director of the mobile business unit of Wind and as Vice President of Marketing and Strategy of the Benetton Group. Mr. Ibarra is a member of the Management Board of VimpelCom Ltd.. Mr. Ibarra earned a degree in Political Science and Economics from the University of Rome-Italy “La Spienza” in 1991.

167 MAJOR SHAREHOLDERS

The Issuer is a wholly owned subsidiary of VimpelCom Ltd., which owns through its subsidiary VimpelCom Amsterdam B.V. 100.0% of our issued and outstanding shares of capital stock. The following table sets forth information with respect to the beneficial ownership of VimpelCom Ltd. as of January 15, 2013 by each person who is known by us to beneficially own 5.0% or more of the common or preferred shares of VimpelCom Ltd. As of January 15, 2013, VimpelCom Ltd. had 1,628,199,135 issued and outstanding common shares and 433,532,000 issued and outstanding convertible preferred shares. None of our major shareholders has different voting rights.

Number of Percent of Number of Percent of VimpelCom Ltd. VimpelCom Ltd. VimpelCom Ltd. VimpelCom Ltd. Shareholder Common Shares Common Shares Preferred Shares Voting Shares Telenor East Holding II AS(1) ...... 580,578,840 35.7% 305,000,000 42.95% Altimo Coöperatief U.A.(2) ...... 858,040,563 52.6987% 128,532,000 47.85%

(1) As reported on Schedule 13D, Amendment No. 24, filed on October 18, 2012, by Telenor East Holdings II AS (“Telenor East”) with the SEC, Telenor East is the direct beneficial owner of, and Telenor Mobile Holdings AS and Telenor ASA may be deemed to be the beneficial owners of, 580,578,840 common shares and 305,000,000 convertible preferred shares. The common shares held by Telenor East represent approximately 35.7% of VimpelCom Ltd.’s outstanding common shares. The convertible preferred shares held by Telenor East represent approximately 70.35% of VimpelCom Ltd.’s outstanding convertible preferred shares, and together with the common shares held by Telenor East, represent approximately 43.0% of VimpelCom Ltd.’s outstanding voting shares. If Altimo Coöperatief’s 128,532,000 convertible preferred shares are converted to 128,532,000 common shares as described below, on April 16, 2013, following the conversion of such shares and assuming no other share transfers by Telenor East, Telenor East’s interest in common shares will be diluted to approximately 33.0% and its voting interest will remain at approximately 43.0%. (2) As reported on Schedule 13D, Amendment No. 10, filed on December 26, 2012, by Altimo Coöperatief, part of the Alfa Group Consortium, with the SEC, Altimo Coöperatief is the direct beneficial owner of, and Altimo Holdings, CTF Holdings Limited and Crown Finance Foundation may be deemed to be the beneficial owners of, 858,040,563 VimpelCom Ltd. common shares and 128,532,000 VimpelCom Ltd. convertible preferred shares. The common shares held by Altimo Coöperatief represent approximately 52.7% of VimpelCom Ltd.’s outstanding common shares. The convertible preferred shares held by Altimo Coöperatief represent approximately 29.65% of VimpelCom Ltd.’s outstanding convertible preferred shares and together with the common shares held by Altimo Coöperatief, approximately 47.9% of VimpelCom Ltd.’s outstanding voting shares. If Altimo Coöperatief’s 128,532,000 convertible preferred shares are converted to 128,532,000 common shares as described below, on April 16, 2013, following the conversion of such shares and assuming no other share transfers by Altimo Coöperatief, Altimo Coöperatief’s interest in common shares will increase to approximately 56.2% and its voting interest will remain at approximately 47.9%.

Please see the sections of this prospectus entitled “Risk Factors—Risks Related to Our Business—A disposition by VimpelCom Ltd.’s strategic shareholders of their respective stakes in VimpelCom Ltd. or a change in control of VimpelCom Ltd. could harm our business” and “Risk Factors—Risks Related to Our Business—Litigation involving Telenor and Altimo, two of VimpelCom Ltd.’s largest shareholders, could lead to deterioration in their relationship and could have a material adverse effect on our business, financial condition, results of operations.”

As reported on Schedule 13D, Amendment No. 53, filed on April 23, 2010, by Telenor ASA with the SEC, prior to April 21, 2010, Telenor ASA beneficially owned 33.6% of OJSC VimpelCom’s outstanding common shares and 36.0% of OJSC VimpelCom’s outstanding voting shares. According to Amendment No. 53, on April 21, 2010, Telenor East Invest AS completed the exchange of all of its OJSC VimpelCom shares (comprising 17,254,579 OJSC VimpelCom common shares, of which 1,916,725 shares were represented by OJSC VimpelCom ADSs) for 345,091,580 VimpelCom Ltd. common ADSs (each representing one VimpelCom Ltd. common share) pursuant to the terms and conditions of the VimpelCom Ltd. Exchange Offers that were part of the VimpelCom Ltd. Transaction, as described in the section of this prospectus entitled “Business—History and Development.” As of that date, Telenor ASA ceased to beneficially own any common or preferred shares of OJSC VimpelCom. In addition, as reported on Schedule 13D, filed on May 4, 2010, by Telenor ASA with the SEC, on April 21, 2010, immediately upon completion of the VimpelCom Ltd. Exchange Offers, in exchange for shares in Kyivstar held by certain wholly owned subsidiaries of Telenor ASA and their affiliates, 170,487,260 common shares of VimpelCom Ltd. were transferred to Telenor Mobile Communications AS, a subsidiary of Telenor ASA. As a result, as reported on Schedule 13D, Amendment No. 1, filed on June 11, 2010, by Telenor ASA with the SEC, Telenor ASA may have been deemed at the time to be the beneficial owner of 39.6% of VimpelCom Ltd.’s outstanding common shares and 36.0% of VimpelCom Ltd.’s outstanding voting shares.

As reported on Schedule 13D, Amendment No. 44, filed on April 28, 2010, by Eco Telecom Limited with the SEC, prior to April 21, 2010, Eco Telecom Limited held 37.0% and 100.0% of OJSC VimpelCom’s outstanding common stock and preferred stock, respectively, and 44.0% of its outstanding voting shares, and

168 Altimo Holdings, CTF Holdings Limited and Crown Finance Foundation (all part of the Alfa Group Consortium) were deemed to be the beneficial owners of the OJSC VimpelCom’s common and preferred shares held for the account of Eco Telecom Limited. According to Amendment No. 44, on April 21, 2010, Eco Telecom Limited completed the exchange of all of its OJSC VimpelCom shares (comprising 18,964,799 OJSC VimpelCom common shares and 6,426,600 OJSC VimpelCom convertible preferred shares) in exchange for 379,295,980 VimpelCom Ltd. common ADSs (each representing one VimpelCom Ltd. common share) and 128,532,000 VimpelCom Ltd. preferred ADSs (each representing one VimpelCom Ltd. convertible preferred share) pursuant to the terms and conditions of the VimpelCom Ltd. Exchange Offers that were part of the VimpelCom Ltd. Transaction. In addition, as reported on Schedule 13D, filed on April 30, 2010, by Eco Telecom Limited with the SEC, on April 21, 2010, immediately upon completion of the VimpelCom Ltd. Exchange Offers Altimo Coöperatief received 131,152,700 common shares of VimpelCom Ltd. in exchange for shares in Kyivstar held by other members of the Alfa Group Consortium. As a result of these transfers and other transfers within the Alfa Group Consortium, as reported on Schedule 13D, Amendment No. 1, filed on June 1, 2010, by Eco Telecom Limited with the SEC, Eco Telecom Limited no longer has any beneficial ownership in VimpelCom Ltd. securities, and Altimo Coöperatief was at that time the direct beneficial owner of 39.2% of VimpelCom Ltd.’s outstanding common shares and 100.0% of VimpelCom Ltd.’s outstanding convertible preferred shares, together representing 44.7% of VimpelCom Ltd.’s outstanding voting shares. As part of the Wind Telecom Transaction, as further described in the section of this prospectus entitled “Business—History and Development,” VimpelCom Ltd.’s shareholders approved the issuance by VimpelCom Ltd. of up to 325,639,827 common shares of VimpelCom Ltd. and of 305,000,000 convertible preferred shares of VimpelCom Ltd. and the related increase in the authorized share capital of VimpelCom Ltd. The new shares have the rights and are subject to the conditions set out in the VimpelCom Ltd. bye-laws and at the time of their issuance represented a 20.0% economic interest and a 30.6% voting interest in the enlarged VimpelCom Ltd. Group on a fully diluted basis. As contemplated under the Wind Telecom Transaction and as reported on Schedule 13D, filed on April 22, 2011, by Weather II with the SEC, Weather II acquired 305,000,000 of VimpelCom Ltd.’s convertible preferred shares and 325,639,827 of VimpelCom Ltd.’s common shares, 3,127,996 of which were immediately transferred to Dosantos Investments S.à r.l. and 16,708,435 of which were immediately transferred to TNT Holding S.à r.l. As a result, immediately following the transfers, Telenor East, Altimo Coöperatief and Weather II held approximately 31.7%, 31.4% and 18.8% of VimpelCom Ltd.’s outstanding common shares, respectively, and 25.0%, 31.0% and 29.6% of VimpelCom Ltd.’s outstanding voting shares, respectively. On June 6, 2011, Altimo announced that it had entered into an agreement to sell 123,600,000 convertible preferred shares in VimpelCom Ltd. On June 10, 2011, VimpelCom Ltd. received a notice from Altimo that it had completed the sale of 123,600,000 convertible preferred shares, which reduced its voting rights in VimpelCom Ltd. to below 25.0%, and as a result the VimpelCom Ltd. Shareholders Agreement terminated six months following the date of such notice. For more information, please see the sections of this prospectus entitled “Risk Factors—Risks Related to Our Business—A disposition by VimpelCom Ltd.’s strategic shareholders of their respective stakes in VimpelCom Ltd. or a change in control of VimpelCom Ltd. could harm our business” and “Risk Factors—Risks Related to Our Business—Litigation involving Telenor and Altimo, two of VimpelCom Ltd.’s largest shareholders, could lead to deterioration in their relationship and could have a material adverse effect on our business, financial condition, results of operations and prospects.” As reported on Schedule 13D filed on June 13, 2011, by Forrielite Limited, it acquired 123,600,000 convertible preferred shares of VimpelCom Ltd. According to Forrielite’s 13D, the acquisition was undertaken for investment purposes and Oleg Kiselev, through his control of Forrielite, may have been deemed to be the beneficial owner of the 123,600,000 convertible preferred shares (representing approximately 6.0% of the voting shares of VimpelCom Ltd.) acquired by Forrielite. As reported on Schedule 13D, Amendment No.1, filed on January 4, 2012, by Forrielite with the SEC, on December 30, 2011, Forrielite sold and transferred 123,600,000 VimpelCom Ltd. convertible preferred shares to Bertofan Investments Limited (representing approximately 6.0% of VimpelCom Ltd.’s voting shares). As reported on Schedule 13D, Amendment No. 17, filed on February 15, 2012, by Telenor East with the SEC, on February 15, 2012 Weather II sold and transferred to Telenor East 234,000,000 of the convertible preferred shares that Weather II received in connection with the Wind Telecom Transaction, or approximately 53.98% of VimpelCom Ltd.’s outstanding convertible preferred shares. As a result, immediately following the transfer, Telenor East’s voting interest increased from 25.0% to approximately 36.4% of VimpelCom Ltd.’s outstanding voting shares, and Weather II’s voting interest decreased from approximately 29.6% to approximately 18.3% of VimpelCom Ltd.’s outstanding voting shares. On February 15, 2012, Telenor and Weather II also agreed to a put option with respect to the VimpelCom Ltd. convertible preferred shares retained by Weather II (the “Weather Put Option”) and two call options with respect to the same shares retained by

169 Weather II and any future convertible preferred shares of VimpelCom Ltd. that are issued to or acquired by Weather II or any of its affiliates or related parties. As reported on Schedule 13D, Amendment No. 18, filed on April 4, 2012, by Telenor East, on April 4, 2012, Telenor East acquired 65,000,000 VimpelCom Ltd. ADSs from JPMorgan. The acquisition was made in connection with the termination of a total return swap arrangement between Telenor and JPMorgan which related to the shares that Telenor East acquired. As a result, immediately following the acquisition, Telenor East’s interest in common shares increased from approximately 31.7% to approximately 35.7% of VimpelCom Ltd.’s outstanding common shares, and Telenor East’s voting interest increased from approximately 36.4% to approximately 39.5% of VimpelCom Ltd.’s outstanding voting shares. As reported on Schedule 13D, Amendment No. 22, filed on August 16, 2012, by Telenor East, on August 16, 2012, Telenor East announced that on August 15, 2012, Weather II exercised its rights under the Weather Put Options to sell 71,000,000 VimpelCom Ltd. convertible preferred shares to Telenor East. As reported on Schedule 13D, Amendment No. 23, filed on October 1, 2012, by Telenor East, Telenor East announced that it took delivery of such shares on September 28, 2012. VimpelCom Ltd. registered the share transfer following the cancellation of FAS injunctions, which prohibited such transfer. For a description of the FAS injunctions, please see the section of this prospectus entitled “Business—Legal Proceedings.” As a result, Telenor East’s interest in preferred shares increased from approximately 53.98% to approximately 70.35% of VimpelCom Ltd.’s outstanding convertible preferred shares, and Telenor East’s voting interest increased from approximately 39.5% to approximately 42.95% of VimpelCom Ltd.’s outstanding voting shares. As reported on Schedule 13D, Amendment No. 6, filed on August 15, 2012, by Altimo Coöperatief, on August 15, 2012, Altimo Coöperatief purchased (i) 305,000,000 VimpelCom Ltd. common shares from Weather II, (ii) 12,000,000 VimpelCom Ltd. common shares from Natixis and (iii) 3,265,652 VimpelCom Ltd. common shares from a number of other investors. As a result of these transactions, Altimo Coöperatief’s interest in common shares increased from approximately 31.4% to approximately 51.0274% of VimpelCom Ltd.’s outstanding common shares, and Altimo Coöperatief’s voting interest increased from approximately 24.9981% to approximately 40.5368% of VimpelCom Ltd.’s outstanding voting shares. As reported on Schedule 13D, Amendment No. 7, filed on October 5, 2012, by Altimo Coöperatief, between August 17, 2012 and October 4, 2012, Altimo Coöperatief purchased 27,213,111 VimpelCom Ltd. common shares of which (i) 23,449,768 were purchased on the open market, (ii) 1,614,474 were purchased on September 4, 2012, from Natixis, (iii) 288,042 were purchased on September 4, 2012, from Thursday Holding and (iv) 1,860,827 were purchased on October 2, 2012, from East Capital. As a result of these transactions, Altimo Coöperatief’s interest in common shares increased from approximately 51.0274% to approximately 52.6987% of VimpelCom Ltd.’s outstanding common shares, and Altimo Coöperatief’s voting interest increased from approximately 40.5368% to approximately 41.8567% of VimpelCom Ltd.’s outstanding voting shares. As reported on Schedule 13D, Amendment No. 8, filed on October 29, 2012, by Altimo Coöperatief, on October 26, 2012, Altimo Coöperatief agreed to purchase 123,600,000 VimpelCom Ltd. convertible preferred shares from Bertofan Investments Limited within 60 days. As reported on Schedule 13D, Amendment No. 9, filed on December 20, 2012, by Altimo Coöperatief, on December 20, 2012 Altimo Coöperatief acquired such shares from Bertofan pursuant to the agreement between the parties. As a result of this transaction, Altimo Coöperatief’s interest in convertible preferred shares increased from approximately 1.1376% to approximately 29.65% of VimpelCom Ltd.’s outstanding convertible preferred shares, and Altimo Coöperatief’s voting interest increased from approximately 41.8567% to approximately 47.85%. As described on Schedule 13D, Amendment No. 10, filed on December 26, 2012 by Altimo Coöperatief, on December 21, 2012, Altimo Coöperatief issued notice to VimpelCom Ltd. pursuant to Section 4.3(d) of its bye-laws, stating its present intention to convert 128,532,000 convertible preferred shares to common shares at the ratio of one convertible preferred share to one common share and setting forth a conversion date of April 16, 2013. As further described in the Schedule 13D, Amendment No. 10, on April 16, 2013, subject to payment by Altimo Coöperatief to VimpelCom Ltd. of a conversion premium of US$1,392,644,220 (or US$10.835 per share), Altimo Coöperatief’s 128,532,000 convertible preferred shares will convert into 128,532,000 common shares pursuant to Section 4.3(d) of VimpelCom Ltd.’s bye-laws. Based on the holdings of VimpelCom Ltd.’s common shares and information from The Bank of New York, we estimate that as of January 15, 2013, 254,579,732 common shares representing approximately 15.6% of VimpelCom Ltd.’s common shares were held by The Bank of New York, as depositary on behalf of holders of VimpelCom Ltd. ADSs.

170 CERTAIN TRANSACTIONS

Agreements Related to the VimpelCom Ltd. Transaction Squeeze Out Loan Agreement On May 25, 2010, following the completion of the VimpelCom Ltd. Exchange Offers, VimpelCom Ltd. commenced a squeeze out procedure to acquire the remaining shares of OJSC VimpelCom (including shares represented by ADSs) that it did not acquire in the VimpelCom Ltd. Exchange Offers. To finance the payment of the squeeze out purchase price, on July 9, 2010, VimpelCom Ltd. signed a one year bridge facility agreement with Barclays, BNP Paribas, Citi and The Royal Bank of Scotland plc in the amount of US$470.0 million (the “Squeeze Out Loan Agreement”). OJSC VimpelCom guaranteed all of VimpelCom Ltd.’s obligations under the Squeeze Out Loan Agreement pursuant to a guarantee dated August 23, 2010. In addition, Kyivstar issued a suretyship in favor of the lenders under the Squeeze Out Loan Agreement. On October 8, 2010, VimpelCom Ltd. prepaid the full outstanding balance, including accrued interest, under the Squeeze Out Loan Agreement. The prepayment was funded in part by a sixty year loan from VimpelCom Finance B.V., a wholly owned subsidiary of OJSC VimpelCom, in the amount of US$467.5 million.

CTF Holdings Guarantee CTF Holdings Limited, an affiliate of the Alfa Group and a former affiliate of Storm LLC (a former Kyivstar shareholder ), entered into a guarantee dated October 4, 2009 in favor of VimpelCom Ltd., Kyivstar, Storm and us, pursuant to which CTF Holdings Limited guaranteed Altimo’s performance of its indemnification obligations in respect of Storm under the Share Exchange Agreement in relation to the VimpelCom Ltd. Transaction between certain members of the Alfa Group and certain members of the Telenor Group, dated October 4, 2009 (the “VimpelCom Ltd. SEA”). CTF Holdings Limited’s maximum aggregate liability under the guarantee is limited to US$500.0 million. The agreement terminates upon the earlier of agreement by all parties in writing or the expiration of the fifth anniversary of the closing of the Kyivstar share exchange that followed the VimpelCom Ltd. Transaction (as may be extended in accordance with the terms of the VimpelCom Ltd. SEA).

Original Promissory Note and Outstanding Promissory Note Through a series of intercompany transactions within the VimpelCom Ltd. Group, in September 2010, the Issuer issued the Original Promissory Note to VimpelCom Ltd. in the principal amount of US$16.7 billion. VimpelCom Ltd. subsequently transferred the Original Promissory Note to VimpelCom Amsterdam B.V., which directly owns 100% of the Issuer. In connection with an offering of notes by the Issuer completed on June 29, 2011, the Issuer repaid the outstanding amount under the Original Promissory Note by issuing to VimpelCom Amsterdam B.V. the Outstanding Promissory Note on June 29, 2011, in the principal amount of US$16.1 billion, representing the remaining outstanding principal plus unpaid interest on the Original Promissory Note. The Outstanding Promissory Note was further amended on February 13, 2013 to extend its maturity period. Although repayment of principal is permitted at any time, the debt under the Outstanding Promissory Note, as amended, matures on March 13, 2023. The principal amount of the Outstanding Promissory Note was US$12.0 billion as of December 31, 2012. For more information about the Original Promissory Note and the Outstanding Promissory Note, see “Risk Factors—Risks Related to Our Business—The Issuer’s substantial Outstanding Promissory Note held by VimpelCom Amsterdam B.V. will rank pari passu with the Notes until the Issuer’s insolvency, when it becomes subordinated to the Notes, but until the Issuer’s insolvency it may be prepaid in whole or in part, potentially diverting funds from payment of the Notes to payment of the Outstanding Promissory Note or reducing the assets of the Issuer available upon insolvency for application to the Notes.”

Agreements Related to the Wind Telecom Transaction As part of the financing for the Wind Telecom Transaction, on April 12, 2011, OJSC VimpelCom signed a loan agreement with Sberbank of Russia for up to the Russian rouble equivalent of approximately US$2.5 billion (of which it borrowed US$2.0 billion in connection with the Wind Telecom Transaction). In addition, OJSC VimpelCom borrowed US$1.5 billion under a US$1.5 billion loan agreement with VIP Finance Ireland, funded with the proceeds of loan participation notes issued by but with limited recourse to VIP Finance Ireland on February 2, 2011. OJSC VimpelCom used a portion of the proceeds from these two financings to fund loans to VimpelCom Ltd., VimpelCom Amsterdam B.V. and VimpelCom Amsterdam Finance B.V. See “—Loans by OJSC VimpelCom to VimpelCom Ltd. Group” below for more information on the intercompany loans between OJSC VimpelCom and VimpelCom Ltd., VimpelCom Amsterdam B.V. and VimpelCom Amsterdam Finance B.V.

171 In addition, in order to finance the Wind Telecom Transaction, on March 31, 2011, VimpelCom Amsterdam B.V. signed the a bridge loan with a group of international banks (including Barclays Capital, BNP Paribas, Citibank, N.A., London Branch, ING Bank NV, HSBC Bank plc, The Royal Bank of Scotland plc and Citibank International plc) in a principal amount of up to US$2.5 billion due March 31, 2012 (referred to as the “Bridge Loan”). VimpelCom Amsterdam B.V.’s obligations under the Bridge Loan were guaranteed by OJSC VimpelCom. The Bridge Loan bore interest at an annual interest rate of LIBOR plus a margin ranging from 0.85% to 3.0% depending on how long it remained outstanding. On April 14, 2011, VimpelCom Amsterdam B.V. drew down on the Bridge Loan in the amount of US$2.2 billion. On June 30, 2011, VimpelCom Amsterdam B.V. repaid all outstanding amounts under the Bridge Loan.

Loans by OJSC VimpelCom to VimpelCom Ltd. Group OJSC VimpelCom is a lender under the following intercompany loan facilities with members of the VimpelCom Ltd. Group that are not members of the Issuer’s group: (i) On December 13, 2010, OJSC VimpelCom loaned US$37.0 million to VimpelCom Ltd. under a loan facility with an interest rate of LIBOR plus 0.25%. From April 29, 2011 to June 23, 2011, OJSC VimpelCom loaned an additional amount of US$63.0 million to VimpelCom Ltd. under this facility. From September 30, 2011 to December 31, 2011, VimpelCom Ltd. repaid part of this loan in the total principal amount of US$30.0 million. Effective January 1, 2012, the interest rate on this loan was changed to 6.5% per annum. From January 1, 2012 to April 25, 2012, OJSC VimpelCom granted additional loans in an aggregate amount of US$30.0 million to VimpelCom Ltd. under this facility. As of December 30, 2012, the principal amount of debt outstanding under this loan agreement was US$100.0 million. The loan matures on December 13, 2014. (ii) On March 21, 2011 and on April 29, 2011, OJSC VimpelCom granted two tranches in the total amount of US$500.0 million to VimpelCom Amsterdam B.V. under a US$500.0 million loan facility due March 21, 2013 with an interest rate of LIBOR plus 0.25%. On May 17, 2011, VimpelCom Amsterdam B.V. repaid US$250.0 million of this loan together with accrued interest. The facility was fully repaid on November 28, 2011. Effective January 1, 2012, the interest rate on this loan was changed to 6.5% per annum. On December 27, 2012, OJSC VimpelCom granted a new tranche in the amount of US$350.0 million under this loan facility. As of December 30, 2012, a principal amount of US$350.0 was outstanding under this loan facility. (iii) On May 13, 2011, OJSC VimpelCom loaned US$2.6 billion to VimpelCom Amsterdam Finance B.V. under a US$3.0 billion loan facility (comprising a US$2.7 billion term loan facility and a US$0.3 billion revolving loan facility, each due May 31, 2014 and with an interest rate of 8.72%). From May 20, 2011 to June 30, 2011, VimpelCom Amsterdam Finance B.V. repaid US$54.0 million of this loan, together with accrued interest. From August 31, 2011 to November 23, 2011, OJSC VimpelCom loaned VimpelCom Amsterdam Finance B.V. an additional US$204.0 million under this loan facility. On December 31, 2011, accrued interest on the loan in the amount of US$147.8 million was added to the loan principal. From January 1, 2012 to April 24, 2012, OJSC VimpelCom loaned an additional aggregate amount of US$240.0 million to VimpelCom Amsterdam Finance B.V. under this facility. On May 12, 2012, US$72.7 million was repaid. As of December 30, 2012, the principal amount of debt outstanding under this loan facility was US$3.1 billion.

Services Agreements with VimpelCom Ltd. Each of OJSC VimpelCom and Kyivstar have entered into a general services agreement with our parent company, VimpelCom Ltd., pursuant to which VimpelCom Ltd. will provide OJSC VimpelCom and Kyivstar with services, and OJSC VimpelCom will provide VimpelCom Ltd. with services, relating to the conduct of each of their respective businesses. Such services include, but are not limited to, general management, legal, regulatory, treasury and reporting services, procurement strategy and implementation of special projects.

Other Borrowings, Loans and Guarantees of Indebtedness On December 6, 2011, VimpelCom Amsterdam B.V. entered into a revolving credit facility in an amount up to US$225.0 million and EUR 204.5 million arranged by a group of international banks, with Citibank International plc as agent, bearing interest at a rate of LIBOR plus a margin of 2.50% (which margin is subject to adjustment in accordance with the terms of the facility agreement). OJSC VimpelCom and the Issuer have guaranteed VimpelCom Amsterdam B.V.’s payment obligations under this revolving credit facility. As of September 30, 2012, there were no amounts outstanding under the facility.

172 On June 8, 2012, our subsidiary Sotelco entered into a loan agreement with VimpelCom Amsterdam B.V. for a maximum principal amount of US$20.0 million. The loan bears interest at a rate of 4.0% per annum and matures on June 8, 2015. As of September 30, 2012, a principal amount of US$11.5 million was outstanding under this loan. On September 24, 2012, the Issuer issued a promissory note in the principal amount of US$201.4 million to VimpelCom Amsterdam Finance B.V., a subsidiary of VimpelCom Amsterdam B.V. that is not part of our group. The note bears interest at a rate of 8.78% and is payable on demand. On December 20, 2012, VimpelCom Amsterdam B.V. entered into a term loan facility in an amount up to US$500.0 million with China Development Bank Corporation as lender, bearing interest at a rate of LIBOR plus a margin of 3.30%, to finance equipment purchases by subsidiaries of VimpelCom Amsterdam B.V. from Huawei Technologies Company Limited and its affiliates. OJSC VimpelCom has guaranteed VimpelCom Amsterdam B.V.’s payment obligations under this facility.

Certain Agreements with Alfa Group and Telenor Registration Rights Agreement A member of the Alfa Group, Telenor and OJSC VimpelCom entered into a registration rights agreement on May 30, 2001, which provided Alfa Group and Telenor with demand and piggyback registration rights with respect to OJSC VimpelCom’s ADSs and shares of OJSC VimpelCom’s common stock. Pursuant to the terms of the agreement, the rights and obligations of Alfa Group and Telenor, respectively, under the registration rights agreement, other than indemnification rights and obligations, terminated on December 22, 2010.

Kyivstar Shareholders Agreement On January 30, 2004, Telenor, Storm and Kyivstar entered into a shareholders’ agreement. The shareholders agreement contained, among other things, provisions relating to the election of Kyivstar’s board of directors, the conduct of the board of directors and general shareholders’ meetings, and “qualified majority provisions,” which specified the decisions of the board of directors requiring the votes of seven of the nine directors. The shareholders’ agreement also gave existing shareholders pre-emption rights, rights of first refusal, drag-along and tag-along rights and provided for restrictions on transfers by shareholders. In addition, the shareholders’ agreement restricted Kyivstar’s ability to enter into certain credit transactions and imposed non-compete restrictions on Kyivstar’s shareholders and their affiliates. The agreement was terminated as of December 22, 2010.

Agreements with Telenor and its Affiliates Telenor Services Agreements Since September 2005, OJSC VimpelCom has been a party to a general services agreement with Telenor, under which Telenor renders to OJSC VimpelCom or its affiliates services related to telecommunication operations, including management advisory services, training, technical assistance and network maintenance, industry information research and consulting, implementation support for special projects and other services as mutually agreed by Telenor and OJSC VimpelCom. OJSC VimpelCom pays Telenor an annual fee of US$0.5 million for the services. In addition, in the event that Telenor’s personnel participate in any long-term engagements (defined as engagements lasting longer than five days), OJSC VimpelCom must pay to Telenor an additional service fee equal to the U.S. dollar equivalent of 8,000 Norwegian kroner per person for each day of work performed on the engagement. In each of 2009 and 2010, OJSC VimpelCom paid Telenor US$0.6 million under this agreement. This agreement expired on December 1, 2010. On June 19, 2009, Kyivstar entered into an agreement with LLC Miratech Corporation, a Telenor affiliate, regarding the outsourcing of IT professionals to Kyivstar. Payment provisions under this agreement provide for monthly payments in accordance with performed works. This agreement is valid until June 30, 2015. On August 25, 2010, Kyivstar entered into an agreement with LLC Miratech Corporation for provision of various IT services to Kyivstar. The payment provisions under this agreement provide for monthly payments based on works performed, the agreement is valid until September 1, 2013. On October 19, 2009, Kyivstar and Telenor entered into a services agreement pursuant to which Telenor provides assistance to Kyivstar in connection with the preparation of reports and presentations on the following issues: analysis of current spectrum utilization and future requirements; review of spectrum reframing options and possibilities; analysis of potential competitors, competitor 3G bid strategies, 3G license valuation, 3G license

173 auction strategy and 3G equipment tender requirements; and preparation of Kyivstar’s 3G roll-out plan and capital and operating expenditures requirements. The agreement expired on January 5, 2010. Because the NCCIR suspended its plans to hold a tender to auction one 3G license, on January 28, 2010, Kyivstar and Telenor entered into a new services agreement pursuant to which Telenor will provide services to Kyivstar in connection with the preparation of the updated short-term 3G roll-out plan for 2010 and long-term 3G roll-out plan for 2010 to 2022, capital and operating expenditures requirements, analysis of possible competitors’ valuations and competitor 3G bid strategies and Kyivstar’s strategy for a future 3G auctions. The agreement expired on June 30, 2010. On January 28, 2010, Kyivstar and Telenor entered into a services agreement pursuant to which Telenor provided assistance and services to Kyivstar in connection with the preparation of surveys, reports and systemized information on Kyivstar’s business activities, financial condition and operations. The agreement expired on March 15, 2010.

Telenor Commission Agreements On July 8, 2009, Kyivstar and Telenor entered into a commission agreement pursuant to which Kyivstar agreed to compensate Telenor for expenses borne by Telenor in connection with its verification services agreement with Ernst & Young Audit Services LLC. Under this verification services agreement, Ernst & Young Audit Services LLC provided various services, including verifying the accuracy of Kyivstar’s conversion of its financial statements prepared under Ukrainian statutory standards into the IFRS and identifying potential errors in, and conducting assessments of, the revenues, taxes, property, plants and equipment, inventories and cash reported by Kyivstar to Telenor for consolidation purposes. This commission agreement terminated in accordance with its terms on October 1, 2009. On November, 10, 2009, Kyivstar and Telenor entered into a commission agreement pursuant to which Telenor performed certain actions in its own name, but at the instruction and expense of Kyivstar, including notifying the members of Kyivstar’s corporate governance bodies of the date and location of meetings and arranging and paying for travel and accommodation related to their participation in such meetings. The fee payable to Telenor under this commission agreement was 0.1% of the amount of its expenses incurred in connection with rendering services under this commission agreement. In addition, Kyivstar was required to reimburse Telenor for its expenses incurred in connection with this commission agreement. This commission agreement expired on December 31, 2010. On January 28, 2010, Kyivstar and Telenor entered into two commission agreements pursuant to which Kyivstar agreed to compensate Telenor for expenses borne by Telenor in connection with the services initially rendered to Kyivstar by PricewaterhouseCoopers (Norway) and PricewaterhouseCoopers (Ukraine), pursuant to the relevant services agreements with Telenor. PricewaterhouseCoopers (Norway) provided services related to an efficiency review of Kyivstar’s internal control department, as well as development and implementation of new internal control procedures for Kyivstar. PricewaterhouseCoopers (Ukraine) provided assistance to Kyivstar in connection with the improvement of existing internal control systems, budgeting methodology and financial closure processes. The commission agreements expired on April 30, 2010.

Interconnection Agreements with Telenor Affiliates Kyivstar has roaming agreements with the following mobile operators that are Telenor affiliates: Grameen Phone Limited (Bangladesh), Sonofon Denmark, PANNON GSM (Hungary), DiGi Telecommunications (Malaysia), ProMonte (Montenegro), Telenor Mobile AS, Telenor Pakistan (PAK) Ltd., Telenor Serbia, Telenor Sverige AB (Sweden) and DTAC (Thailand).

Djuice License Agreement Kyivstar licenses its “djuice” brand from Djuice AS, a wholly owned Telenor subsidiary, pursuant to a license agreement entered into between Kyivstar and Djuice AS. The license agreement, dated December 5, 2006, which was amended and restated on November 27, 2012, is effective for a period of five years from January 1, 2010 to December 31, 2015 and provides for automatic extension for another year unless either party terminates it in accordance with its terms. The agreement provides for an annual license fee of €200,000 payable to Djuice AS yearly on June 30th of the respective year. In 2010, 2011 and the first nine months of 2012, Kyivstar paid Djuice €150,000, €150,000 and €150,000, respectively. Upon the agreement’s termination, Kyivstar must discontinue its use of the “djuice” brand within six months of the termination date. The “djuice” brand trademark registration held by Djuice AS will, however, expire on March 11, 2013. Unless the trademark registration is extended, Kyivstar may have no legal right to use the “djuice” brand after March 11, 2013, and the license agreement may also be at risk of being invalidated due to expiration of the trademark registration. Kyivstar has informed Djuice that the trademark registration needs to be extended.

174 Agreements with Alfa Group and its Affiliates AT Consulting Limited Services Agreements On October 6, 2009, Kyivstar and AT Consulting Limited, an affiliate of Storm, entered into a services agreement pursuant to which AT Consulting Limited provides assistance to Kyivstar in connection with the preparation of reports and presentations on a number of matters including the following: detailed analysis of the mobile market and impact of macroeconomic crisis on market development, corporate and marketing analysis and strategies and risk assessment. The agreement terminated on January 5, 2010. On January 28, 2010, Kyivstar and AT Consulting Limited entered into a services agreement pursuant to which AT Consulting Limited provided services to Kyivstar in connection with the preparation of reports and presentations on the following issues: analysis of the mobile market during 2010, Kyivstar’s updated corporate strategy for 2010 to 2012, segment oriented strategies, fixed business strategy and development and determination and assessment of risks. The agreement terminated on June 30, 2010. On January 28, 2010, Kyivstar and AT Consulting Limited entered into a services agreement pursuant to which AT Consulting Limited provided services to Kyivstar related to the preparation of reports, surveys and systemized information on structure, business and operations. The agreement was terminated on March 15, 2010.

Service Obligation Agreement In July 2006, OJSC VimpelCom entered into a service obligation agreement with a member of the Alfa Group for the provision of services to OJSC VimpelCom related to telecommunications operations, including management advisory services, technical assistance and maintenance of network systems and equipment, industry information research and consulting, training of personnel, support of implementation of certain projects, assignment of qualified personnel and other services. The annual fee for the services is the equivalent of US$0.5 million (paid in Russian roubles at a fixed exchange rate of 31.0 Russian roubles per U.S. dollar). The agreement specifies the rights and obligations of the parties to any intellectual property developed in connection with the agreement. In addition, in the event that the service provider’s personnel participate in any long-term engagements (defined as engagements lasting longer than five days), OJSC VimpelCom must pay to the service provider an additional service fee equal to the U.S. dollar equivalent of 27,000 Russian roubles per person for each day of work performed on the engagement. In 2009 and 2010, OJSC VimpelCom paid Alfa Group US$1.8 million and US$2.8 million, respectively, under this agreement, which expired on December 1, 2010.

Alfa Bank We maintain some of our bank accounts at Alfa Bank, which is part of the Alfa Group. From time to time, we also place time deposits with Alfa Bank. As of September 30, 2012, OJSC VimpelCom had balances at Alfa Bank of US$16.2 million in current accounts. As of September 30, 2012, Kyivstar had balances at Alfa Bank of US$2.7 million in current accounts and US$13.3 million in its deposit accounts.

AlfaStrakhovaniye PLC Since February 2007, property and equipment and certain construction risks of OJSC VimpelCom and some of its subsidiaries have been covered by an insurance policy from AlfaStrakhovaniye PLC, an Alfa Group subsidiary. Approximately 60.0% of the coverage has been reinsured by AlfaStrakhovaniye with a third party. In February 2011, OJSC VimpelCom entered into an agreement with AlfaStrakhovaniye PLC for provision of travel insurance to its employees in the amount of up to RUB 13.1 million for the period from March 1, 2011 to February 28, 2013.

Agreements with Firma Kurier OJSC VimpelCom purchased bill delivery services from its associate Firma Kurier in the amount of US$2.1 million, US$3.8 million, US$3.8 million and US$2.4 million in 2009, 2010, 2011 and the first nine months of 2012, respectively.

Agreements with CSI Loyalty Partners Limited CSI Loyalty Partners, OJSC VimpelCom’s associate, provides subscriber loyalty programs to OJSC VimpelCom, and OJSC VimpelCom paid commissions to CSI Loyalty Partners for these services in the amount of US$6.6 million, US$6.9 million, US$8.6 million and US$5.0 million in 2009, 2010, 2011 and the first nine months of 2012, respectively.

175 Agreements with ZAO Rascom OJSC VimpelCom provided its associate ZAO Rascom fixed telecommunication services and maintenance and support services in the amount of US$1.0 million, US$1.1 million, US$0.8 million and US$0.5 million in 2009, 2010, 2011 and the first nine months of 2012, respectively. Additionally, in 2009, 2010, 2011 and the first nine months of 2012, OJSC VimpelCom rented domestic and international channels from ZAO Rascom and paid US$6.2 million, US$1.1 million, US$8.8 million and US$2.1 million, respectively, for these rentals.

Agreements with Euroset OJSC VimpelCom has contracts with Euroset, which became an associate in October 2008, for services for acquisition of new subscribers and receipt of subscribers’ payments. OJSC VimpelCom paid to Euroset dealer commissions and bonuses totaling US$159.1 million, US$191.4 million, US$197.3 million and US$146.1 million in 2009, 2010, 2011 and the first nine months of 2012, respectively.

176 TERMS AND CONDITIONS OF THE NOTES The following is the text of the Terms and Conditions of the Notes which will be endorsed on each Note Certificate in definitive form (if issued) and will be attached and (subject to the provisions thereof) apply to the Global Note Certificates. Unless otherwise indicated, the text will be the same for the 2019 Notes, the 2023 Notes and the RUB Notes. The following paragraph applies and will be included in the Terms and Conditions in respect of the 2019 Notes: The US$600,000,000 5.20% Notes due 2019 (the “Notes”, which expression shall in these terms and conditions (the “Conditions”), unless the context otherwise requires, include any further notes issued pursuant to Condition 16 (Further Issues) and forming a single series therewith) of VimpelCom Holdings B.V. (the “Issuer”) were authorised by a resolution of the board of directors of the Issuer dated February 4, 2013, and the Notes and the Guarantee were authorised by a resolution of the supervisory board of VimpelCom Ltd., the parent of the Issuer and Open Joint Stock Company “Vimpel-Communications” (the “Guarantor”) dated February 4, 2013. The following paragraph applies and will be included in the Terms and Conditions in respect of the 2023 Notes: The US$1,000,000,000 5.95% Notes due 2023 (the “Notes”, which expression shall in these terms and conditions (the “Conditions”), unless the context otherwise requires, include any further notes issued pursuant to Condition 16 (Further Issues) and forming a single series therewith) of VimpelCom Holdings B.V. (the “Issuer”) were authorised by a resolution of the board of directors of the Issuer dated February 4, 2013, and the Notes and Guarantee were authorised by a resolution of the supervisory board of VimpelCom Ltd., the parent of the Issuer and Open Joint Stock Company “Vimpel-Communications” (the “Guarantor”) dated February 4, 2013. The following paragraph applies and will be included in the Terms and Conditions in respect of the RUB Notes: The RUB12,000,000,000 9.00% Notes due 2018 (the “Notes”, which expression shall in these terms and conditions (the “Conditions”), unless the context otherwise requires, include any further notes issued pursuant to Condition 16 (Further Issues) and forming a single series therewith) of VimpelCom Holdings B.V. (the “Issuer”) were authorised by a resolution of the board of directors of the Issuer dated February 4, 2013, and the Notes and the Guarantee were authorised by a resolution of the supervisory board of VimpelCom Ltd., the parent of the Issuer and Open Joint Stock Company “Vimpel-Communications” (the “Guarantor”) dated February 4, 2013. The Notes are constituted by, are subject to and have the benefit of, a trust deed (as amended or supplemented from time to time, the “Trust Deed”) dated on or about February 13, 2013 between the Issuer, the Guarantor and BNY Mellon Corporate Trustee Services Limited as trustee (the “Trustee”, which expression includes all persons from time to time appointed trustee or trustees under the Trust Deed). For so long as the Guarantee is in effect, the Notes have the benefit of the Guarantee given by the Guarantor pursuant to the Trust Deed. The following paragraph applies and will be included in the Terms and Conditions in respect of the USD Notes: The Notes are the subject of an agency agreement dated February 13, 2013 (as amended or supplemented from time to time, the “Agency Agreement”) among the Issuer, the Guarantor, The Bank of New York Mellon (Luxembourg) S.A., at its specified office in Luxembourg, as registrar (the “Registrar”, which expression includes any successor registrar appointed from time to time in connection with the Notes), The Bank of New York Mellon, London Branch, at its specified office in London, as principal paying agent (the “Principal Paying Agent”, which expression includes any successor principal paying agent appointed from time to time in connection with the Notes), The Bank of New York Mellon (Luxembourg) S.A., at its specified office in Luxembourg, as paying agent and transfer agent (the “Luxembourg Paying Agent”andthe“Luxembourg Transfer Agent”, respectively, which expressions include any successor paying agent or transfer agent, as the case may be, appointed from time to time in connection with the Notes), The Bank of New York Mellon, New York Branch at its specified office in New York, as paying agent and transfer agent (the “U.S. Paying Agent”andthe“U.S. Transfer Agent”, respectively, which expressions include any successor paying agent or transfer agent, as the case may be, appointed from time to time in connection with the Notes, and the Principal Paying Agent, the Luxembourg Paying Agent and the U.S. Paying Agent together the “Paying Agents” and each a “Paying Agent”, and the Luxembourg Transfer Agent and the U.S. Transfer Agent together the “Transfer Agents” and each a “Transfer Agent”) and the Trustee. References herein to the “Agents” are to the Registrar, any Transfer Agent, the Principal Paying Agent and any Paying Agent, and any reference to an “Agent” is to any one of them.

177 The following paragraph applies and will be included in the Terms and Conditions in respect of the RUB Notes: The Notes are the subject of an agency agreement dated February 13, 2013 (as amended or supplemented from time to time, the “Agency Agreement”) among the Issuer, the Guarantor, The Bank of New York Mellon (Luxembourg) S.A., at its specified office in Luxembourg, as registrar (the “Registrar”, which expression includes any successor registrar appointed from time to time in connection with the Notes), The Bank of New York Mellon, London Branch, at its specified office in London, as principal paying agent and exchange agent (the “Principal Paying Agent” and “Exchange Agent”, respectively, which expressions include any successor principal paying agent or exchange agent, as the case may be, appointed from time to time in connection with the Notes), The Bank of New York Mellon (Luxembourg) S.A., at its specified office in Luxembourg, as paying agent and transfer agent (the “Luxembourg Paying Agent” and the “Luxembourg Transfer Agent”, respectively, which expressions include any successor paying agent or transfer agent, as the case may be, appointed from time to time in connection with the Notes), The Bank of New York Mellon, New York Branch at its specified office in New York, as paying agent and transfer agent (the “U.S. Paying Agent” and the “U.S. Transfer Agent”, respectively, which expressions include any successor paying agent or transfer agent, as the case may be, appointed from time to time in connection with the Notes, and the Principal Paying Agent, the Luxembourg Paying Agent and the U.S. Paying Agent together the “Paying Agents” and each a “Paying Agent”, and the Luxembourg Transfer Agent and the U.S. Transfer Agent together the “Transfer Agents” and each a “Transfer Agent”) and the Trustee. References herein to the “Agents” are to the Registrar, any Transfer Agent, the Principal Paying Agent, any Paying Agent and the Exchange Agent, and any reference to an “Agent” is to any one of them. Certain provisions of these Conditions are summaries of the Trust Deed and the Agency Agreement and are subject to their detailed provisions. The Noteholders are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to them. Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours at the registered office for the time being of the Issuer, being at the date hereof Claude Debussylaan 88 (1082 MD) Amsterdam, The Netherlands, the registered office for the time being of the Trustee, being at the date hereof One Canada Square, London E14 5AL and at the Specified Offices (as defined in the Agency Agreement) of the Agents. The initial Specified Offices of the initial Agents are set out below. Capitalised terms used but not defined in these Conditions shall have the respective meanings given to them in the Trust Deed.

1. Form, Denomination and Status The following paragraph applies and will be included in the Terms and Conditions in respect of the USD Notes: (a) Form and denomination: The Notes are in registered form in minimum denominations in aggregate principal amount of US$200,000 each and integral multiples of US$1,000 in excess thereof, without coupons attached. The following paragraph applies and will be included in the Terms and Conditions in respect of the RUB Notes: (a) Form and denomination: The Notes are in registered form in minimum denominations in aggregate principal amount of RUB5,000,000 each and integral multiples of RUB1,000 in excess thereof, without coupons attached. (b) Status: The Notes constitute unsubordinated and (subject to Condition 4) unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves. The Guarantee constitutes (for so long as the Guarantee is in effect) unsubordinated and (subject to Condition 4) unsecured obligations of the Guarantor. Subject to Condition 4, each of the Issuer and (for so long as the Guarantee is in effect) the Guarantor shall ensure that at all times the claims of the Noteholders against them under the Notes and the Guarantee, respectively, rank in right of payment at least pari passu with the claims of all their other unsecured and unsubordinated creditors save those whose claims are preferred by any mandatory operation of law.

2. Guarantee (a) The Guarantor has in Clause 6 (Guarantee) of the Trust Deed irrevocably and unconditionally guaranteed (for so long as the Guarantee is in effect) the payment when due of all sums expressed to be payable by the Issuer under the Trust Deed and the Notes.

178 (b) The Issuer has the option to terminate the Guarantee if at any time the Notes are rated Baa3 or better by Moody’s or BBB- or better by S&P. If either Moody’s or S&P ceases to exist or ceases to rate the Notes for reasons outside the control of the Issuer, the Issuer shall have the same option to terminate the Guarantee if at any time the Notes receive an equivalent investment grade credit rating from any other entity selected by the Issuer as a replacement agency and recognised as a “nationally recognized statistical rating organization” as defined in Section 3(a)(62) of the U.S. Securities Exchange Act of 1934, as amended. (c) The Issuer also has the option to terminate the Guarantee if at any time the total outstanding principal amount of Priority Debt following the termination of the Guarantee (taking into account the effect of the termination of any other guarantee by the Guarantor that would terminate at the same time as the Guarantee, or the termination of which is contingent upon the termination of the Guarantee) would be less than 25% of the Consolidated Total Assets of the Issuer. (d) If a Put Option Event occurs, any Noteholder may exercise the Put Option to require the Issuer to redeem its Notes at 100% of their principal amount plus accrued and unpaid interest (if any) to the Put Option Settlement Date (as defined in Condition 6(c)), in accordance with Condition 6(c). (e) The Issuer shall exercise its option to terminate the Guarantee under either Condition 2(b) or 2(c) above by giving written notice of its election to terminate the Guarantee to the Trustee and the Agents, together with an Officers’ Certificate of the Issuer (i) certifying that no Event of Default has occurred and is continuing and (ii) attaching written evidence demonstrating it is entitled to exercise its option. Promptly after receipt of notice and the accompanying Officers’ Certificate from the Issuer, the Trustee will give the Noteholders notice of termination of the Guarantee, and the Guarantee will terminate automatically, and with no further action by any party, as of the fifth Business Day after the date of the Trustee’s notice, after which the Guarantee will cease to have any effect (except that the Guarantee will continue to apply to the Issuer’s obligation (if applicable) to redeem Notes on exercise of the Put Option until the Put Option has expired or been satisfied). (f) References in these Conditions to any event, matter or thing applying “for so long as the Guarantee is in effect” (and any related expressions) shall mean until such time as the Guarantee is terminated in accordance with Condition 2(e) and Clause 6(P) of the Trust Deed.

3. Register, Title and Transfers (a) Register: The Registrar will maintain outside the United Kingdom a register (the “Register”) in respect of the Notes in accordance with the provisions of the Agency Agreement. In these Conditions, the “Holder” of a Note means the person in whose name such Note is for the time being registered in the Register (or, in the case of a joint holding, the first named thereof) and “Noteholder” shall be construed accordingly. A certificate (each, a “Note Certificate”) will be issued to each Noteholder in respect of its registered holding. Each Note Certificate will be numbered serially with an identifying number which will be recorded in the Register. (b) Title: The Holder of each Note shall (except as otherwise required by law) be treated as the absolute owner of such Note for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing on the Note Certificate relating thereto (other than the endorsed form of transfer) or any notice of any previous loss or theft of such Note Certificate) and no person shall be liable for so treating such Holder. The following paragraph applies and will be included in the Terms and Conditions in respect of the USD Notes: (c) Transfers: Subject to Conditions 3(f) and 3(g) below, a Note may be transferred upon surrender of the relevant Note Certificate, with the endorsed form of transfer duly completed (including any certificates as to compliance with restrictions on transfer included therein), at the Specified Office of the Registrar or a Transfer Agent, together with such evidence as the Registrar or (as the case may be) such Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals who have executed the form of transfer. Where not all the Notes represented by the surrendered Note Certificate are the subject of the transfer, a Note Certificate in respect of the balance of the Notes will be issued to the transferor in accordance with Condition 3(d) below provided that no Notes will be issued in minimum denominations in aggregate principal amount of less than US$200,000.

179 The following paragraph applies and will be included in the Terms and Conditions in respect of the RUB Notes: (c) Transfers: Subject to Conditions 3(f) and 3(g) below, a Note may be transferred upon surrender of the relevant Note Certificate, with the endorsed form of transfer duly completed (including any certificates as to compliance with restrictions on transfer included therein), at the Specified Office of the Registrar or a Transfer Agent, together with such evidence as the Registrar or (as the case may be) such Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals who have executed the form of transfer. Where not all the Notes represented by the surrendered Note Certificate are the subject of the transfer, a Note Certificate in respect of the balance of the Notes will be issued to the transferor in accordance with Condition 3(d) below provided that no Notes will be issued in minimum denominations in aggregate principal amount of less than RUB5,000,000. (d) Registration and delivery of Note Certificates: Within five business days of the surrender of a Note Certificate in accordance with Condition 3(c) above, the Registrar will register the transfer in question and deliver a Note Certificate of a like principal amount to the Note(s) transferred to the relevant Holder at the Registrar’s Specified Office or (as the case may be) the Specified Office of the Transfer Agent or (at the request and risk of any such relevant Holder) by uninsured first class mail (airmail if overseas) to the address specified for the purpose by such relevant Holder. In this paragraph, “business day” means a day on which commercial banks are open for business (including dealings in foreign currencies) in the city where the Registrar and (if applicable) the Transfer Agents have their respective Specified Offices. In the case of the transfer of part only of the Notes, a Note Certificate in respect of the balance of the Notes not transferred will be so delivered or (at the risk and, if mailed at the request of the transferor otherwise than by ordinary uninsured mail, at the expense of the transferor) sent by mail to the transferor. (e) No charge: The transfer of a Note will be effected without charge by or on behalf of the Issuer or the Registrar, but against such indemnity as the Registrar or the Transfer Agent, as the case may be, may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such transfer. (f) Closed periods: Noteholders may not require transfers to be registered during the period beginning at close of business on the business day prior to the due date and ending on the due date for any payment of principal, at maturity or otherwise, premium, if any, or interest in respect of the Notes. (g) Regulations concerning transfers and registration: All transfers of Notes and entries on the Register are subject to the detailed regulations concerning the transfer of Notes scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Trustee and the Registrar. A copy of the current regulations will be mailed (free of charge) by the Registrar and/or any Transfer Agent to any Noteholder who requests in writing a copy of such regulations and will be available at the office of the Registrar in Luxembourg and the Transfer Agent in New York.

4. Negative Pledge The Issuer has agreed in the Trust Deed that it shall not, and shall not permit any of its Subsidiaries, and the Guarantor has agreed in the Trust Deed that (for so long as the Guarantee is in effect) it shall not, and shall not permit any of its Subsidiaries to, create, Incur, assume or suffer to exist any Lien (other than Permitted Liens) on any asset now owned or hereafter acquired, or any income or profits therefrom, which secure any Indebtedness, unless the Notes or (for so long as the Guarantee is in effect) the Guarantee, as applicable, and any other sum owing hereunder and under the Trust Deed and (for so long as the Guarantee is in effect) the Guarantee are secured by a Lien equally and rateably with the Liens securing such other Indebtedness; provided that if such Indebtedness is Subordinated Indebtedness, the Lien securing such Indebtedness shall be subordinate or junior to the Lien securing the Notes or (for so long as the Guarantee is in effect) the Guarantee, as applicable, with the same relative priority as such Indebtedness shall have with respect to the Notes or the Guarantee.

5. Interest The following provisions apply and will be included in the Terms and Conditions in respect of the 2019 Notes: The Notes bear interest from February 13, 2013 (the “Issue Date”) at the rate of 5.20% per annum (the “Interest Rate”), payable semi-annually in arrear on February 13 and August 13 in each year (each an “Interest

180 Payment Date”); provided that the first payment of interest will be made on August 13, 2013 for the period from, and including, the Issue Date to, but excluding, August 13, 2013 subject as provided in Condition 7 (Payments). Each period from (and including) the Issue Date or any Interest Payment Date to (but excluding) the next (or first) Interest Payment Date is herein called an “Interest Period”. Each Note will cease to bear interest from the due date for redemption unless, upon due presentation of the relevant Note Certificate, payment of principal is improperly withheld or refused, in which case interest will continue to accrue (before or after any judgment) from the due date for redemption to, but excluding, the date on which payment in full of the principal is made under the Notes. The amount of interest payable in respect of each Note for any Interest Period shall be calculated by applying the Interest Rate to the principal amount of such Note, dividing the product by two and rounding the resulting figure to the nearest cent (half a cent being rounded upwards). When interest is required to be calculated in respect of a period other than an Interest Period, it shall be calculated on the basis of a 360 day year consisting of 12 months of 30 days each, and in the case of an incomplete month, the actual number of days elapsed. The following provisions apply and will be included in the Terms and Conditions in respect of the 2023 Notes: The Notes bear interest from February 13, 2013 (the “Issue Date”) at the rate of 5.95% per annum (the “Interest Rate”), payable semi-annually in arrear on February 13 and August 13 in each year (each an “Interest Payment Date”); provided that the first payment of interest will be made on August 13, 2013 for the period from, and including, the Issue Date to, but excluding, August 13, 2013 subject as provided in Condition 7 (Payments). Each period from (and including) the Issue Date or any Interest Payment Date to (but excluding) the next (or first) Interest Payment Date is herein called an “Interest Period”. Each Note will cease to bear interest from the due date for redemption unless, upon due presentation of the relevant Note Certificate, payment of principal is improperly withheld or refused, in which case interest will continue to accrue (before or after any judgment) from the due date for redemption to, but excluding, the date on which payment in full of the principal is made under the Notes. The amount of interest payable in respect of each Note for any Interest Period shall be calculated by applying the Interest Rate to the principal amount of such Note, dividing the product by two and rounding the resulting figure to the nearest cent (half a cent being rounded upwards). When interest is required to be calculated in respect of a period other than an Interest Period, it shall be calculated on the basis of a 360 day year consisting of 12 months of 30 days each, and in the case of an incomplete month, the actual number of days elapsed. The following provisions apply and will be included in the Terms and Conditions in respect of the RUB Notes: The Notes bear interest from February 13, 2013 (the “Issue Date”) at the rate of 9.00% per annum (the “Interest Rate”), payable semi-annually in arrear on February 13 and August 13 in each year (each an “Interest Payment Date”); provided that the first payment of interest will be made on August 13, 2013 for the period from, and including, the Issue Date to, but excluding, August 13, 2013 subject as provided in Condition 7 (Payments). Each period from (and including) the Issue Date or any Interest Payment Date to (but excluding) the next (or first) Interest Payment Date is herein called an “Interest Period”. Each Note will cease to bear interest from the due date for redemption unless, upon due presentation of the relevant Note Certificate, payment of principal is improperly withheld or refused, in which case interest will continue to accrue (before or after any judgment) from the due date for redemption to, but excluding, the date on which payment in full of the principal is made under the Notes. The amount of interest payable in respect of each Note for any Interest Period shall be calculated by applying the Interest Rate to the principal amount of such Note, dividing the product by two and rounding the resulting figure to the nearest cent (half a cent being rounded upwards). When interest is required to be calculated in respect of a period other than an Interest Period, it shall be calculated on the basis of a 360 day year consisting of 12 months of 30 days each, and in the case of an incomplete month, the actual number of days elapsed.

181 6. Redemption and Purchase (a) Final redemption: The following sentence applies and will be included in the Terms and Conditions in respect of the 2019 Notes: Unless previously redeemed or cancelled, the Notes will be redeemed at their principal amount on February 13, 2019, subject as provided in Condition 7 (Payments). The following sentence applies and will be included in the Terms and Conditions in respect of the 2023 Notes: Unless previously redeemed or cancelled, the Notes will be redeemed at their principal amount on February 13, 2023, subject as provided in Condition 7 (Payments). The following sentence applies and will be included in the Terms and Conditions in respect of the RUB Notes: Unless previously redeemed or cancelled, the Notes will be redeemed at their principal amount on February 13, 2018, subject as provided in Condition 7 (Payments). (b) Redemption by the Issuer for tax reasons: The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time, on giving not less than 25 days’ notice to the Noteholders (which notice shall be irrevocable and shall specify a date for redemption) in accordance with Condition 17 (Notices) at the principal amount thereof, together with interest accrued and unpaid to (but excluding) the date fixed for redemption and any additional amounts in respect thereof pursuant to Condition 8 (Taxation), if, immediately before giving such notice, the Issuer satisfies the Trustee that: (1) it (or, if the Guarantee was called, the Guarantor) has or will become obliged to pay additional amounts as provided or referred to in Condition 8 (Taxation) as a result of any change in, or amendment to, the laws or regulations of The Netherlands or the Russian Federation or any political or governmental subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after February 13, 2013 and (2) such obligation cannot be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures available to it; provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer (or the Guarantor, as the case may be) would be obliged to pay such additional amounts were a payment in respect of the Notes (or the Guarantee, as the case may be) then due. The Issuer shall deliver to the Trustee a certificate signed by two officers of the Issuer or the Guarantor (as the case may be) stating that the Issuer is entitled to effect such redemption in accordance with this Condition 6(b). The Trustee shall be entitled to accept any notice or certificate delivered by the Issuer or the Guarantor (as the case may be) in accordance with this Condition 6(b) as sufficient evidence of the satisfaction of the applicable circumstances in which event they shall be conclusive and binding on the Noteholders. Upon the expiry of any such notice given by the Issuer to the Noteholders as is referred to in this Condition 6(b), the Issuer shall be bound to redeem the Notes in accordance with this Condition 6, subject as provided in Condition 7 (Payments). (c) Redemption at the option of the Noteholders upon a Put Option Event: Upon the occurrence of a Put Option Event, the holder of a Note will have the option to require the Issuer to redeem such Note on the Put Option Settlement Date (as defined below) at 100% of its principal amount together with accrued and unpaid interest (if any) to the Put Option Settlement Date. Promptly upon the occurrence of a Put Option Event, the Issuer shall give notice thereof (a “Put Option Event Notice”) to the Noteholders in accordance with Condition 17 (Notices), specifying (i) that a Put Option Event has occurred, (ii) the details relating to the occurrence of the Put Option Event, (iii) the Put Option Period (as defined below), (iv) the procedure for exercising the Put Option and (v) that any Note not properly tendered or not tendered at all prior to the end of the Put Option Period will remain outstanding and continue to accrue interest and additional amounts (if any). In order to exercise the Put Option, the holder of a Note must deliver, no later than 60 calendar days after the date on which the Put Option Event Notice is given (the “Put Option Period”), to the specified office of the Principal Paying Agent, evidence satisfactory to the Principal Paying

182 Agent of such holder’s entitlement to such Note and a duly completed put option election notice (a “Put Option Election Notice”) specifying the principal amount of the Notes in respect of which the Put Option is exercised, in the form obtainable from the Principal Paying Agent. The Principal Paying Agent will provide such Noteholder with a non-transferable receipt. On the Business Day following the end of the Put Option Period, the Principal Paying Agent shall notify in writing the Issuer and the Trustee of the exercise of the Put Option specifying the aggregate principal amount of the Notes to be redeemed in accordance with the Put Option. Provided that the Notes that are the subject of any such Put Option Election Notice have been delivered to the Principal Paying Agent prior to the end of the Put Option Period, then the Issuer shall, as provided in Condition 7 (Payments), redeem all such Notes on the date falling five Business Days after the expiration of the Put Option Period (the “Put Option Settlement Date”). No Put Option Election Notice, once delivered to the Principal Paying Agent in accordance with this Condition 6(c), may be withdrawn. (d) No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as provided in Conditions 6(a), 6(b) and 6(c) above. (e) Purchase: The Issuer or the Guarantor or any of their respective Subsidiaries may at any time purchase Notes in the open market or otherwise and at any price. (f) Cancellation: All Notes so redeemed or purchased by the Issuer shall be cancelled and all Notes purchased by the Guarantor or any of the Issuer’s or the Guarantor’s Subsidiaries and surrendered to the Registrar, together with an authorisation addressed to the Registrar by the Guarantor or such Subsidiary, shall be cancelled. Upon any such cancellation by or on behalf of the Registrar, the principal amount of such Notes surrendered for cancellation shall be extinguished as of the date of such cancellation, together with accrued interest (if any) thereon, and no further payment shall be made or required to be made by the Issuer in respect of such Notes. Any Notes so cancelled may not be reissued. (g) Right to Compel Sale: The Issuer may compel any beneficial owner of Notes initially sold pursuant to Rule 144A under the Securities Act to sell its interest in such Notes, or may sell such interest on behalf of such holder, if such holder of Notes is a U.S. person that is not a qualified institutional buyer (within the meaning of Rule 144A under the Securities Act).

7. Payments The following applies and will be included in the Terms and Conditions in respect of the USD Notes: (a) Principal: Payments of principal shall be made by dollar cheque or, upon application by a Holder of a Note to the Specified Office of the Principal Paying Agent not later than the close of business on the business day before the due date for any such payment, by transfer to a dollar account maintained by the payee, upon surrender (or, in the case of part payment only, endorsement) of the relevant Note Certificate(s) at the Specified Office of the Registrar and/or the Luxembourg Transfer Agent. (b) Interest: Payments of interest shall be made by dollar cheque or, upon application by a Holder of a Note to the Specified Office of the Principal Paying Agent not later than the close of business on the business day before the due date for any such payment, by transfer to a dollar account maintained by the payee, and (in the case of interest payable on redemption in whole) upon presentation for surrender of the relevant Note Certificate(s) at the Specified Office of the Registrar and/or the Luxembourg Transfer Agent. (c) Payments on business days: Where payment is to be made by transfer to a dollar account, payment instructions (for value the due date for payment, or, if the due date for payment is not a business day, for value the next succeeding business day) will be initiated and, where payment is to be made by dollar cheque, the cheque will be mailed (i) (in the case of payments of principal, premium, if any, and interest payable on redemption) on the later of the due date for payment and the day on which the relevant Note Certificate is surrendered (or, in the case of part payment only, endorsed) at the Specified Office of the Registrar and (ii) (in the case of payments of interest payable other than on redemption) on the due date for payment. A Holder of a Note shall not be entitled to any interest or other payment in respect of any delay in payment resulting from (A) the due date for a payment not being a business day or (B) a cheque mailed in accordance with this Condition 7 (Payments) arriving after the due date for payment or being lost in the mail. In this Condition 7 (Payments), “business day” means any day (other than a Saturday or Sunday) on which banks generally are open for business in London, Luxembourg, Moscow, Amsterdam and

183 New York and, in the case of surrender (or, in the case of part payment only, endorsement) of a Note Certificate, the place in which the Note Certificate is surrendered (or, as the case may be, endorsed). (d) Partial payments: If the Principal Paying Agent makes a partial payment in respect of any Note, the Issuer shall procure that the amount and date of such payment are noted on the Register and, in the case of partial payment upon presentation of a Note Certificate, that a statement indicating the amount and the date of such payment is endorsed on the relevant Note Certificate. (e) Record date: Each payment in respect of a Note will be made to the person shown as the Holder in the Register at the close of business in the place of the Specified Office of the Registrar on the business day before the due date for such payment (the “Record Date”). Where payment in respect of a Note is to be made by cheque, the cheque will be mailed to the address shown as the address of the Holder in the Register at the close of business in the place of the Specified Office of the Registrar on the relevant Record Date. The following applies and will be included in the Terms and Conditions in respect of the RUB Notes: Payments of principal and interest in respect of the RUB Notes while they are represented by Global Note Certificates will be made, or procured to be made by a Paying Agent in accordance with the Agency Agreement in roubles, unless a holder of Notes has made an irrevocable election to receive payment in U.S. dollars at least five business days prior to the date on which a payment becomes due on the Notes, in each case through the facilities of Euroclear and Clearstream, Luxembourg. (a) Currency Exchange Option: The Exchange Agent shall, upon receipt by it of the Exchange Amount (as defined below), on or before 12.30 p.m. (London time) two business days prior to each date on which a payment becomes due on the Notes, use the Exchange Amount to procure dollars (the “US Dollar Amount”) at a purchase price calculated on the basis of the Applicable Exchange Rate (as defined below) for delivery on the relevant payment date and in accordance with any elections received by the Principal Paying Agent under Condition 7(d) below. If, notwithstanding any other provision of this Condition 7 (Payments), it is not possible for the Exchange Agent to procure the US Dollar Amount with the Exchange Amount at the Applicable Exchange Rate, the Exchange Agent shall so notify the Issuer and shall make all payments on the Notes in roubles. “Exchange Amount” means, in respect of each date on which a payment becomes due on the Notes, the amount in roubles in aggregate equivalent to the portion of the interest and/or principal due on the relevant payment date which is payable to the holders of Notes (if any) which have duly elected to receive payment of interest and/or principal on such payment date in dollars in accordance with Condition 7(d) below and the provisions of the Agency Agreement. “Applicable Exchange Rate” means the internal foreign exchange conversion rate for settlement as determined by the Exchange Agent on or before 12.30 p.m. (London time) two business days prior to any date on which a payment becomes due on the Notes following receipt by it of the Exchange Amount, which the Exchange Agent acting in a commercially reasonable manner as principal for its own account uses to convert roubles into dollars at the request of its other customers. For the purposes of this Condition 7 (Payments), the Exchange Agent may rely conclusively on the basis on which its internal foreign exchange conversion rate (including, for the avoidance of doubt, any third party indices forming the basis for such conversion rates) for settlement has been determined and shall not be liable for losses associated with the basis for determination of such rate. The Exchange Agent may retain for its own account any spread on foreign exchange transactions customarily charged by it in connection with such conversion. The Principal Paying Agent and the Exchange Agent shall be entitled to rely on, without further investigation or enquiry, any notifications received by them pursuant to this Condition 7 (Payments) and shall not be liable to any party for any losses whatsoever resulting from acting in accordance with such notifications even though subsequent to its acting it may be found that there was some defect in the notification or the notification was not authentic. Any foreign exchange transaction effected by the Exchange Agent will generally be a transaction to buy or sell currency between (i) on one part, the Issuer or the Guarantor (acting through the Exchange Agent, as an agent of the Issuer or the Guarantor) and (ii) on the other part, either the Exchange Agent or its affiliate acting as principal for its own account. The Exchange Agent as agent of the Issuer or the Guarantor will trade the foreign exchange transaction with the Exchange

184 Agent or its affiliate acting as a principal for its own account, and not, in such counterparty role to the Issuer and the Guarantor, as an agent, fiduciary or broker on behalf of the Issuer or the Guarantor. In certain circumstances, the foreign exchange transaction may be transmitted to a sub- custodian. In such cases, the Exchange Agent or its affiliate may not be the foreign exchange counterparty and the foreign exchange transaction may not be processed and priced as described herein. In forwarding certain foreign exchange transactions to the sub-custodian or affiliate for execution, the Exchange Agent does not serve as agent, fiduciary, or broker on behalf of the Issuer or the Guarantor. (b) Principal: Payments of principal in respect of each Note will be made by transfer to a Russian rouble bank account or, in the case of an election pursuant to Condition 7(d), a U.S. dollar bank account, maintained by the Noteholder. Such payment will be made only upon presentation and surrender of the relevant Note Certificate at the specified office of any of the Paying Agents and will be rounded downwards, if necessary, to the nearest kopeck. For the purposes of this Condition 7(b) the holder of such Note will be deemed to be the person shown as the holder (or the first-named of joint holders) on the Register at the Record Date (as defined in Condition 7(g) below). (c) Interest: Payments of interest (other than interest due on redemption) in respect of each Note will be made by transfer to a Russian rouble bank account or, in the case of an election pursuant to Condition 7(d), a U.S. dollar bank account, maintained by the Noteholder and will be rounded downwards, if necessary, to the nearest kopeck. For the purposes of this Condition 7(c) the holder of such Note will be deemed to be the person shown as the holder (or the first-named of joint holders) on the Register at the Record Date (as defined in Condition 7(g) below). (d) U.S. dollar payment election: Noteholders may, no later than the seventh business day before the due date for any payment of interest or principal, give an irrevocable election to the Principal Paying Agent to receive such payment of interest or principal, as the case may be, in U.S. dollars. Upon any such election, such interest or principal will be converted into U.S. dollars by the Exchange Agent and paid on the relevant payment date in accordance with the provisions of Condition 7(a) above and the Agency Agreement. (e) Payments on business days: Where payment is to be made by transfer to a Russian rouble account or, as the case may be, a U.S. dollar account, payment instructions (for value the due date for payment, or, if the due date for payment is not a business day, for value the next succeeding business day) will be initiated (i) (in the case of payments of principal, premium, if any, and interest payable on redemption) on the later of the due date for payment and the day on which the relevant Note Certificate is surrendered (or, in the case of part payment only, endorsed) at the Specified Office of the Registrar and (ii) (in the case of payments of interest payable other than on redemption) on the due date for payment. A Holder of a Note shall not be entitled to any interest or other payment in respect of any delay in payment resulting from the due date for a payment not being a business day. In this Condition 7 (Payments), “business day” means any day (other than a Saturday or Sunday) on which banks generally are open for business in London, Luxembourg, Moscow, Amsterdam and New York and, in the case of surrender (or, in the case of part payment only, endorsement) of a Note Certificate, the place in which the Note Certificate is surrendered (or, as the case may be, endorsed). (f) Partial payments: If the Principal Paying Agent makes a partial payment in respect of any Note, the Issuer shall procure that the amount and date of such payment are noted on the Register and, in the case of partial payment upon presentation of a Note Certificate, that a statement indicating the amount and the date of such payment is endorsed on the relevant Note Certificate. (g) Record date: Each payment in respect of a Note will be made to the person shown as the Holder in the Register at the close of business in the place of the Specified Office of the Registrar on the business day before the due date for such payment (the “Record Date”). Where payment in respect of a Note is to be made by cheque, the cheque will be mailed to the address shown as the address of the Holder in the Register at the close of business in the place of the Specified Office of the Registrar on the relevant Record Date. 8. Taxation All payments of principal, premium, if any, and interest in respect of the Notes by or on behalf of the Issuer or (for so long as the Guarantee is in effect) under the Guarantee by the Guarantor shall be made to, or for the account of, each Holder free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatsoever nature (“Taxes”) imposed or levied by The Netherlands or

185 the Russian Federation or any political subdivision or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In that event, the Issuer or (as the case may be) the Guarantor shall, subject as provided below, pay such additional amounts as will result in the receipt by the Noteholders of such amounts as would have been received by them if no such withholding or deduction had been made or required to be made. No such additional amounts shall be payable in respect of any Note: (a) held by a Holder which is liable for such Taxes in respect of such Note or the Guarantee by reason of its having some connection with The Netherlands or the Russian Federation other than the mere holding of such Note (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in The Netherlands or the Russian Federation); or (b) for any Taxes, that are imposed or withheld by reason of the failure of the Holder of the Note to comply with a request of, or on behalf of, the Issuer addressed to the Holder to provide information concerning the nationality, residence or identity of such Holder or to make any declaration or similar claim or satisfy any information or reporting requirement, which is required or imposed by a statute, treaty, regulation, protocol, or administrative practice of The Netherlands or the Russian Federation as a precondition to exemption from all or part of such Taxes; or (c) where (in the case of a payment of principal, premium, if any, or interest on redemption) the relevant Note Certificate is surrendered for payment more than 30 days after a Relevant Date except to the extent that the relevant Holder would have been entitled to such additional amounts if it had surrendered the relevant Note Certificate on the last day of such period of 30 days; or (d) where such withholding or deduction is imposed or levied on a payment to an individual and is required to be made pursuant to European Union Council Directive 2003/48/EC (the “European Union Directive”) or any other directive on the taxation of savings or any law implementing or complying with, or introduced in order to conform to, the European Union Directive; or (e) presented for payment by or on behalf of a Holder who would be able to avoid such withholding or deduction by presenting the relevant Note Certificate to another Paying Agent in a Member State of the European Union. In these Conditions, “Relevant Date” means whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in London by the Principal Paying Agent or the Trustee on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders by the Issuer. Any reference in these Conditions to principal, premium, or interest shall be deemed to include any additional amounts in respect of principal, premium, or interest (as the case may be) which may be payable under this Condition 8 or any undertaking given in addition to or in substitution of this Condition 8 pursuant to the Trust Deed. If the Issuer or the Guarantor becomes subject at any time to any taxing jurisdiction other than (or in addition to) The Netherlands or the Russian Federation, references in these Conditions to The Netherlands or the Russian Federation shall be construed as including references to such other jurisdiction. 9. Events of Default The Trustee may, at its discretion, and shall if so requested in writing by the holders of not less than one-quarter of the principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of holders of the Notes shall (subject to its rights under the Trust Deed to be indemnified and/or provided with security to its satisfaction) give notice to the Issuer and (for so long as the Guarantee is in effect) the Guarantor that the Notes are immediately due and repayable if any of the following events occurs (each an “Event of Default”): (a) default in the payment of principal of the Notes, in the currency and in the manner provided herein, when the same becomes due and payable at maturity, upon acceleration, redemption or otherwise, and such default continues for a period of 7 calendar days or more; (b) default in the payment of interest on the Notes, in the currency and in the manner provided herein, when the same becomes due and payable, and such default continues for a period of 15 calendar days or more; (c) default in the performance of, or breaches of, any covenant or agreement of the Issuer under these Conditions or the Trust Deed (other than a default under Conditions 9(a) and 9(b) above) and such default or breach continues for a period of 30 consecutive calendar days after written notice by the Trustee;

186 (d) default on any Indebtedness of the Issuer or any of the Significant Subsidiaries of the Issuer with an aggregate principal amount in excess of US$75 million (or, to the extent non-U.S. dollar denominated, the U.S. dollar equivalent of such amount as of the date of such default) (i) resulting from the failure to pay principal or interest (in the case of interest default or a default in the payment of principal other than at its Stated Maturity, after the expiration of the originally applicable grace period) in an aggregate amount in excess of US$5 million (or, to the extent non- U.S. dollar denominated, the U.S. dollar equivalent of such amount as of the date of such default) when due or (ii) as a result of which the maturity of such Indebtedness has been accelerated prior to its Stated Maturity; (e) any final judgment or order (not covered by insurance) for the payment of money in excess of US$75 million (or, to the extent non-U.S. dollar denominated, the U.S. dollar equivalent of such amount) in the aggregate for all such final judgments or orders against all such Persons (treating any deductibles, self-insurance or retention as not so covered) shall be rendered against the Issuer or any Significant Subsidiary of the Issuer and shall not be paid or discharged, and there shall be any period of 60 consecutive calendar days following entry of the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed US$5 million (or, to the extent non-U.S. dollar denominated, the U.S. dollar equivalent of such amount) during which a stay of enforcement of such final judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (f) any regulation, decree, consent, approval, licence or other authority necessary to enable the Issuer to enter into or perform its obligations under these Conditions or the Trust Deed or for the validity or enforceability thereof shall expire or be withheld, revoked or terminated or otherwise cease to remain in full force and effect or shall be modified in a manner which adversely affects any rights or claims of the Trustee or the Noteholders; (g) it is, or will become, unlawful for the Issuer to perform or comply with any of its obligations under or in respect of these Conditions or the Trust Deed or any of such obligations shall become unenforceable or cease to be legal, valid and binding; (h) a decree, judgment, or order by any Agency or a court of competent jurisdiction shall have been entered adjudging the Issuer or any of the Significant Subsidiaries of the Issuer as bankrupt or insolvent, or approving as properly filed a petition seeking reorganisation of the Issuer or any of the Significant Subsidiaries of the Issuer under any bankruptcy or similar law, and such decree or order shall have continued undischarged and unstayed for a period of 60 days; or a decree or order of a court of competent jurisdiction appointing a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the Issuer or any of the Significant Subsidiaries of the Issuer, or any substantial part of the assets or property of any such Person, or for the winding up or liquidation of the affairs of any such Person, shall have been entered, and such decree, judgment or order shall have remained in force undischarged and unstayed for a period of 60 days; (i) the Issuer or any of the Significant Subsidiaries of the Issuer shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganisation under any bankruptcy or similar law or similar statute, or shall consent to the filing of any such petition, or shall consent to the appointment of a custodian, receiver, liquidator, trustee or assignee in bankruptcy or insolvency of it or any substantial part of its assets or property, or shall make a general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall, within the meaning of any Bankruptcy Law, become insolvent, fail generally to pay its debts as they become due, or takes any corporate action in furtherance of or to facilitate, conditionally or otherwise, any of the foregoing; (j) default in the performance of, or breaches of, any covenant or agreement of the Guarantor under these Conditions, the Guarantee or the Trust Deed (other than a default under Conditions 9(a) and 9(b) above) and such default or breach continues for a period of 30 consecutive calendar days after written notice by the Trustee; (k) default on any Indebtedness of the Guarantor or any of the Significant Subsidiaries of the Guarantor with an aggregate principal amount in excess of US$75 million (or, to the extent non- U.S. dollar denominated, the U.S. dollar equivalent of such amount as of the date of such default) (i) resulting from the failure to pay principal or interest (in the case of interest default or a default in the payment of principal other than at its Stated Maturity, after the expiration of the originally applicable grace period) in an aggregate amount in excess of US$5 million (or, to the extent non-

187 U.S. dollar denominated, the U.S. dollar equivalent of such amount as of the date of such default) when due or (ii) as a result of which the maturity of such Indebtedness has been accelerated prior to its Stated Maturity; (l) any final judgment or order (not covered by insurance) for the payment of money in excess of US$75 million (or, to the extent non-U.S. dollar denominated, the U.S. dollar equivalent of such amount) in the aggregate for all such final judgments or orders against all such Persons (treating any deductibles, self-insurance or retention as not so covered) shall be rendered against the Guarantor or any Significant Subsidiary of the Guarantor and shall not be paid or discharged, and there shall be any period of 60 consecutive calendar days following entry of the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed US$5 million (or, to the extent non-U.S. dollar denominated, the U.S. dollar equivalent of such amount) during which a stay of enforcement of such final judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (m) any regulation, decree, consent, approval, licence or other authority necessary to enable the Guarantor to enter into or perform its obligations under the Guarantee or the Trust Deed or for the validity or enforceability thereof shall expire or be withheld, revoked or terminated or otherwise cease to remain in full force and effect or shall be modified in a manner which adversely affects any rights or claims of the Trustee or the Noteholders; (n) it is, or will become, unlawful for the Guarantor to perform or comply with any of its obligations under or in respect of these Conditions, the Guarantee or the Trust Deed or any of such obligations shall become unenforceable or cease to be legal, valid and binding; (o) a decree, judgment, or order by any Agency or a court of competent jurisdiction shall have been entered adjudging the Guarantor or any of the Significant Subsidiaries of the Guarantor as bankrupt or insolvent, or approving as properly filed a petition seeking reorganisation of the Guarantor or any of the Significant Subsidiaries of the Guarantor under any bankruptcy or similar law, and such decree or order shall have continued undischarged and unstayed for a period of 60 days; or a decree or order of a court of competent jurisdiction appointing a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the Guarantor or any of the Significant Subsidiaries of the Guarantor, or any substantial part of the assets or property of any such Person, or for the winding up or liquidation of the affairs of any such Person, shall have been entered, and such decree, judgment or order shall have remained in force undischarged and unstayed for a period of 60 days; or (p) the Guarantor or any of the Significant Subsidiaries of the Guarantor shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganisation under any bankruptcy or similar law or similar statute, or shall consent to the filing of any such petition, or shall consent to the appointment of a custodian, receiver, liquidator, trustee or assignee in bankruptcy or insolvency of it or any substantial part of its assets or property, or shall make a general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall, within the meaning of any Bankruptcy Law, become insolvent, fail generally to pay its debts as they become due, or takes any corporate action in furtherance of or to facilitate, conditionally or otherwise, any of the foregoing, provided that the events specified in Conditions 9(j) to 9(p) above shall cease to constitute Events of Default on and from the date on which the Guarantee is terminated in accordance with Condition 2(e) above and Clause 6(P) of the Trust Deed. Subject to the paragraph below, upon such notice being given to the Issuer, the Notes will immediately become due and repayable at their principal amount together with all accrued and unpaid interest. If an Event of Default specified in Condition 9(h), 9(i) or, for so long as the Guarantee is in effect, 9(o) or 9(p) occurs the Notes will be immediately due and repayable without any declaration, notice or other act on the part of the Trustee or the Noteholders all without diligence, presentment, demand of payment, protest or notice of any kind, which are expressly waived by the Issuer.

10. Prescription Claims for principal, premium, if any, and interest on redemption shall become void unless the relevant Note Certificates are surrendered for payment within ten years, and claims for interest due other than on redemption shall become void unless made within five years, of the appropriate Relevant Date.

188 11. Replacement of Note Certificates If any Note Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Registrar, subject to all applicable laws and stock exchange requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer or Registrar may reasonably require. Mutilated or defaced Note Certificates must be surrendered before replacements will be issued.

12. Trustee and Agents Under the Trust Deed, the Trustee is entitled to be indemnified and relieved from responsibility in certain circumstances and to be paid its costs and expenses in priority to the claims of the Noteholders. In addition, the Trustee is entitled to enter into business transactions with the Issuer, the Guarantor and any entity relating to the Issuer or the Guarantor without accounting for any profit. In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder be entitled to claim, from the Issuer, the Guarantor, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders except to the extent already provided for in Condition 8 (Taxation) and/or any undertaking given in addition to, or in substitution for, Condition 8 (Taxation) pursuant to the Trust Deed. In acting under the Agency Agreement and in connection with the Notes, the Agents act solely as agents of the Issuer and (to the extent provided therein) the Trustee and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders. Under the Agency Agreement, the Agents are entitled to be indemnified and relieved from certain responsibility in certain circumstances. The initial Agents and their initial Specified Offices are listed below. Each of the Issuer and (for so long as the Guarantee is in effect) the Guarantor reserves the right (with the prior approval of the Trustee) at any time to vary or terminate the appointment of any Agent and to appoint a successor registrar or principal paying agent or additional or successor other paying agents and transfer agents; provided, however, that the Issuer shall, at all time maintain a registrar outside the United Kingdom. Notice of any change in any of the Agents or in their Specified Offices shall promptly be given to the Noteholders. The Agency Agreement provides that the Issuer may at any time, with the prior written approval of the Trustee, appoint a successor Registrar or Principal Paying Agent and/or additional or successor Paying Agents or Transfer Agents provided that the Issuer maintains (i) a Principal Paying Agent; (ii) for so long as the Notes are listed and/or admitted to trading on any stock exchange, a Paying Agent as may be required by the rules and regulations of such stock exchange; (iii) a Registrar having a Specified Office outside the United Kingdom; and (iv) a Paying Agent in a European Union member state that will not be obliged to withhold or deduct tax pursuant to any law implementing the European Union Directive or any other directive regarding the taxation of savings or any law implementing or complying with, or introduced in order to conform to, the European Union Directive.

13. Meetings of Noteholders; Modification and Waiver; Substitution (a) Meetings of Noteholders: The Trust Deed contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions or the Trust Deed or the Subordination Deed. Any such modification may be made if sanctioned by an Extraordinary Resolution (as defined in the Trust Deed). Such a meeting may be convened on no less than 14 days notice by the Trustee, the Issuer or by the Trustee upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the Notes then outstanding. The quorum at any meeting convened to vote on an Extraordinary Resolution will be one or more persons holding or representing more than half of the aggregate principal amount of the Notes then outstanding or, at any adjourned meeting, one or more persons holding or representing more than one quarter of the aggregate principal amount of the Notes then outstanding (and proposals at such meetings may only be sanctioned by one or more persons holding or representing more than

189 half or one quarter, respectively, of the aggregate principal amount of the Notes then outstanding); provided, however, that certain proposals (“Reserved Matters”) (including any proposal to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes, to alter the method of calculating the amount of any payment in respect of the Notes or the date for any such payment, to change the currency of payments under the Notes, to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution, to alter the governing law of the Conditions or the Trust Deed or consent to the modification of any provision of the Subordination Deed) may only be sanctioned by all Noteholders who for the time being are entitled to receive notice of a meeting of Noteholders under the Trust Deed. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders, whether present or not. In addition, a resolution in writing and in accordance with the provisions of the Trust Deed notified, in accordance with Condition 17 (Notices), to all Noteholders who for the time being are entitled to receive notice of a meeting of Noteholders under the Trust Deed will take effect as if it were an Extraordinary Resolution if signed by or on behalf of such Noteholders that would be entitled to pass such resolution as if such resolution had been proposed at a duly convened and quorate meeting of Noteholders at which such Noteholders were present or duly represented. Once duly signed, such a resolution in writing shall take effect as an Extraordinary Resolution so long as at least 14 days have elapsed following the date of notification of such resolution to the Noteholders in accordance with Condition 17 (Notices). Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders. Affiliated shareholders of the Issuer or the Guarantor who are also Noteholders shall not, by virtue of their votes alone, be allowed to pass certain Extraordinary Resolutions. (b) Modification and waiver: The Trustee may, without the consent of the Noteholders, agree to any modification of the Notes or the Trust Deed (other than in respect of a Reserved Matter) which is, in the opinion of the Trustee, proper to make if, in the opinion of the Trustee, such modification will not be materially prejudicial to the interests of Noteholders or which is of a formal, minor or technical nature or is to correct a manifest error. In addition, the Trustee may, without the consent of the Noteholders, authorise or waive any breach or proposed breach of the Notes or the Trust Deed by the Issuer or the Guarantor (other than a proposed breach or breach relating to a Reserved Matter) if, in the opinion of the Trustee, the interests of the Noteholders will not be materially prejudiced thereby. Unless the Trustee agrees otherwise, any such authorisation, waiver or modification shall be notified to the Noteholders in accordance with Condition 17 (Notices) as soon as practicable thereafter. (c) Substitution: The Trust Deed contains provisions under which the Issuer or the Guarantor may, without the consent of the Noteholders, transfer the obligations of the Issuer as principal debtor under the Trust Deed and the Notes or of the Guarantor under the Guarantee to a third party provided that certain conditions specified in the Trust Deed are fulfilled.

14. Enforcement The Trustee may, at its discretion and without notice, institute such proceedings subject to Condition 1 (Form, Denomination and Status) as it thinks fit to enforce its rights under the Trust Deed and in respect of the Notes, but it shall not be bound to do so unless: (a) it has been so directed by an Extraordinary Resolution or (in the case only of the occurrence of an Event of Default and provided, in each case, that such event is continuing) has been so requested in writing by the Holders of at least one-quarter in principal amount of the outstanding Notes; and (b) it has been indemnified and/or prefunded and/or provided with security to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges and expenses which may be incurred by it in connection therewith. No Noteholder may proceed directly against the Issuer or the Guarantor unless the Trustee, having become bound to do so, fails to do so within a reasonable time and such failure is continuing.

190 15. Enforcement of limited provisions in the Subordination Deed The Trustee may institute such proceedings as it thinks fit to enforce its rights under the Subordination Deed following an Insolvency Event (as such term is defined in the Subordination Deed) in respect of the Issuer, but it shall not be bound to do so unless: (i) it has been so directed by an Extraordinary Resolution of the Noteholders; and (ii) it has been indemnified and/or prefunded and/or provided with security to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges and expenses which may be incurred by it in connection therewith.

16. Further Issues The Issuer may from time to time, without the consent of the Noteholders and in accordance with the Trust Deed, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.

17. Notices Notices to the Noteholders will be sent to them by first class mail (or its equivalent) or (if posted to an overseas address) by airmail at their respective addresses on the Register and, so long as the Notes are listed on the Irish Stock Exchange, filed with the Companies Announcements Office of the Irish Stock Exchange. Any such notice shall be deemed to have been given on the fourth day after the date of mailing.

18. Governing Law and Arbitration (a) Governing law: The Trust Deed, the Agency Agreement, the Notes and all other agreements entered into, and any non-contractual obligations arising out of or in connection therewith, are governed by, and shall be construed in accordance with, English law. (b) Arbitration: As provided in the Trust Deed, any dispute, controversy, claim or difference of whatever nature between the Issuer or, as the case may be, the Guarantor and any Noteholder (subject to Condition 14) howsoever arising out of or in connection with the Notes or the Guarantee, or any supplement, modifications or additions thereto (including any question regarding the subject matter, existence, negotiation, validity, termination or enforceability of such agreement and also including any non-contractual disputes or claims arising out of such agreement) (each a “Dispute”) shall be finally and exclusively resolved by confidential arbitration under the Rules of Arbitration of the London Court of International Arbitration (the “LCIA Rules”), which rules are deemed to be incorporated by reference into this Condition 18(b). The procedure for arbitration will be as follows: (1) The arbitral tribunal shall consist of three arbitrators. (2) Each of the two parties shall be entitled to nominate one arbitrator for appointment by the LCIA Court in accordance with the LCIA Rules. In the event that either of the two parties fails to nominate an arbitrator within the time limits specified by the LCIA Rules, such arbitrator shall be appointed promptly by the LCIA Court. The third arbitrator, who shall be the chairman of the arbitral tribunal, shall be nominated jointly by the first two arbitrators within 14 days of the confirmation of the appointment of the second arbitrator, or in default of agreement, appointed by the LCIA Court. (3) The seat of the arbitration shall be London, England and the language of the arbitration shall be English. Any award shall be issued in English. The jurisdiction of the English court shall be excluded under section 45 (determination of preliminary point of law) and 69 (appeal on point of law) of the Arbitration Act 1996. (c) The Issuer agrees, and the Guarantor has agreed in the Trust Deed, that the process by which any proceedings in England are begun may be served on it by being delivered to Law Debenture Corporate Services Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX, United Kingdom. (d) The Issuer consents, and the Guarantor has in the Trust Deed consented, generally in respect of any Disputes to the giving of any relief or the issue of any process in connection with such Disputes insofar as such relief or process is consistent with the parties’ agreement to arbitrate, including, without limitation, the making, enforcement or execution against any property whatsoever, irrespective of its use or intended use, of any order or judgment which is made or given in such Disputes.

191 (e) To the extent that either the Issuer or the Guarantor may in any jurisdiction claim for itself or its assets or revenues immunity from suit, execution, injunctive relief, attachment or other legal process (whether interim or final and whether in aid of execution, before judgment or otherwise) and to the extent that such immunity (whether or not claimed) may be attributed in any such jurisdiction to the Issuer, the Guarantor or their respective assets or revenues, the Issuer agrees, and the Guarantor has agreed in the Trust Deed, not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

19. Definitions In these Conditions the following terms have the meaning given to them in this Condition 19: “Acquisition Facility” means a syndicated or bilateral term loan credit facility entered into by the Issuer or the Guarantor (as the case may be) with a commercial lender or lenders or multilateral finance agency in connection with financing the acquisition by the Issuer or the Guarantor (as the case may be) or a Subsidiary thereof, or a merger by the Issuer or the Guarantor (as the case may be) or a Subsidiary thereof with, an entity whose total consolidated assets represent at least 25% of the Issuer’s or the Guarantor’s (as the case may be) total consolidated assets prior to such acquisition or merger, in each case as at the end of its most recently completed fiscal quarter, provided that such credit facility shall cease to be an Acquisition Facility if the proceeds thereof are applied towards anything other than in connection with the financing of such acquisition or merger; “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control; “Agency” means any agency, authority, central bank, department, committee, government, legislature, minister, ministry, official or public or statutory person (whether autonomous or not); “Bankruptcy Law” means (i) for purposes of the Issuer, any applicable bankruptcy, reorganisation or insolvency law in The Netherlands; (ii) for purposes of the Guarantor and any Significant Subsidiary of the Guarantor organised under the laws of the Russian Federation on the date hereof, the Federal Law No. 127-FZ “On Insolvency (Bankruptcy)”, dated 26 October 2002, as may be amended from time to time, and any similar statute, regulation or provision of any other jurisdiction in which the Guarantor or such Significant Subsidiary is organised or conducting business; and (iii) for purposes of any Significant Subsidiary of the Guarantor organised outside of the Russian Federation, any applicable bankruptcy, reorganisation or insolvency law in its jurisdiction of incorporation; “Board of Directors” means, as to any Person, the board of directors of such Person or any duly authorised committee thereof; “Business Day” means any day (other than a Saturday or Sunday) on which banks generally are open for business in New York, Moscow, Amsterdam and London; “Capital Stock” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s equity, including Preferred Stock of such Person, whether now outstanding or issued after the date hereof, including without limitation, all series and classes of such capital stock; “Capitalised Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental obligations of such Person as lessee, in conformity with GAAP or IFRS, as applicable, is required to be capitalised on the balance sheet of such Person; “Capitalised Lease Obligations” means the capitalised amount of a Capitalised Lease determined in accordance with GAAP or IFRS, as applicable, and the amount of Indebtedness represented by such obligation will be the capitalised amount of such obligation at the time any determination thereof is to be made as determined in accordance with GAAP or IFRS, as applicable, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty; “Cash Equivalents” means: (1) any evidence of Indebtedness with a maturity of one year or less issued or directly and fully guaranteed or insured by an Approved Jurisdiction or any Agency or instrumentality thereof; provided that the full faith and credit of an Approved Jurisdiction (or similar concept under the laws of the relevant Approved Jurisdiction) is pledged in support thereof;

192 (2) current account balances, deposits, certificates of deposit, promissory notes, acceptances or money market deposits with a maturity of one year or less of (i) any institution having combined consolidated capital and surplus and undivided profits (or any similar capital concept) of not less than US$500 million (or the equivalent in another currency) as determined under GAAP, IFRS, other international accounting standards or the accounting standards of the country in which such institution is incorporated and as set forth in the most recent publicly available financial reports published by such institution or (ii) any Subsidiary of the Issuer or (for so long as the Guarantee is in effect) the Guarantor (as the case may be) duly organised and operating as a banking institution under the laws of Russia, Ukraine or any other jurisdiction in which the Issuer or its Subsidiaries, or (for so long as the Guarantee is in effect) the Guarantor or its Subsidiaries, (as the case may be) conducts telecommunications business, of any banking or financial institution referred to under (i) above; (3) current account balances, deposits, certificates of deposit, promissory notes, acceptances or money market deposits with a maturity of one year or less with any banking institution duly organised and operating under the laws of Russia, Ukraine or any other jurisdiction in which the Issuer or its Subsidiaries, or (for so long as the Guarantee is in effect) the Guarantor or its Subsidiaries, (as the case may be) conducts telecommunications business, having combined capital and surplus and undivided profits (or any similar capital concept) of not less than US$100 million (or the equivalent in another currency) as determined under GAAP, IFRS, other international accounting standards or the accounting standards of the country in which such institution is incorporated and as set forth in the most recent publicly available financial reports published by such institution; provided, however, that the aggregate of such current account balances, deposits, certificates of deposit, promissory notes, acceptances or money market deposits with a maturity of one year or less may not exceed at any one time the aggregate of (x) US$25 million (or the equivalent in another currency) with any single such banking institution and (y) US$50 million (or the equivalent in another currency) with all such banking institutions; (4) current account balances with any banking institution duly organised and operating under the laws of Russia, Ukraine or any other jurisdiction in which the Issuer or its Subsidiaries, or (for so long as the Guarantee is in effect) the Guarantor or its Subsidiaries, (as the case may be) conducts telecommunications business, having combined capital and surplus and undivided profits (or any similar capital concept) of at least US$10 million (or the equivalent in another currency) but less than US$100 million (or the equivalent in another currency) as determined under GAAP, IFRS, other international accounting standards or the accounting standards of the country in which such institution is incorporated and as set forth in the most recent publicly available financial reports published by such institution; provided, however, that the aggregate of such current account balances may not exceed at any one time (x) US$15 million (or the equivalent in another currency) with any single such banking institution or (y) US$50 million (or the equivalent in another currency) with all such banking institutions; provided, further, that the Issuer or (for so long as the Guarantee is in effect) the Guarantor, as applicable, shall give (and not withdraw) instructions to any such banking institution with which the Issuer or any of its Subsidiaries, or (for so long as the Guarantee is in effect) the Guarantor or any of its Subsidiaries, has a current account balance in excess of US$1 million (or the equivalent in another currency) to transfer the balance in excess of such amount to a banking institution meeting the qualifications set forth in clause (2) or (3) of this definition no later than 10 Business Days from the date on which such current account balance exceeds US$1 million (or the equivalent in another currency); (5) commercial paper with a maturity of one year or less issued by a corporation (other than an Affiliate of the Issuer or the Guarantor) organised under the laws of an Approved Jurisdiction and rated at least “A-1” by S&P or “P-1” by Moody’s Investor Services, Inc.; (6) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the government of an Approved Jurisdiction which obligations mature within one year from the date of acquisition; and (7) interests in any money market funds at least 95% of the assets of which consist of Cash Equivalents of the type discussed in clauses (1) through (5).

193 For the avoidance of doubt, an Investment in an investment fund or trust which invests substantially all of its assets in Investments described above in this definition or which is itself rated at least “AAA” or “A-1” by S&P or “Aaa” or “P-1” by Moody’s Investor Services, Inc. constitutes a Cash Equivalent. For the purposes of this definition of “Cash Equivalents”, “Approved Jurisdiction” means the United States of America, Switzerland, Russia, Norway and any European Union Member State; “Consolidated Total Assets” means at any date of determination the total assets of the Issuer and its consolidated Subsidiaries as shown in the most recently available balance sheet of the Issuer prepared in accordance with GAAP or IFRS, as applicable, and delivered pursuant to Clause 13(ee)(ii) or Clause 13(ee)(iii) of the Trust Deed; “Currency Agreement” means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement; “Fair Market Value” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors, (including a majority of the disinterested directors, if any) whose determination shall be conclusive if evidenced by a resolution of such Board of Directors. “GAAP” means U.S. generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (“FASB”) or, if FASB ceases to exist, any successor thereto; “Guarantee” means the guarantee and indemnity provided by the Guarantor pursuant to Clause 6 (Guarantee) of the Trust Deed; “guarantee” means, for the purpose of the definitions of “Incur”, “Indebtedness”, “Investment” and “Trade Payables”, any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term “guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “guarantee” used as a verb has a corresponding meaning; “Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement; “IFRS” means the International Financial Reporting Standards issued by the International Accounting Standards Board (“IASB”) or, if IASB ceases to exist, any successor thereto; “Incur” (or any derivative term thereof) means, with respect to any Indebtedness, to incur, create, issue, assume, guarantee or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise; provided that neither the accrual of interest nor the accretion of original issue discount shall be considered an Incurrence of Indebtedness; “Indebtedness” means, with respect to any Person at any date of determination (without duplication), (1) all indebtedness of such Person for borrowed money; (2) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, excluding Trade Payables and accrued current liabilities arising in the ordinary course of business; (3) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto); (4) all obligations of such Person to pay the deferred and unpaid purchase price of property, assets or services (including, without limitation, any fees paid in connection with any mobile telecommunications licences), which purchase price is due more than six months after the earlier of the date of placing such property in service or taking delivery and title thereto or the completion of such services, except Trade Payables or other accrued liabilities arising in the ordinary course of business which are not overdue or which are being contested in good faith; (5) all Capitalised Lease Obligations of such Person;

194 (6) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness shall be the lesser of: (A) the Fair Market Value of such asset at such date of determination; and (B) the amount of such Indebtedness; (7) all Indebtedness of other Persons guaranteed by such Person to the extent such Indebtedness is guaranteed by such Person; (8) to the extent not otherwise included in this definition, net obligations under Currency Agreements and Interest Rate Agreements; and (9) the maximum redemption amount of any Redeemable Stock or the maximum redemption amount or principal amount of any security which any Redeemable Stock is convertible or exchangeable into in accordance with clause (3) of the definition of Redeemable Stock. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations as described above, the maximum liability upon the occurrence of the contingency giving rise to the obligation; provided: (A) that the amount outstanding at any time of any Indebtedness issued with original issue discount is the face amount of such Indebtedness less the remaining unamortised portion of the original issue discount of such Indebtedness at such time as determined in conformity with GAAP or IFRS, as applicable; (B) that Indebtedness shall not include any liability for federal, state, local or other Taxes; and (C) that Indebtedness shall not include obligations of any Persons (x) arising from the honouring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds in the ordinary course of business; provided that such obligations are extinguished within two Business Days of their incurrence unless covered by an overdraft line, (y) resulting from the endorsement of negotiable instruments for collection in the ordinary course of business and consistent with past business practices and (z) under stand-by letters of credit or guarantees to the extent collateralised by cash or Cash Equivalents; “Interest Rate Agreement” means any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement, option or future contract or other similar agreement or arrangement; “Investment” in any Person means any direct or indirect advance, loan or other extension of credit (including, without limitation, by way of guarantee or similar arrangement; but excluding (i) advances to customers in the ordinary course of business that are, in conformity with GAAP or IFRS, as applicable, recorded as accounts receivable on the balance sheet of the Issuer or any of its Subsidiaries, or (for so long as the Guarantee is in effect) the Guarantor or any of its Subsidiaries, (as the case may be), (ii) advances to suppliers (including advances to suppliers of equipment) and (iii) advance payments of federal, state, local or other Taxes and customs duties in the ordinary course of business that are, in conformity with GAAP or IFRS, as applicable, recorded as prepayments or other non-current assets on the balance sheet of the Issuer or any of its Subsidiaries, or (for so long as the Guarantee is in effect) the Guarantor or any of its Subsidiaries, (as the case may be)) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, bonds, notes, debentures or other similar instruments issued by, such Person; “June 2011 Notes” means the US$200,000,000 Floating Rate Guaranteed Notes due 2014, the US$500,000,000 6.2546% Guaranteed Notes due 2017 and the US$1,500,000,000 7.5043% Guaranteed Notes due 2022 issued by the Issuer on 29 June 2011; “Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof, any sale with recourse against the seller or any Affiliate of the seller, or any agreement to give any security interest); “Moody’s” means Moody’s Investors Service, Inc.; “Officer” means, with respect to a Person, the Chairman of the Board of Directors, the General Director, the Chief Executive Officer, the President, the Chief Financial Officer, the Controller, the Treasurer or the General Counsel of such Person;

195 “Officers’ Certificate” means a certificate signed by two Officers of the Issuer or the Guarantor, as applicable; “Permitted Guarantor Liens” means, in relation to a Lien of the Guarantor or a Subsidiary of the Guarantor (as the case may be): (1) Liens securing the Notes; (2) Liens granted by a Subsidiary of the Guarantor in favour of the Guarantor or another Subsidiary of the Guarantor, with respect to the property or assets, or any income or profits therefrom, of such Subsidiary; (3) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, material men, repairmen or other similar Liens arising in the ordinary course of business; (4) any Lien existing on the date of these Conditions; (5) any Lien on any property or assets of any Person or on any property or assets of the Subsidiaries of such Person existing at the time such Person is merged or consolidated with or into the Guarantor or any of its Subsidiaries or into which the Guarantor or any of its Subsidiaries is merged or at the time such Person becomes a Subsidiary of the Guarantor or any of its Subsidiaries and not created in contemplation of such event; provided that no such Lien shall extend to any other property or assets of such Person or to any other property or assets of the Subsidiaries of such Person or the Guarantor or any of its Subsidiaries; (6) any Lien existing on any property or assets prior to the acquisition thereof by the Guarantor or any of its Subsidiaries and not created in contemplation of such acquisition; provided that no such Lien shall extend to any other property or assets or any property or assets of the Guarantor or any of its Subsidiaries; (7) any Lien on any property or assets securing Indebtedness of the Guarantor or any of its Subsidiaries Incurred or assumed for the purpose of financing all or part of the cost of acquiring, repairing or refurbishing such property or assets; provided that (i) no such Lien shall extend to any other property or assets of the Guarantor or any of its Subsidiaries other than the assets affixed thereto, and proceeds thereof, (ii) the aggregate principal amount of all Indebtedness secured by Liens under this sub-paragraph (7) on such property or assets does not exceed the purchase price of such property or assets and (iii) such Lien attaches to such property or assets concurrently with the repair or refurbishing thereof or within 180 days after the acquisition thereof; (8) easements, rights-of-way, restrictions and any other similar charges or encumbrances incurred in the ordinary course of business and not interfering in any material respect with the business of the Guarantor or any of its Subsidiaries; (9) Liens securing Hedging Obligations so long as any such Hedging Obligation is not speculative; (10) Any extension, renewal or replacement of any Lien described in sub-paragraphs (1) through (9) above; provided that (i) such extension, renewal or replacement shall be no more restrictive in any material respect than the original Lien, (ii) the amount of Indebtedness secured by such Lien is not increased and (iii) if the property or assets securing the Indebtedness subject to such Lien are changed in connection with such refinancing, extension or replacement, the Fair Market Value of such property or assets is not increased; (11) pledge of Capital Stock of the Guarantor in favour of a Subsidiary of the Guarantor in connection with the direct or indirect issuance by the Guarantor of securities convertible into or exchangeable for Capital Stock of the Guarantor; (12) any additional Lien; provided that (A) immediately after giving effect to such additional Lien, all the secured Indebtedness in the aggregate secured by all such Liens under this sub-paragraph 12 does not exceed 10% of the Guarantor’s total consolidated assets as of the end of the most recently completed fiscal quarter; or (B) to the extent such additional Lien secures Indebtedness incurred under an Acquisition Facility, immediately after giving effect to such additional Lien, all the secured Indebtedness in the aggregate secured by all such Liens under this sub-paragraph 12 does not exceed 20% of the Guarantor’s total consolidated assets as of the end of the most recently completed fiscal quarter (determined on a pro forma basis taking into account the

196 assets of the acquired or merged entity, to the extent so acquired or merged) and provided further that such additional Lien incurred under such Acquisition Facility shall cease to be permitted by this sub-paragraph 12(B) three months after the creation of such security (although, for the avoidance of doubt, such additional Lien may continue to be permitted under sub-paragraph 12(A), except that, if the merger or acquisition has completed, the Guarantor’s total consolidated assets shall be determined as if the merger or acquisition shall have occurred as of the end of the most recently completed fiscal quarter), in each case as determined in accordance with GAAP or IFRS, as applicable; (13) pledges or deposits by such Person in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party or to secure public or statutory obligations of such Person or deposits or cash or Russian government bonds to secure bid, surety or appeal bonds to which such Person is a party, or for contested taxes or import or custom duties or for the payment of rent, in each case Incurred in the ordinary course of business; (14) Liens imposed by law, and Liens in favour of customs authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods, in each case for sums not yet due or being contested in good faith by appropriate proceedings, if a reserve or other appropriate provision, if any, as shall be required by GAAP or IFRS, as applicable, shall have been made in respect thereof; (15) Liens for Taxes, assessments or other governmental charges not yet subject to penalties for non- payment or which are being contested in good faith by appropriate proceedings provided reserves required pursuant to GAAP or IFRS, as applicable, have been taken on the books of the Guarantor or its Subsidiaries; (16) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired; and (17) Liens arising solely by virtue of any statutory or common law provision relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depository institution; provided that (x) such deposit account is not a pledged cash collateral account and (y) such deposit account is not intended by the Guarantor or any of its Subsidiaries to provide collateral to the depository institution; provided, further, except as set forth above, that no Lien on the property, income or assets of the Guarantor shall be a “Permitted Guarantor Lien” other than a Lien arising by operation of law;

“Permitted Issuer Liens” means, in relation to a Lien of the Issuer or a Subsidiary of the Issuer (as the case may be): (1) Liens securing the Notes; (2) Liens granted by a Subsidiary of the Issuer in favour of the Issuer or another Subsidiary of the Issuer, with respect to the property or assets, or any income or profits therefrom, of such Subsidiary; (3) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, material men, repairmen or other similar Liens arising in the ordinary course of business; (4) any Lien existing on the date of these Conditions; (5) any Lien on any property or assets of any Person or on any property or assets of the Subsidiaries of such Person existing at the time such Person is merged or consolidated with or into the Issuer or any of its Subsidiaries or into which the Issuer or any of its Subsidiaries is merged or at the time such Person becomes a Subsidiary of the Issuer or any of its Subsidiaries and not created in contemplation of such event; provided that no such Lien shall extend to any other property or assets of such Person or to any other property or assets of the Subsidiaries of such Person or the Issuer or any of its Subsidiaries; (6) any Lien existing on any property or assets prior to the acquisition thereof by the Issuer or any of its Subsidiaries and not created in contemplation of such acquisition; provided that no such Lien shall extend to any other property or assets or any property or assets of the Issuer or any of its Subsidiaries;

197 (7) any Lien on any property or assets securing Indebtedness of the Issuer or any of its Subsidiaries Incurred or assumed for the purpose of financing all or part of the cost of acquiring, repairing or refurbishing such property or assets; provided that (i) no such Lien shall extend to any other property or assets of the Issuer or any of its Subsidiaries other than the assets affixed thereto, and proceeds thereof, (ii) the aggregate principal amount of all Indebtedness secured by Liens under this sub-paragraph (7) on such property or assets does not exceed the purchase price of such property or assets and (iii) such Lien attaches to such property or assets concurrently with the repair or refurbishing thereof or within 180 days after the acquisition thereof; (8) easements, rights-of-way, restrictions and any other similar charges or encumbrances incurred in the ordinary course of business and not interfering in any material respect with the business of the Issuer or any of its Subsidiaries; (9) Liens securing Hedging Obligations so long as any such Hedging Obligation is not speculative; (10) Any extension, renewal or replacement of any Lien described in sub-paragraphs (1) through (9) above; provided that (i) such extension, renewal or replacement shall be no more restrictive in any material respect than the original Lien, (ii) the amount of Indebtedness secured by such Lien is not increased and (iii) if the property or assets securing the Indebtedness subject to such Lien are changed in connection with such refinancing, extension or replacement, the Fair Market Value of such property or assets is not increased; (11) pledge of Capital Stock of the Issuer in favour of a Subsidiary of the Issuer in connection with the direct or indirect issuance by the Issuer of securities convertible into or exchangeable for Capital Stock of the Issuer; (12) any additional Lien; provided that (A) immediately after giving effect to such additional Lien, all the secured Indebtedness in the aggregate secured by all such Liens under this sub-paragraph 12 does not exceed 10% of the Issuer’s total consolidated assets as of the end of the most recently completed fiscal quarter; or (B) to the extent such additional Lien secures Indebtedness incurred under an Acquisition Facility, immediately after giving effect to such additional Lien, all the secured Indebtedness in the aggregate secured by all such Liens under this sub-paragraph 12 does not exceed 20% of the Issuer’s total consolidated assets as of the end of the most recently completed fiscal quarter (determined on a pro forma basis taking into account the assets of the acquired or merged entity, to the extent so acquired or merged) and provided further that such additional Lien incurred under such Acquisition Facility shall cease to be permitted by this sub-paragraph 12(B) three months after the creation of such security (although, for the avoidance of doubt, such additional Lien may continue to be permitted under sub-paragraph 12(A), except that, if the merger or acquisition has completed, the Issuer’s total consolidated assets shall be determined as if the merger or acquisition shall have occurred as of the end of the most recently completed fiscal quarter), in each case as determined in accordance with GAAP or IFRS, as applicable; (13) pledges or deposits by such Person in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party or to secure public or statutory obligations of such Person or deposits or cash or Russian government bonds to secure bid, surety or appeal bonds to which such Person is a party, or for contested taxes or import or custom duties or for the payment of rent, in each case Incurred in the ordinary course of business; (14) Liens imposed by law, and Liens in favour of customs authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods, in each case for sums not yet due or being contested in good faith by appropriate proceedings, if a reserve or other appropriate provision, if any, as shall be required by GAAP or IFRS, as applicable, shall have been made in respect thereof; (15) Liens for Taxes, assessments or other governmental charges not yet subject to penalties for non- payment or which are being contested in good faith by appropriate proceedings provided reserves required pursuant to GAAP or IFRS, as applicable, have been taken on the books of the Issuer or its Subsidiaries;

198 (16) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired; and (17) Liens arising solely by virtue of any statutory or common law provision relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depository institution; provided that (x) such deposit account is not a pledged cash collateral account and (y) such deposit account is not intended by the Issuer or any of its Subsidiaries to provide collateral to the depository institution; provided, further, except as set forth above, that no Lien on the property, income or assets of the Issuer shall be a “Permitted Issuer Lien” other than a Lien arising by operation of law;

“Permitted Liens” means, with respect to the Issuer and its Subsidiaries, Permitted Issuer Liens and (for so long as the Guarantee is in effect), with respect to the Guarantor and its Subsidiaries, Permitted Guarantor Liens, as the context may indicate or require; “Person” means any individual, corporation, partnership, joint venture, trust unincorporated organisation or government or any Agency or political subdivision thereof; “Preferred Stock” means, with respect to any Person any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s preferred or preference equity, whether now outstanding or issued after February 13, 2013, including, without limitation, all series and classes of such preferred stock or preference stock; “Priority Debt” means, without double counting, any Indebtedness of any Subsidiary of the Issuer from time to time; provided, however, that (a) Priority Debt shall not include any Indebtedness of any such Subsidiary to any member of the VIP Group, and (b) Priority Debt shall include any Indebtedness of any such Subsidiary arising from a guarantee by such Subsidiary of the Indebtedness of any member of the VIP Group to a Third Party; “Put Option” means the option of any Noteholder to require the Issuer to redeem or purchase any of its Notes upon the occurrence of a Put Option Event in accordance with Conditions 2(e) and 6(c); “Put Option Event” means the downgrading of the Notes by a Rating Agency within sixty (60) days immediately following termination of the Guarantee pursuant to Condition 2(c), where (1) the Rating Agency attributes the downgrade in whole or in part to termination of the Guarantee and (2) the downgrade results in the Rating Agency’s rating of the Notes falling at least one notch below the then current rating by such Rating Agency of the June 2011 Notes (or, if the June 2011 Notes are not outstanding at the time, then one notch below the then current rating by such Rating Agency of the VIP Finance Ireland Notes, or, if VIP Finance Ireland Notes are not outstanding at the time, then one notch below the then current rating by such Rating Agency of the UBS (Luxembourg) Notes, or, if UBS (Luxembourg) Notes are not outstanding at the time, then one notch below the then current rating by such Rating Agency of the Guarantor); “Rating Agency” means Moody’s, S&P or any other entity selected by the Issuer as a replacement agency in accordance with Condition 2(b); “Redeemable Stock” means any class or series of Capital Stock of any Person that by its terms or otherwise is: (1) required to be redeemed prior to the Stated Maturity of the Notes; (2) redeemable at the option of the holder (other than in connection with a “Reorganisation” or a “Major Transaction” as such terms are defined in Article 15 and Article 78, respectively, of the Russian Federation Federal Law No. 208-FZ “On Joint Stock Companies”, dated 26 December 1995, as such law may be amended, supplemented or modified from time to time or any successor statute or statutes thereof) of such class or series of Capital Stock at any time prior to the Stated Maturity of the Notes; or (3) convertible into or exchangeable for Capital Stock referred to in clause (1) or (2) above or Indebtedness having a scheduled maturity prior to the Stated Maturity of the Notes;

“S&P” means Standard & Poor’s Ratings Services; “Securities Act” means the United States Securities Act of 1933, as amended;

199 “Significant Subsidiary” means: (a) from time to time, any Subsidiary of the Issuer or the Guarantor, as applicable, that holds or has the right, title or interest to or in any telecommunications licence which licence is responsible for generating more than 10% of the consolidated revenues of the Issuer or the Guarantor, as the case may be, in accordance with GAAP or IFRS, as applicable; or (b) from time to time, any Subsidiary of the Issuer or the Guarantor, as applicable, that, together with its Subsidiaries, (i) for the most recent fiscal year of the Issuer or the Guarantor, as the case may be, accounted for more than 10% of the consolidated revenues of the Issuer or the Guarantor, as the case may be, in accordance with GAAP or IFRS, as applicable; or (ii) as of the end of such fiscal year, was the owner of more than 10% of the consolidated assets of the Issuer or the Guarantor, as the case may be, in accordance with GAAP or IFRS, as applicable; all as set forth on the most recently available consolidated financial statements of the Issuer or the Guarantor, as applicable, in accordance with GAAP or IFRS, as applicable for such fiscal year, but excluding on any date any Person who is no longer a Subsidiary of the Issuer or the Guarantor, as applicable, on such date; “Stated Maturity” means: (1) with respect to any Indebtedness, the date specified in such Indebtedness as the fixed date on which the final instalment of principal of such Indebtedness is due and payable; and (2) with respect to any scheduled instalment of principal of or interest on any Indebtedness, the date specified in such Indebtedness as the fixed date on which such instalment is due and payable;

“Subordinated Indebtedness” means any Indebtedness of the Issuer or (for so long as the Guarantee is in effect) the Guarantor (whether outstanding on the date hereof or thereafter Incurred) which is expressly subordinate in right of repayment to the Notes pursuant to a written agreement; “Subordination Deed” means the subordination deed entered into on February 13, 2013 between the Issuer, the Trustee and VimpelCom Amsterdam B.V.; “Subsidiary” means, with respect to any Person, (i) a corporation more than 50% of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such Person, by such Person and one or more Subsidiaries of such Person or by one or more Subsidiaries of such Person, or (ii) a partnership in which such Person or a Subsidiary of such Person is, at the time, a general partner of such partnership, or (iii) any other Person in which such Person, one or more Subsidiaries of such Person, or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof has (x) over a 50% ownership interest or (y) the power to elect or direct the election of a majority of the directors, members of the board of directors or other governing body of such Person; “Tax”or“Taxes” means any present or future tax, duty, levy, impost, assessment, or other governmental charge (including penalties, interest and other liabilities related thereto); “Taxing Authority” means any government or political subdivision or territory or possession of any government or authority or Agency therein or thereof having the power to tax; “Third Party” means any Person that is not a member of the VIP Group; “Trade Payables” means, with respect to any Person, any accounts payable or any other indebtedness or monetary obligation to trade creditors created, assumed or guaranteed by such Person or guaranteed by any of its Subsidiaries arising in the ordinary course of business in connection with the acquisition of goods or services; “UBS (Luxembourg) Notes” means any outstanding loan participation notes issued by, but without recourse to, UBS (Luxembourg) S.A. for the purpose of funding loans to the Guarantor; “VIP Finance Ireland Notes” means any outstanding loan participation notes issued by, but with limited recourse to, VIP Finance Ireland Limited for the purpose of funding loans to the Guarantor; “VIP Group” means VimpelCom Ltd. and its Subsidiaries from time to time; and “Voting Stock” means with respect to any Person, any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, management board, managers or trustees of such Person (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency).

200 SUMMARY OF PROVISIONS OF THE NOTES WHILE IN GLOBAL FORM The Global Note Certificates contain provisions which apply to the Notes in respect of which the Global Note Certificates are issued, some of which modify the effect of the “Terms and Conditions of the Notes” contained elsewhere in this prospectus. Terms defined in the “Terms and Conditions of the Notes” section of this prospectus have the same meanings as in the paragraphs below. The following is a summary of those provisions.

Meetings The registered holder of each Global Note Certificate will be treated at any meeting of Noteholders as having one vote in respect of each US$1,000 principal amount of USD Notes and one vote in respect of each RUB1,000 principal amount of RUB Notes for which the relevant Global Note Certificates may be exchanged. The registered holder of each Global Note Certificate may grant (in accordance with the normal rules and operating procedures of Euroclear, Clearstream, Luxembourg or DTC, or any alternative clearing system, as appropriate) proxies and otherwise authorize persons with an interest in the Notes in respect of which such Global Note Certificate has been issued to take any action which such registered holder is entitled to take in respect of such meeting.

Purchase and Redemption In the event of the purchase or redemption by or on behalf of the Issuer (or the Guarantor or any of the Issuer’s or the Guarantor’s subsidiaries, as the case may be) and cancellation of a part of a Global Note Certificate in accordance with Condition 6 (Redemption and Purchase) of the Terms and Conditions of the Notes, the portion of the principal amount thereof so purchased, or redeemed, and cancelled shall be endorsed by or on behalf of the Registrar on behalf of the Issuer on the schedule to such Global Note Certificate, whereupon the principal amount thereof shall be reduced by the amount so purchased and cancelled and endorsed. Upon the purchase or redemption of the whole of a Global Note Certificate in accordance with Condition 6 (Redemption and Purchase) of the Terms and Conditions of the Notes, such Global Note Certificate shall be surrendered to or to the order of the Registrar and cancelled. So long as the Notes are held on behalf of Euroclear, Clearstream, Luxembourg or DTC, as applicable, or any alternative clearing system, such purchases and redemptions will be made in accordance with the procedures of Euroclear, Clearstream, Luxembourg or DTC, as applicable, or any alternative clearing system, as appropriate.

Payment Payments of interest in respect of Notes represented by a Global Note Certificate will be made without presentation or if no further payment of principal or interest is to be made in respect of the Notes, against presentation and surrender of such Global Note Certificate to or to the order of the Registrar. Upon any payment of principal, the amount so paid shall be endorsed by or on behalf of the Registrar on behalf of the Issuer on the schedule to the Global Note Certificate. Payment while the Notes are represented by Global Note Certificates will be made in accordance with the Agency Agreements and the procedures of Euroclear, Clearstream, Luxembourg or DTC, as applicable, or any alternative clearing system. See Condition 7 (Payments) of the Terms and Conditions in Respect of the RUB Notes for further information on the method in which payments will be made on the RUB Notes.

Notices So long as any of the Notes are represented by a Global Note Certificate and such Global Note Certificate is held on behalf of Euroclear, Clearstream, Luxembourg or DTC, as applicable, or any alternative clearing system, notices to Noteholders may be given by delivery of the relevant notice to Euroclear, Clearstream, Luxembourg or DTC, or any alternative clearing system, for communication by it to entitled accountholders in substitution for notification as required by the “Terms and Conditions of the Notes.” For so long as the Notes are listed on the Irish Stock Exchange and the guidelines of that exchange so require, notices shall also be filed with the Companies Announcements Office of the Irish Stock Exchange.

Transfers Transfers of interests in the Notes will be effected through the records of Euroclear, Clearstream, Luxembourg or DTC, as applicable, or any alternative clearing system and their respective direct and indirect participants.

Trustee’s Powers In considering the interests of Noteholders in circumstances where the Global Note Certificates are being held on behalf of Euroclear, Clearstream, Luxembourg or DTC, as applicable, or any alternative clearing system, the Trustee may, to the extent it considers it appropriate to do so in the circumstances (a) have regard to such

201 information as may have been made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its accountholders (either individually or by way of category) with entitlements in respect of the Global Note Certificates and (b) consider such interests on the basis that such accountholders were the Noteholders.

Prescription Claims against the Issuer and the Guarantor in respect of principal, premium, if any, and interest on the Notes while the Notes are represented by the Global Note Certificates will become void unless they are presented for payment within a period of 10 years (in the case of principal and premium) and five years (in the case of interest) from the appropriate Relevant Date.

202 DESCRIPTION OF THE ISSUER The Issuer is incorporated for the purpose of engaging in holding and financing activities and was incorporated in the Netherlands as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid), under the name VimpelCom Holdings B.V. on June 29, 2009. The corporate seat of the Issuer is at Amsterdam, the Netherlands. The registered office of the Issuer is Claude Debussylaan 88, 1082 MD Amsterdam, The Netherlands and the telephone number is +31 (0)20 7977 200. The Issuer has been registered with the trade register of the Chamber of Commerce in Amsterdam, the Netherlands under number 34345993.

Corporate structure At the date of this prospectus, a total of 15,099,998 shares of par value EUR 1 each have been issued and paid up. All issued ordinary shares are and will be in registered form, and no share certificates are or will be issued. The Issuer is a wholly owned subsidiary of VimpelCom Amsterdam B.V. and a wholly owned indirect subsidiary of VimpelCom Ltd. The diagram below shows a simplified corporate structure of the Issuer at the date hereof.

VimpelCom Ltd.

(Bermuda)

100%

1 ordinary share 0.0039% VimpelCom Amsterdam B.V. (Netherlands)

100%

VimpelCom Holdings B.V. (Netherlands) (Issuer)

100% - 1 share 99.9961%*

Open Joint Stock Company “Vimpel-Communications” Private Joint Stock Company (Russia) “Kyivstar” (Guarantor)

* For more information on Kyivstar’s ownership structure and anticipated changes, see the section of this prospectus entitled “Business—Organizational Structure.”

Business The principal objects of the Issuer are set forth in section 3 of its Articles of Association and permit the Issuer, inter alia, to (i) incorporate, participate in any way whatsoever in, to manage, to supervise businesses and companies; (ii) to finance businesses and companies; and (iii) to borrow, to lend and to raise funds, including the issue of bonds, promissory notes or other securities or evidence of indebtedness as well as to enter into agreements in connection with aforementioned activities. As such, the Issuer is, inter alia, authorized to issue the Notes and enter into the Trust Deeds and the other transaction documents to which it is or will be a party.

203 Financial Statements The financial year of the Issuer ends on 31 December in each year. The Issuer has prepared standalone Dutch GAAP financial statements for the year ended December 31, 2011 in accordance with Dutch Civil Code and IFRS consolidated interim financial statements for the nine months ended September 30, 2012 and 2011 and for the years ended December 31, 2011, 2010, 2009. The Issuer is as of April 21, 2010, the accounting successor to the Guarantor, and, accordingly, accounting data and disclosures related to the period prior to April 21, 2010 in its IFRS financial statements represent accounting data and disclosures of the Guarantor. Each year, a copy of the annual accounts of the Issuer together with the annual report thereon is required to be prepared within five months following the end of the financial year, which period may be extended by six months by the general meeting of shareholders. The annual accounts must be audited, adopted by the general meeting of shareholders, and, within eight days following the adoption (and ultimately within 13 months following the financial year if the annual accounts are not adopted), the annual accounts together with the auditor’s statement, the annual report and supplementary information must be filed with the Chamber of Commerce in Amsterdam. The annual accounts can be obtained from the Chamber of Commerce in Amsterdam and free of charge from the registered office of the Issuer. The Issuer does not have audited annual accounts for any period prior to the year ended December 31, 2010 because the Issuer did commence operations until April 2010. The auditors of the Issuer are Ernst & Young Accountants LLP, who are chartered accountants (register accountants) and are members of the Nederlandse Beroepsorganisatie van Accountants (NBA) and registered auditors qualified to practice in the Netherlands, and Ernst & Young LLC are members of the Non-Profit partnership “Russian Audit Chamber” and are registered auditors qualified to practice in Russia.

Negative Total Equity The Issuer’s consolidated IFRS financial statements as of December 31, 2011 and consolidated IFRS interim financial statements as of September 30, 2012, show that the Issuer had negative total equity of US$4.4 billion and US$3.3 billion, respectively. The negative total equity position is mainly due to accounting rules applicable to the Issuer’s acquisition of the assets and liabilities of OJSC VimpelCom, which was required to be accounted for as a transaction under common control whereby the assets and liabilities acquired were recorded on the Issuer’s financial statements at their historical carrying value on OJSC VimpelCom’s financial statements. If the assets and liabilities of OJSC VimpelCom were to be accounted for at their fair value, the consolidated total equity amount of the Issuer would be a positive amount. The negative total equity of the Issuer does not indicate that it is insolvent or that it is unable to meet its obligations as they come due because the fair value of its assets is substantially greater than the carrying value reflected on its IFRS consolidated financial statements. The standalone (unconsolidated) financial statements of the Issuer prepared under Dutch GAAP indicate that the Issuer has US$7.1 billion and US$7.6 billion of positive shareholders equity as of December 31, 2011 and September 30, 2012, respectively, reflecting the fair value of the assets and liabilities of Kyivstar as of its acquisition date and dividend income earned from OJSC VimpelCom and Kyivstar, less the obligation under the Outstanding Promissory Note. The negative total equity in the Issuer’s consolidated financial statements arises because the historical carrying value of the assets and liabilities of OJSC VimpelCom acquired by the Issuer was approximately US$5.6 billion as of the date of their acquisition by VimpelCom Ltd. For accounting reasons, this is the approximate value of the assets and liabilities of OJSC VimpelCom on the consolidated financial statements of the Issuer. Because the Issuer was required, for tax reasons, to pay fair value for the OJSC VimpelCom shares under the arm’s length principle, it made such payment by issuing the Original Promissory Note in the principal amount of US$16.7 billion plus a cash payment of EUR150,000. See “Risk Factors—Risks Related to Our Business—The Issuer’s substantial Outstanding Promissory Note held by VimpelCom Amsterdam B.V. will rank pari passu with the Notes until the Issuer’s insolvency, when it becomes subordinated to the Notes, but until the Issuer’s insolvency it may be prepaid in whole or in part, potentially diverting funds from payment of the Notes to payment of the Outstanding Promissory Note or reducing the assets of the Issuer available upon insolvency for application to the Notes.” The difference between the value at which the OJSC VimpelCom assets and liabilities are recorded on the Issuer’s consolidated financial statements and the liability under the Original Promissory Note was approximately US$11.1 billion as of September 2010, and this amount was recorded on the Issuer’s consolidated IFRS statements of changes in equity. This amount was partially offset by other changes in equity in the financial statements of the Issuer, but resulted in the negative total equity amounts reflected on the Issuer’s financial statements as of December 31, 2011 and September 30, 2012.

204 Miscellaneous The Issuer may be appointed by the Dutch Central Bank (De Nederlandsche Bank N.V.) as a reporter pursuant to the regulation of February 4, 2003, issued by the Dutch Central Bank, implementing reporting instructions under the Act on the Financial Foreign Relations 1994 (Wet financiële betrekkingen buitenland 1994), and, if so appointed, the Issuer must file reports with the Dutch Central Bank for the benefit of the composition of the balance of payments for the Netherlands by the Dutch Central Bank. As long as the Notes are listed on the Irish Stock Exchange, the Issuer will be subject to insider trading rules in the Netherlands pursuant to the Dutch Act on the Financial Supervision (Wet op het financieel toezicht) and the regulations promulgated thereunder.

205 TAX CONSIDERATIONS The following is a general description of certain tax considerations relating to the Notes based on advice received. It does not purport to be a complete analysis of all tax considerations relating to the Notes. Prospective purchasers of Notes should consult their tax advisers as to the consequences of a purchase of Notes, including but not limited to the consequences of receipt of interest and of sale or redemption of the Notes. This summary is based upon the law in effect on the date of this document and is subject to any change in law that may take effect after such date. This summary does not seek to address the applicability of, and procedures in relation to, taxes levied by regions, municipalities or other non-federal legal authorities of Russia, nor does it seek to address the availability of double tax treaty relief.

Russian Taxation General The following is a summary of certain Russian tax considerations relevant to the purchase, ownership and disposition of the Notes, as well as concerning taxation of payments under the Guarantees. The summary is based on the laws of Russia and the interpretations thereof by the Ministry of Finance and the Federal Tax Service (and its predecessor, the Russian Ministry of Taxes and Levies) as in effect on the date of this prospectus and is subject to changes that may come into effect after that date (possibly with retroactive effect). The summary does not seek to address the applicability of, or procedures in relation to, taxes levied by regions, municipalities or other non-federal level authorities of Russia, nor does the summary seek to address the availability of double tax treaty relief in respect of the Notes, or practical difficulties involved in obtaining such double tax treaty relief. Prospective investors should consult their own tax advisors regarding the tax consequences of investing in the Notes. No representation with respect to the Russian tax consequences to any particular Noteholder is made hereby. Many aspects of Russian tax law are subject to significant uncertainty and lack interpretive guidance. Further, the substantive provisions of Russian tax law applicable to financial instruments (including the Notes) and to Noteholders and the interpretation and application of those provisions by the Russian tax authorities may be subject to more rapid and unpredictable change and inconsistency than in jurisdictions with more developed capital markets and tax systems. In particular, the interpretation and application of such provisions will in practice rest substantially with local tax inspectorates. In practice, interpretation by different tax inspectorates may be inconsistent or contradictory and may result in the imposition of conditions, requirements or restrictions not provided for by the existing legislation. Similarly, in the absence of binding precedents court rulings on tax or related matters by different courts relating to the same or similar circumstances may also be inconsistent or contradictory. For the purposes of this summary, a “non-resident Noteholder” means: (i) a legal entity or organization, in each case not organized under Russian law, which holds and disposes of the Notes otherwise than through a permanent establishment (as defined under Russian tax law) in Russia; or (ii) an individual actually present in the Russian Federation for an aggregate period of less than 183 calendar days (including days of arrival to Russia and departure from Russia) in any period comprising 12 consecutive months. Presence in Russia for tax residency purposes is not considered interrupted for an individual’s short term departures (less than 6 month) from Russia for medical treatment or education in any period comprising 12 months. The interpretation of this definition by the Ministry of Finance of Russia states that for tax withholding purposes an individual’s tax residency status should be determined on the date of the income payment (based on the number of days in Russia in the 12-month period preceding the date of the payment). The individual’s final tax liability in Russia for the reporting calendar year should be determined based on the number of days spent in Russia in such calendar year. For purposes of this summary, a “resident Noteholder” means any Noteholder (including any individual and any legal entity or organization) who is not a non-Resident Noteholder. Russian tax residency rules may be affected by an applicable double tax treaty. It is anticipated that the Russian tax residency rules applicable to legal entities may change in the future.

206 The Russian tax treatment of payments under the Guarantees made by the Guarantor to the Issuer (or to the Trustee, as the case may be) may affect the Noteholders. See “—Taxation of Payment under the Guarantee” below.

Taxation of Payments on the Notes Non-resident Noteholders. A non-resident Noteholder should not be subject to any Russian taxes on receipt from the Issuer of amounts payable in respect of principal of, or interest on, the Notes, subject to what is stated in “—Taxation of Payment under the Guarantee” below. A non-resident Noteholder also generally should not be subject to any Russian taxes in respect of any gains or other income realized on redemption, sale or other disposition of the Notes outside Russia, provided that the proceeds of such redemption, sale or other disposition of the Notes are not received from a source within Russia. A Non-Resident Noteholder that is a legal entity or organization should not be subject to Russian withholding tax on acquisition of the Notes, as well as on the sale, redemption or disposition of the Notes, even if the proceeds from such sale, redemption or disposition of the Notes are received from a source within Russia. In the event that proceeds from a sale, redemption or disposal of the Notes are received from a source within Russia, a non-resident Noteholder who is an individual will generally be subject to Russian personal income tax at a rate of 30 percent on the gain from such disposal (the gain generally being calculated as the gross proceeds from such disposal less any available cost deduction, including the original purchase price of the Notes), subject to any available double tax treaty relief. According to Russian tax legislation, income received from a sale, exchange, redemption or other disposal of the Notes should be treated as having been received from a source within Russia if such sale, exchange, redemption or other disposal occurs in Russia. Russian tax law gives no clear indication as to how to identify the source of income received from a sale, exchange, redemption or other disposal of securities except that income received from the sale of securities “in Russia” will be treated as having been received from a source within Russia. There is a risk that, if the documentation supporting the cost deductions is deemed insufficient by the tax authorities, the deduction will be disallowed and the tax will apply to the gross amount of sales proceeds. The taxable base should be calculated in roubles and, therefore, may be affected by changes in the exchange rate between the currency of acquisition of the Notes, the currency of disposal of the Notes and roubles. The tax may be withheld at source of payment or, if the tax is not withheld, the non-resident Noteholder may be liable to declare its income in Russia and to pay the tax. Additionally, acquisition of the Notes by a non-resident Noteholder who is an individual may constitute a taxable event pursuant to provisions of Russian tax legislation relating to the material benefit (deemed income) received by individuals as a result of acquisition of securities. If the acquisition price of the Notes is below the lower margin of fair market value calculated under a specific procedure for the determination of market prices of securities for tax purposes, the difference may be subject to the Russian personal income tax at the rate of 30 percent (which could be subject to reduction or elimination under an applicable double tax treaty). As noted above with respect to the disposal of the Notes, under Russian tax legislation, taxation of income of non-resident Noteholders who are individuals will depend on whether this income would be qualified as received from Russian or non-Russian sources. Although Russian tax legislation does not contain any provisions on how the related material benefit should be sourced, the tax authorities may infer that such income should be considered as Russian source income if the Notes are purchased “in Russia.” In the absence of any additional guidance as to what should be considered as a purchase of securities “in Russia,” the Russian tax authorities may apply various criteria in order to determine the source of the related material benefit, including looking at the place of conclusion of the acquisition transaction, the location of the Issuer, or other similar criteria. Non-resident Noteholders who are individuals should consult their own tax advisors with respect to the tax consequences of the purchase of the Notes, sale or other disposal of the Notes and of the receipt of proceeds from a source within Russia. Tax Treaty Relief. The Russian Federation has concluded double tax treaties with a number of countries and honors some double tax treaties concluded by the former Union of Soviet Socialist Republics. These tax treaties may contain provisions that reduce or eliminate Russian tax due with respect to income received from a source within Russia by a non-resident Noteholder on disposition of the Notes. To obtain the benefit of such double tax treaty provisions, the Noteholder must comply with the certification, information, and reporting requirements in force in Russia. Currently a non-resident Noteholder which is a legal entity would need to provide the payer of income with a certificate of tax residence issued by the competent tax authority of the relevant treaty country in advance

207 of the first payment of income in each calendar year. The certificate should confirm that the respective non-resident Noteholder which is a legal entity is the tax resident of the relevant double tax treaty country in a particular calendar year during which the income is paid. This certificate should be apostilled or legalized and needs to be renewed on an annual basis. A notarized Russian translation of the certificate may be required. There can be no assurance however that the advance treaty relief will be available in practice. A non-resident Noteholder who is an individual must present to the tax authorities a tax residency certificate issued by the competent authorities in his/her country of residence for tax purposes and a confirmation of the income received and an appropriate documentary proof of tax payments outside of Russia on income with respect to which treaty benefits are claimed as confirmed by the relevant foreign tax authorities. Due to uncertainties regarding the form and procedures for providing such documentary proof, individuals in practice may not be able to obtain tax treaty relief benefits on receipt of proceeds from a source within Russia and obtaining a refund can be extremely difficult. Non-resident Noteholders should consult their own tax advisors regarding possible tax treaty relief and procedures for obtaining such relief with respect to any Russian taxes imposed on any payment received from the Notes. Refund of Tax Withheld. Where double tax treaty relief is available, but Russian withholding tax on income has nevertheless been withheld by the source of payment, a non-resident Noteholder may file an application for the refund of such tax withheld within three years from the end of the tax period in which the tax was withheld. In order to obtain a refund, a non-resident Noteholder would need to file with the Russian tax authorities, among other documents, an application form and a duly notarized, apostilled and translated certificate of tax residence issued by the competent tax authority of the relevant tax treaty country, as well as documents confirming receipt of income and withholding of Russian tax. In addition, a non-resident Noteholder who is an individual would need to provide appropriate documentary proof of tax payments made outside of Russia on income with respect to which tax refund is claimed. The supporting papers must be provided by such non-resident Noteholder who is an individual within one year of the year to which the treaty benefits relate. The Russian tax authorities may, in practice, require a wide variety of documentation confirming the non-resident Noteholder’s right to benefits under a double tax treaty. Such documentation, in practice, may not be explicitly required by the Russian tax law. Obtaining a refund of Russian tax withheld may be a time-consuming process and can involve considerable practical difficulties. Non-resident Noteholders whether individuals or legal entities or organizations should consult their own tax advisors should they need to obtain refund of tax withheld on any payments from the Notes. Resident Holders. Resident Noteholders are generally subject to all applicable Russian taxes in respect of the purchase of the Notes, income received on the Notes, including gains from a disposition of the Notes and interest received on the Notes. Resident Noteholders should consult their own tax advisors with respect to their tax position regarding the Notes.

Taxation of Payment under the Guarantee Russian tax legislation in respect of withholding tax on guarantee payments to non-residents is complex and unclear. Non-resident Noteholders that are legal entities or individuals should consult their own tax advisors with respect to the tax consequences of the receipt of payments under the Guarantees, including applicability of any available double tax treaty relief. In general, payments of Russian source income made by a Russian legal entity to a Non-Resident Noteholder who is an individual or to a Non-Resident Noteholder that is a legal entity with no registered presence and no permanent establishment in the Russian Federation would be subject to Russian withholding tax at prescribed tax rates, unless withholding tax is reduced or eliminated under an applicable double tax treaty. Due to the lack of clarity in Russian tax legislation and the vague wording of the Russian withholding income tax provisions, payments under the Guarantees related to interest on the Notes and, to a lesser extent, payments related to the principal amounts due under the Notes, may be regarded as Russian source income and therefore become subject to withholding tax at a rate of 20% if payment under a Guarantee is made to a Non- Resident Noteholder that is a legal entity which is not organized under Russian laws and which does not hold and dispose of the Notes through a permanent establishment in Russia the 20% withholding tax would apply in such a case unless the withholding tax is reduced or eliminated pursuant to the terms of an applicable double tax treaty.

208 A Russian legal entity (such as the Guarantor) (or a foreign organization that operates in Russia through a permanent establishment) paying income to a foreign legal entity (such as a Non-Resident Noteholder) is required to withhold the tax on each payment, except for interest payments made on debt obligations where two conditions are simultaneously met: (i) the debt obligation on which interest payments are made arises in connection with the issuance by a foreign legal entity of traded bonds; and (ii) the foreign legal entity that receives interest payments duly confirms its tax residency as of the date of receiving the interest payments in a jurisdiction that has a double tax treaty in effect with the Russian Federation. The exemption from this withholding obligation is applied retrospectively from January 1, 2007, and with respect to traded bonds issued until January 1, 2014, which would include the Notes.

A debt obligation is treated as connected with the issuance of traded bonds by foreign legal entity if it is explicitly stated in the agreement governing the relevant debt obligation, and / or in the terms and conditions, and / or the prospectus for issuance of traded bonds, or if this fact is confirmed by the actual transfer of funds upon the issuance of traded bonds.

“Traded bonds” is defined as bonds and other debt obligations listed and / or traded on one or several foreign stock exchanges and / or rights to which are recorded by recognized depository-clearing organizations, provided that such foreign stock exchanges and depository-clearing organizations are specified in the list approved by the Federal Authority for Securities Markets in consultation with the Ministry of Finance of Russia. Such list was approved by the Federal Authority for Securities Markets on October 25, 2012. The Irish Stock Exchange, Euroclear, Clearstream, Luxembourg and DTC are included in this list. The fact that bonds are traded should be confirmed by Russian companies based on information provided by foreign stock exchanges, depository-clearing organizations, prospectus or other documents relating to the issue of the bonds and publicly available information. Therefore, it appears that the Notes should qualify for treatment as traded bonds under the Russian Tax Code, although as noted above there is no certainty in this area of Russian taxation.

In order to confirm tax residence in a jurisdiction that has a double tax treaty in effect with the Russian Federation, recipients of interest income that are legal entities are required to file a residency certificate issued by the competent tax authority of the relevant treaty country. This certificate (apostilled or legalized and translated into Russian) is then required to be filed in the Russian Federation with the payer of interest income, in its role as a withholding tax agent, before the payment under the debt obligation is made.

These conditions for the release of Russian companies from the obligation to withhold Russian withholding tax should also apply to guarantee payments made in respect of traded bonds or corresponding debt obligations, provided that such guarantee payments are envisaged by the terms of the debt obligations. In case guarantee payments are not envisaged by the terms of the debt obligations, there is a risk that no relief from withholding tax obligation would be available. However, the Tax Code may potentially be interpreted in such a way that such relief would still be available if guarantee payments are envisaged by the terms and conditions of the Notes, or the prospectus and/or funds (i.e. Note proceeds) are actually transferred to the Guarantor.

Release from the duty to act as a withholding tax agent effectively means that, in practice, withholding tax on interest payments should not arise in Russia, because currently there is no mechanism or requirement for non-resident legal entities to self-assess and pay the tax. However, there can be no assurance that such rules will not be introduced in the future, which may result in the obligation of non-resident legal entities to self-assess and pay the tax.

If Guarantee payments are payable to, or to the order of the Trustee pursuant to the Trust Deed, there is uncertainty if the Guarantor will be released from obligation to withhold the Russian withholding tax from guarantee payments made to the Trustee. In such a case, the part of the Guarantee payments relating to interest on the Notes and, to a lesser extent, principal of the Notes, may be subject to Russian withholding tax at a rate of 20%, or such other rate as may be effective at the time of payment, where the payee is a Trustee. It is not expected that the Trustee will, or will be able to, claim a withholding tax exemption or reduction under the applicable double tax treaty under such circumstances. In such cases, the Noteholders may seek the reduction or elimination of Russian withholding tax or a refund of the tax under applicable double taxation treaties entered into between their countries of residence and the Russian Federation. There is no assurance, however, that the respective treaty relief will be available to them in practice under these circumstances.

If, on the other hand, Guarantee payments are payable to the Noteholders, Russian withholding income tax may be reduced or eliminated under provisions of a double tax treaty, if the Noteholders are residents in countries having effective double tax treaties with the Russian Federation, and the requirements established by

209 the applicable treaty are met. While some Noteholders may be eligible for an exemption from or reduction on Russian withholding tax under the applicable double tax treaty, there is no assurance that such relief will be available in practice, especially if the payments under the Trust Deeds are made to the non-resident Noteholders who are individuals or in a case when the tax is withheld and a tax refund is claimed.

Where Russian source income is paid to a non-resident Noteholder who is an individual, the list of Russian source income subject to Russian personal income tax is defined by Article 208 of the Tax Code. It is not clear from the provisions of the Tax Code whether payments made by the Guarantor under the Guarantees should be classified as income received from sources within or outside the Russian Federation. If payments made by the Guarantor under the Guarantees to individuals who are not tax residents of the Russian Federation are classified as income received from source in the Russian Federation, these payments may be subject to withholding tax at a rate of 30% on the gross proceeds subject to reduction or elimination under any available double tax treaty provided that conditions for application of treaty relief established by such corresponding treaty and Russian tax legislation are met.

Where a guarantee payment made to a non-resident Noteholder who is an individual is subject to Russian personal income tax but no Russian withholding tax is withheld at source by the Guarantor, the non-resident Noteholder who is an individual would be required to file a tax return individually. The applicable tax would then have to be paid by such individual on the basis of the filed tax return.

Any payment under the Guarantee made by the Guarantor should not be subject to Russian value added tax.

Dutch Taxation The following is a general summary and the tax consequences as described here may not apply to a Noteholder (as defined below). Any potential investor should consult such investor’s tax advisor for more information about the tax consequences of acquiring, owning and disposing of Notes in such investor’s particular circumstances. This taxation summary solely addresses the principal Dutch tax consequences of the acquisition, ownership and disposal of Notes. It does not consider every aspect of taxation that may be relevant to a particular Noteholder under special circumstances or who is subject to special treatment under applicable law. Where in this summary English terms and expressions are used to refer to Dutch concepts, the meaning to be attributed to such terms and expressions shall be the meaning to be attributed to the equivalent Dutch concepts under Dutch tax law. Where in this taxation summary the terms “the Netherlands” and “Dutch” are used, these refer solely to the European part of the Kingdom of the Netherlands. This summary assumes that the Issuer is organized, and that its business will be conducted, in the manner outlined in this prospectus. A change to such organizational structure or to the manner in which the Issuer conducts its business may invalidate the contents of this summary, which will not be updated to reflect any such change. This summary is based on the tax law of the Netherlands (unpublished case law not included) as it stands at the date of this prospectus. The law upon which this summary is based is subject to change, perhaps with retroactive effect. Any such change may invalidate the contents of this summary, which will not be updated to reflect such change. This summary assumes that each transaction with respect to Notes is at arm’s length. Where in this Dutch taxation paragraph reference is made to a “Noteholder,” that concept includes, without limitation: (i) an owner of one or more Notes who in addition to the title to such Notes has an economic interest in such Notes; (ii) a person who or an entity that holds the entire economic interest in one or more Notes; (iii) a person who or an entity that holds an interest in an entity, such as a partnership or a mutual fund, that is transparent for Dutch tax purposes, the assets of which comprise one or more Notes, within the meaning of paragraphs (i) or (ii) above; or (iv) a person who is deemed to hold an interest in Notes, as referred to under paragraphs (i) to (iii) above, pursuant to the attribution rules of article 2.14a, of the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001), with respect to property that has been segregated, for example, in a trust or a foundation.

210 Withholding tax All payments under the Notes may be made free from withholding or deduction of or for any taxes of whatever nature imposed, levied, withheld or assessed by the Netherlands or any political subdivision or taxing authority of or in the Netherlands.

Taxes on Income and Capital Gains Resident Noteholders. The summary set out in this section “—Taxes on Income and Capital Gains—Resident Noteholders” applies only to a Noteholder who is a “Dutch Individual” or a “Dutch Corporate Entity.” A Noteholder is a “Dutch Individual” if: (i) such Noteholder is an individual; and (ii) such Noteholder is resident, or deemed to be resident, in the Netherlands for Dutch income tax purposes, or has elected to be treated as a resident of the Netherlands for Dutch income tax purposes. A Noteholder is a “Dutch Corporate Entity” if: (i) it is a corporate entity (lichaam), including an association that is taxable as a corporate entity, that is subject to Dutch corporation tax; (ii) it is resident, or deemed to be resident, in the Netherlands for Dutch corporation tax purposes; (iii) it is not an entity that, although in principle subject to Dutch corporation tax, is, in whole or in part, specifically exempt from that tax; and (iv) it is not an investment institution (beleggingsinstelling) as defined in the Dutch Corporation Tax Act 1969 (Wet op de vennootschapsbelasting 1969). If a Noteholder is not an individual and if it does not satisfy any one or more of these tests, with the exception of the test in paragraph (ii) with regard to Dutch Corporate Entities above, its Dutch tax position is not discussed in this prospectus. Dutch Individuals deriving profits or deemed to be deriving profits from an enterprise. Any benefits derived or deemed to be derived from Notes, including any gain realized on the disposal of Notes, by a Dutch Individual that are attributable to an enterprise from which such Dutch Individual derives profits, whether as an entrepreneur (ondernemer) or pursuant to a co-entitlement to the net value of an enterprise, other than as a shareholder, are generally subject to Dutch income tax at progressive rates. Dutch Individuals deriving benefits from miscellaneous activities. Any benefits derived or deemed to be derived from Notes, including any gain realized on the disposal of Notes, by a Dutch Individual that constitute benefits from miscellaneous activities (resultaat uit overige werkzaamheden) are generally subject to Dutch income tax at progressive rates. Benefits derived from Notes by a Dutch Individual are taxable as benefits from miscellaneous activities if such Dutch Individual, or an individual who is a connected person in relation to such Dutch Individual as meant by article 3.91, paragraph 2, letter b, or c, of the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001), has a substantial interest (aanmerkelijk belang) in the Issuer. Generally, a person has a substantial interest in the Issuer if such person, either alone or, in the case of an individual, together with such person’s partner (partner), if any, or pursuant to article 2.14a, of the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001), owns or is deemed to own, directly or indirectly, either a number of shares representing five percent or more of the total issued and outstanding capital (or the issued and outstanding capital of any class of shares) of the Issuer, or rights to acquire, directly or indirectly, shares, whether or not already issued, representing five percent or more of the total issued and outstanding capital (or the issued and outstanding capital of any class of shares) of the Issuer or profit participating certificates (winstbewijzen) relating to five percent or more of the annual profits of the Issuer or to five percent or more of the liquidation proceeds of the Issuer. A person who is entitled to the benefits from shares or profit participating certificates (for instance a holder of a right of usufruct) is deemed to be a holder of shares or profit participating certificates, as the case may be, and such person’s entitlement to such benefits is considered a share or a profit participating certificate, as the case may be.

211 Furthermore, a Dutch Individual may, inter alia, derive, or be deemed to derive, benefits from Notes that are taxable as benefits from miscellaneous activities in the following circumstances: (i) if such Dutch Individual’s investment activities go beyond the activities of an active portfolio investor, for instance in the case of use of insider knowledge (voorkennis) or comparable forms of special knowledge; (ii) if such Dutch Individual makes Notes available or is deemed to make Notes available, legally or as a matter of fact, directly or indirectly, to certain parties as meant by articles 3.91 and 3.92 of the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001) under circumstances described there; or (iii) if such Dutch Individual holds Notes, whether directly or indirectly, and any benefits to be derived from such Notes are intended, in whole or in part, as remuneration for activities performed by him or by a person who is a connected person in relation to him as meant by article 3.92b, paragraph 5, of the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001). Other Dutch Individuals. If a Noteholder is a Dutch Individual whose situation has not been discussed before in this section “—Resident Noteholders,” benefits from such Dutch Individual’s Notes are taxed annually as a benefit from savings and investments (voordeel uit sparen en beleggen). Such benefit is deemed to be 4 percent per annum of such Dutch Individual’s “yield basis” (rendementsgrondslag), generally to be determined at the beginning of the calendar year, to the extent that such yield basis exceeds the “exempt net asset amount” (heffingvrij vermogen) for the relevant year. The benefit is taxed at the rate of 30 percent The value of such Dutch Individual’s Notes forms part of such Dutch Individual’s yield basis. Actual benefits derived from such Dutch Individual’s Notes, including any gain realized on the disposal of Notes, are not as such subject to Dutch income tax. Attribution rule. Benefits derived or deemed to be derived from certain miscellaneous activities by, and yield basis for benefits from savings and investments of, a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or to the parents who exercise, authority over the child, irrespective of the country of residence of the child. Dutch Corporate Entities. Any benefits derived or deemed to be derived from Notes, including any gain realized on the disposal thereof, that are held by a Dutch Corporate Entity are generally subject to Dutch corporation tax.

Non-Resident Noteholders The summary set out in this section “—Non-Resident Noteholders” applies only to a Noteholder who is a Non-Resident Noteholder. A Noteholder will be considered a “Non-Resident Noteholder” if such Noteholder is neither resident, nor deemed to be resident, in the Netherlands for the purposes of Dutch income tax or corporation tax, as the case may be, and who, in the case of an individual, has not elected to be treated as a resident of the Netherlands for Dutch income tax purposes.

Individuals. A Non-Resident Noteholder who is an individual will not be subject to any Dutch taxes on income or capital gains in respect of any benefits derived or deemed to be derived from Notes, including any payment under Notes and any gain realized on the disposal of Notes, except if either of the following is applicable: (i) such Non-Resident Noteholder derives profits from an enterprise, whether as an entrepreneur (ondernemer) or pursuant to a co-entitlement to the net value of such enterprise, other than as a shareholder, such enterprise is either being managed in the Netherlands or carried on, in whole or in part, through a permanent establishment or a permanent representative in the Netherlands, and such Noteholder’s Notes are attributable to such enterprise; or (ii) such Noteholder derives benefits or is deemed to derive benefits from Notes that are taxable as benefits from miscellaneous activities in the Netherlands (resultaat uit overige werkzaamheden in Nederland). See the section “—Resident Noteholders—Dutch Individuals deriving benefits from miscellaneous activities” for a description of the circumstances under which the benefits derived from Notes may be taxable as benefits from miscellaneous activities, on the understanding that such benefits will be taxable in the Netherlands only if such activities are performed or deemed to be performed in the Netherlands.

212 Attribution rule. Benefits derived or deemed to be derived from certain miscellaneous activities by a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or to the parents who exercise, authority over the child, irrespective of the country of residence of the child. Entities. A Non-Resident Noteholder other than an individual will not be subject to any Dutch taxes on income or capital gains in respect of any benefits derived or deemed to be derived from Notes, including any payment under Notes and any gain realized on the disposal of Notes, except if (i) such Non-Resident Noteholder derives profits from an enterprise directly, or pursuant to a co-entitlement to the net value of such enterprise, other than as a holder of securities, such enterprise either being managed in the Netherlands or carried on, in whole or in part, through a permanent establishment or a permanent representative in the Netherlands, and its Notes are attributable to such enterprise; or (ii) such Non-Resident Noteholder has a substantial interest in the Issuer (as described above under “—Individuals”) or a deemed substantial interest in the Issuer. A deemed substantial interest may be present if shares, profit participating certificates or rights to acquire shares in the Issuer are held by such person or deemed to be held by such person following the application of a non-recognition provision. General. Subject to the above, a Non-Resident Noteholder will not be subject to income taxation in the Netherlands by reason only of the execution (ondertekening), delivery (overhandiging) and/or enforcement of the documents relating to the issue of Notes or the performance by the Issuer of its obligations under such documents or under the Notes.

Gift and inheritance taxes If a Noteholder disposes of Notes by way of gift, in form or in substance, or if a Noteholder who is an individual dies, no Dutch gift tax or Dutch inheritance tax, as applicable, will be due, unless: (i) the donor is, or the deceased was resident or deemed to be resident in the Netherlands for purposes of Dutch gift tax or Dutch inheritance tax, as applicable; or (ii) the donor made a gift of Notes, then became a resident or deemed resident of the Netherlands, and died as a resident or deemed resident of the Netherlands within 180 days of the date of the gift. For example, and without being exhaustive, an individual who has Dutch nationality is deemed to be resident in the Netherlands at the time of such individual’s death or the making of the gift, if such individual resided in the Netherlands at any time during a period of ten years preceding the time of such individual’s death or the time of the gift. In addition, as a further example, and without being exhaustive, any individual who has been resident in the Netherlands and who has made a gift within a period of one year after such individual has taken up residence outside the Netherlands, is deemed to be resident in the Netherlands at the time of the gift. For purposes of the above, a gift of Notes made under a condition precedent (opschortende voorwaarde) is deemed to be made at the time the condition precedent is satisfied.

Turnover tax No Dutch turnover tax will arise in respect of any payment in consideration for the issue of Notes or with respect to any payment by the relevant Issuer of principal or interest on Notes.

Other taxes and duties No Dutch registration tax, transfer tax, stamp duty or any other similar documentary tax or duty, other than court fees, is payable in the Netherlands in respect of or in connection with (i) the execution, delivery and/or enforcement by legal proceedings (including the enforcement of any foreign judgment in the courts of the Netherlands) of the documents relating to the issue of Notes, (ii) the performance by the Issuer of its obligations under such documents or under the Notes, or (iii) the transfer of Notes, except that Dutch real property transfer tax (overdrachtsbelasting) may be due by a Noteholder if in satisfaction of all or part of any of its rights under the Notes, it acquires any asset, or an interest in any asset (economische eigendom), that qualifies as real property or as a right over real property situated in the Netherlands, for the purposes of Dutch real property transfer tax (overdrachtsbelasting).

EU Savings Directive Under Directive 2003/48/EC (the “Directive”) on the taxation of savings income in the form of interest payments each EU Member State is required to provide to the tax authority of another EU Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to, or collected by such a

213 person for, an individual resident in that other EU Member State. However, currently Luxembourg and Austria are instead required (unless they elect otherwise) to operate a withholding system in relation to such payments (the ending of such withholding system being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries), deducting tax at rates rising over time to 35.0%. A number of non-EU countries (including Switzerland, which has adopted a withholding system) and certain dependent or associated territories of certain EU Member States, have agreed to adopt similar measures (either provision of information or transitional withholding) in relation to payments made by a person within its jurisdiction to, or collected by such a person for, an individual resident in a EU Member State. In addition, the EU Member States have entered into reciprocal provision of information or transitional withholding arrangements with certain of those dependent or associated territories in relation to payments made by a person in such EU Member State to, or collected by such a person for, an individual resident in the relevant territory.

United States Taxation General The following discussion summarizes certain U.S. federal income tax consequences relevant to the acquisition, ownership, disposition and retirement of the Notes by a Noteholder, and does not purport to be a complete analysis of all potential tax considerations. This discussion only applies to Notes that are held as capital assets within the meaning of Section 1221 of the Code and that are purchased in the initial offering at the initial offering price, by Noteholders. This discussion does not describe all of the U.S. federal income tax consequences that may be relevant to Noteholders in light of their particular circumstances or to Noteholders subject to special treatment under U.S. federal income tax law, such as financial institutions; tax-exempt organizations; insurance companies; real estate investment trusts; regulated investment companies; entities treated as partnerships for U.S. federal income tax purposes; traders or dealers in securities; persons holding Notes as part of a straddle, hedge, conversion transaction or other integrated transaction; or certain former citizens or residents of the United States. This summary also does not address tax consequences to U.S. Noteholders (as defined below) whose “functional currency” is not the U.S. dollar. Persons considering the purchase of Notes are urged to consult their tax advisors with regard to the application of the U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction. Furthermore, this discussion does not describe the effect of U.S. federal estate and gift tax laws or the effect of any applicable foreign, state or local law. This summary is based on the Code, Treasury regulations promulgated thereunder (the “Regulations”) administrative pronouncements and judicial decisions, each as available and in effect on the date hereof. All of the foregoing are subject to change (possibly with retroactive effect) or differing interpretations which could affect the tax consequences described herein. The Issuer has not and will not seek any rulings or opinions from the Internal Revenue Service (the “IRS”) with respect to the matters discussed below. There can be no assurance that the IRS will not take a different position concerning the tax consequences of the acquisition, ownership or disposition of the Notes or that any such position would not be sustained.

U.S. Internal Revenue Circular 230 Disclosure TO ENSURE COMPLIANCE WITH U.S. TREASURY DEPARTMENT CIRCULAR 230, NOTEHOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF UNITED STATES FEDERAL TAX ISSUES IN THIS OFFERING MEMORANDUM IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY NOTEHOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON HOLDERS UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS INCLUDED HEREIN BY THE ISSUER IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE ISSUER OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) NOTEHOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. For purposes of this summary, a “U.S. Noteholder” is a beneficial owner of Notes, who is for U.S. federal income tax purposes: • a citizen or individual resident of the United States; • a corporation or other entity subject to tax as a corporation for U.S. federal income tax purposes created or organized in or under the laws of the United States or any state thereof (including the District of Columbia); • an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

214 • a trust (1) that validly elects to be treated as a U.S. person for U.S. federal income tax purposes, or (2) (a) the administration of which a U.S. court can exercise primary supervision over and (b) all of the substantial decisions of which one or more U.S. persons have the authority to control. A “Non-U.S. Noteholder” is a beneficial owner of Notes other than a U.S. Noteholder. If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds Notes, the tax treatment of a partner will depend on the status of the partner and the activities of the partnership. A holder of Notes that is a partnership and partners in such partnership should consult their own tax advisors as to the tax consequences to them of acquiring, owning, disposing and retirement of Notes.

Interest Interest paid on a Note (including any additional amounts paid by the Issuer to the Noteholders pursuant to “Terms and Conditions of the Notes—Condition 8 Taxation”) generally will be taxable to a U.S. Noteholder as ordinary interest income when paid or accrued, in accordance with the U.S. Noteholder’s method of accounting for U.S. federal income tax purposes.

Foreign Currency Denominated Interest If an interest payment is denominated in, or determined by reference to, roubles, the amount of income recognized by a cash basis U.S. Noteholder will be the U.S. Dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. Dollars. This calculation must be performed even if the U.S. Noteholder receives the payment in U.S. dollars. If the interest payment is converted into U.S. Dollars on the date of receipt, a U.S. Noteholder should not be required to recognize foreign currency exchange gain or loss in respect to the interest income. A U.S. Noteholder may have foreign currency exchange gain or loss (generally taxable as an ordinary gain or loss) if the interest payment is converted into U.S. Dollars after the date of receipt. In general, foreign currency exchange gain or loss will be treated as U.S. source gain or loss for foreign tax credit purposes. An accrual basis U.S. Noteholder may determine the amount of income recognized with respect to an interest payment denominated in, or determined by reference to, roubles in accordance with one of three methods. This calculation must be performed even if the U.S. Noteholder receives the payment in U.S. dollars. Under the first method, the amount of income accrued will be based on the average exchange rate in effect during the interest accrual period (or, in the case of an accrual period that spans two taxable years of a U.S. Noteholder, the part of the period within the taxable year). Under the second method, the U.S. Noteholder may elect to determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period (or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the taxable year). Under the third method, if a payment of interest is actually received within five business days of the last day of the accrual period, an electing accrual basis U.S. Noteholder may translate the accrued interest into U.S. Dollars at the exchange rate in effect on the day of actual receipt. Any such election will apply to all debt instruments held by the U.S. Noteholder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Noteholder, and will be irrevocable without the consent of the IRS. Upon receipt of accrued interest payments (including a payment attributable to accrued but unpaid interest upon the sale or retirement of a Note) denominated in, or determined by reference to, roubles, the U.S. Noteholder may recognize foreign currency exchange gain or loss (generally taxable as an ordinary gain or loss) equal to the difference between the amount received (translated into U.S. Dollars at the exchange rate in effect on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. Dollars. If the payment is then converted into U.S. Dollars on the date of receipt, a U.S. Noteholder should not be required to recognize any additional foreign currency exchange gain or loss in respect to the payment. A U.S. Noteholder may have additional foreign currency exchange gain or loss if the payment is converted into U.S. Dollars after the date of receipt. In general, foreign currency exchange gain or loss will be treated as U.S. source gain or loss for foreign tax credit purposes.

Withholding and Payment of Additional Amounts If any non-U.S. taxes are withheld with respect to interest payments on the Notes, a U.S. Noteholder would be required to include in income any additional amounts (as described under “Terms and Conditions of the Notes—Condition 8 Taxation”) paid and any tax withheld from the interest payment, notwithstanding that such withheld tax is not in fact received by the U.S. Noteholder. A U.S. Noteholder may be eligible, subject to a number of limitations, for a deduction or U.S. foreign tax credit with respect to any non-U.S. tax withheld. Interest on the Notes will generally be treated as foreign source income for U.S. federal income tax purposes, and for purposes of certain limitations imposed on the United States foreign tax credit, generally will be considered

215 passive income. The rules relating to U.S. foreign tax credits or deductions and the timing thereof are extremely complex and U.S. Noteholders should consult their own tax advisors with regard to the availability of a U.S. foreign tax credit or deduction and the application of the U.S. foreign tax credit limitations to their particular situations. Subject to the discussion below under “—U.S. Backup Withholding Tax and Information Reporting,” payments of interest on a Note to a Non-U.S. Noteholder generally will not be subject to U.S. federal income tax, unless such income is effectively connected with the conduct by such Non-U.S. Noteholder of a trade or business in the United States.

Sale, Exchange, Retirement or Other Disposition Upon the sale, exchange, retirement or other disposition of a Note, a U.S. Noteholder generally will recognize capital gain or loss equal to the difference between the amount realized on the sale, exchange, retirement or other disposition (other than accrued but unpaid interest which will be taxable as ordinary income to the extent not yet included in income by the U.S. Noteholder) and the U.S. Noteholder’s adjusted tax basis in such Note. A U.S. Noteholder’s adjusted tax basis in a Note generally should equal the cost of the Note to such U.S. Noteholder. Any capital gain or loss recognized on the disposition of a Note will generally be long-term capital gain or loss if the U.S. Noteholder has held the Note for more than one year. Long-term capital gain of a non-corporate U.S. Noteholder is generally subject to reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss realized by a U.S. Noteholder on the sale, exchange, retirement or other disposition of a Note generally will be treated as U.S. source income or loss, as the case may be. Subject to the discussion below under “—U.S. Backup Withholding Tax and Information Reporting,” any capital gain realized by a Non-U.S. Noteholder upon the sale, exchange, retirement or other disposition of a Note generally will not be subject to U.S. federal income tax, unless (i) such gain is effectively connected with the conduct by such Non-U.S. Noteholder of a trade or business in the United States, or (ii) in the case of any gain realized by an individual Non-U.S. Noteholder, such Non-U.S. Noteholder is present in the United States for 183 days or more in the taxable year of such sale, exchange, retirement or other disposition and certain other conditions are met.

Foreign Currency Notes A U.S. Noteholder’s tax basis in a Note that is denominated in roubles will be determined by reference to the U.S. Dollar cost of the Note. The U.S. Dollar cost of a Note purchased with roubles will generally be the U.S. Dollar value of the purchase price on the date of purchase or, in the case of Notes traded on an established securities market, as defined in the applicable Regulations, that are purchased by a cash basis U.S. Noteholder (or an accrual basis U.S. Noteholder that so elects), on the settlement date for the purchase. The amount realized on a sale or retirement for an amount in roubles will be the U.S. Dollar value of this amount on the date of sale or retirement or, in the case of Notes traded on an established securities market, as defined in the applicable Regulations, sold by a cash basis U.S. Noteholder (or an accrual basis U.S. Noteholder that so elects) on the settlement date for the sale. Such an election by an accrual basis U.S. Noteholder must be applied consistently from year to year and cannot be revoked without the consent of the IRS. A U.S. Noteholder will recognize U.S. source exchange rate gain or loss (taxable as ordinary income or loss) on the sale or retirement of a Note equal to the difference, if any, between the U.S. Dollar value of the U.S. Noteholder’s purchase price for the Note (or, if less, the principal amount of the Note) (i) on the date of sale or retirement and (ii) the date on which the U.S. Noteholder acquired the Note. Any such exchange rate gain or loss will be realized only to the extent of total gain or loss realized on the sale or retirement (including any exchange gain or loss with respect to the receipt of accrued but unpaid interest). These rules will apply to the retirement of a U.S. Noteholder’s Note that is denominated in roubles even if the U.S. Noteholder receives U.S. dollars.

U.S. Backup Withholding Tax and Information Reporting U.S. backup withholding tax and information reporting requirements apply to certain payments of principal of, and interest (including additional amounts, if any) on, Notes and to proceeds of dispositions of Notes, to certain non-corporate U.S. Noteholders. The payor currently will be required to withhold backup withholding tax from any such payment within the United States on a Note to a U.S. Noteholder (other than an “exempt recipient”) if such U.S. Noteholder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, such backup withholding requirements. Backup withholding is not an additional tax.

216 Payments within the United States of principal and interest to a Non-U.S. Noteholder that is not a United States person will not be subject to backup withholding tax and information reporting requirements if an appropriate certification is provided by the Non-U.S. Noteholder to the payor and the payor does not have actual knowledge or reason to know that the certification is false. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a Noteholder’s federal income tax liability, provided that the requisite procedures are followed and certain information is provided to the IRS. In addition, individuals and, to the extent provided by Regulations or other guidance, certain U.S. entities that hold an interest in a “specified foreign financial asset” are required to attach certain information regarding such assets to their U.S. federal income tax returns for any year in which the aggregate value of all such assets held by such persons exceeds US$50,000. A “specified foreign financial asset” includes, among other things, any depository or custodial accounts at a foreign financial institution, and to the extent not held in an account at a financial institution, (1) stocks or securities issued by non-U.S. persons, and (2) any interest in a non U.S. entity. Penalties may be imposed for the failure to disclose such information regarding specified foreign financial assets. U.S. Noteholders should consult their tax advisors regarding the potential application of these rules to their ownership of a Note.

Medicare Tax on Unearned Income A 3.8% tax is imposed on the “net investment income” of certain U.S. citizens and U.S. resident aliens, and on the undistributed “net investment income” of certain estates and trusts, in both cases to the extent that net investment income exceeds a certain threshold. Among other items, “net investment income” generally includes interest and certain net gains from the disposition of property, less certain deductions. Prospective Noteholders should consult their own tax advisors with respect to such tax.

217 CERTAIN ERISA CONSIDERATIONS ERISA imposes certain requirements on “employee benefit plans” (as defined in Section 3(3) of ERISA) subject to Title I of ERISA, including entities such as collective investment funds and separate accounts whose underlying assets include the assets of such plans (collectively, the “ERISA Plans”) and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA’s general fiduciary requirements, including the requirement of investment prudence and diversification and the requirement that an ERISA Plan’s investments be made in accordance with the documents governing the ERISA Plan. Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts, and entities whose underlying assets include the assets of such plans (together with ERISA Plans, the “Plans,”) and certain persons (referred to as “parties in interest” or “disqualified persons”) having certain relationships to such Plans, unless a statutory or administrative exemption is applicable to the transaction. Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may arise if any Notes are acquired by a Plan with respect to which the Issuer, the Guarantor, any of the Lead Managers or any of their respective affiliates is a party in interest or a disqualified person. Certain exemptions from the prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code may be applicable, however, depending in part on the type of Plan fiduciary making the decision to acquire Notes and the circumstances under which such decision is made. There can be no assurance that any exemption will be available with respect to any particular transaction involving the Notes, or that, if an exemption is available, it will cover all aspects of any particular transaction. By its purchase of any Notes, the purchaser thereof will be deemed to have represented and agreed either that: (i) it is not and for so long as it holds Notes will not be (and is not acquiring the Notes directly or indirectly with the assets of a person who is or while the Notes are held will be) a Plan, or a governmental, church or other employee benefit plan which is subject to any U.S. federal, state or local law, or non-U.S. law, that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code, or (ii) its purchase and holding of the Notes will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of such a governmental, church or other employee benefit plan, a violation of any such substantially similar U.S. federal, state or local law, or non-U.S. law). Similarly, each transferee of any Notes, by virtue of the transfer of such Notes to such transferee, will be deemed to have represented and agreed either that: (i) it is not and for so long as it holds Notes will not be (and is not acquiring the Notes directly or indirectly with the assets of a person who is or while the Notes are held will be) a Plan, or a governmental, church or other employee benefit plan which is subject to any U.S. federal, state or local law, or non-U.S. law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code, or (ii) its purchase and holding of the Notes will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of such a governmental, church or other employee benefit plan, a violation of any such substantially similar federal, state or local law, or non-U.S. law). Governmental plans, certain church plans and various other (including non-U.S.) plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to U.S. federal, state or local laws, or non-U.S. laws that are substantially similar to such provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing any Notes. The foregoing discussion is general in nature and not intended to be all inclusive. Any Plan fiduciary who proposes to cause a Plan to purchase any Notes should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code to such an investment, and to confirm that such investment will not constitute or result in a non-exempt prohibited transaction or any other violation of an applicable requirement of ERISA. The sale of Notes to a Plan is in no respect a representation by the Issuer, the Lead Managers or any other person that such an investment meets all relevant requirements with respect to investments by Plans generally or any particular Plan, or that such an investment is appropriate for Plans generally or any particular Plan.

218 FORM OF NOTES AND TRANSFER RESTRICTIONS The following information relates to the form and transfer of the Notes. Terms defined in the section of this prospectus entitled “Terms and Conditions of the Notes” have the same meanings in the paragraphs below.

Form of Notes All Notes will be in fully registered form, without interest coupons attached. The 2019 Notes offered and sold outside the United States in reliance on Regulation S (the “Unrestricted 2019 Notes”) will be represented by interests in an Unrestricted Global 2019 Note Certificate (the “Unrestricted Global 2019 Note Certificate”), the 2023 Notes offered and sold outside the United States in reliance on Regulation S (the “Unrestricted 2023 Notes” and, together with the Unrestricted 2023 Notes, the “Unrestricted USD Notes”) will be represented by interests in an Unrestricted Global 2023 Note Certificate (the “Unrestricted Global 2023 Note Certificate” and, together with the Unrestricted Global 2019 Note Certificate, the “Unrestricted Global USD Note Certificates”), and the RUB Notes offered and sold outside the United States in reliance on Regulation S (the “Unrestricted RUB Notes” and, together with the Unrestricted USD Notes, the “Unrestricted Notes”) will be represented by interests in an Unrestricted Global RUB Note Certificate (the “Unrestricted Global RUB Note Certificate”). References to an Unrestricted Global Note Certificate are to any of the Unrestricted Global USD Note Certificates and the Unrestricted Global RUB Note Certificate. Each Unrestricted Global Note Certificate will be in fully registered form, without interest coupons attached, which will be deposited on or about the closing date of the Offer with a common depositary for Euroclear Bank and Clearstream, Luxembourg, and registered in the name of The Bank of New York Depository (Nominees) Limited, as nominee for such common depositary in respect of interests held through Euroclear or Clearstream, Luxembourg. Beneficial interests in an Unrestricted Global Note Certificate may at all times be held only through Euroclear or Clearstream, Luxembourg. The 2019 Notes offered and sold in reliance on Rule 144A (the “Restricted 2019 Notes”) will be represented by interests in one or more Restricted Global 2019 Note Certificates (the “Restricted Global 2019 Note Certificate”), the 2023 Notes offered and sold in reliance on Rule 144A (the “Restricted 2023 Notes” and, together with the Restricted 2019 Notes, the “Restricted USD Notes”) will be represented by interests in one or more Restricted Global 2023 Note Certificates (the “Restricted Global 2023 Note Certificate” and, together with the Restricted Global 2019 Note Certificate, the “Restricted Global USD Note Certificates”), and the RUB Notes offered and sold in reliance on Rule 144A (the “Restricted RUB Notes” and, together with the Restricted USD Notes, the “Restricted Notes”) will be represented by interests in a Restricted Global RUB Note Certificate (the “Restricted Global RUB Note Certificate”). References to a Restricted Global Note Certificate are to any of the Restricted Global USD Note Certificates and the Restricted Global RUB Note Certificate. The Restricted Global USD Note Certificates will be in fully registered form, without interest coupons attached, which will be deposited on or about the closing date of the Offer with a custodian for, and registered in the name of Cede & Co., as nominee for, DTC. The Restricted Global RUB Note Certificate will be in fully registered form, without interest coupons attached, which will be deposited on or about the closing date of the Offer with a common depositary for Euroclear Bank and Clearstream, Luxembourg, and registered in the name of The Bank of New York Depository (Nominees) Limited, as nominee for such common depositary in respect of interests held through Euroclear or Clearstream, Luxembourg. By acquisition of a beneficial interest in a Restricted Global Note Certificate, the purchaser thereof will be deemed to represent, among other things, that the purchaser is a QIB and that, if in the future it determines to transfer such beneficial interest, it will transfer such interest in accordance with the procedures and restrictions contained in the relevant Trust Deed. The Restricted Global Note Certificates (and any Note Certificates in definitive form issued in exchange therefor) will be subject to certain restrictions on transfer contained in a legend appearing on the face of each such Note as set forth below and in the Trust Deeds. Beneficial interests in the Restricted Global Note Certificates may be held through DTC (in the case of the Restricted Global USD Note Certificates only), Euroclear or Clearstream, Luxembourg. Each Unrestricted Global Note Certificate and the Restricted Global RUB Note Certificate will have an ISIN and a common code and each Restricted Global USD Note Certificate will have a CUSIP number, an ISIN and a common code.

Transfer Restrictions Beneficial interests in each Global Note Certificate will be subject to certain restrictions on transfer set forth therein and in the Trust Deeds, and with respect to a Restricted Global Note Certificate, as set forth in Rule 144A and the Notes will bear the legends set forth thereon regarding such restrictions set forth below. A beneficial interest in an Unrestricted Global Note Certificate may be transferred to a person who wishes to take delivery of such beneficial interest through a Restricted Global Note Certificate only in denominations

219 greater than or equal to the minimum denominations applicable to interests in such Restricted Global Note Certificate and only upon receipt by the Registrar or any Agent of a written certification from the transferor (in the applicable form set out in the schedule to the relevant Agency Agreement) to the effect that such transfer is being made to a person whom the transferor reasonably believes is purchasing for its own account or accounts as to which it exercises sole investment decision, is a qualified institutional buyer within the meaning of Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction. A beneficial interest in a Restricted Global Note Certificate may also be transferred to a person who wishes to take delivery of such beneficial interest through an Unrestricted Global Note Certificate only upon receipt by the Registrar or any Agent of a written certification from the transferor (in the form set out in the schedule to the relevant Agency Agreement) to the effect that such transfer is being made in accordance with Regulation S under the Securities Act. Any beneficial interest in either a Restricted Global Note Certificate or an Unrestricted Global Note Certificate that is transferred to a person who takes delivery in the form of a beneficial interest in the other Global Note Certificate will, upon transfer, cease to be a beneficial interest in such Global Note Certificate and become a beneficial interest in the other Global Note Certificate and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to a beneficial interest in such other Global Note Certificate for so long as such person retains such an interest. The Notes are being offered and sold in the United States only to persons that are qualified institutional buyers within the meaning of Rule 144A and in reliance on Rule 144A. Because of the following restrictions, purchasers of Notes offered in the United States in reliance on Rule 144A are advised to consult legal counsel prior to making any offer, resale, pledge or transfer of such Notes. By purchasing Notes, such purchaser will be deemed to have made the following acknowledgments, representations to and agreements with the Issuer, the Guarantor and the Lead Managers: (i) it acknowledges that: • neither the Notes nor the Guarantees have been registered under the Securities Act or any other securities laws and the Notes are being offered for resale in transactions that do not require registration under the Securities Act or any other securities laws; and • the Notes may not be offered, sold or otherwise transferred except under an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act or any other applicable securities laws, and in each case in compliance with the conditions for transfer set forth in paragraph (v) below; (ii) it acknowledges that this prospectus relates to an offering that is exempt from registration under the Securities Act and may not comply in important respects with the Securities and Exchange Commission rules that would apply to an offering document relating to a public offering of securities; (iii) it represents that it is not an affiliate (as defined in Rule 144 under the Securities Act) of the Issuer or the Guarantor, that it is not acting on the Issuer’s or the Guarantor’s behalf and that either: • it is a qualified institutional buyer (a “QIB”) (as defined in Rule 144A under the Securities Act) and is purchasing Notes for its own account or for the account of another QIB, and it is aware that the Lead Managers are selling the Notes to it in reliance on Rule 144A; or • it is not a person in the United States (as defined in Regulation S under the Securities Act) or purchasing for the account or benefit of a person in the United States, and it is purchasing Notes in an offshore transaction in accordance with Regulation S; (iv) it acknowledges that neither the Issuer, the Guarantor nor the Lead Managers nor any person representing the Issuer, the Guarantor or the Lead Managers has made any representation to it with respect to the Issuer, the Guarantor or the offering of the Notes, other than the information contained in this prospectus. It represents that it is relying only on this prospectus in making its investment decision with respect to the Notes; (v) it represents that it is purchasing Notes for its own account, or for one or more investor accounts for which it is acting as a fiduciary or agent, in each case not with a view to, or for offer or sale in connection with, any distribution of the Notes in violation of the Securities Act. If it is a QIB who is in the United States, it agrees on its own behalf and on behalf of any investor account for which

220 it is purchasing Notes, and each subsequent holder of the Notes by its acceptance of the Notes will agree, that until the end of the Resale Restriction Period (as defined below), the Notes may be offered, sold or otherwise transferred only: (a) to the Issuer; (b) to the Guarantor; (c) for so long as the Notes are eligible for resale under Rule 144A, to a person the seller reasonably believes is a QIB that is purchasing for its own account or for the account of another QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A; (d) through offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act; and (e) under any other available exemption from the registration requirements of the Securities Act; (vi) it also acknowledges that: • the above restrictions on resale will apply to holders of Restricted Notes from the Closing Date until the date that is one year after the later of the Closing Date and the last date that the Issuer, the Guarantor or any of their affiliates was the owner of the Notes or any predecessor of the Notes (the “Resale Restriction Period”), and will not apply after the Resale Restriction Period ends; • the Issuer, the Guarantor and the Trustee reserve the right to require in connection with any offer, sale or other transfer of Notes before the Resale Restriction Period ends under clauses (v)(d) above the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee; and • each Restricted Global Note Certificate and Note Certificate in definitive form (if any) issued in exchange for an interest in a Restricted Global Note Certificate will contain a legend substantially to the following effect: “THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER, THE GUARANTOR OR ANY AFFILIATE OF THE ISSUER OR THE GUARANTOR WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A (A “QIB”) UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S, THE GUARANTOR’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

221 THE ISSUER HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER OF AN INTEREST IN THIS NOTE TO A U.S. PERSON WHO IS NOT A QIB. EACH BENEFICIAL OWNER HEREOF REPRESENTS AND WARRANTS THAT FOR SO LONG AS IT HOLDS THIS NOTE OR ANY INTEREST HEREIN (A) EITHER (1) IT IS NOT AND FOR SO LONG AS IT HOLDS THIS NOTE OR ANY INTEREST HEREIN WILL NOT BE (AND IS NOT ACQUIRING THIS NOTE OR ANY INTEREST HEREIN DIRECTLY OR INDIRECTLY WITH THE ASSETS OF A PERSON WHO IS OR WHILE THIS NOTE OR ANY INTEREST IS HELD WILL BE) AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN SUBJECT TO TITLE I OF THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, (“ERISA”) OR SECTION 4975 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, (THE “CODE”) OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE ASSETS OF ANY SUCH PLANS, OR A GOVERNMENTAL, CHURCH OR OTHER EMPLOYEE BENEFIT PLAN SUBJECT TO ANY U.S. FEDERAL, STATE OR LOCAL LAW, OR NON-U.S. LAW, THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR (2) ITS PURCHASE AND HOLDING OF THIS NOTE OR ANY INTEREST HEREIN WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF SUCH A GOVERNMENTAL, CHURCH OR OTHER EMPLOYEE BENEFIT PLAN, A VIOLATION OF ANY SUCH SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW, OR NON-U.S. LAW) AND (B) IT WILL NOT SELL OR OTHERWISE TRANSFER ANY NOTE OR INTEREST THEREIN TO ANY PERSON WITHOUT FIRST OBTAINING THE SAME FOREGOING REPRESENTATIONS, WARRANTIES AND COVENANTS FROM THAT PERSON. Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.” (vii) it acknowledges that the Issuer, the Guarantor, the Trustee and the Lead Managers and others will rely upon the truth and accuracy of the above acknowledgments, representations and agreements. If it is purchasing any Notes as a fiduciary or agent for one or more investor accounts, it represents that you have sole investment discretion with respect to each of those accounts and that it has full power to make the above acknowledgments, representations and agreements on behalf of each account. The purchaser understands and acknowledges that its purchase and holding of such Notes constitutes a representation and agreement by it that (1) either (i) it is not and for so long as it holds Notes will not be (and is not acquiring the Notes directly or indirectly with the assets of a person who is or while Notes are held will be) a Plan, or a governmental, church or other employee benefit plan which is subject to any U.S. federal, state or local law or non-U.S. law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code, or (ii) its purchase and holding of the Notes will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of such a governmental, church or other employee benefit plan, a violation of any such substantially similar U.S. federal, state or local law, or non-U.S. law) and (2) it will not sell or otherwise transfer such Notes to any Plan otherwise than to a purchaser or transferee that is deemed to represent and agree with respect to its purchase and holding of such Notes to the same effect as the purchaser’s representation and agreement set forth in this sentence.

Exchange of Interests in Global Note Certificates for Note Certificates Exchange of interests in Notes represented by a Restricted Global USD Note Certificate, in whole but not in part, for Restricted USD Notes represented by individual Note Certificates in definitive form (the “Restricted USD Note Certificates”) will not be permitted unless (i) DTC or a successor depositary notifies the Issuer that it is no longer willing or able to discharge properly its responsibilities as depository with respect to the Restricted Global USD Note Certificates or ceases to be a “clearing agency” registered under the Exchange Act, or is at any time no longer eligible to act as such, and the Issuer is unable to locate a qualified successor within 90 days of receiving notice of such ineligibility or cessation on the part of such depository, (ii) following a failure by the Issuer and the Guarantor to pay an amount in respect of any Notes within five days of the date on which such amount became due and payable in accordance with the Conditions or (iii) the Issuer or the Guarantor would suffer a material disadvantage in respect of the Notes as a result of a change in the laws or regulations which would not be suffered were the Restricted USD Notes evidenced by Restricted USD Note Certificates.

222 Exchange of interests in Notes represented by the Restricted Global RUB Note Certificate, in whole but not in part, for Restricted RUB Notes represented by individual Note Certificates in definitive form (the “Restricted RUB Note Certificates” and, together with the Restricted USD Note Certificates, the “Restricted Note Certificates”) will not be permitted unless (i) Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business or does in fact do so, (ii) following a failure by the Issuer and the Guarantor to pay an amount in respect of any Notes within five days of the date on which such amount became due and payable in accordance with the Conditions or (iii) the Issuer or the Guarantor would suffer a material disadvantage in respect of the Notes as a result of a change in the laws or regulations which would not be suffered were the Restricted RUB Notes evidenced by Restricted RUB Note Certificates. Exchange of interests in Notes represented by an Unrestricted Global Note Certificate, in whole but not in part, for Unrestricted Notes represented by individual Note Certificates in definitive form (the “Unrestricted Note Certificates” and, together with the Restricted Note Certificates, the “Note Certificates”) will not be permitted unless (i) Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business or does in fact do so, (ii) following a failure by the Issuer and the Guarantor to pay an amount in respect of any Notes within five days of the date on which such amount became due and payable in accordance with the Conditions or (iii) the Issuer or the Guarantor would suffer a material disadvantage in respect of the Notes as a result of a change in the laws or regulations which would not be suffered were the Notes evidenced by Unrestricted Note Certificates. Exchange of interests in a Global Note Certificate, in whole or in part, for Note Certificates may be made if instructions have been given for the transfer of an interest in such Global Note Certificate to a person who would otherwise take delivery thereof in the form of an interest in the other Global Note Certificate where such other Global Note Certificate has been exchanged for Note Certificates. In such circumstances, the relevant Global Note Certificate shall be exchanged for Note Certificates and the Issuer will, at the cost of the Issuer, failing whom the Guarantor, and against such indemnity as the Registrar or any relevant Transfer Agent may require in respect of any tax or other duty of whatever nature which may be levied or imposed in connection with such exchange), cause sufficient Note Certificates to be executed and delivered to the Registrar for completion, authentication and dispatch to the relevant Noteholders in accordance with the Conditions. A person having an interest in a Global Note Certificate must provide the Issuer and the Registrar with (i) a written order containing instructions and such other information as the Issuer and the Registrar may require to complete, execute and deliver such Note Certificates and (ii) in the case of a Restricted Global Note Certificate only, a fully completed, signed certificate substantially to the effect that the exchanging holder is not transferring its interest at the time of such exchange or, in the case of simultaneous sale pursuant to Rule 144A or Regulation S, that the transfer is being made in compliance with the provisions of Rule 144A or Regulation S. Subject to the provisions of the relevant Agency Agreement, Note Certificates issued in exchange for a beneficial interest in a Restricted Global Note Certificate shall bear the legends applicable to transfers pursuant to Rule 144A, as set out above under “—Transfer Restrictions.” The holder of a Note, represented by a Note Certificate, may transfer such Note in accordance with the provisions of Condition 3 (Register, Title and Transfers). Upon the transfer, exchange or replacement of a Restricted Note Certificate bearing the legend referred to under “—Transfer Restrictions” or upon specific request for removal of the legend on a Restricted Note Certificate, the Issuer will deliver only Restricted Note Certificates that bear such legend, or will refuse to remove such legend, as the case may be, unless there is delivered to any Agent a fully completed, signed certificate substantially to the effect that the transfer is being made in compliance with the provisions of Regulation S or Rule 144 (if applicable) or such evidence, which may include an opinion of counsel, as may reasonably be required by the Issuer and the Trustee that neither the legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act.

Euroclear, Clearstream, Luxembourg and DTC Arrangements So long as Euroclear, Clearstream, Luxembourg or the nominee of their common depositary or DTC or its nominee is the registered holder of a Global Note Certificate, Euroclear, Clearstream, Luxembourg, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Note Certificate for all purposes under the relevant Agency Agreement and the Notes. Payments of principal, premium (if any), interest and additional amounts (if any) in respect of Global Note Certificates will be made to Euroclear, Clearstream, Luxembourg, DTC or such nominee, as the case may be, as the registered holder thereof. None of the Issuer, the Guarantor, the Trustee, any Agent or the Lead Managers or any affiliate of any of them or any person by whom any of them is controlled for the purposes of the Securities Act will have any responsibility

223 or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in Global Note Certificates or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Distributions of principal, premium (if any) and interest with respect to book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by Euroclear or Clearstream, Luxembourg from the Principal Paying Agent, to the cash accounts of Euroclear or Clearstream, Luxembourg customers in accordance with the relevant system’s rules and procedures. Holders of book-entry interests in a Restricted Global USD Note Certificate through DTC will receive, to the extent received by DTC from the Principal Paying Agent, all distributions of principal, premium (if any) and interest with respect to book entry interests in the Notes in accordance with the rules and procedures of DTC. Distribution in the United States will be subject to relevant United States tax laws and regulations. Payments on the Notes will be paid to the holder shown on the Register on the close of business the Business Day before the due date for such payment so long as the Notes are represented by a Global Note Certificate, and on the close of business the Business Day before the due date for such payment if the Notes are in the form of Note Certificates (the “Record Date”). The laws of some states of the United States require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer interests in a Global Note Certificate to such persons may be limited. Because Euroclear, Clearstream, Luxembourg and DTC can only act on behalf of indirect participants, the ability of a person having an interest in a Global Note Certificate to pledge such interest to persons or entities which do not participate in the relevant clearing system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate in respect of such interest. The holdings of book-entry interests in the Notes through Euroclear, Clearstream, Luxembourg and DTC will be reflected in the book-entry accounts of each such institution. As necessary, the Registrar will adjust the amounts of Notes on the Register for the accounts of (i) The Bank of New York Depository (Nominees) Limited to reflect the amounts of Notes held through Euroclear and Clearstream, Luxembourg, and (ii) Cede & Co. to reflect the amounts of Notes held through DTC. Beneficial ownership in the Notes will be held through financial institutions as direct and indirect participants in Euroclear, Clearstream, Luxembourg and DTC. Beneficial interests in the Unrestricted Global Note Certificates and the Restricted Global Note Certificates will be in uncertificated book-entry form.

Euroclear Actions with respect to the Notes The Issuer will instruct Euroclear to take the following steps in connection with the Notes: • to reference “144A” as part of the security name in the Euroclear securities database; • in each daily securities balances report and daily transactions report to Euroclear participants holding positions in the Notes, to include “144A” in the securities name for the Notes; and • to deliver to the Issuer from time to time, upon its request, a list of all Euroclear participants holding an interest in the Notes.

Clearstream, Luxembourg Actions with respect to the Notes The Issuer will instruct Clearstream, Luxembourg to take the following steps in connection with the Notes: • to reference “144A” as part of the security name in the Clearstream, Luxembourg securities database; • in each daily portfolio report and daily settlement report to Clearstream, Luxembourg participants holding positions in the Notes, to include “144A” in the securities name for the Notes; and • to deliver to the Issuer from time to time, upon its request, a list of all Clearstream, Luxembourg, participants holding an interest in the Notes.

DTC Actions with respect to the USD Notes The Issuer will direct DTC to take the following steps in connection with the USD Notes: • to include, in lieu of the “GABS” marker or otherwise, the “GRLS” marker in the DTC 20-character security descriptor, and the 48-character additional descriptor for the USD Notes in order to indicate that sales are limited to qualified institutional buyers;

224 • to cause (i) each physical DTC delivery order ticket delivered by DTC to purchasers to contain the 20-character security descriptors and (ii) each DTC delivery order ticket delivered by DTC to purchasers in electronic form to contain the “GRLS” indicators and the related user manual for participants, which will contain a description of relevant restrictions; • to send, on or prior to the closing date of this Offer, an “Important Notice” to all DTC participants in connection with this Offer. The Issuer may instruct DTC from time to time (but not more frequently than every six months) to reissue the “Important Notice”; • to include in all “confirms” of trades of the USD Notes in DTC, CUSIP numbers with a “fixed field” attached to the CUSIP number that has the “GRLS” markers; and • to deliver to the Issuer from time to time a list of all DTC participants holding an interest in the USD Notes.

Payments in Respect of the RUB Notes Payments of principal and interest in respect of the RUB Notes will be made or procured to be made by a Paying Agent in accordance with the Agency Agreement in respect of the RUB Notes in roubles, unless a holder of RUB Notes has made an irrevocable election to receive payment in dollars at least five Business Days prior to the date on which a payment becomes due on the RUB Notes (each a “Relevant RUB Note Payment Date”), in each case through the facilities of Euroclear and Clearstream, Luxembourg. The Exchange Agent shall, upon receipt by it of the Exchange Amount, on or before 12.30 p.m. (London time) two Business Days prior to each Relevant RUB Note Payment Date, use the Exchange Amount to procure dollars (the “US Dollar Amount”) at a purchase price calculated on the basis of the Applicable Exchange Rate (as defined below) for delivery on the Relevant RUB Note Payment Date. “Exchange Amount” means, in respect of each Relevant RUB Note Payment Date, the amount in roubles in aggregate equivalent to the portion of the interest and/or principal due on the Relevant RUB Note Payment Date which is payable to the holders of RUB Notes (if any) which have duly elected to receive payment of interest and/or principal on such Relevant RUB Note Payment Date in dollars in accordance with the provisions of the RUB Notes Agency Agreement. “Applicable Exchange Rate” means the internal foreign exchange conversion rate for settlement as determined by the Exchange Agent on or before 12.30 p.m. (London time) two Business Days prior to the Relevant RUB Note Payment Date following receipt by it of the Exchange Amount, which the Exchange Agent acting in a commercially reasonable manner as principal for its own account uses to convert roubles into US dollars at the request of its other customers. On each Relevant RUB Note Payment Date, the Exchange Agent shall, on behalf of the Issuer, give notice to Noteholders in accordance with the Agency Agreement in respect of the RUB Notes of (a) the Exchange Amount and the US Dollar Amount applicable to such Relevant RUB Note Payment Date, (b) the Applicable Exchange Rate at which such US Dollar Amount was procured by the Exchange Agent, and (c) if applicable, whether such US Dollar Amount was purchased from either the Exchange Agent or from another leading foreign exchange bank in London or New York City. Subject to receipt by the Exchange Agent two Business Days prior to each Relevant RUB Note Payment Date of the Exchange Amount in respect of such Relevant RUB Note Payment Date, (a) the Exchange Agent will pay, or procure the payment of, the US Dollar Amount procured with the Exchange Amount to the Principal Paying Agent, and (b) a Paying Agent will pay, or procure the payment of, the US Dollar Amount received from the Exchange Agent to Euroclear and Clearstream, Luxembourg accountholders that have made an irrevocable election to receive payments in dollars through the facilities of Euroclear and Clearstream, Luxembourg, pro rata to their book-entry interests in the RUB Notes, by wire transfer of same day funds for value the due date for payment or, if the due date for payment is not a Business Day, the next succeeding day which is a Business Day. If, while RUB Notes are represented by Global Notes, for any reason it is not possible for the Exchange Agent to procure the US Dollar Amount with the Exchange Amount at the Applicable Exchange Rate, the Exchange Agent shall so notify the Issuer and shall make payment on such RUB Notes in roubles to accountholders in Euroclear and Clearstream, Luxembourg. Payments of principal and interest in respect of any Note Certificates representing interests in the RUB Notes will be made, or procured to be made, by the Paying Agents in roubles unless holders of any such RUB Note Certificates have made an irrevocable election to receive payments in dollars at least seven Business Days prior to a Relevant RUB Note Payment Date. With respect to any such holders of Note Certificates who have irrevocably elected to receive payments in dollars, subject to receipt by the Exchange Agent of the Exchange

225 Amount two Business Days prior to each Relevant RUB Note Payment Date in respect of that Relevant RUB Note Payment Date, (a) the Exchange Agent will pay, or procure the payment of, the US Dollar Amount procured with the Exchange Amount to the Principal Paying Agent, and (b) a Paying Agent will pay, or procure the payment of, the US Dollar Amount received from the Exchange Agent to the relevant Noteholders by wire transfer of same day funds for value the due date for payment or, if the due date for payment is not a Business Day, the next succeeding day which is a Business Day. If, while any RUB Notes are presented by Note Certificates, for any reason it is not possible for the Exchange Agent to procure the US Dollar Amount with the Exchange Amount at the Applicable Exchange Rate, the Exchange Agent shall so notify the Issuer and shall make all payments on the Note Certificates in roubles. Notwithstanding any other provision of the Agency Agreement in respect of the RUB Notes or the Conditions to the contrary, (a) all costs of the purchase of dollars with the Exchange Amount shall be borne pro rata by the relevant Noteholders by deduction from the US Dollar Amount paid by the Exchange Agent to the Principal Paying Agent, and (b) the Issuer, the Principal Paying Agent and the Exchange Agent shall have no obligation whatsoever to pay any commissions or expenses, or to indemnify the Noteholders against any difference between the US Dollar Amount received by such Noteholders and their pro rata portion of the Exchange Amount or the application by the Exchange Agent of the Applicable Exchange Rate. The Exchange Agent may rely conclusively on the basis on which its internal foreign exchange conversion rate (including, for the avoidance of doubt, any third party indices forming the basis for such conversion rates) for settlement has been determined and shall not be liable for losses associated with the basis for determination of such rate. The Exchange Agent may retain for its own account any spread on foreign exchange transactions customarily charged by it in connection with such conversion. The Exchange Agent shall be entitled to rely on, without further investigation or enquiry, any notifications received by it pursuant to these provisions and shall not be liable to any party for any losses whatsoever resulting from acting in accordance with such notifications even though subsequent to its acting it may be found that there was some defect in the notification or the notification was not authentic. Any foreign exchange transaction effected by the Exchange Agent will generally be a transaction to buy or sell currency between (i) on one part, the Issuer or the Guarantor (acting through the Exchange Agent, as an agent of the Issuer or the Guarantor) and (ii) on the other part, either the Exchange Agent or its affiliate acting as principal for its own account. The Exchange Agent as agent of the Issuer or the Guarantor will trade the foreign exchange transaction with the Exchange Agent or its affiliate acting as a principal for its own account, and not, in such counterparty role to the Issuer and the Guarantor, as an agent, fiduciary or broker on behalf of the Issuer or the Guarantor. In certain circumstances, the foreign exchange transaction may be transmitted to a sub-custodian. In such cases, the Exchange Agent or its affiliate may not be the foreign exchange counterparty and the foreign exchange transaction may not be processed and priced as described herein. In forwarding certain foreign exchange transactions to the sub-custodian or affiliate for execution, the Exchange Agent does not serve as agent, fiduciary, or broker on behalf of the Issuer or the Guarantor.

Bloomberg Screens, etc. The Issuer will from time to time request all third-party vendors to include appropriate legends regarding Rule 144A restrictions on the Notes on screens maintained by such vendors. Without limiting the foregoing, the Lead Managers will request that Bloomberg, L.P. include the following on each Bloomberg screen containing information about the securities as applicable: • the bottom of the “Security Display” page describing the Notes should state: “Iss’d under 144A” and “GRLS”; • the “Security Display” page should have a flashing red indicator stating “Additional Note Pg”; • such indicator for the Notes should link to an “Additional Security Information” page, which should state that the Notes “are being offered in reliance on the exception from registration under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”) to persons that are “qualified institutional buyers” as defined in Rule 144A under the Securities Act; and • the “Disclaimer” pages for the Notes should state that the securities “have not been and will not be registered under the Securities Act of 1933, as amended.”

CUSIP Each “CUSIP” obtained for a Restricted USD Note will have an attached “fixed field” that contains “GRLS” and “144A” indicators.

226 Trading between Euroclear, Clearstream, Luxembourg and DTC Trading between Euroclear and Clearstream, Luxembourg Accountholders in respect of the Notes

Secondary market sales of book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg to purchasers of book-entry interests in the Notes through Euroclear or Clearstream, Luxembourg will be conducted in accordance with the normal rules and operating procedures of Euroclear and Clearstream, Luxembourg and will be settled using the procedures applicable to conventional Eurobonds.

Trading between DTC Participants in respect of the USD Notes

Secondary market sales of book-entry interests in the USD Notes between DTC participants will occur in the ordinary way in accordance with DTC rules and will be settled using the procedures applicable to United States corporate debt obligations in DTC’s Same Day Funds Settlement System.

Trading between DTC Seller and Euroclear or Clearstream, Luxembourg Purchaser in respect of the USD Notes

When book-entry interests in USD Notes are to be transferred from the account of a DTC participant holding a beneficial interest in a Restricted Global USD Note Certificate to the account of a Euroclear or Clearstream, Luxembourg accountholder wishing to purchase a beneficial interest in an Unrestricted Global USD Note Certificate (subject to such certification procedures as are provided in the relevant Agency Agreement), the DTC participant will input delivery instructions in accordance with the normal rules and operating procedures of DTC for delivery of such interest to the relevant Euroclear or Clearstream, Luxembourg accountholder by 12:00 noon, New York time, on the relevant settlement date. Separate payment arrangements may be required to be made between the DTC participant and the relevant Euroclear or Clearstream, Luxembourg accountholder, as the case may be. On the relevant settlement date, the common depositary for Euroclear and Clearstream, Luxembourg will, upon receipt of confirmation from Euroclear or Clearstream, Luxembourg, instruct the Registrar to (i) decrease the amount of USD Notes registered in the name of Cede & Co and evidenced by the relevant Restricted Global USD Note Certificate and (ii) increase the amount of USD Notes registered in the name of The Bank of New York Depository (Nominees) Limited and evidenced by the relevant Unrestricted Global USD Note Certificate.

Trading between Euroclear or Clearstream, Luxembourg Seller and DTC Purchaser in respect of the USD Notes

When book-entry interests in USD Notes are to be transferred from the account of a Euroclear or Clearstream, Luxembourg accountholder holding a beneficial interest in an Unrestricted Global USD Note Certificate to the account of a DTC participant wishing to purchase a beneficial interest in a Restricted Global USD Note Certificate (subject to such certification procedures as are provided in the relevant Agency Agreement), the Euroclear or Clearstream, Luxembourg accountholder must send to Euroclear or Clearstream, Luxembourg delivery free of payment instructions by 7:45 p.m., Brussels or Luxembourg time, one Business Day prior to the relevant settlement date. Euroclear or Clearstream, Luxembourg, as the case may be, will in turn transmit appropriate instructions to the common depositary for Euroclear and Clearstream, Luxembourg and the Registrar, as the case may be, to arrange delivery to the DTC participant on the settlement date. Separate payment arrangements may be required to be made between the DTC participant and the relevant Euroclear or Clearstream, Luxembourg accountholder, as the case may be. On the relevant settlement date, the common depositary for Euroclear and Clearstream, Luxembourg will (i) transmit appropriate instructions to DTC to deliver such book-entry interests in the Notes free of payment to the relevant account of the DTC participant so notified to it and (ii) instruct the Registrar to (a) decrease the amount of USD Notes registered in the name of The Bank of New York Depository (Nominees) Limited and evidenced by the relevant Unrestricted Global USD Note Certificate and (b) increase the amount of USD Notes registered in the name of Cede & Co and evidenced by the relevant Restricted Global USD Note Certificate. Although the foregoing sets out the procedures of, as applicable, Euroclear, Clearstream, Luxembourg and DTC in order to facilitate the transfers of interests in the Notes among the participants of Euroclear, Clearstream, Luxembourg and DTC, none of Euroclear, Clearstream, Luxembourg or DTC is under any obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Issuer, the Guarantor, the Trustee, any Agent, the Lead Managers or any affiliate of any of them or any person by whom any of them is controlled for the purposes of the Securities Act, will have any responsibility for the performance by Euroclear, Clearstream, Luxembourg, DTC or their respective direct or indirect participants or accountholders of their respective obligations under the rules and procedures governing their operations or for the sufficiency for any purpose of the arrangements described above.

227 SUBSCRIPTION AND SALE The managers named below (the “Lead Managers”) have agreed, subject to the satisfaction of the terms and conditions of the subscription agreement, dated February 11, 2013, by and among the Issuer, the Guarantor and the Lead Managers (the “Subscription Agreement”), to subscribe and pay for the Notes offered and sold in this Offer at the issue price of 100.0% of the principal amount of Notes. The Lead Managers are entitled to be released and discharged from their obligations under the Subscription Agreement in certain circumstances prior to the closing of the issue of the Notes. Aggregate Principal Aggregate Principal Aggregate Principal Amount of the 2019 Amount of the 2023 Amount of the RUB Notes Notes Notes Lead Manager Barclays Bank PLC ...... US$150,000,000 US$250,000,000 RUB3,000,000,000 Citigroup Global Markets Limited ...... US$150,000,000 US$250,000,000 RUB3,000,000,000 ING Bank N.V., London Branch ...... US$150,000,000 US$250,000,000 RUB3,000,000,000 The Royal Bank of Scotland plc ...... US$150,000,000 US$250,000,000 RUB3,000,000,000 Total ...... US$600,000,000 US$1,000,000,000 RUB12,000,000,000

The Subscription Agreement will provide that the obligations of the Lead Managers as set out in the Subscription Agreement including the obligation to purchase the Notes offered and sold in this Offer are several (rather than joint or joint and several) and are subject to the satisfaction of conditions, including, among others, the delivery of legal opinions by legal counsel. We have been advised by the Lead Managers that the Lead Managers propose to offer and sell the Notes in this Offer: • within the United States, to persons whom they reasonably believe are QIBs who can represent that (A) they are QIBs within the meaning of Rule 144A; (B) they are acting for their own account, or the account of one or more QIBs; and (C) they will provide notice of the transfer restrictions set forth in this prospectus to any subsequent transferees; and • outside the United States, to persons other than U.S. persons, within the meaning of Regulation S under the Securities Act, in reliance on Regulation S under the Securities Act and in accordance with applicable law. See the section of this prospectus entitled “Form of Notes and Transfer Restrictions.” The price at which the Notes are being sold may be changed at any time without notice. Any offer or sale of the Notes to QIBs in reliance on an exemption from registration pursuant to Rule 144A under the Securities Act will be made by broker dealers (including broker dealer affiliates of the Lead Managers) who are registered as such under the Exchange Act. Terms used above have the meanings assigned to them in Rule 144A or Regulation S under the Securities Act, as the case may be. Each Lead Manager will acknowledge and agree that in connection with the sale of the Notes in this Offer made in reliance on Regulation S, except as permitted by the Subscription Agreement, it will not offer, sell or deliver the Notes within the United States or to, or for the account or benefit of, U.S. persons: • as part of their distribution at any time; or • otherwise, until 40 days after the later of the date of the commencement of the Offer and the closing of the Offer, and that it will send to each distributor, dealer or other person receiving a selling concession, fee or other remuneration to which they sell the Notes in reliance on Regulation S during the 40-day restricted period, a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. Offers and sales into the United States will be made through the required U.S. broker-dealer affiliates of the Lead Managers. In addition, an offer or sale of the Notes within the United States or to or for the account or benefit of a U.S. person by a dealer (whether or not participating in the Offer) during the 40 day period referred to above, may violate the registration requirements of the Securities Act if such offer or sale is made other than to persons that are QIBs in reliance on an exemption from registration pursuant to Rule 144A under the Securities Act or pursuant to another exemption from registration under the Securities Act.

228 The Notes and the Guarantees have not been and will not be registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to the requirements of, the Securities Act. See the section of this prospectus entitled “Form of Notes and Transfer Restrictions.” Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and trading on its regulated market. However, the Issuer cannot assure you that an active public or other market will develop for the Notes or that a liquid trading market will exist for the Notes. The Issuer does not intend to list the Notes on any U.S. national securities exchange or to seek the admission thereof to trading on the Nasdaq National Market System. The Issuer and the Guarantor have been advised by the Lead Managers that the Lead Managers currently intend to make a market in the Notes. However, the Lead Managers are not obligated to do so and any market making activities with respect to the Notes may be discontinued at any time without notice in their sole discretion. No assurance can be given as to how liquid the trading markets for the Notes will be. In addition, any market making activities will be subject to the limits imposed by applicable securities laws, including the Securities Act and the Exchange Act. Each of the Issuer and the Guarantor will agree in the Subscription Agreement that, for a period of 90 days after the date of this prospectus, neither the Issuer, the Guarantor nor any of their direct or indirect subsidiaries will, without the prior written consent of the Lead Managers, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any debt securities issued or guaranteed by the Issuer or the Guarantor or any subsidiary of the Issuer or the Guarantor and having a maturity of more than one year from the date of issue and that are listed or capable of being listed on a stock exchange, or any substantially similar securities issued by another entity either guaranteed by or in connection with a loan to the Issuer or the Guarantor, or similar structure. Each of the Issuer and the Guarantor has agreed, jointly and severally, in the Subscription Agreement to indemnify the Lead Managers against certain liabilities incurred in connection with the issue of the Notes. In connection with the issue of the Notes, the Lead Managers or persons acting on their behalf may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Lead Managers (or persons acting on their behalf) will undertake stabilization action. Any stabilization action may begin on or after the date on which adequate public disclosure of the terms of the Offer of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of allotment of the Notes. The Lead Managers have, directly and indirectly, provided investment and commercial banking or financial advisory services to the Issuer, the Guarantor and their affiliates, for which they have received customary fees and commissions and expect to provide these services to us and our affiliates in the future, for which they expect to receive customary fees and commissions. The Lead Managers and certain of their affiliates may communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

United Kingdom Each of the Lead Managers has represented and agreed that: • it has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 (the “FSMA”) with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom; and • it has only communicated or caused to be communicated and it will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer or the Guarantor.

229 The Netherlands Each Lead Manager has represented, warranted and agreed that it has not offered, sold, transferred or delivered and will not offer, sell , transfer or deliver Notes in to the public in the Netherlands, unless in reliance on Article 3(2) of the Prospectus Directive and provided: • such offer is made exclusively to legal entities which are qualified investors (within the meaning of the Prospectus Directive) in the Netherlands; • standard logo and exemption wording are incorporated in the offer documents, advertisements and documents in which the offer is announced, as required by article 5:20(5) of the Dutch Financial Supervision Act (Wet op het financieel toezicht) (the “Dutch FSA”); or • such offer is otherwise made in circumstances in which article 5:20(5) of the Dutch FSA is not applicable. For the purposes of this paragraph, the expression an “offer of Notes to the public” in relation to any Notes in the Netherlands means the announcement or communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive) and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Ireland Each of the Lead Managers has represented, warranted and agreed that: • it will not underwrite the issue of, or place the Notes, otherwise than in conformity with the provisions of the European Communities (Markets in Financial Instruments) Regulations 2007 (Nos. 1 to 3) (as amended), including, without limitation, Regulations 7 and 152 thereof or any codes of conduct used in connection therewith, and the provisions of the Investor Compensation Act 1998; • it will not underwrite the issue of, or place, the Notes, otherwise than in conformity with the provisions of the Companies Acts 1963 to 2012 (as amended), the Central Bank Acts 1942 to 2011 (as amended) and any codes of conduct rules made under Section 117(1) of the Central Bank Act 1989; • it will not underwrite the issue of, or place, or do anything in Ireland in respect of the Notes otherwise than in conformity with the provisions of the Prospectus (Directive 2003/71/EC) Regulations 2005 (as amended) and any rules issued under Section 51 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005, by the Central Bank of Ireland; and • it will not underwrite the issue of, place or otherwise act in Ireland in respect of the Notes, otherwise than in conformity with the provisions of the Market Abuse (Directive 2003/6/EC) Regulations 2005 (as amended) and any rules issued under Section 34 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005 by the Central Bank of Ireland.

The Russian Federation Each of the Lead Managers has represented, warranted and agreed that it has not offered or sold or otherwise transferred any Notes as part of their initial distribution to or for the benefit of any persons (including legal entities) that are resident, organized, registered, established or having their usual residence or place of business in the Russian Federation or to any person located within the territory of the Russian Federation, except in compliance with Russian law.

Hong Kong Each Lead Manager has represented, warranted and agreed that it has not offered or sold and will not offer or sell Notes in Hong Kong, by means of any document other than (i) to “professional investors” as defined in the Securities and Futures Ordinance (Cap.571) of Hong Kong and any rules made under that ordinance; or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap.32) of Hong Kong or which do not constitute an offer to the public within the meaning of that ordinance. Further, each Lead Manager has represented, warranted and agreed that it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purpose of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at,

230 or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance (Cap.571) of Hong Kong and any rules made under that ordinance.

Singapore Each Lead Manager has acknowledged that this prospectus has not been, and will not be, registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Lead Manager has represented, warranted and agreed that it has not offered or sold any Notes or caused the Notes to be made the subject of an invitation for subscription or purchase and has not circulated or distributed, nor will it circulate or distribute, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes offered in this Offer, nor has it offered or sold, or caused such Notes to be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Switzerland Each of the Lead Managers has represented, warranted and agreed that it has not publicly offered, sold or advertised the Notes, directly or indirectly, into or from Switzerland and the Notes will not be listed on the SIX Swiss Exchange or on any other exchange or regulated trading facility in Switzerland. Accordingly, each Lead Manager acknowledges that neither this prospectus nor any other offering or marketing material relating to the Notes constitutes a prospectus as such term is understood pursuant to article 652a or article 1156 of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange Ltd or any other regulated trading facility in Switzerland or a simplified prospectus or a prospectus as such term is defined in the Swiss Federal Collective Investment Scheme Act, and each Lead Manager represents, warrants and agrees that neither this prospectus nor any other offering or marketing material relating to the Notes will be publicly distributed by it or otherwise made publicly available by it in Switzerland.

231 GENERAL INFORMATION

1. The USD Notes have been accepted for clearance through Euroclear, Clearstream, Luxembourg and DTC. The RUB Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The ISINs, common codes and/or CUSIP (as applicable) for the Notes will be as follows:

2019 Notes represented by the Unrestricted Global 2019 Note Certificate ISIN: XS0889401054 Common Code: 088940105 2019 Notes represented by the Restricted Global 2019 Note Certificate ISIN: US92718WAD11 Common Code: 088995449 CUSIP: 92718W AD1 2023 Notes represented by the Unrestricted Global 2023 Note Certificate ISIN: XS0889401724 Common Code: 088940172 2023 Notes represented by the Restricted Global 2023 Note Certificate ISIN: US92718WAE93 Common Code: 088995945 CUSIP: 92718W AE9 RUB Notes represented by the Unrestricted Global RUB Note Certificate ISIN: XS0889402029 Common Code: 088940202 RUB Notes represented by the Restricted Global RUB Note Certificate ISIN: XS0889402458 Common Code: 088940245

2. So long as any of the Notes is outstanding and the Notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Issuer will promptly furnish, for the benefit of holders from time to time of Notes, upon request, to holders of Notes and prospective purchasers designated by any such holders, information required to be disclosed by subsection (d)(4) of Rule 144A (or any successor provision).

3. So long as any of the Notes is outstanding and a Guarantee is a “restricted security” within the meaning of Rule 144(a)(3) under the Securities Act, the Guarantor will promptly furnish, for the benefit of holders from time to time of the relevant Notes, upon request, to holders of Notes and prospective purchasers designated by any such holders, information required to be disclosed by subsection (d)(4) of Rule 144A (or any successor provision).

4. It is expected that the listing of the Notes on the Irish Stock Exchange and the admission of the Notes to trading on the Irish Stock Exchange’s regulated market for listed securities will take place on or about February 13, 2013, subject to the issuance of the Global Note Certificates. Transactions will normally be effected for delivery on the third business day after the transaction.

5. For so long as any of the Notes are listed on the Irish Stock Exchange, copies of the following documents may be inspected at and are available free of charge in physical form at the registered office of the Issuer, the Guarantor and the specified office of the Principal Paying Agent in London during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted): • the deed of incorporation of the Issuer and articles of association of the Issuer; • a copy of the charter of the Guarantor (together with an English translation thereof); • the Agency Agreements; • the Trust Deeds, each of which include the forms of the Global Note Certificates and the Individual Note Certificates; • the Issuer’s audited consolidated financial statements prepared in accordance with IFRS for the years ended December 31, 2011, 2010 and 2009; • the Issuer’s unaudited condensed consolidated financial statements prepared in accordance with IFRS for the nine month periods ended September 30, 2012 and 2011; • the Issuer’s audited standalone financial statements prepared in accordance with Dutch GAAP for the year ended December 31, 2011;

232 • the Guarantor’s audited consolidated financial statements prepared in accordance with IFRS for the years ended December 31, 2011, 2010 and 2009; • the Guarantor’s unaudited condensed consolidated financial statements prepared in accordance with IFRS for the nine month periods ended September 30, 2012 and 2011; • the Guarantor’s published non-consolidated financial statements prepared in accordance with Russian accounting principles for the years ended December 31, 2011, 2010 and 2009; • the Guarantor’s published non-consolidated unaudited financial statements prepared in accordance with Russian accounting principles for the nine month periods ended September 30, 2012 and 2011; and • the authorizations listed below. The Guarantor does not publish or otherwise make available its non-consolidated financial statements prepared in accordance with IFRS. 6. The issuance of the Notes and the Guarantees have been authorized by a decision of the Supervisory Board of the Issuer’s parent, VimpelCom Ltd., dated February 4, 2013; and the issuance of the Notes has been authorized by a decision of the Board of Directors of the Issuer dated February 4, 2013. 7. No consents, approvals, authorizations or orders of any regulatory authorities are required by the Issuer or the Guarantor under the laws of Ireland, the Russian Federation or the Netherlands for issuing the Notes or the giving of the Guarantees. 8. As of the date hereof, other than as disclosed in this prospectus, there has been no material adverse change in the prospects of the Guarantor since the date of its last published audited financial statements. 9. Other than as disclosed in this prospectus, there has been no significant change in the financial or trading position of the Issuer or the Guarantor which has occurred since September 30, 2012. 10. Since December 31, 2011, there has been no material adverse change in the financial position or prospects of the Issuer. 11. Since the date of incorporation of the Issuer, there have been no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware), which may have, or have had in the recent past, significant effects on the Issuer’s financial position or profitability. 12. Other than as disclosed in this prospectus, there have been no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Guarantor is aware), during a period covering at least the previous 12 months, which may have, or have had in the recent past, significant effects on the Guarantor’s financial position or profitability. 13. Other than as disclosed in this prospectus, in “Terms and Conditions of the Notes” and in “Form of Notes and Transfer Restrictions,” there are no restrictions on transfers of the Notes. 14. The Notes have been rated “BB” by Standard & Poor’s Ratings Services and “Ba3” by Moody’s Investors Service. Each of the credit ratings issued by Standard & Poor’s Rating Services are issued out of the Moscow branch of Standard & Poor’s International Services, Inc. which is not established in the European Union and therefore has not applied for registration under the CRA Regulation. Moody’s Investors Service is established in the European Union and is registered under the CRA Regulation. 15. The Issuer does not intend to provide post-issuance transaction information regarding the Notes or the Guarantees. 16. The approximate expenses in relation to the admission to trading of the Notes will be €5,000. 17. Ernst & Young Accountants LLP are chartered accountants (registeraccountants) and are members of the Koninklijk Nederlands Instituut van Registeraccountants (NIVRA) and registered auditors qualified to practice in the Netherlands. Ernst & Young LLC are members of the Non-Profit partnership “Russian Audit Chamber” and are registered auditors qualified to practice in Russia. 18. Arthur Cox Listing Services Limited is acting solely in its capacity as listing agent in connection with Notes and is not itself seeking admission of the Notes to the Official List of the Irish Stock Exchange or to trading on its regulated market for the purposes of the Prospectus Directive. 19. The language of the prospectus is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law.

233 20. Any reference to websites in this prospectus is for information purposes only and such websites shall not form part of this document. 21. The Issuer is incorporated for the purpose of engaging in holding and financing activities and was incorporated in the Netherlands as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid), under the name VimpelCom Holdings B.V. on June 29, 2009. The corporate seat of the Issuer is at Amsterdam, the Netherlands. The registered office of the Issuer is Claude Debussylaan 88, 1082 MD Amsterdam, The Netherlands and the telephone number is +31 (0)20 7977 200. The Issuer has been registered with the trade register of the Chamber of Commerce in Amsterdam, the Netherlands under number 34345993. 22. The Guarantor is an open joint stock company organized under the laws of the Russian Federation with the legal name Open Joint Stock Company “Vimpel-Communications”. The Guarantor was registered in the Russian Federation on September 15, 1992 as a closed joint stock company and re-registered as an open joint stock company on July 28, 1993. On August 28, 2002, the Guarantor was re-registered as an open joint stock company under registration number 1027700166636. The Guarantor’s registered offices are located at 10, Ulitsa 8-Marta, Building 14, Moscow, Russian Federation 127083. Its telephone number is +7 (495) 725 0700.

234 GLOSSARY OF TECHNICAL TERMS “ADSL”—Asymmetric Digital Subscriber Line. “AMPS”—Advanced Mobile Phone System, an analog cellular system standard in the 800 MHz frequency band. “analog”—Communications by transmission of continuously varying representations of the input signal, as compared to binary coding of words in digital transmission. “API”—open application programming interface. “base station”—A fixed site with network equipment that is used for radio frequency communications with mobile stations, and is part of a cell, or a sector within a cell, and is connected to an MSC, an MTSO or other part of a mobile telecommunications system. “BSC”—Base Station Controller. Network equipment designed to manage a small network of base stations. “CDMA”—Code Division Multiple Access. A digital wireless transmission technology for use in mobile telephone communications, personal communications services and other mobile communications systems. CDMA is a spread spectrum technology in which calls are assigned a pseudo-random code to encode digital bit streams. The coded signals are then transmitted on a frequency between the end user and a cell site, where a base station processes them. CDMA allows more than one wireless user to simultaneously occupy a single radio frequency band with reduced interference. “CDMA 450”—A 3G technology which uses CDMA 2000-1x air interface deployed in the 450 MHz range. “cells”—A discrete area within a mobile telecommunications system, which is equipped with transmitters, receivers and antennas and connected to switching gear and control equipment with a low-powered transmitter- receiver. Cell size varies depending on a number of factors, including terrain and capacity demands. By controlling transmission power, the radio frequencies assigned to one cell can be limited to the boundaries of that cell. “cellular system”—A telephone system based on a grid of cells deployed at a specified frequency. “channel”—A single path, either radio frequency or voice, for transmitting electrical signals. “CLEC”—competitive local exchange carriers that own and operate fully digital overlay networks in a number of major Russian cities. “DAMPS”—Digital Advanced Mobile Phone System. A standard for digital mobile telephone transmissions in the 800 MHz frequency band. “digital”—A method of storing, processing and transmitting information through the use of distinct electronic or optical pulses that represent the binary digits 0 and 1. Digital transmission and switching technologies employ a sequence of discrete, distinct pulses to represent information, as opposed to the continuously variable analog signal. “DLD”—Domestic Long Distance. “DSL”—Digital Subscriber Line. Digital data transmission over local telephone networks. “DSLAMs”—Digital Subscriber Line Access Multiplexers. “DWDM”—Dense Wavelength Division Multiplexing. “EDGE”—Enhanced Data Rates for Global Evolution. An advanced technology that allows subscribers to connect to the Internet and send and receive data, including digital images, web pages and photographs, up to three times faster than an ordinary GSM/GPRS network. “fiber optic network”—Transmission system utilizing small-diameter glass fibers through which light is transmitted. “Fixed Mobile Convergence”—The ability to connect a mobile phone to fixed-line infrastructure enabling users to maintain one number, address book and voicemail bank, taking advantage of cheap, high-speed connectivity in their fixed-line home or office setting, while enjoying mobility. “FMTN”—Fixed Mobile Technological Network. “FTTB”—Fiber-to-the-building technology. “FTN”—Federal Transit Network. “frequency”—The number of cycles per second, measured in hertz, of a periodic oscillation or wave in radio propagation.

235 “Gbps”—Gigabits per second. “GPRS”—General Packet Radio Services. A technology standard for high speed data transmission over GSM networks. “GSM”—Global System for Mobile Communications. A standard for digital mobile telephone transmissions in the frequency bands of 900 MHz, 1800 MHz and 1900 MHz. “GSM-900”—A GSM network in the 900 MHz frequency range. “GSM-1800”—A GSM network in the 1800 MHz frequency range. “GSM-900/1800”—A dual band GSM network in the 900 MHz and 1800 MHz frequency ranges. “HSPA”—High Speed Packet Access. A collection of mobile telephony protocols that extend and improve the performance of existing UMTS protocols. “HSDPA”—High Speed Downlink Packet Access. A form of HSPA, which provides enhanced performance by using improved modulation and by refining the protocols by which handsets and base stations communicate. “ILD”—International Long Distance. “IMPS”—Instant Messaging and Presence Service. An instant messaging technology created specifically for mobile devices. “infrastructure”—Fixed infrastructure equipment consisting of base stations, base station controllers, antennas, switches, management information systems and other equipment that receives, transmits and processes signals from and to subscriber equipment and/or between mobile telecommunications systems and the public switched telephone network. “interconnect”—Any variety of hardware arrangements that permit the connection of telecommunications equipment to a communications common carrier network such as a public switched telephone network. “IP”—Internet Protocol. A data-oriented protocol used for communicating data across a packet-switched network. “IP telephony”—Internet Protocol telephony. The routing of voice conversations over the Internet or any other IP-based network. The voice data flows over a general-purpose packet-switched network, instead of traditional dedicated, circuit-switched telephony transmission lines. “IP VPN”—IP virtual private network. “ISDN”—A circuit-switched telephone network system, which allows for digital transmission of voice and data over ordinary telephone wires, enhancing voice quality. “ISP”—Internet Service Provider. “LAN”—Local Area Network. A computer network covering a small geographic area. “large screen subscribers”—Subscribers other than small screen subscribers. “MHz”—Megahertz. A unit of measure of frequency; 1 MHz is equal to one million cycles per second. “microwave”—Electromagnetic waves in radio frequencies above 890 MHz and below 20 GHz. “MMS”—Multimedia Messaging Service. A mobile messaging service that allows the addition of photos, pictures and audio to text messages. “MPLS”—Multiprotocol Label Switching. “MVNOs”—Mobile Virtual Network Operators. “M2M”—Machine-to-Machine. Refers to technologies that allow both wireless and wired systems to communicate with other devices of the same ability and includes technologies that allow data transmission between remote equipment. “network equipment”—The fixed infrastructure consisting of base stations, base station controllers, mobile switching centers and related information processing control points that manages communications between the mobile unit and the public switched telephone network. “OTT”—Over the Top. Refers to content service providers such as Yandex, Google and Facebook. “PBX”—Private Branch Exchange. “plesiochronous digital hierarchy”—A technology for transporting data over digital transport equipment such as fiber optic and microwave radio systems.

236 “PSTN”—Public Switched Telephone Network. “REDS” —Radio Electronic Devices. “roaming”—A service offered by wireless communications network operators which allows a subscriber to use his or her handset while in the service area of another carrier. Roaming requires an agreement between operators of different individual markets to permit customers of either operator to access the other’s system. “SIM card”—Subscriber Identity Module card. GSM subscriber data is contained on a SIM card, which can be transferred from one mobile telephone to another. “SMS”—Short Messaging Service. Mobile messaging service which allows cellular customers to send and receive text messages. “small screen subscribers”—Subscribers using mobile devices. “spectrum”—The range of electromagnetic frequencies available for use. “switch”—The switch completes a call by connecting it to the wireline telephone network or another mobile telephone unit. Incoming calls are received by the switch, which instructs the appropriate cell to complete the communications link by radio signal between the cell’s transmitter-receiver and the mobile telephone. The switch also records information on system usage and subscriber statistics. “TDMA”—Time Division Multiple Access. A channel access method for shared medium networks, which makes it possible for multiple users to share the same frequency channel. “telephony”—The process of converting sounds into electrical impulses for transmission over a connecting medium such as wires, fiber optics or microwave. “UMTS”—Universal Mobile Telecommunications Services. UMTS is a type of 3G mobile telecommunications technology. It is a multi-function mobile system with wideband multimedia capabilities as well as present narrowband capabilities. UMTS will probably consist of a family of interworking networks, delivering the same new and innovative personal communication services to users regardless of used networks. “USB”—Mobile Internet Service via Universal Serial Bus. “VoIP”—Voice Over Internet Protocol. A protocol optimized for the transmission of voice through the Internet or other packet switched networks. “VPN”—virtual private networks service. “VSAT”—very small aperture terminal. “WAN”—Wide Area Network. A computer network covering a large geographic area. “WAP”—Wireless Application Protocol technology. A new advanced intelligent messaging service for digital mobile wireless devices and other mobile terminals that will allow users to see Internet content in special text format on special WAP-enabled GSM mobile wireless devices. “WiFi”—Wireless Fidelity. See WLAN. “wireline telephone network”—Conventional telephone system that uses wires or cables, rather than radio signals, to transmit information. “WLAN”—Wireless local-area network, also known as wireless LAN. A network that uses high-frequency radio waves as its carrier to give a network connection to all users in the surrounding area. The backbone network usually uses cables, with one or more wireless access points connecting the wireless users to the wired network.

237 INDEX TO FINANCIAL STATEMENTS VIMPELCOM HOLDINGS B.V.

Unaudited Interim Condensed Consolidated IFRS Financial Statements Interim condensed consolidated income statement for the three- and nine-month periods ended September 30, 2012 and 2011 ...... F-3 Interim condensed consolidated statement of comprehensive income for the three- and nine-month periods ended September 30, 2012 and 2011 ...... F-4 Interim condensed consolidated statement of financial position as at September 30, 2012 and December 31, 2011 ...... F-5 Interim condensed consolidated statement of changes in equity for the three- and nine-month periods ended September 30, 2012 ...... F-6 Interim condensed consolidated statement of cash flows for the nine-month periods ended September 30, 2012 and 2011 ...... F-8 Notes to the unaudited interim condensed consolidated financial statements ...... F-9 Audited Consolidated IFRS Financial Statements Report of Independent Auditor ...... F-31 Consolidated income statement for the years ended December 31, 2011, 2010 and 2009 ...... F-32 Consolidated statement of comprehensive income for the years ended December 31, 2011, 2010 and 2009 ...... F-33 Consolidated statement of financial position as at December 31, 2011, 2010 and 2009 ...... F-34 Consolidated statement of changes in equity for the years ended December 31, 2011, 2010 and 2009 ..... F-35 Consolidated statement of cash flows for the years ended December 31, 2011, 2010 and 2009 ...... F-38 Notes to the audited consolidated financial statements ...... F-39

OPEN JOINT STOCK COMPANY “VIMPEL-COMMUNICATIONS”

Unaudited Interim Condensed Consolidated IFRS Financial Statements Interim condensed consolidated income statement for the three- and nine-month periods ended September 30, 2012 and 2011 ...... F-143 Interim condensed consolidated statement of comprehensive income for the three- and nine-month periods ended September 30, 2012 and 2011 ...... F-144 Interim condensed consolidated statement of financial position as at September 30, 2012 and December 31, 2011 ...... F-145 Interim condensed consolidated statement of changes in equity for the three- and nine-month periods ended September 30, 2012 and 2011 ...... F-146 Interim condensed consolidated statement of cash flows for the nine-month period ended September 30, 2012 and 2011 ...... F-150 Notes to the unaudited interim condensed consolidated financial statements ...... F-151 Audited Consolidated IFRS Financial Statements Report of Independent Auditor ...... F-183 Consolidated income statement for the years ended December 31, 2011, 2010 and 2009 ...... F-184 Consolidated statement of comprehensive income for the years ended December 31, 2011, 2010 and 2009 ...... F-185 Consolidated statement of financial position as at December 31, 2011, 2010 and 2009 ...... F-186 Consolidated statement of changes in equity for the years ended December 31, 2011, 2010 and 2009 .... F-187 Consolidated statement of cash flows for the years ended December 31, 2011, 2010 and 2009 ...... F-191 Notes to the audited consolidated financial statements ...... F-192

F-1

Unaudited Interim Condensed Consolidated Financial Statements

VimpelCom Holdings B.V.

For the three- and nine-month periods ended September 30, 2012 and 2011

F-2

VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim condensed consolidated income statement for the three and nine month periods ended 30 September 2012

Three months ended Nine months ended 30 September 30 September Note 2012 2011 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) (In millions of US dollars, except per share amounts) Service revenues 3,092 3,115 8,911 8,792 Sale of equipment and accessories 99 71 261 201 Other revenues 5 2 14 10 Total operating revenues 5 3,196 3,188 9,186 9,003

Operating expenses Service costs 673 769 1,918 2,118 Cost of equipment and accessories 95 90 245 247 Selling, general and administrative expenses 965 972 2,933 2,719 Depreciation 398 414 1,224 1,227 Amortization 124 161 389 460 Loss on disposals of non-current assets 43 29 121 50 Total operating expenses 2,298 2,435 6,830 6,821

Operating profit 898 753 2,356 2,182

Finance costs 420 427 1,216 941 Finance income (92) (98) (290) (182) Other non-operating losses 32 17 25 99

Shares of profit of associates and joint ventures accounted for using the equity method (41) (13) (62) (33) Net foreign exchange loss/ (gain) 50 (56) (67) (170)

Profit before tax 529 476 1,534 1,527

Income tax expense 6 158 218 528 532

Profit for the period 371 258 1,006 995

Attributable to: The owners of the parent 356 258 968 967 Non-controlling interest 15 - 38 28 371 258 1,006 995

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-3

VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim condensed consolidated statement of comprehensive income for the three and nine month periods ended 30 September 2012

Three months ended Nine months ended 30 September 30 September 2012 2011 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) (In millions of US dollars)

Profit for the period 371 258 1,006 995

Other comprehensive income

Cash flow Hedge Reserve (3) - (3) - Recycling of accumulated foreign currency translation difference for equity interest in acquiree in business combination achieved in stages - - - 43

Share of foreign currency translation of associates and joint ventures accounted for using the equity method 25 (40) 17 (37)

Income from available for sale asset measured through Other comprehensive income 35 - 22 - Foreign currency translation 240 (575) 104 (228)

Other comprehensive (loss)/ income for the period, net of tax 297 (615) 140 (222)

Total comprehensive (loss)/ income for the period, net of tax 668 (357) 1,146 773

Attributable to: The owners of the parent 646 (358) 1,104 737 Non-controlling interests 22 1 42 36

668 (357) 1,146 773

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-4

VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim condensed consolidated statement of financial position

As of As of Note 30 September 2012 31 December 2011 (unaudited) (audited) (In millions of US dollars) Assets Non-current assets Property and equipment 7 8,309 8,188 Intangible assets 8 1,916 2,164 Goodwill 8 6,991 6,897 Investments in associates and joint ventures 465 388 Deferred tax asset 9 - Financial assets 9 4,149 3,807 Other non-financial assets 18 86 Total non-current assets 21,857 21,530

Current assets Inventories 92 168 Other non-financial assets 261 288 Trade and other receivables 748 658 Current income tax asset 135 208 Other financial assets 9 741 93 Cash and cash equivalents 10 1,370 767 Total current assets 3,347 2,182

Assets classified as held for sale 86 -

Total assets 25,290 23,712

Equity and liabilities Equity Equity attributable to equity owners of the parent (3,292) (4,388) Non-controlling interests (10) 35 Total equity (3,302) (4,353)

Non-current liabilities Financial liabilities 9 23,896 23,425 Provisions 210 142 Other non-financial liabilities 46 50 Deferred tax liability 628 588 Total non-current liabilities 24,780 24,205

Current liabilities Trade and other payables 1,064 1,396 Other non-financial liabilities 979 857 Other financial liabilities 9 1,652 1,513 Current income tax payable 5 10 Provisions 60 84 Total current liabilities 3,760 3,860

Liabilities associated with assets held for sale 52 -

Total equity and liabilities 25,290 23,712

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-5 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim condensed consolidated statement of changes in equity For the three month period ended 30 September 2012

Issued Capital Treasury Other Retained Foreign Total Non- Total capital Surplus shares capital earnings currency controlling equity (In millions of US dollars, except for share amounts) reserves translation interest

As of 1 July 2012 (unaudited) 20 274 (1) 130 (3,440) (920) (3,937) (12) (3,949)

Profit for the period - - - - 356 - 356 15 371 Other comprehensive income - - - - - 290 290 7 297 Total comprehensive income - - - - 356 290 646 22 668 Changes in fair value of options over non-controlling interests in subsidiaries - - - 6 - (1) 5 (20) (15) Other movements - - - - - (6) (6) - (6) As of 30 September 2012 (unaudited) 20 274 (1) 136 (3,084) (637) (3,292) (10) (3,302)

Issued Capital Treasury Other Retained Foreign Total Non- Total capital Surplus shares capital earnings currency controlling equity (In millions of US dollars, except for share amounts) reserves translation interest

As of 1 July 2011 (unaudited) 20 274 (1) (105) (4,123) (84) (4,019) 314 (3,705)

Profit for the period - - - - 258 - 258 - 258 Other comprehensive income - - - - - (616) (616) 1 (615) Total comprehensive income - - - - 258 (616) (358) 1 (357) Changes in fair value of options over non-controlling interests in subsidiaries - - - (9) - - (9) (19) (28) Restructuring of shareholding in consolidated subsidiaries - - - 264 - (5) 259 (10) 249 As of September 30, 2011 (unaudited) 20 274 (1) 150 (3,865) (705) (4,127) 286 (3,841)

The accompanying notes are an integral part of these condensed consolidated financial statements. F-6 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim condensed consolidated statement of changes in equity For the nine month period ended 30 September 2012

Issued Capital Treasury Other Retained Foreign Total Non- Total capital Surplus shares capital earnings currency controlling equity (In millions of US dollars, except for share amounts) reserves translation interest

As of 1 January 2012 20 274 (1) 138 (4,052) (768) (4,389) 35 (4,354)

Profit for the period - - - - 968 - 968 38 1,006 Other comprehensive income - - - - - 136 136 4 140 Total comprehensive income - - - - 968 136 1,104 42 1,146 Changes in fair value of options over non-controlling interests in subsidiaries - - - 8 - (4) 4 (44) (40) Acquisition of non-controlling interest - - - (10) - - (10) 1 (9) Divestment ------(44) (44) Other movements - - - - - (1) (1) - (1) As of 30 September 2012 (unaudited) 20 274 (1) 136 (3,084) (637) (3,292) (10) (3,302)

Issued Capital Treasury Other Retained Foreign Total Non- Total capital Surplus shares capital earnings currency controlling equity (In millions of US dollars, except for share amounts) reserves translation interest

As of 1 January 2011 20 274 (1) (63) (4,832) (470) (5,072) (25) (5,097)

Profit for the period - - - - 967 - 967 28 995 Other comprehensive income - - - - - (230) (230) 8 (222) Total comprehensive income - - - - 967 (230) 737 36 773 Changes in fair value of options over non-controlling interests in subsidiaries - - - (44) - - (44) (43) (87) Acquisition of non-controlling interest - - - (6) - - (6) 307 301 Restructuring of shareholding in consolidated subsidiaries - - - 264 - (5) 259 (10) 249 Acquisition of new subsidiaries ------21 21 Other movements - - - (1) - - (1) - (1) As of 30 September 2011 (unaudited) 20 274 (1) 150 (3,865) (705) (4,127) 286 (3,841)

The accompanying notes are an integral part of these condensed consolidated financial statements. F-7 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim condensed consolidated statement of cash flows For the nine month periods ended 30 September 2012 and 30 September 2011

Period ended 30 September 2012 2011 (unaudited) (unaudited)

(In millions of US dollars) Operating activities Profit for the period 1,006 995 Tax expense 528 532 Profit before tax 1,534 1,527 Non-cash adjustment to reconcile profit before tax to net cash flows: Depreciation 1,224 1,227 Amortization 389 460 Loss on disposals of non-current assets 121 50 Finance income (290) (182) Finance costs 1,216 941 Other non-operating (gains)/ losses 25 99 Net foreign exchange gains (67) (170) Shares of profit of associates and joint ventures accounted for using the equity method (62) (33) Movements in provisions and pensions 35 14 Working capital adjustments: Change in trade and other receivables and prepayments (121) (271) Change in inventories 30 (64) Change in trade and other payables 77 242 (14) (93) Interest paid (730) (399) Interest received 331 154 Income tax paid (417) (465) Net cash flows from operating activities 3,295 3,130 Investing activities Proceeds from sale of property, plant and equipment and intangible assets 18 9 Purchase of property, plant and equipment and intangible assets (1,575) (1,824) Payments of loans granted (241) (5,612) (Payments to) /receipts from deposits (660) (78) Proceeds from sale of assets held for sale 3 4 Divested cash net of proceeds from sales of share in subsidiaries (77) - Receipts from associates - 13 Acquisition of subsidiaries, net of cash acquired (2) (497) Net cash flows used in investing activities (2,534) (7,985) Financing activities Net proceeds from exercise of share options - 1 Acquisition of non-controlling interest (9) (4) Proceeds from borrowings net of fees paid 1,262 6,261 Repayment on borrowings (1,399) (575) Dividends paid to equity holders of the parents - (3) Net cash flows used in financing activities (146) 5,680 Net increase in cash and cash equivalents 615 825 Net foreign exchange difference (12) (46) Cash and cash equivalents at beginning of period 767 851 Cash and cash equivalents at end of period 1,370 1,630

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-8 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

1 General information

VimpelCom Holdings B.V. ("VimpelCom", the "Company", the "Group" or "we") was established as a private company with limited liability under the laws of the Netherlands on 29 June 2009.

The registered office of VimpelCom is located at Claude Debussylaan 88, 1082 MD Amsterdam, the Netherlands.

In these notes, VimpelCom, the Company, the Group or "we" also refers to VimpelCom Holdings B.V.’s consolidated subsidiaries. In these notes U.S. dollar amounts are presented in millions, except for share and per share amounts and as otherwise indicated.

VimpelCom Ltd., the ultimate controlling shareholder of the Company, was incorporated in Bermuda on 5 June 2009, as an exempted company under the name New Spring Company Ltd., which was subsequently changed to VimpelCom Ltd. on 1 October 2009. VimpelCom Ltd. was formed to recapitalize Open Joint Stock Company “Vimpel-Communications” (“OJSC VimpelCom”) and acquire CJSC “Kyivstar G.S.M.” (“Kyivstar”). Altimo Holdings & Investments Limited (“Altimo”) and Telenor ASA (“Telenor”) together with certain of their respective affiliates were the two major shareholders in each of the companies.

On 24 September, 2010 VimpelCom Ltd. and VimpelCom Holdings B.V. entered into the Share Transfer Agreement through which the shares in OJSC VimpelCom were transferred to VimpelCom Holding B.V. in exchange for a promissory note (“Original promissory note”) valued USD 16,748 minus 150,000 euro. As a result of the Exchange Offer VimpelCom Holdings B.V. acquired indirectly 100% of shares in Kyivstar. These shares were acquired from Altimo group companies and Telenor group companies.

On 29 June 2011, the Original promissory note was replaced with the new one (the “Promissory note”), with maturity of March 31, 2022 and bearing interest at a rate per annum based on One-Year USD-LIBOR plus 4.5%. The amount of annual repayment depends on the dividends received from the Company’s subsidiaries.

As of 30 September 2012 the Company has negative net equity mainly due to the fact that the liability under the Promissory Note is based on the fair value of OJSC VimpelCom shares while the assets and liabilities of OJSC VimpelCom were measured at historical cost with the difference recorded in equity.

VimpelCom earns revenues by providing voice, data and other telecommunication services through a range of wireless, fixed and broadband internet services, as well as selling equipment and accessories. As of 30 September 2012, the Company operated telecommunications services in Russia, Kazakhstan, Armenia, Tajikistan, Uzbekistan, Georgia, Kyrgyzstan, Cambodia and Laos primarily under the "Beeline" brand name and in Ukraine primarily under the “Kyivstar” brand name.

F-9 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

2 Basis of the interim condensed consolidated financial statements

2.1 Basis of preparation The interim condensed consolidated financial statements for the three and nine months ended 30 September 2012 have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required for a complete set of consolidated financial statements, and should be read in conjunction with the Group’s annual financial statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) for the year ended 31 December 2011.

The interim condensed consolidated financial statements have been prepared on a historical cost basis, unless disclosed otherwise.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2011.

The preparation of these consolidated financial statements required management to apply accounting policies and methodologies based on subjective judgments and estimates based on past experience and assumptions determined from time to time to be reasonable and realistic based on the related circumstances. The use of these estimates and assumptions affects the amounts reported in the statement of financial position and the income statement as well as the notes. The final amounts for items for which estimates and assumptions were made in these consolidated financial statements may differ from those reported in these statements due to the uncertainties that characterize the assumptions and conditions on which the estimates are based.

2.2 Basis of consolidation

The interim condensed consolidated financial statements comprise the financial statements of the Company and its subsidiaries as of 30 September 2012. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date when such control ceases.

Intercompany accounts and transactions within the Company have been eliminated. Non- controlling interests are reported in the consolidated statement of financial position as a separate component of equity. Non-controlling interests represent the equity in subsidiaries not attributtable, directly or indirectly, to the owners of the parent.

F-10 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

3 Seasonality of operations

Due to seasonality of the Group’s operations, higher revenues and operating profits are usually expected in the third quarter of the year. These expectations are mainly attributable to the increased demand for telecommunication services during peak holiday season from private customers. This information is provided to allow for a proper assessment of the results, however management have concluded that this does not constitute “highly seasonal” as described by IAS 34.

4 Significant transactions

GTEL-Mobile

On 23 April 2012, VimpelCom completed the sale of its entire indirect 49.9% stake in GTEL Mobile to GTEL Transmit and Infrastructure Service One Member Company Limited, or “GTEL Transmit,” a related party of our Vietnamese local partner, Global Telecommunications Corporation, or “GTEL,” for cash consideration of USD 45 resulting in immaterial loss on sale. VimpelCom has no further obligations or liabilities to GTEL or GTEL Mobile as a result of the completion of the sale.

Sotelco

VimpelCom intends to dispose its entire indirect 90.0% stake in Sotelco Ltd. (“Sotelco”). As at 30 September 2012 final sale negotiations with a potential buyer were in progress. Assets and liabilities of Sotelco qualify as a Disposal Group under IFRS 5 Non-current assets held for sale and discontinued operations and therefore are reclassified in the Statement of Financial Position as of 30 September 2012 in the accompanying condensed consolidated financial statements.

As of 30 September 2012 Sotelco’s (100%) carrying values are as follows:

Property and equipment 30 Intangible assets 26 Other non-current assets 16 Other current assets 4

Non-current liabilities 21 Current liabilities 20

Total Net assets held for sale 35

F-11 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

5 Segment information Management analyzes the operating segments separately because of different economic environments and stages of development in different geographical areas, requiring different investment and marketing strategies. Management does not analyze assets by reportable segments. The segment data for acquired operations are reflected herein from the date of their respective acquisition.

Prior to 1 January 2012, management evaluated the performance of its segments, primarily based on earnings before interest, tax, depreciation, amortization and impairment loss (“adjusted EBITDA”), as calculated based on US Generally Accepted Accounting Principles. Beginning in 2012, while still utilizing the same measure of segment performance, the information analysed by management is based on IFRS. Information for comparative periods was adjusted to IFRS and is presented below accordingly.

Financial information by reportable segment for the three and nine month periods ended 30 September 2012 and 30 September 2011 is presented in the following tables.

Three months ended 30 September 2012 Russia Ukraine CIS Total All other Group Revenue External customers 2,301 428 454 3,183 13 3,196 Inter-segment 26 24 24 74 (74) - Total revenue 2,327 452 478 3,257 (61) 3,196

Adusted EBITDA 1,006 231 235 1,472 (9) 1,463

Other disclosures Capital expenditures 355 54 90 499 - 499

Nine months ended 30 September 2012 Russia Ukraine CIS Total All other Group Revenue External customers 6,752 1,186 1,198 9,136 50 9,186 Inter-segment 67 58 70 195 (195) - Total revenue 6,819 1,244 1,268 9,331 (145) 9,186

Adjusted EBITDA 2,901 632 578 4,111 (21) 4,090

Other disclosures Capital expenditures 1,027 156 256 1,439 - 1,439

F-12 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

5 Segment information (continued)

Three months ended 30 September 2011 Russia Ukraine CIS Total All other Group Revenue External customers 2,383 398 393 3,174 14 3,188 Inter-segment 14 39 37 90 (90) - Total revenue 2,397 437 430 3,264 (76) 3,188

Adusted EBITDA 896 234 198 1,328 29 1,357

Other disclosures Capital expenditures 457 80 180 717 - 717

Nine months ended 30 September 2011 Russia Ukraine CIS Total All other Group Revenue External customers 6,730 1,152 1,081 8,963 40 9,003 Inter-segment 61 72 89 222 (222) - Total revenue 6,791 1,224 1,170 9,185 (182) 9,003

Adusted EBITDA 2,797 663 532 3,992 (73) 3,919

Other disclosures Capital expenditures 1,197 185 385 1,767 - 1,767

The following table provides the reconciliation of consolidated adjusted EBITDA to consolidated profit for the three and nine month periods ended:

3 months 9 months 3 months 9 months ended 30 ended 30 ended 30 ended 30 Sept. 2012 Sept. 2012 Sept. 2011 Sept. 2011 Adjusted EBITDA 1,463 4,090 1,357 3,919

Depreciation (398) (1,224) (414) (1,227) Amortization (124) (389) (161) (460) Impairment loss - - - - Loss on disposals of non-current assets (43) (121) (29) (50) Finance income (420) (1,216) (427) (941) Finance costs 92 290 98 182 Other non-operating gains/ (losses) (32) (25) (17) (99)

Shares of profit of associates and joint ventures accounted for using the equity method 41 62 13 33 Net foreign exchange income/ (loss) (50) 67 56 170 Income tax expense (158) (528) (218) (532) Profit for the period 371 1,006 258 995

F-13 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

6 Income taxes Current tax is the expected tax expense, payable or receivable on the taxable income or loss for the year or period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Income tax expense consisted of the following for the periods ended 30 September:

Three months ended Nine months ended 30 Septmber 30 Septmber 2012 2011 2012 2011 Current income taxes 154 147 517 506

Deferred income taxes 4 71 11 26

Income tax expense 158 218 528 532

F-14 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

7 Property and equipment

Aquisitions and disposals During the three and nine month periods ended 30 September 2012, the Group acquired assets with a cost of USD 439 and USD 1,319 (2011: USD 653 and USD 1,575), respectively.

Assets with a net book value of USD 49 and USD 139 were disposed of by the Group during the three and nine month periods ended 30 September 2012 (2011: USD 32 and USD 59) respectively, resulting in a net loss on disposal of USD 43 and USD 121 for the three and nine month periods (2011: USD 29 and USD 50), respectively.

For the nine month period ended 30 September 2012, there were no other material changes to property and equipment other than foreign currency translation differences and depreciation charges.

8 Intangible assets

Aquisitions and disposals During the three and nine month periods ended 30 September 2012, the Group acquired intangible assets with a cost of USD 60 and USD 120 (2011:USD 64 and USD 192), respectively.

There was no impairment of intangible assets during the nine month periods ended 30 September 2012 and 2011.

For the nine month period ended 30 September 2012, there were no other material changes to intangible assets other than foreign currency translation differences and amortization charges.

Goodwill

Goodwill is tested for impairment annually (at 1 October) and when circumstances indicate the carrying value may be impaired. The Company’s impairment test for goodwill is primarily based on value-in-use calculations that use a discounted cash flow model. The key assumptions used to determine the recoverable amount for the different cash generating units were disclosed in the annual financial statements for the year ended 31 December 2011.

There was no impairment of goodwill during the nine month periods ended 30 September 2012 and 2011.

For the nine month period ended 30 September 2012, there were no material changes to Goodwill other than foreign currency translation differences.

F-15 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

9 Financial assets and liabilities Significant changes in financial assets

Short-term deposits restricted in use

Short-term deposits at 30 September 2012 include USD 568 of restricted amounts under the injunctions issued by a Russian court (Note 12).

Significant change in financial liabilities

Foreign exchange contracts During August and September 2012, OJSC VimpelCom entered into short-term forward and zero-cost collar agreements with several banks for a total notional amount of USD 1,258, in order to protect the cash flows of its short-term financial and non-financial obligations denominated in USD from adverse USD-RUB movement. As of 30 September 2012 the notional amount outstanding of the derivative contracts was USD 1,243. Derivative contracts with notional amounts of USD 1,052 have been designated as a hedging instrument to hedge cash flows of the financial obligations. The fair value of these derivatives is immaterial.

Euroset VimpelCom owns a 50% minus 1 share indirect stake in Euroset, a distributor of mobile phone services and equipment in Russia, and owns a call option allowing it to acquire a further 25% and one share in Euroset, which becomes exercisable in case of certain triggering events. No such events occurred before the issuance of these financial statements. The exercise price of the option is determined under a formula linked to certain inputs that depend on the timing of the exercise of the options and certain other conditions.

Interest rate exchange contracts Early August 2012, the Company has unwound its interest rate swaps related to our USD 500 6.2546% notes due March 2017 and part (USD 1,300 out of USD 1,500; see note 13 for the remaining USD 200) of its interest rate swaps related to our USD 1,500 7.5043% notes due March 2022. With the unwind, the company has locked in the current low USD interest rates, resulting in a reduction of the effective interest rate on the notes due March 2017 with approximately 1.5% and on the notes due March 2022 with approximately 2.0%. As a result of the unwind, the Company has received a cash amount of USD 226 (including accrued interest) which was classified as interest received in the accompanying interim condensed consolidated statement of cash flows.

F-16 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

9 Financial assets and liabilities (continued)

Interest-bearing obligations

On 2 February 2012, OJSC VimpelCom signed a loan facility agreement with CISCO Systems Finance International. The loan was a ruble denominated export credit facility for a total amount of RUR1,550 million (USD 51). The facility is to finance equipment provided to OJSC VimpelCom by CISCO on a reimbursement basis. The facility bears interest at a rate of 7.35% per annum. On 2 March 2012, OJSC VimpelCom drew down RUR1,040 (the equivalent to approximately USD 36 as of 2 March 2012).

On 20 March 2012, OJSC VimpelCom issued Russian ruble–denominated bonds, in an aggregate principal amount of RUR25,000 million, equivalent to approximately USD 856 at the exchange rate of the Central Bank of Russia on the same date. The bonds have a ten–year maturity with a put option in 3 years and bear an annual interest rate of 8.85%. Interest will be paid semi-annually. On 26 March 2012, OJSC VimpelCom issued Russian ruble–denominated bonds, in an aggregate principal amount of RUR10,000 million, equivalent to approximately USD 340 at the exchange rate of the Central Bank of Russia on the same date. The bonds have a ten–year maturity with a put option in 3 years and bear an annual interest rate of 8.85%. Interest will be paid semi-annually. The proceeds of the offerings will be used for OJSC VimpelCom’s general corporate purposes including refinancing of the existing debt.

On 20 April 2012, OJSC VimpelCom repaid RUR 10 billion owed to Sberbank pursuant to a one- year non-revolving loan facility, which was signed and drawn down in December 2011. No amount is outstanding as of 30 September 2012.

On 27 August 2012, OJSC VimpelCom partially repaid debt to Sberbank in the amount of RUR 5 billion (the equivalent of USD 157 as of 27 August 2012) according to the payment schedule under RUR10 billion non-revolving loan facility, which was signed on 28 August 2009. As of 30 September 2012 the outstanding debt under this agreement is RUR 5 billion (the equivalent of USD 162) .

On 27 September 2012, OJSC VimpelCom partially repaid debt to Sberbank in the amount of RUR 2.2 billion (the equivalent of USD 72 as of 27 September 2012) according to the payment schedule under non-revolving loan facility signed on 2 February 2008 with availability limit USD 750, which was fully drawn down in rubles. As of 30 September 2012 the outstanding debt under this agreement is RUR 2.2 billion (the equivalent of USD 71).

F-17 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

9 Financial assets and liabilities (continued)

Promissory note

On September 24, 2010 VimpelCom Ltd. and VimpelCom Holdings B.V. entered into the Share Transfer Agreement through which the shares in OJSC VimpelCom were transferred to VimpelCom Holding B.V. in exchange for the Original promissory note valued approximately USD 16,748.

The Original promissory note issued was scheduled to mature and be due and payable on September 24, 2014 and bore interest at a rate per annum based on One-Year USD-LIBOR plus 1% up to 29 June 2011.

On 29 June 2011, the Original promissory note was replaced with the the Promissory note, with maturity of March 31, 2022 and bearing interest at a rate per annum based on One-Year USD- LIBOR plus 4.5%. The amount of annual repayment depends on the dividends received from the Company’s subsidiaries. The movement of the obligation for the respective year is presented in the table:

2012 2011 Balance as at 1 January 12,972 16,217 Repayment (377) (2,469) Interest added to notional 310 206 Balance as at 30 September 12,905 13,954

Fair value hierarchy There are no siginificant changes to the fair value hierarchy of the financial instruments carried at fair value on the balance sheet when compared to 31 December 2011.

F-18 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

10 Cash and cash equivalents Cash and cash equivalents consisted of the following items as at:

30-Sep-12 31-Dec-11

Cash at banks and on hand 590 682 Short-term deposits with original maturity of less than 90 days 780 85 Total cash and cash equivalents 1,370 767

The cash balances as of 30 September 2012 in Russia of USD 384 (31 December 2011: nil) and in Uzbekistan of USD 77 (31 December 2011: USD 17) are restricted for the use of the Group due to local government, central bank regulations or existing covenants under borrowing facilities. The local government and the central bank restrictions have effect on international payments only, while such cash can be used for transactions within the country.

F-19 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

11 Related parties

Shareholders and other related parties As of 30 September 2012, the Company is ultimately owned by two major shareholders: Telenor and Altimo. The Company has no ultimate controlling shareholder.

The following tables provide the total amount of transactions that have been entered into with related parties and balances of accounts with them for the relevant financial periods:

For the three months For the three months ended ended 30 September 2012 30 September 2011 Revenue from Altimo 2 1 Revenue from Telenor 2 1 Revenue from associates 16 21 20 23

Services from associates 41 150 Services from other related parties 3 - 44 150 Interest income from VimpelCom LTD 82 69 Interest expense to VIP Amsterdam B.V. (Note 9) 184 186 266 255

F-20 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

11 Related parties (continued)

For the nine months For the nine months ended ended 30 September 2012 30 September 2011 Revenue from Altimo 5 5 Revenue from Telenor 3 2 Revenue from associates 41 88 Revenue from other related parties 7 1 56 96

Services from Telenor 2 1 Services from associates 134 192 Services from other related parties 3 - 139 193 Interest income from VimpelCom LTD 246 120 Interest expense to VIP Amsterdam B.V. (Note 9) 517 332 763 452 Other gain from related parties 8 5 Other loss from related parties 26 - 34 5 As of As of 30 September 2012 31 December 2011 Accounts receivable from Altimo - 1 Accounts receivable from Telenor 1 10 Accounts receivable from associates 57 81 Accounts receivable from other related parties 1 43 59 135 Non-current account receivable from associates - 2 Long-term loan granted to VimpelCom Ltd. 4,191 3,454 Interest receivable from VimpelCom Ltd. 254 40 4,445 3,496 Accounts payable to Telenor 1 10 Accounts payable to associates 39 25 Accounts payable to other related parties 73 38 113 73 Promissory note to VIP Amsterdam B.V. (Note 9) 12,905 12,972 Long-term loans to associates 8 - 12,913 12,972

F-21 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

11 Related parties (continued)

Terms and conditions of transactions with related parties

On 13 December 2010, VimpelCom granted an unsecured loan to VimpelCom Ltd. in the total amount of USD 37 under the agreement dated 10 December 2010. In the period from 29 April 2011 to 23 June 2011, VimpelCom granted loans in the total amount of USD 63 to VimpelCom Ltd. In the period from 30 September 2011 to 31 December 2011, VimpelCom Ltd. repaid part of this loan in the total amount USD 30. In the period from 1 January 2012 to 25 April 2012 VimpelCom granted additional loan tranches in the total amount of USD 30 to VimpelCom Ltd. As of 30 September 2012, the principal amount of debt outstanding under this loan agreement was USD 100. The interest rate is LIBOR+0.25% per annum until 1 January 2012 when it was changed to 6.5% per annum. The borrower may repay all or any portion of the loan at any time or from time to time, provided that the unpaid balance of the loan shall be due and payable in full no later than two years from the first advance date. The loan matures on 13 December 2012. The loan is denominated in US dollars.

In May 2011, accrued interest on loan with VimpelCom Ltd. in the amount of USD 9 was added to loan principal of USD 468. In May 2012 accrued interest on the loan with VimpelCom Ltd. under the agreement for the year 2011 in amount of USD 40 was added to loan principal. As of 30 September 2012, the principal amount of debt outstanding under this loan agreement was USD 516. The loan matures on 31 December 2070. The interest rate is LIBOR+7.5% per annum. The loan is denominated in US dollars.

On 13 May 2011, VimpelCom granted an unsecured loan to VimpelCom Amsterdam Finance B.V., a subsidiary of VimpelCom Ltd., in the total amount of USD 2,610. In the period from 20 May 2011 to 30 June 2011, VimpelCom Amsterdam Finance B.V. repaid part of this loan in the total amount USD 54. In the period from 31 August 2011 to 23 November 2011, the loan was increased by the tranches in the total amount of USD 204. In the period from 30 September 2011 to 31 December 2011, accrued interest on loan with VimpelCom Amsterdam Finance B.V. in the amount of USD 148 was added to loan principal. In the period from 1 January 2012 to 24 April 2012 VimpelCom granted additional loan tranches in the total amount of USD 240 to VimpelCom Amsterdam Finance B.V. under the agreement dated 15 April 2011. On 12 May 2012 USD 73 was repaid. As of 30 September 2012 the principal amount of debt outstanding under this loan agreement was USD 3,075. Under the agreement, VimpelCom may grant additional USD 73. The loan matures on 31 May 2014. The interest rate is 8.72% per annum. The loan is denominated in US dollars.

On 12 December 2011 the Company became an guarantor of the three years credit facility of VimpelCom Amsterdam B.V (see Note 12).

F-22 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

12 Commitments, contingencies and uncertainties

Commitments Telecom Licenses Capital Commitments VimpelCom’s ability to generate revenues in the countries it operates is dependent upon the operation of the wireless telecommunications networks authorized under its various licenses under GSM-900/1800 and “3G” (UMTS / WCDMA) mobile radiotelephony communications services and “4G” (LTE) granted in 2011-2012. Under the license agreements operating companies are subject to certain commitments, such as territory or population coverage, level of capital expenditures, and number of base stations to be fulfilled within a certain timeframe. After expiration of the license, our operating companies might be subject to additional payments for renewals, as well as new license capital and other commitments.

On 12 July 2012, OJSC VimpelCom was awarded a license to provide services using radio- electronic devices in the territory of the Russian Federation and its further modifications within the frequency band of 813.5-821/854.5-862MHz (the “LTE License”).

The LTE license is provided on condition that the Company will invest at least RUR 15 billion (around USD 455) annually until its federal LTE network is built through 2019.

Apple On 31 March 2011, VimpelCom and Apple signed an amendment to an existing agreement regarding VimpelCom’s purchase of iPhones from Apple (the ‘Ammendment’). Under the amendment, 958,540 iPhone handsets (being the difference between 1,500,000 iPhone handsets per the original agreement and the amount actually purchased by the Company from Apple through 31 March 2011) should be purchased starting 1 April 2011 and before 31 March 2013. If VimpelCom does not comply with this agreed schedule and certain other terms of amendments, then according to the agreement it could become liable for the shortfall in orders of iPhone handsets that existed as of 31 March 2011, less any iPhone handsets actually purchased by VimpelCom after this date. The Company expects to be able to comply with the terms of the Amendment and as such no provisions has been recorded with respect to this matter.

Pricing of iPhone

The Federal Anti-Monopoly Service ("FAS") in Russia commenced proceedings against OJSC VimpelCom and OJSC Mobile TeleSystems (“MTS”) regarding alleged price collusion with respect to the sale prices of iPhones by OJSC Vimpelcom and MTS. On 26 April 2012, the FAS issued a decision pursuant to which OJSC VimpelCom and MTS were found guilty of price fixing in that they acted in concert to fix identical wholesale prices for certain iPhone models during the period from September 2010 to April 2011. Since both parties voluntarily ceased the wrongdoings, the antimonopoly case was terminated. On 17 July 2012, the FAS fined OJSC VimpelCom RUR 18.2 million (the equivalent to USD 0.6 as of 17 July 2012), which was expensed and paid prior to 30 September 2012.

F-23 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

12 Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties

Telenor East and Weather II – FAS claim

In April 2012, VimpelCom Ltd. was named as a third party in a claim brought by the FAS against Telenor East Holding II AS (“Telenor East”) and Weather II in the Moscow Arbitration Court (the “FAS Claim”).

In connection with the FAS Claim, on 24 April 2012 the FAS obtained from the Moscow Arbitration Court an order (the “First Injunction”) for interim relief which prohibits VimpelCom and VimpelCom Holdings B.V. from voting their shares in OJSC VimpelCom at shareholder meetings of OJSC VimpelCom, to change the OJSC VimpelCom Board of Directors and approve major transactions and interested party transactions, as such terms are defined under Russian law. The First Injunction also prohibits Telenor East and Weather II from (i) voting their shares of VimpelCom to change the composition of its Supervisory Board and (ii) exercising their rights under their option agreement of 15 February 2012. Telenor East filed an appeal against the First Injunction. On 24 September 2012, the Moscow Arbitration Court dismissed the appeal of Telenor East.

On 23 May 2012, the Moscow Arbitration Court issued a new, expanded injunction order (the “Expanded Injunction”) in connection with the FAS Claim. The Expanded Injunction states that it prohibits VimpelCom and each of its wholly-owned subsidiaries, OJSC VimpelCom and VimpelCom Holdings B.V., and their respective management bodies (CEOs and members of the boards of directors) from giving effect to the resolutions of OJSC VimpelCom’s Annual General Shareholders Meeting (“AGM”), which was held on 21 May 2012, including:

- Prohibiting the payment of dividends to shareholders of OJSC VimpelCom based on the results of operations in 2011, and the transfer of the cash intended for dividend distribution to the accounts of OJSC VimpelCom or other companies with foreign banks; - Prohibiting the external auditors elected at the OJSC VimpelCom AGM from exercising the powers conferred on them; - Prohibiting the board of directors of OJSC VimpelCom elected at the OJSC VimpelCom AGM from exercising their powers pursuant to the charter of OJSC VimpelCom; and - Prohibiting the taking of other actions and steps designated to transfer the indicated funds out of our Russian subsidiary OJSC VimpelCom. OJSC VimpelCom, Weather II and Telenor East filed appeals against the Expanded Injunction. The appeals are scheduled for hearing on 12 November 2012. On 12 November 2012 the Moscow Arbitration Court dismissed these appeals.

F-24 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

12 Commitments, contingencies and uncertainties (continued)

Telenor East and Weather II – FAS claim (continued)

As part of the enforcement action in connection with the First and Expanded Injunctions, three of OJSC VimpelCom’s banks (OAO “Moscow Bank Sberbank of Russia”, ZAO “Citibank” and OAO “Nordea Bank”) were received orders from enforcement authorities prohibiting them from:

- Transferring OJSC VimpelCom’s cash in certain bank accounts at these banks to any current, deposit and other accounts in other bank institutions; - Using (including by OJSC VimpelCom) cash deposited in certain bank accounts at these banks; - Any other possible actions targeted to transfer cash from these bank accounts; - Cancellation of the bank accounts without approval of FAS.

The Company’s deposits in these bank accounts amount to RUR 17.6 billion (USD 568) at 30 September 2012 and are classified as ‘Other current financial assets’ in the statement of financial position. The remaining cash balance in Russia of USD 384 is not subject to the injunctions and can be used for the purposes of local operations subject to the restrictions described in note 10.

The next hearing on the merits of the FAS Claim is set for 27 November 2012. In the course of Moscow Arbitration Court hearings held on 27 November 2012, the Federal Anti-Monopoly Service of Russia filed a request to withdraw its claim and its motion for injunctive relief. The court accepted the request and motion to withdraw. The court hearings have been adjourned until 30 November 2012. 30 November 2012 the Moscow Arbitration Court approved the request of withdrawal and removed the injunctions previously placed upon the Company, Telenor and Weather. The decision can be appealed within one month.

Russian tax claims

On 21 January 2011, VimpelCom received a report from the tax authorities regarding a tax audit for the period from 2007 to 2008. The amount of claims was RUR 1,191 million which is approximately USD 39 at the exchange rate as of 30 September 2012. The Company recorded a provision of RUR 844 million which is approximately USD 27 at the exchange rate as of 30 September 2012. The Company filed an appeal against tax audit report to the court. The courts of first and second instance satisfied a Company’s claim in full amount. The tax inspectorate has filed an appeal against the lower court decision to a higher court. The appeal that was initially scheduled for hearing on 6 September 2012 was later postponed till 26 November 2012.

F-25 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

12 Commitments, contingencies and uncertainties (continued)

Kyrgyzstan Sky Mobile, the Company’s operator in Kyrgyzstan, is a co-defendant in a litigation in the Isle of Man. The litigation was brought by affiliates of OJSC Mobile TeleSystems (“MTS”) against various companies and individuals directly or indirectly associated with Alfa Group and/or Altimo and Sky Mobile. The claimants allege that the Kyrgyz judgment determining that an Altimo affiliate was the rightful owner of an interest in the equity of Bitel, an MTS affiliate, was wrongfully obtained and that Bitel shares and assets were misappropriated. The legal proceedings in this matter are pending.

At this time the Company is unable to assess the likelihood of the ultimate outcome of this litigation and its effect on the Company’s operating results and financial position.

KaR-Tel litigation with ex-shareholders On 10 January 2005, KaR-Tel, the Company’s operator and subsidiary in Kazakhstan, received an "order to pay" (“Order to Pay”) issued by The Savings Deposit Insurance Fund, a Turkish state agency responsible for collecting state claims arising from bank insolvencies (the "Fund"), in the amount of the equivalent of approximately USD 4,205 at the exchange rate as of 30 September 2012.

Through various court proceedings since 2005, the Company has petitioned to annul the Order to Pay. On 25 October 2010, the 4th Administrative Court of Istanbul reviewed Kar-Tel’s petition to annul the Order to Pay and ruled in favor of KaR-Tel. The court decision has been appealed by the Fund. The court file was sent by the Court to the Councel of State for the appeal proceedings.

On 22 March 2012 the Fund’s and Kar-Tel’s appeals on the decision of the 4th Administrative Court of Istanbul dated 25 October 2010 has been reviewed by the Prosecution Office of the Council of State and has been sent to the 13th Chamber of the Council of State for review on the merits.

The Company continues to believe that the Fund's claim is without merit, and KaR-Tel will take whatever further actions it deems necessary and appropriate to protect itself against the Fund's claim. No provision has been made in relation to this case.

F-26 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

12 Commitments, contingencies and uncertainties (continued)

The 1st Roaming Claim Against KaR-Tel: Threshold amounts On 14 May 2010, the Antimonopoly Agency of Kazakhstan (“the Agency”) initiated an investigation of the alleged breach of antimonopoly laws of Kazakhstan by all three Kazakhstan GSM-operators, KaR-Tel, GSM Kazakhstan OAO Kazakhtelecom LLP (trademarks KCell, Active), and Mobile Telecom Systems LLP (trade mark Neo), for abuse of dominant position through the infringement of consumers' rights by way of determination of a threshold (minimal) amount of money on consumer's account required for rendering (switching on and off) roaming services (“the Threshold Amounts”).

On 3 July 2010, the Agency initiated an administrative procedure with respect to all the three Kazakhstan GSM operators, including KaR-Tel, and issued the protocol on administrative offence (“the Protocol”). The Agency filed with the Administrative Court of Kazakhastan a claim based on the Protocol. The Company estimated KaR-Tel’s share of administrative fines to be KZT 11.6 billion (the equivalent to USD 79 as of 3 July 2010). On 16 July 2010, KaR-Tel filed a claim to recognize as illegal and annul the acts of the Agency, which have served as a procedural basis for the Protocol.

Through various court proceeding, culminating in a decision by the Interregional Administrative Court on 15 June 2012, the administrative fines have been reduced to KZT 155 million (USD 1). On 16 August 2012 the administrative fine was paid and expensed. The decision is subject to appeal by the public prosecutor’s office within one year from the date thereof. The Company is considering whether it will appeal the decision.

No provision has been made in relation to this case.

The 2nd Roaming Claim Against KaR-Tel: Concerted actions high roaming tariffs The Agency has continued another part of its investigation with respect to concerted actions of Kazakhstan and Russian GSM-mobile operators on establishing and/or preservation of tariffs (“Concerted Actions Investigation”). On 25 October 2010, the Agency completed the Concerted Actions Investigation, alleging that concerted actions of KaR-Tel and other Russian and Kazakhstan GSM-operators were establishing monopolistically high tariffs. On 3 November 2010, the Agency initiated an administrative procedure and issued a new protocol on administrative offence, according to which the Agency has found KaR-Tel and the other two Kazakhstan GSM-operators liable for abuse of their dominant position on the market by way of establishing monopolistically high roaming tariffs (“the New Protocol”). The Company estimates Kar-Tel’s administrative fines to be not more than KZT 9.9 billion (USD 66).

On 24 February 2011, the Interregional Economic Court of Astana ruled in favor of KaR-Tel and recognized as illegal, null and void all acts of the Agency and its territorial branch, which served as procedural basis for the New Protocol.

On 25 November 2011, the Agency appealed to the Supreme Court of Kazakhstan the Decision of the Interregional Economic Court of Astana of 24 February 2011. On 1 March 2012 the Interregional Administrative court of Almaty ruled in favor of KaR-Tel and recognized the protocol of the Agency as illegal, null and void.

The decision of the Interregional Administrative court of Almaty will remain subject to appeal for one year. No provision has been made in relation to this case.

F-27 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

12 Commitments, contingencies and uncertainties (continued)

Dominant Market Position of Kar-Tel On 10 October 2011, Kar-Tel was recognized by the Agency as dominant in the market of interconnection. When a company is recognized as having a dominant position, it is subject to special reporting obligations to the national regulatory authority, higher scrutiny in anti-monopoly and competition issues and price control and potential price regulation (e.g., tariff caps). The Company does not agree with this decision of the Agency. The Company filed a claim to the Interregional Economic Court of Astana against the Agency’s claim. On 26 December 2011, the court ruled and rejected the claim of Kar-Tel. Kar-Tel appealed the decision. On 8 August 2012, the Court of Appeals rejected the appeal of Kar-Tel and upheld the decision of 26 December 2011. KaR-Tel appealed the decision to the Court of cassation. The appeal has not been considered yet. No provision has been made in relation to this case.

Contingent tax liabilities

Multinational groups of the size of VimpelCom are exposed to varying degrees of uncertainty related to tax planning changes in tax law and periodic tax audits. VimpelCom accounts for its income taxes on the basis of its own internal analyses, supported by external advice. VimpelCom continually monitors its global tax position, and whenever uncertainties arise, VimpelCom assesses the potential consequences and either accrues the liability or discloses a contingent liability in its financial statements, depending on the strength of the Company’s position and the resulting risk of loss.

Guarantee in favour of VimpelCom Amsterdam B.V.

12 December 2011 VimpelCom Amsterdam B.V. completed a committed revolving credit facility of approximately USD 495. The three years credit facility for VimpelCom Amsterdam B.V. is committed by ten relationship banks. This facility is composed of USD 225 and EUR 205 and is guaranteed by the Company. None triggering events under the guarantee occurred. The Company believes that probability of these events is remote.

Other contingencies and uncertainties In addition to the individual matters discussed above, the Company is also involved in legal proceedings relating to the normal conduct of its business, such as claims for regulatory and employment issues as well as general liability. The Company believes it has provided for all probable liabilities deriving from the normal course of business. The Company does not expect any liability arising from any other of these legal proceedings to have a material effect on the results of operations, liquidity, capital resources or financial position of the Company.

F-28 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (in millions of US dollars unless otherwise stated)

13 Events after the reporting period

New EKN facility

On 9 October 2012, OJSC VimpelCom signed a Facility Agreement with HSBC Bank PLC and Nordea Bank AB (publ) for a Russian ruble denominated Swedish export credit facility supported by the Swedish Export Credits Guarantee Board (EKN) for the total amount of USD 200 to be drawn down in rubles. The facility is to finance equipment and services provided to VimpelCom by a Swedish supplier on a reimbursement basis. The facility bears interest at a rate of MosPRIME (Moscow indicative independent interbank offered rate) plus 1.00% p.a. On 23 October 2012 VimpelCom drew down RUR 6,151 million (the equivalent to USD 200).

On 13 November 2012, the Company has unwound the remaining interest rate swap for notional USD 200 related to our USD 1,500 7.5043% notes due March 2022. The unwind was done for the same reason as mentioned in note 9. As a result of the unwind, the Company will receive a cash amount of USD 27 (including accrued interest).

Telenor East and Weather II – FAS claim

See Note 12 for subsequent events on FAS claim.

Amsterdam, 30 November 2012

VimpelCom Holdings B.V.

Henrik Cornelis van Dalen, Director

F-29

Consolidated Financial Statements

VimpelCom Holdings B.V.

Years ended December 31, 2011, 2010 and 2009

with Report of Independent Auditor

F-30

Ernst & Young Accountants LLP Cross Towers, Antonio Vivaldistraat 150 1083 HP Amsterdam, The Netherlands P.O. Box 7883 1008 AB Amsterdam, The Netherlands

Tel.: +31 (0) 88 - 407 1000 Fax: +31 (0) 88 - 407 1005 www.ey.nl Report of Independent Auditor

To: The Supervisory Board and Shareholders of VimpelCom Holdings B.V.

We have audited the accompanying consolidated statement of financial position of VimpelCom Holdings B.V. (“VimpelCom”) as of December 31, 2011, 2010 and 2009, and the related consolidated income statements, statements of comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of VimpelCom’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with United States Generally Accepted Auditing Standards (“US GAAS”). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of VimpelCom at December 31, 2011, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

International Financial Reporting Standards as issued by the International Accounting Standards Board vary in certain respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Notes 4 and 6 to the consolidated Financial statements.

Amsterdam, The Netherlands, June 28, 2012

/s/ Ernst & Young Accountants LLP

F-31 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated income statement

Year ended 31 December Note 2011 2010 2009 (All amounts in millions of US dollars unless otherwise stated)

Service revenues 11,727 10,303 8,691 Sale of equipment and accessories 322 194 110 Other revenues 14 16 12 Total operating revenues 12,063 10,513 8,813

Operating expenses Service costs 2,860 2,250 1,895 Cost of equipment and accessories 390 217 111 Selling, general and administrative expenses 3,701 3,129 2,482 Depreciation 1,643 1,404 1,190 Amortization 613 618 440 Impairment loss 13 526 – – Loss on disposals of non-current assets 77 48 77 Total operating expenses 9,810 7,666 6,195

Operating profit 2,253 2,847 2,618

Finance costs 1,259 620 603 Finance income (269) (82) (58) Net foreign exchange (gain)/loss (161) 14 404 Other non-operating losses 21 171 5 69 Shares of profit of associates and joint ventures accounted for using the equity method 8 (63) (90) (3) Profit before tax 1,316 2,380 1,603

Income tax expense 10 675 522 431 Profit for the year 641 1,858 1,172

Attributable to: The owners of the parent 779 1,810 1,142 Non-controlling interest (138) 48 30 641 1,858 1,172

The accompanying notes are an integral part of these consolidated financial statements.

F-32 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of comprehensive income

Year ended 31 December Note 2011 2010 2009 (All amounts in millions of US dollars unless otherwise stated)

Profit for the year 641 1,858 1,172

Other comprehensive income, net of tax Shares of other comprehensive income of associates and joint ventures accounted for using the equity method (41) (18) (21) Reclassification of current period earnings of exchange differences on translation of foreign operations for equity interest in acquiree in business combination achieved in stages 7 43 – – Foreign currency translation (287) (73) (355) Other comprehensive loss for the year, net of tax (285) (91) (376) Total comprehensive income for the year, net of tax 356 1,767 796

Attributable to: The owners of the parent 489 1,724 768 Non-controlling interests (133) 43 28 356 1,767 796

The accompanying notes are an integral part of these consolidated financial statements.

F-33 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of financial position

31 December 31 December 31 December 1 January Note 2011 2010 2009 2009 (All amounts in millions of US dollars unless otherwise stated) Assets Non-current assets Property and equipment 11 8,188 7,296 5,861 6,812 Intangible assets 12 2,164 2,490 1,551 2,001 Goodwill 12 6,897 6,722 3,292 3,481 Investments in associates and joint ventures 8 388 569 524 542 Financial assets 15 3,807 845 430 430 Other non-financial assets 22 86 83 93 126 Total non-current assets 21,530 18,006 11,751 13,392

Current assets Inventories 14 168 138 63 145 Other non-financial assets 22 288 408 239 394 Trade and other receivables 16 658 616 664 553 Current income tax asset 10 208 30 9 151 Other financial assets 15 93 99 441 142 Cash and cash equivalents 17 767 851 1,451 935 Total current assets 2,182 2,142 2,867 2,320 Total assets 23,712 20,147 14,618 15,712

Equity and liabilities Equity Equity attributable to equity owners of the parents 18 (4,388) (5,072) 4,164 3,752 Non-controlling interests 35 (25) 38 61 Total equity (4,353) (5,097) 4,202 3,813

Non-current liabilities Financial liabilities 15 23,425 21,360 6,342 7,365 Provisions 20 142 119 116 93 Other non-financial liabilities 22 50 46 49 40 Deferred tax liability 10 588 577 480 536 Total non-current liabilities 24,205 22,103 6,987 8,034

Current liabilities Trade and other payables 1,396 1,010 761 1,123 Other non-financial liabilities 22 857 840 741 699 Financial liabilities 15 1,513 1,228 1,907 2,011 Current income tax payable 10 10 4 9 26 Provisions 20 84 60 11 6 Total current liabilities 3,860 3,142 3,429 3,865 Total equity and liabilities 23,712 20,147 14,618 15,712

The accompanying notes are an integral part of these consolidated financial statements.

F-34 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of changes in equity

Attributable to owners of the parent Other Foreign Non- Issued Capital Treasury capital Retained currency controlling Total Note capital surplus shares reserves earnings translation Total interest equity (All amounts in millions of US dollars unless otherwise stated)

As at 1 January 2009 – 1,433 (240) 12 2,547 – 3,752 61 3,813 Profit for the period – – – – 1,142 – 1,142 30 1,172 Other comprehensive loss – – – – – (374) (374) (2) (376) Total comprehensive income (loss) – – – – 1,142 (374) 768 28 796

Dividends declared – – – – (319) – (319) (14) (333) Acquisition of non-controlling interest 7 – – – 4 – (10) (6) (14) (20) Changes in a parent's ownership interest in a subsidiary that do not result in a loss of control – – – (52) – – (52) (23) (75) Exercise of options 19 – – 16 3 – – 19 – 19 Share-based payment transactions 19 – – – 2 – – 2 – 2 As at 31 December 2009 – 1,433 (224) (31) 3,370 (384) 4,164 38 4,202

The accompanying notes are an integral part of these consolidated financial statements.

F-35 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of changes in equity (continued)

Attributable to owners of the parent Other Foreign Non- Issued Capital Treasury capital Retained currency controlling Total Note capital surplus shares reserves earnings translation Total interest equity (All amounts in millions of US dollars unless otherwise stated)

As at 31 December 2009 – 1,433 (224) (31) 3,370 (384) 4,164 38 4,202 Profit for the period – – – – 1,810 – 1,810 48 1,858 Other comprehensive loss – – – – - (86) (86) (5) (91) Total comprehensive income (loss) – – – – 1,810 (86) 1,724 43 1,767

Dividends declared – – – – – – – (73) (73) Exchange of treasury shares to available-for-sale financial assets – – 223 (18) – – 205 – 205 Repurchase of controlling interest in OJSC VimpelCom and Kyivstar 7 20 (1,159) – – (10,012) – (11,151) – (11,151) Acquisition of non-controlling interest 7 – – – (4) – – (4) (6) (10) Changes in a parent's ownership interest in a subsidiary that do not result in a loss of control – – – (11) – – (11) (27) (38) Share-based payment transactions 19 – – – 1 – – 1 – 1 As at 31 December 2010 20 274 (1) (63) (4,832) (470) (5,072) (25) (5,097)

The accompanying notes are an integral part of these consolidated financial statements.

F-36 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of changes in equity (continued)

Attributable to owners of the parent Other Foreign Non- Issued Capital Treasury capital Retained currency controlling Total Note capital surplus shares reserves earnings translation Total interest equity (All amounts in millions of US dollars unless otherwise stated)

As at 31 December 2010 20 274 (1) (63) (4,832) (470) (5,072) (25) (5,097) – – – – 779 – 779 (138) 641 Profit for the period Other comprehensive income – – – 3 – (293) (290) 5 (285) Total comprehensive income (loss) – – – 3 779 (293) 489 (133) 356 Non-controlling interest arising on a 229 business combination – – – (13) – – (13) 242 Restructuring of shareholding in 250 consolidated subsidiaries – – – 265 – (5) 260 (10) Changes in a parent's ownership (112) interest in a subsidiary that do not result in a loss of control – – – (53) – – (53) (59) Acquisition of new subsidiaries 7 – – – – – – – 20 20 Exercise of options 19 – – – 1 – – 1 – 1 As at 31 December 2011 20 274 (1) 140 (4,053) (768) (4,388) 35 (4,353)

The accompanying notes are an integral part of these consolidated financial statements.

F-37 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of cash flows

Note 2011 2010 2009 (All amounts in millions of US dollars unless otherwise stated) Operating activities Profit after tax 641 1,858 1,172 Tax expense 10 675 522 431 Profit before tax 1,316 2,380 1,603 Non-cash adjustment to reconcile profit after tax to net cash flows: Depreciation and impairment of property and equipment 1,643 1,404 1,190 Impairment loss 526 – – Amortization and impairment of intangible assets 613 618 440 Loss on disposals of non-current assets 77 48 77 Finance income (269) (82) (58) Finance costs 1,259 620 603 Other non-operating losses 171 5 69 Net foreign exchange (gain)/loss (161) 14 404 Shares of profit of associates and joint ventures accounted for using the equity method (63) (90) (3) Movements in provisions 33 42 28 Operating cash flow before working capital changes and before interest and income taxes 5,145 4,959 4,353 Working capital adjustments (Increase)/decrease in trade and other receivables and prepayments (337) 10 157 (Increase)/decrease in inventories (69) (49) 65 (Decrease)/increase in trade and other payables 325 (121) (64) Interest and income taxes Interest paid (901) (538) (532) Interest received 258 82 52 Income tax paid (799) (615) (429) Net cash flows from operating activities 3,622 3,728 3,602 Investing activities Proceeds from sale of property, equipment and intangible assets 7 14 – Purchase of property, equipment and intangible assets (2,774) (1,812) (1,022) Payment for shares in Golden Telecom – (144) – Cash proceeds from Kyivstar acquisition – 167 – Inflow/(outflow) from deposits and loans granted (2,779) (59) (489) Proceeds from sale of treasury shares 4 – – Receipts from/(investments in) associates 13 – (13) Acquisition of subsidiaries, net of cash acquired 7 (545) (52) – Net cash flows used in investing activities (6,074) (1,886) (1,524) Financing activities Net proceeds from exercise of share options 1 7 18 Acquisition of non-controlling interest (13) (13) (18) Proceeds from borrowings net of fees paid 6,873 1,170 1,217 Repayment of borrowings (4,450) (3,511) (2,433) Dividends paid to equity holders of the parent 3,622 – (316) Dividends paid to non-controlling interests – (72) (31) Net cash flows from/(used in) financing activities 2,411 (2,419) (1,563) Net increase/decrease in cash and cash equivalents (41) (577) 515 Net foreign exchange difference (43) (23) 1 Cash and cash equivalents at beginning of period 851 1,451 935 Cash and cash equivalents at end of period 767 851 1,451

F-38

VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Notes to the consolidated financial statements for the year ended 31 December 2011

1 General information VimpelCom Holdings B.V. ("VimpelCom", the "Company", the "Group" or "we") was established as a private company with limited liability under the laws of the Netherlands on June 29, 2009.

The registered office of VimpelCom is located at Claude Debussylaan 88, 1082 MD Amsterdam, the Netherlands.

In these notes, VimpelCom, the Company, the Group or "we" also refers to VimpelCom Holdings B.V.’s consolidated subsidiaries.

In these notes U.S. dollar amounts are presented in millions, except for share and per share (or ADS) amounts and as otherwise indicated.

VimpelCom Ltd., the ultimate controlling shareholder of the Company, was incorporated in Bermuda on 5 June 2009, as an exempted company under the name New Spring Company Ltd., which was subsequently changed to VimpelCom Ltd. on 1 October 2009. VimpelCom Ltd. was formed to recapitalize OJSC Vimpel-Communications ("OJSC VimpelCom") and acquire CJSC "Kyivstar G.S.M." ("Kyivstar"). Altimo Holdings & Investments Limited ("Altimo") and Telenor ASA ("Telenor") or their affiliates were the two major shareholders in each of the companies.

After the completion of the offer, the affiliates of Altimo Holdings & Investments Limited ("Altimo") contributed to VimpelCom Ltd’s subsidiary VimpelCom Holdings 99.99% of their ownership interests in Storm LLC, which in turn owns 43.5% of outstanding shares in Closed Joint Stock Company "Kyivstar G.S.M." ("Kyivstar"), one of the leading providers of mobile telecommunications services in Ukraine, in exchange for 6,557,635 VimpelCom Holdings common shares, and to VimpelCom Ltd. 0.01% of their ownership interests in Storm LLC in exchange for 13,120 VimpelCom Ltd. common shares. Affiliates of Telenor ASA ("Telenor") contributed their Kyivstar’s shares (56.5% of equity) to VimpelCom Holdings in exchange for 8,524,363 VimpelCom Holdings shares. Affiliates of Altimo and affiliates of Telenor subsequently exchanged their shares in VimpelCom Holdings for shares in VimpelCom Ltd.

On 25 May 2010, VimpelCom Ltd. served a squeeze-out demand notice to VimpelCom demanding that the remaining shareholders of VimpelCom sell their shares to VimpelCom Ltd. The squeeze-out process was completed on 6 August 2010. As a result, VimpelCom Ltd. became the sole shareholder of VimpelCom.

On September 24, 2010 VimpelCom Ltd. and VimpelCom Holdings B.V. entered into the Share Transfer Agreement through which the shares in OJSC VimpelCom were transferred to VimpelCom Holding B.V. in exchange for a promissory note (“Original promissory note”) valued US$ 16,748 minus 150,000 euro. As a result of the Exchange Offer VimpelCom Holdings B.V. acquired indirectly 100% of shares in Kyivstar. These shares were acquired from Altimo group companies (“Altimo”) and Telenor group companies (“Telenor”).

F-39 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The Original promissory note issued would mature and be due and payable on September 24, 2014 and bore interest at a rate per annum based on One-Year US$-LIBOR plus 1% up to June 29, 2011. On June 29, 2011, the Original promissory note was replaced with the new one (the “Promissory note”), with maturity of March 31, 2022 and bearing interest at a rate per annum based on One-Year US$-LIBOR plus 4.5%. The movement of the obligation under the Promissory note for the respective year is presented in the table:

2011 2010

Balance as at January 1 16,217 – New promissory note – 16,748 Repayments of promissory note (3,757) (613) Interest added to notional 512 82 Balance as at December 31 (Note 15) 12,972 16,217

The acquisition of Kyivstar and the transfer of OJSC VimpelCom were accounted for as transactions under common control following to the provisions of International Financial Reporting Standards (“IFRS”) 3 (Revised) Business combinations (“IFRS 3”) therefore the assets and liabilities acquired and transferred were recorded at the historical carrying value as they are recorded in the parent’s financial statements. Since VimpelCom Holdings B.V. is the accounting successor to OJSC VimpelCom, therefore accounting data and disclosures related to the period prior to April 21, 2010, represent accounting data and disclosures of OJSC VimpelCom. Information about the number of shares prior to April 21, 2010 has been adjusted to reflect the effect of the transfer of the shares of OJSC VimpelCom.

As of December 31, 2011 the Company has negative net equity mainly due to the fact that the liability under the Promissory Note is based on the fair value of OJSC VimpelCom shares while its assets and liabilities were measured at historical cost.

VimpelCom earns revenues by providing voice, data and other telecommunication services through a range of wireless, fixed and broadband internet services, as well as selling equipment and accessories. As of 31 December 2011, the Company operated telecommunications services in Russia, Kazakhstan, Armenia, Tajikistan, Uzbekistan, Georgia, Kyrgyzstan, Vietnam Cambodia and Laos primarily under the "Beeline" brand name and in Ukraine primarily under the “Kyivstar” brand name.

The consolidated financial statements of the Company for the year ended 31 December 2011 were authorized for issue by Directors of the Company on 22 June 2012.

F-40 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

2 Basis of the consolidated financial statements 2.1 Basis of preparation These consolidated financial statements of the Company have been prepared in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"), effective at the time of preparing the consolidated financial statements and applied by VimpelCom.

VimpelCom maintains its records and prepares its financial statements in accordance with Dutch accounting and tax legislation. VimpelCom’s foreign subsidiaries maintain their accounting records in accordance with local accounting and tax legislation.

For all periods up to and including the year ended 31 December 2010, VimpelCom prepared its consolidated financial statements in accordance with generally accepted accounting principles in the United States ("US GAAP"). VimpelCom was considered a first-time adopter of IFRS for these financial statements. Therefore in the first VimpelCom group consolidated IFRS financial statements as of 31 December 2011, VimpelCom stated that the consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB. These financial statements include certain supplemental disclosures in the form of reconciliations from US GAAP to IFRS as issued by the IASB to disclose the changes in the basis of presentation from US GAAP basis-financial statements. Refer to Note 4 for information on the Company’s adoption of IFRS.

The consolidated financial statements have been prepared on a historical cost basis, unless disclosed otherwise.

The consolidated financial statements are presented in US dollars which is the functional and reporting currency of our controlling shareholder VimpelCom Ltd. Moreover major part of the Company’s financing is denominated in US dollars and significant part of our operations is outside of Netherlands. Amounts are presented in thousands, unless otherwise indicated.

2.2 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2011.

Subsidiaries (Note 23) are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

All intercompany accounts and transactions within the Company have been eliminated in full.

Non-controlling interests are reported in the consolidated statement of financial position as a separate component of equity. Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the Company. We refer to Note 15 for the effect of options over non-controlling interests.

F-41 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

3 Significant accounting policies 3.1 Business combinations Business combinations are accounted for using the acquisition method. The cost of the acquisition, being the total consideration transferred, is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree and the amount of any non-controlling interest in the acquiree. The aggregate consideration transferred is allocated to the underlying assets acquired, including any intangible assets identified, and liabilities assumed based on their respective estimated fair values. Determining the fair value of assets acquired and liabilities assumed requires the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, licenses and other assets’ lives and market multiples, among other items. The results of operations of acquired companies are included in the consolidated financial statements from the date of acquisition.

For each business combination VimpelCom elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share in the recognized amounts of the acquiree’s identifiable net assets. Acquisition costs are expensed in the income statement as incurred.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date and the difference is recognized through profit or loss.

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with IAS 39 Financial Instruments: Recognition and Measurement ("IAS 39") either in profit or loss or as a change to other comprehensive income depending on the classification of financial instrument. If the contingent consideration is classified as equity, it is not remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of IAS 39, it is measured in accordance with the appropriate IFRS standards.

Goodwill is initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the Group’s previously held equity interest in the acquiree, if any, over the fair value of the net amounts of identifiable assets acquired and liabilities assumed at the acquisition date. After initial recognition, goodwill is carried at cost less any accumulated impairment losses.

In the event the acquisition is achieved in stages, goodwill is recognized at the time when the company obtains control over the entity.

If the consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.

Goodwill is not amortized but is tested for impairment on at least an annual basis or when impairment indicators are observed.

F-42 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The Group may enter into business combinations which include options (call, put, or a combination of both) over the shares of the non-controlling interest.

Where there are call options, the Group considers the implications on control. Where call options lead to the establishment of control, then the proportions of the acquiree’s subsequent profits or losses and changes in equity allocated to the parent and non-controlling interests will be based on the present ownership interest, only to the extent that the Group does not have current access to the economic benefits of the shares of non-controlling interest. To the extent the call option provides a present ownership (through current access to the underlying economic benefits) a gross liability is recognized, whereby any changes in the liability are recognized in profit and loss. If the call option does not provide present ownership it is recorded as a derivative asset at fair value through profit and loss.

Where there are put options granted to the non-controlling interest, then a financial liability is recognized. These liabilities are initially measured at the present value of the redemption amount and are subsequently measured in accordance with IAS 39. Where the Group does not have a present ownership interest in the outstanding shares, then at each period end the difference between the financial liability and the non-controlling interest (which reflects its share of the profit and losses, and changes in equity, of the acquiree) is accounted for as an equity transaction. Where the put option does provide a present ownership interest, the changes in the liability are recognized in profit or loss.

3.2 Common-control transactions For business combinations exercised under common control VimpelCom measures the net assets of the transaction at the carrying amounts in the accounts of the transferor.

3.3 Investment in associates An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee without control or joint control over those policies, and is assumed if the company holds, directly or indirectly, 20 percent or more but less than 50 percent of the voting power of the investee, unless it can be clearly demonstrated that it does not have significant influence.

Investments in associates are incorporated in the financial statements of the Group using the equity method of accounting. Under the equity method, the investment in associate is initially recognized at cost and is adjusted in subsequent periods for the post acquisition changes in the company’s share of the net assets of the associate and impairment recognized in accordance with IAS 39 and IAS 36 Impairment of Assets. Losses of an associate in excess of the Groups’ interest in that associate are recognized only to the extent that the Group has incurred a legal or constructive obligation or made payments on behalf of the associate.

The financial statements of the associate are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

F-43 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Upon loss of significant influence VimpelCom measures and recognizes its remaining investment at its fair value. Any difference between the carrying amount of the former associate upon loss of significant influence and the fair value of the remaining investment and proceeds from disposal are recognized in profit and loss.

3.4 Interest in joint ventures The Group has interests in joint ventures which are jointly controlled entities, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. The agreements require unanimous agreement for financial and operating decisions among the venturers. VimpelCom recognizes its interests in the joint ventures using the equity method. The financial statements of the joint ventures are prepared for the same reporting period as the group. Adjustments are made where necessary to bring the accounting policies in line with those of the Group.

Upon loss of joint control VimpelCom measures and recognizes its remaining investments at its fair value unless it is recognized as investments in associates. Any difference between the carrying amount of the former jointly controlled entities upon loss of joint control and the fair value of the remaining investment and proceeds from disposal are recognized in profit or loss. When the remaining investments constitute significant influence, it is accounted for as investment in associates.

3.5 Foreign currency translation The consolidated financial statements of the Group are presented in US dollars, whereas Russian rouble is VimpelCom’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions denominated in foreign currencies are initially recognized at the functional currency rate prevailing on the date of the transaction. Monetary assets and liabilities are retranslated to the functional currency using the closing rate at balance sheet date. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in foreign currencies are translated in the functional currency at the rate prevailing on the initial transaction dates. Non-monetary items carried at fair value are translated in the functional currency at the date when the fair value was determined.

On consolidation the assets and liabilities of foreign operations are translated into US dollars at the rate of exchange prevailing at the reporting date and their income statements are translated at the weighted average exchange rate for the period. The exchange rate differences arising on translation for consolidation are recognized in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in the income statement.

3.6 Revenue recognition VimpelCom generates revenues from providing voice, data and other telecommunication services through a range of wireless, fixed and broadband Internet services, as well as selling equipment and accessories. Revenues are stated net of value-added tax and sales tax charged to customers.

F-44 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

3.7 Wireless services Service revenues include revenues from airtime charges from contract and prepaid subscribers, monthly contract fees, interconnect revenue, roaming charges and charges for value added services ("VAS"). Service revenue is generally recognized when the services (including VAS and roaming revenue) are rendered.

Sale of prepaid cards, used as a method of cash collection, is accounted for as customer advances for future services. Prepaid cards usually do not have expiration dates but are subject to statutory period of limitation, and unused balances are added to service revenue only when statutory period of limitation has lapsed and when the Company determines that, based on a historical statistics, there is a remote possibility that prepaid cards will be activated. Also, VimpelCom uses E-commerce systems, retail offices and agent locations as channels for receiving customer payments.

Revenues from mobile equipment sales, such as handsets, are recognized in the period in which the equipment is sold to either a network customer or, if sold via an intermediary, when the significant risks and rewards have passed to the intermediary.

Interconnect revenue (transit traffic) is generated when the Company receives traffic from mobile or fixed subscribers of other operators and that traffic terminates on VimpelCom’s network. Revenue is recognized on a gross or net basis depending on the amount of control over the traffic routing and hence exposure to risks and rewards.

VAS includes short messages ("SMS"), multimedia messages ("MMS"), caller number identification, call waiting, data transmission, mobile Internet, downloadable content and other services. The content revenue relating to VAS is presented net of related costs when the Company acts as an agent of the content providers and gross when the Company acts as the primary obligor of the transaction.

More specifically, the accounting for revenue sharing agreements and delivery of content depends on the analysis of the facts and circumstances surrounding these transactions. Thus, an analysis is performed using the following criteria in order to determine if the revenue must be recognized on: — a gross basis – when VimpelCom: — is the primary obligor in the transaction with respect to the end-customer; for instance, it has discretion in supplier selection, it is involved in the determination of content specification (service or product); — bears inventory risk; — has reasonable latitude in setting the price invoiced to the end-customer; — bears the credit risk. — a net basis – when: — the service provider is responsible for the service and for setting the price to be paid by the subscriber; — the content provider is responsible for supplying the content to the end-customer and for setting the price.

VimpelCom charges subscribers a fixed monthly fee for the use of certain services. Such fees are recognized as revenue in the respective month.

F-45 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

3.8 Sales of equipment Revenues from mobile equipment sales, such as handsets, are recognized in the period in which the equipment is sold to either a network customer or, if sold via an intermediary, when the significant risks and rewards have passed to the intermediary.

3.9 Interconnect and roaming revenue Interconnect revenue (transit traffic) is generated when the Company receives traffic from mobile or fixed subscribers of other operators and that traffic terminates on VimpelCom’s network. Revenue is recognized on a gross or net basis depending on the amount of control over the traffic routing and hence exposure to risks and rewards.

The Group recognizes mobile usage and roaming service revenue based on minutes of traffic processed or contracted fee schedules when the services are rendered. Roaming revenues include both revenues from VimpelCom customers who roam outside of their home country network and revenues from other wireless carriers for roaming by their customers on VimpelCom’s network. Revenues due from foreign carriers for international roaming calls are recognized in the period in which the call occurs.

3.10 Fixed-line services Revenue from traditional voice services and other service contracts is accounted for when the services are provided. Revenue from Internet services is measured primarily by monthly fees and internet-traffic volume which has not been included in monthly fees. Payments from customers for fixed-line equipment are not recognized as revenue until installation and testing of such equipment are completed and accepted by the customer. Domestic Long Distance/International Long Distance ("DLD/ILD") and zonal revenues are recorded gross or net depending on the contractual arrangements with the end-users. More specifically, the Company recognizes DLD/ILD and zonal revenues from local operators net of payments to these operators for interconnection and agency fees when local operators establish end-user tariffs and assume credit risk since the Company is not the primary obligor in the transaction.

3.11 Connection fees VimpelCom defers upfront telecommunications connection fees. The deferral of revenue is recognized over the estimated average subscriber life or the minimum contractual term. The Company also defers direct incremental costs related to connection fees for fixed line subscribers, in an amount not exceeding the revenue deferred.

3.12 Multiple elements agreements ("MEA") MEA are agreements under which VimpelCom provides more than one service. Services/ products may be provided under different agreements or in groups of agreements which are interrelated in such extent that in fact they are elements of one agreement. In the event of a MEA, each element is accounted for separately if it can be distinguished from the other elements and has a fair value on a standalone basis. The customer’s perspective is important in determining whether the transaction contains multiple elements or is just a single element arrangement. The relative fair value method is applied in determining the value to be allocated to each element of a MEA. Fair value is determined as the selling price of the individual item. If an item has not been supplied by the Group yet, but is sold by other suppliers, the fair value is the price at which the items are sold by the other suppliers.

F-46 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Some tariffs include bundle rollovers which effectively allow customers to rollover unused minutes from one month to the following month. For these tariffs, the portion of the access fee representing the fair value of the rolled over minutes is deferred until the service is delivered.

3.13 Classification of non-operating items The Company distinguishes results of operations into operating and non-operating parts depending on the nature of the transaction. All the results that directly relate to operations are classified as operating items ignoring whether they involve cash, occur irregularly, infrequently, or are unusual in amount. All the results that do not directly relate to operations such as sale of investments, changes in fair value of investments and other financial instruments are classified as non-operating.

3.14 Interest income/expense For all financial instruments measured at amortized cost interest income or expense is recorded using the effective interest rate, which is the rate that exactly discounts the estimated future cash payments or receipts based on the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income/or expense is included in financing income/costs in the consolidated income statement.

3.15 Dividends Dividend income from the entities other than those accounted for under equity method is recognized in the income statement on the date the entity's right to receive payments is established. Dividends from the entities accounted for under equity method reduce the carrying amount of investment.

3.16 Taxation Income tax expense (tax income) represents the aggregate amount determined on the profit or loss for the period in respect of current tax and deferred tax.

In cases when the tax relates to items that are charged directly to equity, the tax is also charged directly to equity.

3.16.1 Current income tax Current tax for the current and prior periods, to the extent unpaid, is recognized as a liability. If the amount already paid in respect of current and prior period exceeds the amount due for those periods, the excess is recognized as an asset.

Current tax liabilities (assets) for the current and prior period is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.

3.16.2 Uncertain tax position Uncertain tax positions are accounted for in accordance with IAS 12 or IAS 37 depending on the type of tax. According to IAS 12 a provision for uncertain income tax position is provided for when as a result of past event and based on technical merits it is probable that future economic benefits will flow from the entity and a reliable estimate can be made of the amount of the obligation.

F-47 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

For provisions for taxes other than income tax the Company follows the general policy on provisions.

3.16.3 Deferred taxation Deferred taxes are recognized for the taxes recoverable or payable in future periods in respect of deductible or taxable temporary differences. A temporary difference arises where the carrying amount of an asset and liability is different from its corresponding tax bases.

Deferred tax liabilities are generally recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from: — the initial recognition of goodwill; or — the initial recognition of an asset or liability in a transaction which — is not a business combination; and — at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.

Deferred tax assets are also recognized for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which unused tax losses and unused tax credits can be utilized.

Deferred tax is recognized for all taxable temporary differences associated with investments in subsidiaries, branches and associates, and interests in joint ventures except to the extent that the parent, investor or venturer is able to control the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when the entity has a legally enforceable right to set off current tax assets against current tax liabilities, and when they relate to income taxes levied by the same taxation authority on either the same taxable entity, or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

The carrying amount of deferred tax assets is reviewed at each reporting period date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the assets to be recovered.

F-48 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

3.17 Property and equipment Property and equipment (P&E) are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.

The costs of an item of P&E include: — its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; — any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. This includes capitalizing the internal labour cost of technical departments involved in the network development; — initial cost estimations of dismantling and removing the item and restoring the site at which it is located, with an equal obligation recognized; — costs of installation and assembly of a connection line between the client and the Company’s network; — costs of site preparation, e.g. creating a foundation for the installation of connections; and — professional fees, e.g. for engineers.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows: Telecommunication equipment 7 – 20 years Buildings and constructions 15 – 50 years Office and measuring equipment 3 – 10 years Other equipment 3 – 10 years

Equipment acquired under a finance lease arrangement is depreciated on a straight-line basis over its estimated useful life or the lease term, whichever is shorter.

Repair and maintenance costs which do not meet capitalization requirements are expensed as incurred.

The carrying amount of an item of P&E is derecognized on disposal or when no future economic benefits are expected from its use. The gain or loss from derecognition of an item of P&E is calculated as the difference between the net proceeds from disposal, if any, and the carrying amount of the item, and is included in the income statement when derecognized.

The asset’s residual values, useful lives and methods of depreciation are reviewed at the end of each financial year, adjusted prospectively if appropriate.

3.18 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time (longer than six months) to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur.

F-49 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

3.19 Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards associated with ownership of leased asset to the lessee. All other leases are classified as operating leases. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date.

3.19.1 Finance lease – VimpelCom as lessee At the commencement of a finance lease term the Company recognizes the assets and liabilities in its statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments as determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

The discount rate to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. If it is impracticable to determine the interest rate implicit in the lease, the lessee’s incremental borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognized as an asset.

3.19.2 Operating lease – VimpelCom as lessee The rental payable under operating lease is recognized as operating lease expenses in the income statement on a straight-line basis over the lease term unless another systematic basis is more representative of the time pattern of the user’s benefit. No asset is capitalized. If the periodic payments or part of the periodic payments has been prepaid, the Company recognizes these prepayments in the statement of financial position.

3.20 Intangible assets (excluding Goodwill) Intangible assets acquired separately are measured initially at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets (excluding eligible development costs) are not capitalized and expenditure is reflected in the income statement in the year when the expenditure is incurred. The costs of the intangible assets acquired as part of a business combination is their fair value at acquisition date.

Intangible assets with an indefinite useful life and also intangible assets not yet available for their intended use, are tested for impairment at least annually as of 1 October to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. Change in the useful life of an intangible asset from indefinite to finite life is treated on a prospective basis. Any impairment to the asset is charged to the income statement in the year in which it arises.

Intangible assets with a finite useful life are amortized over that life on a systematic basis. The amortization method used reflects the pattern in which the asset's future economic benefits are expected to be consumed by the Group. If that pattern cannot be determined reliably, the straight-line method is used. For intangible assets associated with customer relationships the Company uses declining balance amortization pattern based on value contribution the customers bring. For other intangible assets the straight-line method is used. The amortization charge for each period is recognized in profit or loss.

F-50 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at each financial year-end.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the income statement when the asset is derecognized, if any.

3.21 Impairment of non-financial assets The Company assesses at the end of each reporting period whether there is any indication that an asset may be impaired. If there is such an indication or when annual impairment testing is required the Company estimates the recoverable amount of the asset. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s ("CGU") fair value less costs to sell and its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Unless otherwise disclosed, recoverable amount represents value in use.

The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company’s CGU’s to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations are recognized in the income statement in a separate line item.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

F-51 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

3.22 Goodwill Goodwill is tested for impairment annually as at 1 October and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGU’s) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

3.23 Financial instruments 3.23.1 Financial assets or liabilities Initial recognition and measurement When a financial asset or financial liability in the scope of IAS 39 is recognized initially, it is measured at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability (except for a financial asset or financial liability at fair value through profit or loss, in which case transaction costs are expensed).

Subsequent measurement of financial assets Financial assets are classified into the following categories: — Fair value through profit and loss. — Loans and receivables. — Held-to-maturity. — Available for sale. — Derivatives designated as hedging instruments in an effective hedge.

The Company determines the classification of its financial assets at initial recognition.

The subsequent measurement of financial assets depends on their classification as follows:

– Fair value through profit and loss ("FVTPL") Financial assets at fair value through profit and loss are in principle acquired for the purpose of selling in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments as defined by IAS 39. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognized in the income statement.

The reclassification to loans and receivables, available-for-sale or held to maturity depends on the nature of the asset. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation, these instruments cannot be reclassified after initial recognition.

– Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement loans and receivables with maturity longer than one year are subsequently measured at amortized costs using the effective interest rate ("EIR") method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The amortization based on EIR is included in the income statement.

F-52 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

After initial measurement, receivables with maturity shorter than one year are subsequently measured at historical costs less allowance for uncollectible amounts.

– Held-to-maturity Non-derivative financial assets quoted in an active market with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has the positive intention and ability to hold it to maturity.

After initial measurement, held-to-maturity investments are measured at amortized cost using the effective interest rate method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in the income statement.

– Available for sale The available for sale classification contains non-derivative financial assets that are designated as available for sale or are not classified as loans and receivables, held-to-maturity or FVTPL.

After initial measurement, available for sale financial assets are subsequently measured at fair value with unrealized gains and losses recognized in other comprehensive income in the available for sale reserve. When the asset is derecognized, the cumulative gain or loss is recognized in other operating income. When the asset is determined to be impaired, the cumulative loss is reclassified to the income statement and removed from the available for sale reserve. The fair value of the quoted equity shares is determined by reference to published price quotations in an active market.

Derecognition of financial assets A financial asset is derecognized when: — the contractual rights to the cash flows from the financial asset have expired; or — the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either — the Group has transferred substantially all the risks and rewards of the asset, or — the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Modification or exchanges of debt commitments An exchange between an existing borrower and lender of debt instruments is accounted for as an extinguishment of the original financial liability or asset and the recognition of a new financial liability or assets if the terms of the instruments are substantially different. ‘Substantially different’ has been met if the net present value of the cash flows under the new terms (including any fees paid net of any fees received) discounted at the original effective interest rate is at least 10% different from the discounted present value of the remaining cash flows of the original debt instrument.

Impairment of financial assets A financial asset or a group of financial assets is impaired and impairment losses are incurred if there is objective evidence of impairment as a result of a past event that occurred subsequent to the initial recognition of the asset.

F-53 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or group of assets may be impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is evaluated against the original cost of the investment and the Company considers 30% decline to be significant. ‘Prolonged’ against the period in which the fair value has been below its original cost and the Company considers 6-month period to be prolonged.

For the purpose of collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (for example, on the basis of a credit risk evaluation or grading process that considers asset type, industry, geographical location, collateral type, past- due status and other relevant factors).

For assets carried at amortized cost, the impairment loss is the difference between the asset’s carrying amount and the present value of estimated future cash flows at the original EIR (excluding future expected credit losses that have not yet been incurred). For assets classified as available-for-sale, the impairment loss is the difference between the original cost of the asset and its fair value.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the income statement. Financial assets together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Company.

3.23.2 Subsequent measurement of financial liabilities Financial liabilities are classified as those at fair value through profit or loss (including trading liabilities), derivatives designated as hedging instruments and other (i.e. accounts payable, notes payable). Financial liabilities are classified as held for trading if they are acquired for the purpose of repurchase in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as effective hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Trading liabilities (including derivatives when they have negative fair values) are measured at fair value. The changes in fair value are included in the net profit or loss for the period. All other (non-trading) financial liabilities are carried at amortized cost (i.e. loan payables).

Derecognition of financial liabilities The Company removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expires.

Offsetting of financial instruments A financial asset or liability is only offset when the Company: — has a current enforceable legal right to offset the recognized amounts; and — intends either to settle on a net basis or to realize the asset and sell the liability simultaneously.

F-54 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Fair value of financial instruments The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is not active, the fair value could be determined by using an appropriate valuation technique, such as recent arm's length market transactions between knowledgeable, willing parties, of another instrument that is substantially the same. Other valuation techniques could be the discounted cash flow analysis and option pricing models.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

3.23.3 Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement The Company uses derivative instruments such as forwards, interest rate swaps and forward rate agreements, futures, options and others. Such derivative instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

When a contract is entered into the instrument is initially recognized at fair value, with subsequent changes in fair value being recognized as a financial component of income.

3.24 Inventories Inventories are valued at the lower of cost and net realizable value. The costs of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Inventories are expensed by applying the weighted-average cost method.

The net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost of making the sale.

3.25 Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at the banks and on hand and highly liquid investments with an original maturity of less than 90 days.

F-55 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

3.26 Convertible preference shares The Company has issued convertible shares of preferred stock that entitles its holder to one vote per convertible preferred share, voting together with the common shares as a single class, except where cumulative voting applies when electing directors. Convertible preferred shares do not have dividend rights. The holders of convertible preferred shares, in the event of our winding-up or dissolution, are not entitled to any payment or distribution in respect of our surplus assets.

3.27 Treasury shares Treasury shares are shares which have been issued by the Company and subsequently reacquired directly by the Company or through consolidated subsidiaries. No loss or gains are recognized in the income statement as a result of the purchase. The consideration paid or received is deducted from equity and is shown as a separate item in the consolidated statement of changes in equity.

3.28 Provisions 3.28.1 General Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are discounted to their present value if the effect of the time value of money is material. In order to calculate the present value, a pre-tax risk free rate that reflects current market assessments of the time value of money and the risks specific to the liability is used. In some cases, a part or all of the expenditure required to settle a provision is expected to be reimbursed by another party. The reimbursement is recognized only if it is virtually certain that the reimbursement will be received when the obligation is settled. The reimbursement is treated as a separate asset.

Contingent liabilities and assets are not recognized on the statement of financial position.

3.28.2 Provision for decommissioning Decommissioning liabilities are measured at the best estimate of the costs required to settle the obligation. Decommissioning liabilities are discounted using a pre-tax interest rate that reflects current market assessments of the time value of money and the risk specific to the liability. According to IFRIC 1, decommissioning liabilities can be remeasured due to revisions of the amounts or timing of the original cash flows and due to changes in the current market based discount rates. Such changes are added to or deducted from the related asset, with any reductions in excess of the carrying amount of the asset recognized as a gain in the current period.

3.28.3 Legal provisions A provision has been recognized for uncertainties related to legal claims based on managements’ best estimate of the expenditure required to settle the present obligation at the balance sheet date using the weighted average probability of cash outflows.

F-56 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

3.29 Share-based payments Certain of the Group’s employees are entitled to equity-settled share-based payments. These payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

VimpelCom uses the Black-Scholes model for determining the fair value at the grant date.

The Company also has share-based compensation in the form of cash settled stock appreciation rights ("SARs") and Phantom plans which it offers a selected group of directors and senior management. These instruments are classified as liabilities on the basis that there is a put feature that enables the participant to sell the shares back to VimpelCom for a cash payment. The cost of these share plans is remeasured based on fair value of the instruments on each reporting date and is required to be recognized over the period during which the employees are required to provide services in exchange for the equity-based compensation. Any changes in fair value at the date of settlement are recognized in the income statement.

In situations where equity instruments are used and some or all of the goods or services received by the entity as consideration cannot be specifically identified, the unidentified goods or services received (or to be received) are measured as the difference between the fair value of the share-based payment transaction and the fair value of any identifiable goods or services at the grant date.

3.30 Consolidated statement of cash flows The Company presents cash flows from operating activities using the indirect method. Interest paid and received are recorded in the net cash flows from operating activities. Cash flows from derivative instruments are reported in the section in the statement of cash flows where the underlying cash flows are recorded.

F-57 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

4 First time adoption of IFRS These consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), effective at the time of preparing the consolidated financial statements and applied by VimpelCom. These are the first consolidated financial statements of the Company prepared in accordance with IFRS therefore we disclose the reconciliation from the financial statements prepared under US GAAP to IFRS as at 31 December 2010 and 2009 as well as the elections taken by the Company in its adoption of IFRS.

In preparing these consolidated financial statements, the Company’s opening statement of financial position was prepared as at 1 January 2009, the date of transition to IFRS.

IFRS has been applied retrospectively, except for certain optional and mandatory exemptions from full retrospective application, as provided for by IFRS 1 (Revised 2009) First-Time Adoption of International Financial Reporting Standards, as detailed below.

4.1 Business combinations The Company has elected to apply IFRS 3 retrospectively starting from 26 June 2008. As a result, IFRS 3 is applied to all subsequent business combinations. Accordingly, IAS 27 Consolidated and Separate Financial Statements ("IAS 27") is applied from 26 June 2008 onwards. Business combinations that occurred prior to 26 June 2008 have not been restated.

Upon adoption of IFRS, transaction costs that were capitalized are recorded to equity. Under IFRS the Company has a policy choice to recognize the net assets of the non-controlling interest at fair value or at the proportionate share in the recognized amounts of the acquiree’s identifiable net assets, whereas under US GAAP these were measured at the proportionate share of the acquiree’s identifiable net assets.

Concurrently with the election to apply IFRS 3, the Company also applies IAS 27 as of the same date. Therefore an increase in the Company’s ownership interest that does not result in obtaining of control is accounted for as an equity transaction as of that date, whereas under US GAAP increases in the Company’s ownership interest were accounted for applying acquisition accounting.

Had the Company not elected to apply IFRS 3 and IAS 27 to prior business combinations occurred before the date of transition to IFRS, there would be no adjustments related to such transactions as compared to US GAAP.

4.2 Derivative instruments over noncontrolling interests and interests in associates In accordance with IAS 39 Financial Instruments derivative instruments over non-controlling interests in subsidiaries or interests in associates qualify under the definition of financial instruments and are measured at their fair value, whereas they may not qualify as derivative instruments under US GAAP. There is no IFRS 1 exemptions for the Company in this respect.

F-58 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

4.3 Carrying value of long-lived assets and deemed cost approach VimpelCom chose applying the deemed-cost approach in accordance with IFRS 1 and used US GAAP carrying values for certain items of property and equipment and intangible assets as at 1 January 2009 that have been impaired under US GAAP since they are broadly comparable to fair value. For the remainder of long-lived assets the Company did not use “deemed cost” IFRS 1 exemption and accounted for such long-lived assets as though applicable IFRS were always applied.

4.4 Cumulative translation differences Under IAS 21 The Effects of Changes in Foreign Exchange Rates differences from the translation of financial statements prepared in a currency other than the presentation currency of the parent must be recognized as a separate component of equity. In line with the principle of retrospective application of IFRS, these differences would be required to be determined retrospectively. According to the exemption in IFRS 1, cumulative translation differences may be deemed to be zero at the date of transition. In the case of subsequent disposal of the entity concerned, only translation differences that arose after the date of transition to IFRS are recognized in profit or loss. VimpelCom has applied this exemption.

Had the Company not opted for resetting the accumulated translation difference, equity would be different which may result in a different net result from the disposal of a subsidiary or associate entity where functional currency is different from US$.

4.5 Borrowing costs The Company has applied the transitional provisions in IAS 23 Borrowing Costs and capitalizes borrowing costs on qualifying assets as of 1 January 2009, and where the construction was commenced as of and after the date of transition 1 January 2009. Borrowing costs capitalized under US GAAP prior to 1 January 2009 have not been adjusted.

Had the Company not opted for applying this exemption, we may have had different balances related to capitalized interest in the balance of P&E and intangible assets.

4.6 Provisions The Company has elected to use the IFRS 1 exemption relating to recognition of historical changes in the measurement of decommissioning liabilities and therefore measures the decommissioning liabilities in accordance with IAS 37 as at 1 January 2009.

Had the Company not elected to use this exemption, then the carrying amounts of the related assets may have been different.

4.7 Leases The Company opted to use the IFRS 1 exemption relating to not re-evaluating the determination of lease arrangements because VimpelCom had made the same determination of whether an arrangement contains a lease in accordance with US GAAP.

Had the Company not elected to use this exemption, we may have had to change the balance of lease obligations and assets obtained under such agreements in the situation that the conclusion of lease classification was different under IFRS.

F-59 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

4.8 Estimates The estimates at 1 January 2009 and 31 December 2009 are consistent with those made for the same dates in accordance with US GAAP (after adjustments to reflect any differences in accounting policies). However for the year ended 31 December 2010 the tax provisions have been reassessed under IAS 10 Events after the Reporting Period that require adjustment in the respective year.

4.9 Reclassifications The Company changed the presentation of certain items in the consolidated statement of financial position and consolidated income statement as compared to the presentation used under US GAAP.

The most significant reclassifications related to the presentation of: — software including annual updates which is an integral part of telecommunication equipment in property and equipment instead of a separate item in the statement of financial position and prepayments with respect to annual updates of software which were included in other current assets; — other software and frequency permissions as part of intangible assets instead of a separate line item for software and other non-current assets for frequency permissions; — fees associated with borrowings as part of financial liabilities instead of other non-current assets; — amounts payable and receivable in connection with income taxes as separate items instead being part of taxes payable and other current assets; — loans and interest receivable and payable as financial assets and liabilities respectively; — provisions in a separate line item; — provisions for litigation and allowance for bad debts classified as selling, general and administrative expenses, which were included in other gains and loss — deferred taxes which under US GAAP were classified as current or non-current depending on the classification of the items which give rise to a temporary difference to be netted whilst under IFRS deferred taxes are only presented as ‘non-current’.

4.9.1 Group reconciliation of equity as at 1 January 2009 (date of transition to IFRS)

Equity attributable to equity owner of Non-controlling Total Note the parents interests equity As reported under US GAAP 4,108 32 4,140 Limnotex acquisition 1 (421) – (421)

Menacrest consolidation 2 49 29 78 Other options 3 23 – 23 Other adjustments 6 (7) – (7) As reported under IFRS 3,752 61 3,813

F-60 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

4.9.2 Group reconciliation of equity as at 31 December 2009

Equity attributable to equity owner of Non-controlling Total Note the parents interests equity As reported under US GAAP 4,507 2 4,509 Limnotex acquisition 1 (332) 4 (328) Limnotex options 1 (89) – (89) Menacrest consolidation 2 21 32 53 Other options 3 12 – 12 Investments in associates 4 38 – 38 Other adjustments 6 7 – 7 As reported under IFRS 4,164 38 4,202

4.9.3 Group reconciliation of equity as at 31 December 2010

Equity attributable to equity owner of Non-controlling Total Note the parents interests equity As reported under US GAAP (5,041) 142 (4,899) Limnotex acquisition 1 (324) 8 (316) Limnotex options 1 (164) – (164) Manacrest consolidation 2 69 (175) (106) Other options 3 50 – 50 Investments in associates 4 75 – 75 Income tax uncertainties 5 100 – 100 Treasury shares 158 – 158 Other adjustments 6 5 – 5 As reported under IFRS (5,072) (25) (5,097)

4.9.4 Group reconciliation of total comprehensive income for the year ended 31 December 2009

Other Total Non- Profit for the comprehen- comprehen- controlling The owners Note year sive income sive income interest of the parent As reported under US GAAP 1,118 (378) 740 6 734 Limnotex acquisition 1 16 76 92 (5) 97 Menacrest consolidation 2 (3) (73) (76) 31 (107) Other options 3 (11) – (11) – (11) Investments in associates 4 38 – 38 – 38 Income tax uncertainties 5 9 – 9 – 9 Other adjustments 6 5 (1) 4 (4) 8 As reported under IFRS 1,172 (376) 796 28 768

F-61 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

4.9.5 Group reconciliation of total comprehensive income for the year ended 31 December 2010

Other Total Non- Profit for the comprehen- comprehen- controlling The owners Note year sive income sive income interest of the parent As reported under US GAAP 1,696 (88) 1,608 18 1,590 Limnotex acquisition 1 14 (2) 12 4 8 Menacrest consolidation 2 22 (4) 18 19 (1) Other options 3 38 – 38 – 38 Investments in associates 4 36 – 36 – 36 Income tax uncertainties 5 91 – 91 – 91 Other adjustments 6 (39) 3 (36) 2 (38) As reported under IFRS 1,858 (91) 1,767 43 1,724

4.9.6 Material adjustments to the statement of cash flows The consolidated statement of cash flows have been adjusted to reflect purchases of annual updates of software which are an integral part of telecommunication equipment as investing activity.

The consolidation of Menacrest for IFRS purposes resulted in an increase of net cash flows from operating activities of US$ 60 , an increase in net cash used in investing activities of US$ 60 and dividends paid to noncontrolling interest of US$ 17 for the year ended 31 December 2009. No other impact adjustments were recorded for the year ended 31 December 2010.

4.9.7 Notes to the reconciliation of equity as at 1 January 2009, 31 December 2009 and 31 December 2010 and profit for the years ended 31 December 2009 and 31 December 2010 Note 1 – Limnotex acquisition and Limnotex options The Company elected to restate business combinations starting from the acquisition of LLC Komtel in June 2008 and to apply IAS 27 as of that date. In accordance with IFRS a change in ownership interest without loss of control leads to the carrying amounts of the controlling and non- controlling interest being adjusted to reflect the changes in their relative interest in the subsidiary. The difference between the fair value of the consideration paid and the amount by which the non- controlling interest is adjusted is recognized in equity, while US GAAP effective in 2008 required purchase accounting.

On 1 July 2008, VimpelCom acquired 25% of Limnotex in addition to existing controlling stake of 50% plus one share. In addition, VimpelCom entered into a put and call option agreement over the remaining 25% shares. The agreement was recognized as a redeemable noncontrolling interest under US GAAP. Under IFRS the put option granted to the non-controlling interest gives rise to a financial liability. As the Company concluded that they do not have present access to the benefits of all the shares held by the non-controlling shareholders, changes in the carrying amount of the financial liability (Note 15) are recognized in equity.

F-62 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

For the year ended 31 December 2009, the amortization expense was decreased by US$ 18 and deferred tax expense was decreased by US$ 1. Net profit of US$ 4 was attributable to non- controlling interest and US$ 12 to the owners of the parent.

For the year ended 31 December 2010, the amortization expense was decreased by US$ 18 with a corresponding deferred tax expense decrease of US$ 4. Net profit of US$ 4 was attributable to non-controlling interest and US$ 11 to the owners of the parent.

Note 2 – Menacrest consolidation In comparison to US GAAP effective in 2009, the definition of control differs under IAS 27. As a result Menacrest Limited ("Menacrest") and its subsidiaries Aridus and Sky Mobile are included as subsidiaries in the consolidated financial statements in accordance with IFRS that were not included in the consolidated financial statements in accordance with US GAAP. In addition, the Company received two call options to acquire up to 100% of interest in Menacrest which were not recognized under US GAAP but qualify as derivatives under IFRS. As a part of the Menacrest acquisition, VimpelCom granted Crowell Investments Limited ("Crowell"), the owner of Menacrest, a loan of US$ 350 on 13 February 2008 (the "Original Crowell Loan Agreement") and subsequently re-negotiated its terms by decreasing the interest rate and increasing the maturity of the loan (the "Revised Crowell Loan Agreement") which resulted in required de-recognition of the original loan and recognition of the new one.

The original terms were bearing interest rate of 10% per annum and the loan was secured by 25% of the shares of Limnotex Developments Limited ("Limnotex"). The revised terms were bearing fixed annual amount and the security was amended to 100% of Menacrest, which owned 100% of the share capital of Sky Mobile, a mobile operator in Kyrgyzstan, holding GSM and 3G licenses to operate over the entire territory of Kyrgyzstan.

Crowell granted the Company two call options (the "Call Option Agreement") over the issued share capital of Menacrest.

On 29 May 2009, VimpelCom agreed to amend the Revised Crowell Loan Agreement in that the term of the loan facility was extended until 11 February 2014 and interest rate has been changed to be a fixed amount per annum starting from the effective date of the amendment. Also, the security interest granted by Crowell to VimpelCom over 25% of the shares of Limnotex was replaced by a security interest over 100% of the shares of Menacrest.

As a result of the Call Option Agreement, control is deemed to have been established over Menacrest, and Sky Mobile as its subsidiary, on the basis that the call options were exercisable at the date of acquisition in February 2008. Since that date precedes June 2008, after which the business combinations have been converted under IFRS 3R, in accordance with IFRS1, paragraph "C4j", the financial statements of VimpelCom as of 1 January 2009 have been adjusted to include the original Sky Mobile carrying values as of 28 March 2008 (the date at which Menacrest acquired Sky Mobile) plus the subsequent movements to 1 January 2009. At transition date, the Company had present access to the benefits of 50.1% of the non-controlling interest. Since the call option over Menacrest was in the money and likely to be exercised a liability has been recognized of US$ 330. VimpelCom has elected to measure the non-controlling interest in the acquiree at the proportionate share of net assets of Menacrest. The difference between the carrying values of the assets and liabilities of Sky Mobile, the non-controlling interest of Menacrest and the liability recognized has been recognized as goodwill.

F-63 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The values of the consolidated assets and liabilities of Menacrest and Sky Mobile as of 1 January 2009 in accordance with IFRS 1 were as follows:

As of 1 January 2009 Assets Cash and cash equivalents 20 Other current assets 12 Property and equipment (6 years weighted average remaining useful life) 96 Intangible assets 37 Other non-current assets 5 170 Liabilities Current liabilities 56 Long-term liabilities 57 113 Total identifiable net assets acquired 57

Non-controlling interest 29 Goodwill arising on acquisition 301 Purchase consideration transferred 330

The recognized goodwill is expected to be realized from the potential of the Kyrgyzstan telecommunication market development.

Before June 2009, 49.9% of equity over Menacrest was classified as non-controlling interest, after that date, when the Company had lost the present access to the benefits of interest ownership of Menacrest, – 100% of equity over Menacrest was classified as non-controlling interest.

On 20 October 2010, the Company exercised the first call option to acquire 50.1% of the issued share capital of Menacrest. The remaining 49.9% of Menacrest was owned by Crowell. On the same date the pledge over 100% of Menacrest shares was released by the Company.

The consideration for the 50.1% share capital of Menacrest in the amount of US$ 150 has been set off against part of the debt of Crowell to the Company under the Crowell Loan Agreement (Note 15). As Menacrest was already consolidated at the time the first call option was exercised, the transaction was accounted for as a repayment of liability instead of as an equity transaction under US GAAP.

Note 3 – Other options In accordance with IFRS derivative instruments over non-controlling interests in subsidiaries or interests in associates qualify under the definition of financial instruments and are measured at their fair value.

F-64 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

VimpelCom was granted call options and issued put options over the non-controlling interest in its subsidiaries (Tacom, Mobitel, Dicom) and associates (Euroset and M.I.P.R.). The table below represents the fair value of the options.

31 December 31 December 1 January 2010 2009 2009 Financial assets Tacom 1 3 4 Mobitel 4 7 – M.I.P.R. – – 22

Financial liabilities Euroset – 43 48 Dicom 4 3 3

The change in fair value was recognized in income statement of the respective period.

Note 4 – Investments in associates This adjustment is the proportionate impact of applying IFRS to the financial statements of associates.

Note 5 – Income tax uncertainties Under US GAAP uncertainties in income taxes were recognized as of the reporting dates and were not revised as of the transition date. However for the year ended 31 December 2010 the tax provisions have been reassessed under IAS 10 Events after the Reporting Period that require adjustment in the respective year.

Note 6 – Other adjustments Among others these adjustments include different treatment of shares of VimpelCom Ltd. owned by the Company and its subsidiaries. Under US GAAP those shares were accounted for as treasury shares whereas they meet definition of financial assets available-for-sale under IFRS. Please see Note 15 for further details.

F-65 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

5 Significant accounting judgements, estimates and assumptions The preparation of these consolidated financial statements required management to apply accounting policies and methodologies based on complex, subjective judgments, estimates based on past experience and assumptions determined from time to time to be reasonable and realistic based on the related circumstances. The use of these estimates and assumptions affects the amounts reported in the statement of financial position and the income statement as well as the notes. The final amounts for items for which estimates and assumptions were made in the consolidated financial statements may differ from those reported in these statements due to the uncertainties that characterize the assumptions and conditions on which the estimates are based.

Certain accounting principles require a higher degree of subjective judgment in making estimates and judgements and for which changes in the underlying conditions could significantly affect the consolidated financial statements are briefly described below.

5.1 Accounting judgements 5.1.1 Consolidation of GTEL-Mobile In 2011, the Company made certain changes in the joint-venture agreement on our investment in Vietnam with the government and the Charter of GTEL-Mobile. The definition of control under IAS 27 provides for the basic guidance whether the company can actually direct activities of the entity which is considered a judgemental area. Based on these agreed changes, the Company made a significant judgement that it had obtained control over activities of GTEL-Mobile since it has a right to appoint the General Director being the major governing body of GTEL-Mobile for day-to-day operations. Also the Company had a right to unilaterally approve certain decisions in the Board of Directors of the GTEL-Mobile which were considered the most significant in managing the operations of GTEL-Mobile. As a result, the Company determined that it should consolidate GTEL-Mobile effective 26 April 2011. The consolidation of GTEL-Mobile impacted the financial statements as a joint venture previously accounted for as an equity investment became a subsidiary.

5.2 Critical accounting estimates A critical accounting estimate is one which is both important to the presentation of the Group’s financial position and results and requires management’s most difficult, subjective or complex judgements, often as a result of the need to make important estimates based on assumptions about the outcome of matters that are inherently uncertain.

Management evaluates such estimates on an ongoing basis, based upon historical results and experience, consultations with experts, trends and other methods which management considers reasonable under the circumstances, as well as forecasts as to how these might change in the future.

5.2.1 Revenue recognition The Group’s revenues primarily consist of revenues from sale of services and periodic subscriptions. The Group offers subscribers, via multiple element arrangements or otherwise, a number of different services with different price plans, and provides discounts of various types and forms, often in connection with different campaigns, over the contractual or average customer relationship period.

F-66 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The Group also sells wholesale products to other operators and vendors in different countries and across borders. Management has to make estimates related to revenue recognition, relying to some extent, on information from other operators on values of services delivered. Management also makes estimates of the final outcome in instances where the other parties dispute the amounts charged. Furthermore, management has to estimate the average customer relationship for revenue that is initially recognized as deferred revenue in the statement of financial position and recognized in the income statement over a future period, e.g. connection fee. Management also applies judgement in evaluating gross or net presentation of revenue and associated fees. In this case, among others, the main factor is whether the Company is considered as the primary obligor in the transactions.

5.2.2 Business combinations We have entered into certain acquisitions in the past and may make additional acquisitions in the future. For the larger acquisitions, third-party valuation experts are engaged to assist in determining and allocating the fair values of the assets acquired and liabilities assumed. Our financial statements are impacted by the manner in which we allocate the purchase price in a business combination, as assets that are considered to be subject to depreciation will reduce future operating results, whereas goodwill and certain other intangible assets are of a non- amortizing nature, therefore there is no income statement impact. As part of our purchase price allocation, it is necessary to determine the purchase price paid, which includes the fair value of securities issued and any contingent consideration.

After the purchase price is established, we have to allocate that to the underlying assets acquired and liabilities assumed, therefore assets and liabilities that are not originally reflected in the acquired entity need to be assessed and valued. This process requires significant judgment on our part as to what those assets and liabilities are and how they should be valued. Significant acquired intangible assets that have been recognized by the Group in connection with business combinations include customer bases, customer contracts, brands, licenses, service concession rights, roaming agreements and software. The significant tangible assets primarily include networks. The valuation of the individual assets, in particular intangible assets related to assets such as customer intangibles, brands, etc., require us to make significant assumptions, including, among others, the expected future cash flows, the appropriate interest rate to value those cash flows and expected future customer churn rates. All of these factors, which are generally developed in conjunction with the guidance and input of professional valuation specialists, require judgment and estimates. A change in any of these estimates or judgments could change the amount of the purchase price to be allocated to the particular asset or liability. The resulting change in the purchase price allocation to a non-goodwill asset or liability has a direct impact on the residual amount of the purchase price that cannot be allocated, referred to as "goodwill." See below Note 7 for further information about significant business combinations.

5.2.3 Impairment of long-lived assets The Group has made significant investments in property and equipment, intangible assets, goodwill and other investments.

Goodwill, other intangible assets with indefinite useful life and intangible assets not yet brought into use are tested for impairment annually or more often if indicators of impairment exist, whereas other assets are tested for impairment when circumstances indicate there may be a potential impairment.

F-67 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Factors that indicate impairment which trigger impairment testing include, but are not limited to the following: significant fall in market values; significant underperformance relative to historical or projected future operating results; significant changes in the use of the assets or the strategy for the overall business, including assets that are decided to be phased out or replaced and assets that are damaged or taken out of use; significant negative industry or economic trends; significant loss of market share; significant unfavourable regulatory decisions and significant cost overruns in the development of assets.

Estimating recoverable amounts of assets and companies must in part be based on management’s evaluations, including determining appropriate cash-generating units, determining the discount rate, estimates of future performance, revenue generating capacity of the assets and assumptions of the future market conditions.

A significant part of the Group’s operations is in countries with emerging markets. The political and economical situation in these countries may change rapidly and global financial turmoil and recession will potentially have a significant impact on these countries. During the financial crisis in 2008-2009 there were strong indications of increased country risk in the most exposed markets, which was reflected in the discount rates. Moreover recessionary effects and debt crisis in Europe in 2011 as well as increased macroeconomic risks impacted our assessment of cash flow forecasts and the discount rates applied. Changes in circumstances and in management’s evaluations and assumptions may give rise to impairment losses in the relevant periods.

There are significant variations between different markets with respect to growth, mobile penetration, Average Revenue Per User ("ARPU"), market share and similar parameters, resulting in differences in earnings before interest, tax, depreciation and amortization ("EBITDA") margins. The future developments of EBITDA margins are important in the Group’s impairment assessments, and the long-term estimates of EBITDA margins are highly uncertain. In particular, this is the case for emerging markets that are still not in a mature phase.

See below Note 13 for further information about goodwill and other long-lived assets impairment test.

5.2.4 Depreciation and amortization of non-current assets Depreciation and amortization expenses are based on management estimates of residual value, amortization method and the useful life of property and equipment and intangible assets. Estimates may change due to technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the amortization or depreciation charges. Technological developments are difficult to predict and our views on the trends and pace of development may change over time. Some of the assets and technologies, in which the Group invested several years ago, are still in use and provide the basis for the new technologies. Critical estimates in the evaluations of useful lives for intangible assets include, but are not limited to, estimated average customer relationship based on churn, remaining license or concession period and expected developments in technology and markets.

The useful lives of property and equipment and intangible assets are reviewed at least annually taking into consideration the factors mentioned above and all other important relevant factors. Estimated useful lives for similar types of assets may vary between different entities in the Group due to local factors such as growth rate, maturity of the market, history and expectations for replacements or transfer of assets, climate and quality of components used.

F-68 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The actual economic lives of intangible assets may be different than our estimated useful lives, thereby resulting in a different carrying value of our intangible assets with finite lives. We continue to evaluate the amortization period for intangible assets with finite lives to determine whether events or circumstances warrant revised amortization periods. A change in estimated useful lives is a change in accounting estimate, and depreciation and amortization charges are adjusted for prospectively.

5.2.5 Deferred tax assets and uncertain tax positions Deferred tax assets are recognized to the extent that it is probable that the assets will be realized. Significant judgement is required to determine the amount that can be recognized and depends foremost on the expected timing, level of taxable profits as well as tax planning strategies and the existence of taxable temporary differences. The judgements relate primarily to losses carried forward in some of the Group’s foreign operations. When an entity has a history of recent losses the deferred tax asset arising from unused tax losses is recognized only to the extent that there is convincing evidence that sufficient future taxable income will be generated. Estimated future taxable income is not considered such evidence unless that entity has demonstrated the ability by generating significant taxable income for this year or there are certain other events providing sufficient evidence of future taxable income. New transactions and the introduction of new tax rules may also affect the judgements due to uncertainty concerning the interpretation of the rules and any transitional rules. Provisions for uncertain tax positions are recognized when it is probable that a tax position will not be sustained and the amount is reliably measurable. The expected resolution of uncertain tax positions is based upon managements’ judgement of the likelihood of sustaining a position taken through tax audits, tax courts and/or arbitration, if necessary. Circumstances and interpretations of the amount or likelihood may change through the settlement process. See below Note 10 for further information about income tax position and Note 26 about uncertainty in tax positions.

5.2.6 Fair value of financial instruments Where the fair value of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets, their fair value is determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

5.2.7 Provisions The Group is subject to various legal proceedings, disputes and claims including regulatory discussions related to the Group’s business, licenses, tax positions, investments etc., the outcomes of which are subject to significant uncertainty. Management evaluates, among other factors, the degree of probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of loss. Unanticipated events or changes in these factors may require the Group to increase or decrease the amount to be accrued for any matter or accrue for a matter that has not been previously accrued because it was not considered probable or a reasonable estimate could not be made.

Through the operations in many emerging markets, the Group is involved in legal proceedings, including regulatory discussions. Accordingly, management’s estimates relating to legal proceedings and regulatory issues in these countries involve a relatively higher level of uncertainty.

F-69 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

6 New accounting pronouncements not yet adopted Phase I of IFRS 9 Financial Instruments was issued in November 2009 and is effective for annual periods beginning on or after 1 January 2015. The standard introduces changes to the classification and measurement of financial assets and the requirements relating to financial liabilities in relation to the presentation of changes in fair value due to credit risks and the removal of an exemption from measuring certain derivative liabilities at fair value. The Company is currently assessing the impact of the standard on its results, financial position and cash flows.

The Company has also not adopted the following pronouncements, all of which were issued by the IASB on 12 May 2011 and which are effective for annual periods beginning on or after 1 January 2013. The Company has not completed its assessment of the impact of these pronouncements on the consolidated results, financial position or cash flows of the Group. — IFRS 10 Consolidated Financial Statements, which replaces parts of IAS 27, and all of SIC-12, builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The remainder of IAS 27 Separate Financial Statements, now contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates only when an entity prepares separate financial statements and is therefore not applicable in the Group’s consolidated financial statements. — IFRS 11 Joint Arrangements, which replaces IAS 31 Interests in Joint Ventures and SIC-13, Jointly Controlled Entities – Non-monetary Contributions by Venturers, requires a single method, known as the equity method, to account for interests in jointly controlled entities which is consistent with the accounting treatment currently applied to investments in associates. The proportionate consolidation method currently applied to the Group’s interests in joint ventures is prohibited. — IAS 28 Investments in Associates and Joint Ventures, was amended as a consequence of the issuance of IFRS 11. In addition to prescribing the accounting for investment in associates, it now sets out the requirements for the application of the equity method when accounting for joint ventures. The application of the equity method has not changed as a result of this amendment. — IFRS 12 Disclosure of Interest in Other Entities, is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The standard includes disclosure requirements for entities covered under IFRS 10 and IFRS 11. — IFRS 13 Fair Value Measurement provides guidance on how fair value should be applied where its use is already required or permitted by other standards within IFRS, including a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS.

F-70 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Other amendments resulting from Improvements to the following standards and interpretations did not have any impact on the accounting policies, financial position or performance of the Group: — IFRS 3 Business Combinations (Contingent consideration arising from business combination prior to adoption of IFRS 3 (as revised in 2008)). — IFRS 3 Business Combinations (The measurement options available for non-controlling interest). — IFRS 3 Business Combinations (Un-replaced and voluntarily replaced share-based payment awards). — IAS 27 Consolidated and Separate Financial Statements. — IAS 34 Interim Financial Statements. — IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments.

F-71 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

7 Business combinations and other significant transactions 7.1 Acquisitions in 2011 7.1.1 Eltel On 21 January 2011, VimpelCom acquired 100% of the share capital of Closed Joint Stock Company Eltel ("Eltel"), one of the leading alternative fixed-line providers in St. Petersburg, for the total cash consideration of RUR1,000 million (the equivalent to US$ 33,428 as of 21 January 2011).

The primarily reason for the acquisition was to enhance VimpelCom’s presence in the Saint- Petersburg telecommunication market (including through transport network) and to increase VimpelCom’s local FTTB (Fiber-To-The-Building) subscribers base.

The acquisition of Eltel is accounted for as a business combination under the "acquisition method", as defined by IFRS 3. The consideration transferred was measured at fair value on the acquisition date.

The fair values of consolidated identifiable assets and liabilities of Eltel as of 21 January 2011, were as follows:

As of 21 January 2011 Cash and cash equivalents 1 Other current assets 1 Property and equipment 10 Customer Relationships (9 years weighted average remaining useful life) 4 Goodwill 20 Total assets acquired 36 Current liabilities (1) Non-current liabilities (2) Total liabilities assumed (3)

Total consideration transferred 33

The excess of the purchase consideration over the fair value of the identifiable net assets of Eltel amounted to US$ 20 and was recorded as goodwill. The goodwill was assigned to the Russia CGU and is expected to be realized from the potential of "business to business" telecommunication market development in the future, as well as synergies with VimpelCom’s operations. This goodwill is not deductible for tax purposes.

7.1.2 VimpelCom Lao On 9 March 2011, VimpelCom acquired 100% ownership interest in VimpelCom Holding Laos B.V. (Netherlands), formerly Millicom Holding Laos B.V., which holds a 78% interest in VimpelCom Lao (formerly Millicom Lao) Co., Ltd. ("VimpelCom Lao") a cellular telecom operator with operations in the Lao People’s Democratic Republic (PDR). The remaining 22% of VimpelCom Lao is owned by the Government of the Lao PDR, as represented by the Ministry of Finance.

F-72 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The reason for the acquisition was gaining access to the new market of Lao PDR.

The acquisition of VimpelCom Lao is accounted for as a business combination under the "acquisition method," as defined by IFRS 3. The consideration transferred was measured at fair value on the acquisition date. The total cash consideration transferred was approximately US$ 70.

The fair values of consolidated identifiable assets and liabilities of VimpelCom Lao as of 9 March 2011, were as follows:

9 March 2011 Cash and cash equivalents 3 Other current non-financial assets 9 Property and equipment 49 Licenses (10 years weighted average remaining useful life) 9 Goodwill 67 Other non-current assets 3 Total assets acquired 140

Current liabilities (36) Non-current liabilities (14) Total liabilities assumed (50) Non-controlling interest (20) Total consideration transferred 70

The non-controlling interest was valued based on the fair value of 22% stake using discounted cash flows analysis ("DCF") adjusted for control premium.

The excess of the purchase consideration over the fair value of the identifiable net assets of Millicom Lao amounted to US$ 67 and was recorded as goodwill. The goodwill was assigned to the Laos CGU and is expected to be realized from the potential development of telecommunication market in Laos as well as synergies with VimpelCom’s operations in South- East Asia. This goodwill is not deductible for tax purposes.

7.1.3 GTEL-Mobile On 29 March 2011, VimpelCom agreed with GTEL, its local partner in Vietnam, on a financing plan for their investment, GTEL-Mobile, that could result in the Company providing investments in total of up to US$ 500 through 2013. The Company completed the first stage of the financing plan by paying US$ 196 for the newly issued shares and thereby increasing its stake in GTEL-Mobile from 40% to 49% on 26 April 2011. All proceeds from this financing will be used for GTEL-Mobile’s development.

The Company agreed to invest another US$ 304 under this plan, which would increase its economic interest in GTEL-Mobile from 49% to 65%. The additional financing and equity increase are subject to meeting certain performance targets by GTEL-Mobile and obtaining further regulatory approvals. Based on 2011 performance those targets have not been met and as a result the Company was released from its obligation to finance GTEL-Mobile.

F-73 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The primary reason for the increase in ownership was expanding VimpelCom’s operations in Vietnam.

In conjunction with the financing agreements described above, VimpelCom and GTEL agreed on certain changes to the joint venture agreement and charter of GTEL-Mobile. Under the revised agreement, VimpelCom is assigned with the operational management of GTEL-Mobile, by way of substantial control over adoption of annual budgets and appointment of the General Director of GTEL-Mobile who is granted with wide authority with respect of day-to-day operations.

Based on these agreed changes, VimpelCom started consolidating GTEL-Mobile from 26 April 2011 onwards.

The increase in ownership in GTEL-Mobile and subsequent consolidation is accounted for as a business combination achieved in stages, as defined by IFRS 3. The acquisition achieved in stages requires remeasurement of previously held equity interest in the acquiree at its acquisition-date fair value and recognizing the resulting gain or loss, if any, in earnings. As of the acquisition date the fair value of previously held interest was US$ 157 representing the fair value of 40% stake based on DCF adjusted for control premium. The resulting loss of US$ 40 was recognized as other non-operating losses item of accompanied income statement. In prior reporting periods, the Company recognized a portion of changes in the value of its equity interest in GTEL-Mobile associated with foreign currency translation in other comprehensive income. As of the acquisition date, the respective accumulated foreign currency translation adjustment of US$ 43 was reclassified from other comprehensive income and included in the current period earnings as other expenses item of accompanied income statement.

The fair values of consolidated identifiable assets and liabilities of GTEL-Mobile as of 26 April 2011, were as follows:

As of 26 April 2011 Cash and cash equivalents 206 Other current non-financial assets 7 Property and equipment 148 Licenses (14.6 years weighted average remaining useful life) 143 Goodwill 127 Other non-current non-financial assets 1 Total assets acquired 632

Current liabilities (39) Non-current liabilities (4) Total liabilities assumed (43) Non-controlling interest (236) Previously held 40% interest (157) Total cash contribution 196

The non-controlling interest was valued based on 51% stake of total value of the equity based on DCF adjusted for a control premium.

F-74 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The excess of the purchase consideration over the fair value of the identifiable net assets of GTEL-Mobile amounted to US$ 127 and was recorded as goodwill. The goodwill was assigned to the Vietnam CGU and was expected to be realized from the potential development of telecommunication market in Vietnam as well as synergies with VimpelCom’s operations in South-East Asia. This goodwill is not deductible for tax purposes. This goodwill was impaired as of 1 October 2011, due to negative market trends in Vietnamese market in late 2011 which resulted in a negative business enterprise value of Vietnam CGU (Note 13). Subsequent to 31 December 2011 the Company signed an agreement to sell its investments in GTEL-Mobile (Note 27).

7.1.4 NTC On 7 June 2011, VimpelCom acquired 90% of the share capital of OJSC "New Telephone Company" ("NTC") for the total consideration of RUR 10,835 million (the equivalent to US$ 390 as of 7 June 2011). On 21 October 2011, VimpelCom completed acquisition of additional 10% of the outstanding NTC shares. The total acquisition price is US$ 438.

The primarily reason for the acquisition was to enhance VimpelCom’s presence in Primorskiy region telecommunication market and to increase VimpelCom’s local mobile subscribers base.

The acquisition of NTC is accounted for as a business combination under the "acquisition method", as defined by IFRS 3. The consideration transferred was measured at fair value on the acquisition date.

The fair values of consolidated identifiable assets and liabilities of NTC as of 7 June 2011, were as follows:

7 June 2011 Cash and cash equivalents 2 Other current non-financial assets 25 Property and equipment 120 Intangible assets, including - Trademarks (3 years weighted average remaining useful life) 6 - Customer Relationships (7.7 years weighted average remaining useful life) 22 - Licenses (10.3 years weighted average remaining useful life) 56 - Number capacity (10.3 years weighted average remaining useful life) 1 - Software (9.4 years weighted average remaining useful life) 3 Other non-current non-financial assets 5 Goodwill 231 Total assets acquired 471 Current liabilities (13) Non-current liabilities (20) Total liabilities assumed (33) Total consideration transferred 438

The excess of the purchase consideration over the fair value of the identifiable net assets of NTC amounted to US$ 231 and was recorded as goodwill. The goodwill was assigned to Russia CGU and is expected to be realized from the potential of "business to business" telecommunication market development in the future, as well as synergies with VimpelCom’s operations. This goodwill is not deductible for tax purposes. The acquisition-related costs incurred in the transactions were treated as expenses under IFRS 3.

F-75 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

7.2 Restructuring of shareholding in Kazakhstan and Kyrgyzstan On 24 August 2011, a restructuring transaction ("Restructuring transaction") with Crowell Investments Limited ("Crowell") was completed. As a result of the Restructuring transaction, VimpelCom Finance B.V., a subsidiary of the company, became the legal and beneficial owner of 71.5% shares in the issued share capital of the combined Limnotex (resulting in 71.5% indirect shareholding of VimpelCom Finance B.V. in LLP KaR-Tel ("KaR-Tel") and Sky Mobile, while the non-controlling 28.5% of Limnotex shares are now held by Crowell. Before the transaction, VimpelCom Group (via OJSC Vimpel-Communications and VimpelCom Finance B.V.) held indirectly 75.0% in KaR-Tel and 50.1% in Sky Mobile.

At the same time, the Company’s call option to acquire 49.9% of the issued share capital of Menacrest was terminated, while Crowell’s put and VimpelCom’s call options for the 25% of Limnotex shares (Note 15) were amended. After the amendments, Crowell holds two put options for Limnotex shares: the first put option for 13.5% is exercisable during 2013 at a fixed price of US$ 297 and the second put option for 15% is exercisable during 2017 at a fixed price of US$ 330. In turn the Company holds two call options for Limnotex shares (for 13.5% and 15%) and both are exercisable at an EBITDA multiple during the period between April 2012 and May 2018. As a part of the transaction, VimpelCom terminated the loan agreement with Crowell and was released from its commitment to exercise the call option for the 25% of Limnotex shares.

The existing dividend mandate from Crowell to Menacrest (allowing VimpelCom to receive 49.9% Menacrest dividends payable to Crowell) was cancelled. In accordance with new dividend mandates, VimpelCom Finance B.V. will receive 100% Menacrest dividends payable to Limnotex and 3.5% Limnotex dividends payable to Crowell.

The Restructuring transaction was accounted for as an equity transaction reflecting exchange of 21.4% in Menacrest for 3.5% in Limnotex. Simultaneously the termination of the loan was offset by the release of liability to exercise the call option for the 25% of Limnotex shares. In addition the fair value of the call options for the total 28.5% of Limnotex shares at the amount of US$ 68 were recognized as financial assets and the redemption value of the put options for the total of 28.5% of Limnotex shares at the amount of US$ 391 was recorded as financial liabilities.

7.3 Acquisitions in 2010 7.3.1 Kyivstar On 21 April 2010, the Company acquired 100% of the voting shares of Kyivstar, a company based in Ukraine, specializing in the wireless telecommunication services, in exchange for 301,653,080 VimpelCom Ltd shares. The Company has acquired Kyivstar because management believed that it would be value creative and in the best interests of the Company’s stakeholders (Note 1).

The purchase price consideration was USD 5,596, which was calculated based on the market value of VimpelCom Ltd. shares on April 21, 2010 (USD 18.55 per share).

F-76 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The fair value of the identifiable assets and liabilities of Kyivstar as at the date of acquisition was:

As of 21 April 2010

Assets Cash and cash equivalents 167 Other current non-financial assets 206 Property and equipment 1,136 Goodwill arising on acquisition 3,443 Intangible assets, including: — Licenses (5 years weighted average remaining useful life) 130 — Customer Relationships (13 years weighted average remaining useful life) 816 — Other intangible assets (15 years weighted average remaining useful life) 177 6,075 Liabilities Current liabilities (160) Non-current liabilities (319) (479)

Total net assets acquired at fair value 5,596

Purchase consideration transferred 5,596

The fair value of the trade receivables amounts to US$ 63, which approximates their gross carrying amount net of regular provision for doubtful accounts.

The goodwill of US$ 3,443 comprises the value of expected synergies from the combined operations in Ukraine arising from the acquisition. Goodwill is allocated entirely to the Ukraine CGU. None of the goodwill recognized is deductible for income tax purposes.

F-77 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The following table presents amounts of revenue and profit or loss attributable to the owners of the parent (before intercompany eliminations) of the material acquirees since the acquisition date included in the consolidated statement of comprehensive income of the Company for the years ended 31 December 2011 and 2010:

Acquired entity contribution from acquisition date till 31 December 2011, before Acquisition eliminating intercompany date transactions Eltel 21 January 2011 Revenue 14 Profit for the year 3 VimpelCom Lao 9 March 2011 Revenue 29 Profit for the year 2 GTEL-Mobile 26 April 2011 Revenue 13 Loss for the year (311) NTC 7 June 2011 Revenue 60 Profit for the year 7 Kyivstar 21 April 2010 Revenue 1,020 Profit for the year 220

Unaudited consolidated pro forma revenue and profit attributable to the owners of the parent (before elimination of intercompany transactions) for the year ended 31 December 2011 (2010) as though the acquisition date for all material business combinations (as presented in the table above) had been US$ 12,098 (2010: US$ 10,881) and US$ 771 (2010: US$ 1,854) respectively.

7.3.2 Foratec On 29 July 2010, VimpelCom acquired 100% of the share capital of Closed Joint Stock Company Foratec Communication ("Foratec"), one of the leading alternative fixed-line providers in Urals region of Russia. The primary reason for the acquisition of Foratec was enhancing VimpelCom presence in Ural Region, including business services market.

The total value of the transaction amounted to RUR 1,120 million (the equivalent to US$ 37 as of 29 July 2010). The acquisition was recorded under the acquisition method of accounting. The fair value of acquired identifiable net assets of Foratec amounted to US$ 13. The excess of the acquisition cost over the fair value of the identifiable net assets amounted to US$ 24. This amount was recorded as goodwill, was mainly assigned to the Russia CGU and is subject to annual impairment tests. The recognized goodwill is expected to be realized primarily from the synergies of combining of VimpelCom’s and Foratec's regional operations.

F-78 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

7.4 Other transactions 7.4.1 Tacom On 30 July 2010, VimpelCom increased its ownership interest in limited liability company Tacom, a consolidated Tajikistan subsidiary of VimpelCom, from 80% to 90% by acquiring an additional 10% ownership interest for a total cash consideration of US$ 10. The transaction was accounted for as a decrease in noncontrolling interest and an increase in equity.

7.4.2 LLC Golden Telecom (Ukraine) On 30 December 2009, VimpelCom increased its ownership interest in LLC Golden Telecom, a consolidated Ukrainian subsidiary of VimpelCom, from 80% to 100% by acquiring the 20% ownership interest it did not already own for a total cash consideration of US$ 18. The transaction was accounted for as a decrease in noncontrolling interest and an increase in equity.

F-79 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

8 Investments in associates and joint ventures The Company has the following investments in and carrying values of associates and joint ventures:

Percentage of 31 December 31 December 31 December 1 January ownership 2011 2010 2009 2009 Joint ventures GTEL – Mobile 40.0% – 223 266 306 Rascom 54.0% 32 29 27 23

Associates Euroset 49.9% 355 314 226 208 Others 1 3 5 5 Total 388 569 524 542

GTEL-Mobile was a joint venture at 31 December 2010 as there was a joint control situation with the local Government of Vietnam.

Investment in Rascom does not qualify as a subsidiary, because we do not have ability to direct financial and operating activities of Rascom, and as result, we do not control Rascom. Therefore, the Company accounts for this investment under the equity method.

On 26 April 2011, the Company increased its ownership interest in GTEL-Mobile and therefore consolidated GTEL-Mobile (Note 7).

The following table includes summarized consolidated financial information of the investments in the most significant associate Euroset and joint venture GTEL-Mobile (for the years ended 31 December 2010 and 2009) which are held by the Company as at and for the years:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Share of the associate’s statement of financial position: Current assets 366 274 369 505 Non-current assets 166 319 355 304 Current liabilities 516 482 553 753 Non-current liabilities 45 24 129 3 Equity (29) 87 42 53 Goodwill from acquisition 384 450 450 461 Carrying amount of the investment 355 537 492 514

2011 2010 2009 Share of the associate’s revenue and profit: Revenue 1,165 1,018 875 Profit for the year 65 62 1 Share of profit of associates reported 65 62 1

F-80 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

9 Segment information Management analyzes the operating segments separately because of different economic environments and stages of development in different geographical areas, requiring different investment and marketing strategies. Management does not analyze assets by reportable segments separately. The segment data for acquired operations are reflected herein from the date of their acquisitions.

The Management Board of VimpelCom utilizes multiple views of data to measure segment performance. However, the dominant measurements are consistent with VimpelCom’s consolidated financial statements and, accordingly, are reported on the same basis herein. Intersegment revenues are eliminated in consolidation. Intersegment revenues may be accounted for at amounts different from sales to unaffiliated companies. The accounting policies of the segments are the same as those of VimpelCom.

Historically management analyzed the Russian operations as two separate segments, one for fixed line and one for mobile. Following the acquisition of Wind Telecom by VimpelCom Ltd., starting 15 April 2011, VimpelCom defined Russia, CIS (including Georgia), Ukraine, Asia as operating segments based on the business activities in different geographical areas. The comparative information has been revised accordingly.

"All other" category includes Asia mobile and headquarter expenses and other unallocated adjustments and eliminations.

Historically management evaluated the performance of its segments on a regular basis primarily based on revenue and operating income before depreciation, amortization and impairment loss ("adjusted OIBDA"). Following the acquisition of Wind Telecom by VimpelCom Ltd., VimpelCom concluded that earnings before interest, tax, depreciation, amortization and impairment loss ("adjusted EBITDA") is a more appropriate measure for both internal and external reporting because it is more widely used amongst European-based analysts and investors to assess the performance of an entity and compare it with other market players.

Adjusted EBITDA differs from adjusted OIBDA for certain non-operating items recorded in other gain/loss. Items historically excluded from adjusted OIBDA but accounted in adjusted EBITDA generally include: — litigation provisions (including provisions for taxes other than income tax provisions, penalties, and fines) and legal fines income; — write-offs of current assets (including VAT non recoverable).

All recorded in the selling, general and administrative expenses item of accompanying income statement.

Based on management decision, the above adjustments were not included in the Russia business unit’s adjusted EBITDA.

Information analyzed by our management for all the years presented was based on US GAAP. Financial information by reportable segment for the years ended 31 December 2011, 2010 and 2009 is presented in the following tables.

F-81 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Information by reportable segments as for the year ended 31 December 2011

Russia CIS Ukraine Total All other Group Revenue External customers 8,983 1,470 1,548 12,001 62 12,063 Inter-segment 82 119 93 294 (294) - Total revenue 9,065 1,589 1,641 12,295 (232) 12,063

EBITDA 3,641 704 873 5,218 (103) 5,115

Other disclosures Capital expenditures 2,007 625 284 2,916 86 3,002

Information by reportable segments as for the year ended 31 December 2010

Russia CIS Ukraine Total All other Group Revenue External customers 8,115 1,267 1,109 10,491 22 10,513 Inter-segment 47 87 76 210 (210) - Total revenue 8,162 1,354 1,185 10,701 (188) 10,513

EBITDA 3,775 615 629 5,019 (49) 4,970

Other disclosures Capital expenditures 1,557 437 189 2,183 41 2,224

Information by reportable segments as for the year ended 31 December 2009

All other adjustments and Russia CIS Ukraine Total eliminations Group Revenue External customers 7,425 1,220 163 8,808 5 8,813 Inter-segment 24 54 40 118 (118) – Total revenue 7,449 1,274 203 8,926 (113) 8,813

EBITDA 3,696 640 36 4,373 (38) 4,334 Other disclosures Capital expenditures 619 114 20 753 68 821

F-82 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The following table provides the breakdown of operating revenues from external customers by mobile and fixed line services:

Breakdown of revenue per mobile and fixed line

2011 2010 2009 Fixed line 1,662 1,477 1,435 Mobile line 10,401 9,036 7,378 Total 12,063 10,513 8,813

These business activities include the following operations: mobile primarily include activities for the providing of wireless telecommunication services to the Company's subscribers and other operators while fixed line primarily include all activities for providing wireline telecommunication services, broadband and consumer Internet. VimpelCom provides both mobile and fixed line services in Russia, Ukraine and CIS.

The Company’s management does not review total assets and total liabilities per segment, and therefore this information has not been presented in these statements. Neither are depreciation and amortization reviewed per segment.

The following table provides the reconciliation of consolidated US GAAP adjusted EBITDA to IFRS consolidated profit for the year:

Reconciliation between adjusted EBITDA and profit for the year

2011 2010 2009 EBITDA 5,115 4,970 4,334

Reconciliation adjustments (3) (53) (9) Depreciation (1,643) (1,404) (1,190) Amortization (613) (618) (440) Impairment loss (526) – – Loss on disposals of non-current assets (77) (48) (77) Finance costs (1,259) (620) (603) Finance income 269 82 58 Other non-operating losses (171) (5) (69) Shares of profit of associates and joint ventures accounted for using the equity method 63 90 3 Net foreign exchange (loss)/gain 161 (14) (404) Income tax expense (675) (522) (431) Profit for the year 641 1,858 1,172

Reconciliation adjustments primarily represent differences relating to the classification of operating expenses. Adjusted OIBDA 2009 as reported in prior financial statements was adjusted to take into account the consolidation of Menacrest and its operating subsidiary Sky Mobile in the year ended 31 December 2009 as required by IFRS (Note 4).

F-83 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

10 Income taxes Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognized in profit or loss account except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences, carry forward of unused tax losses and the carry forward of unused tax credits. Current and deferred tax also includes withholding tax on dividends and any tax liability arising from the declaration of dividends.

Income tax expense consisted of the following for the years ended 31 December:

Years ended 31 December 31 December 31 December 31 December 2011 2010 2009 Current income taxes 669 722 459 Deferred taxes 6 (200) (28) Income tax expense reported 675 522 431

In the table below, we show the reconciliation between the statutory tax rate in the Russian Federation and effective corporate income tax rates for the group, together with the corresponding amounts.

31 December 31 December 31 December 2011 % 2010 % 2009 % Income tax expense computed on income before taxes at statutory tax rate 329 25.0 595 25.0 320 20.0 Different tax rates in different jurisdictions (112) (8.5) (114) (4.8) – 0.0 Non-deductible expenses 65 4.9 17 0.7 33 2.1 Non-taxable income – 0.0 – 0.0 38 2.4 Prior year adjustments – 0.0 – 0.0 – 0.0 Change in recognition of deferred tax assets 298 22.6 44 1.9 28 1.7 Withholding taxes 106 8.1 57 2.4 16 1.0 Tax claims 2 0.2 (37) (1.6) 2 0.1 Change in Income tax rate – 0.0 (66) (2.8) (12) (0.7) Group restructuring (Golden Telecom) – 0.0 47 2.0 – 0.0 Other (13) (1.0) (21) (0.9) 6 0.4 Income tax expense reported in the accompanying consolidated financial statements 675 51.3 522 21.9 431 26.9

The applicable (or effective) tax rate amounts to 51.3% in 2011 (2010: 21.9% and 2009: 26.9%). The increase of the tax rate is primarily due to effect of unrecognized deferred tax asset (20.7% or US$ 254).

F-84 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

A significant part of this impact relates to impairment of fixed and intangible assets other than goodwill of Asia companies.

10.1 Non recognized deferred tax assets Deferred corporate income tax assets in respect of deductible temporary differences, for tax losses and other tax credits carried forward (mainly carry forward of non-deductible interest) are recognized to the extent that the realization of the related tax benefit through future taxable profits is probable.

VimpelCom has not recognized deferred corporate income tax in relation to loss carry forward periods for the following amounts:

Recognized Non recognized Non recognized Tax losses year of expiration Recognized losses DTA losses DTA 0-5 years – – 187 34 6-10 years – – 500 106 Indefinitely 1 – 428 105 Total 1 – 1,115 245

At 31 December 2011, the amount of deductible temporary differences for which no deferred tax asset has been recognized in the balance sheet of VimpelCom amounts to US$ 437. The reported non recognized deferred income tax on temporary differences amounts to US$ 105.

The following deferred tax balances were calculated by applying the presently enacted statutory tax rate effective to the period in which the temporary differences between the carrying amounts and tax base of assets and liabilities are expected to reverse. The amounts reported in the accompanying consolidated financial statements at 31 December consisted of the following:

31 December 31 December 31 December 1 January Deferred tax liabilities 2011 2010 2009 2009 Deferred tax assets as at 31 December – – – – Deferred tax liabilities as at 31 December (588) (577) (480) (536)

The following table shows the movements of the deferred tax assets and liabilities in 2011:

Movements in deferred tax Charge to Change in Currency 31 December profit and Acquisition/ enacted tax translation 31 December 2010 loss* Divestment rate adjustment 2011 Property, plant and equipment, net (372) (77) (12) 16 – (445) Licenses (77) 14 (9) – 1 (71) Other intangible assets, net (259) 33 – 5 2 (219) Deferred revenue 44 (14) – (1) (2) 27 Other assets (6) 3 1 3 – 1 Bad debts 9 – – – – 9 Loss carry forwards 11 (9) – – – 2 Accounts payable and other liabilities 123 62 – (10) – 175 Withholding tax on undistributed earnings (50) (19) – 2 – (67) Net deferred tax position (577) (7) (20) 15 1 (588)

F-85 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The following table shows the movements of the deferred tax assets and liabilities in 2010:

Movements in deferred tax Charge to Change in Currency 31 December profit and Acquisition/ enacted tax translation 31 December 2009 loss* divestment rate adjustment 2010 Property, plant and equipment, net (376) 13 (18) 9 – (372) Licenses (90) 35 (27) 1 4 (77) Other intangible assets, net (111) 63 (271) 2 58 (259) Deferred revenue 33 14 1 (1) (3) 44 Other assets (10) 3 2 – (1) (6) Bad debts 9 – – – – 9 Loss carry forwards 8 4 – (1) – 11 Accounts payable and other liabilities 76 41 6 – – 123 Withholding tax on undistributed earnings (19) (31) – – – (50) Net deferred tax position (480) 142 (307) 10 58 (577)

The following table shows the movements of the deferred tax assets and liabilities in 2009:

Movements in deferred tax Charge to Change in Currency 31 December profit and Acquisition/ enacted tax translation 31 December 2008 loss* Divestment rate adjustment 2009 Property, plant and equipment, net (317) (76) – 18 (1) (376) Licenses (144) 53 (4) 6 (1) (90) Other intangible assets, net (143) 25 – 9 (2) (111) Deferred revenue 68 (32) – (3) – 33 Other assets (28) 15 – 3 – (10) Bad debts 7 2 – – – 9 Loss carry forwards 4 4 – – – 8 Accounts payable and other liabilities 17 59 – – – 76 Withholding tax on undistributed earnings – (18) – (1) – (19) Net deferred tax liabilities (536) 32 (4) 32 (4) (480)

F-86 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

11 Property and equipment Property and equipment, at cost, consisted of the following at 31 December 2011, 2010 and 2009: Equipment Land, Office not installed Advances Telecommu- buildings and and assets for long nications and measuring Other under lived equipment constructions equipment equipment construction assets Total Cost At 1 January 2009 7,384 368 715 405 1,202 59 10,133 Additions 175 2 4 6 483 - 670 Disposals (161) (2) (11) (7) (46) (3) (230) Transfer 812 13 75 39 (903) (36) – Other 95 (1)10 (17)(34) (6)47 Translation adjustment (315) (27) (24) (18) (77) 10 (451) At 31 December 2009 7,990 353 769 408 625 24 10,169 Additions 282 20 4 5 1,571 75 1,957 Acquisition of a subsidiary 690 246 39 6 55 5 1,041 Disposals (130) (8) (14) (16) (37) – (205) Transfer 862 5 127 99 (1,065) (28) – Other (85) 7 29 2 9 35 (3) Translation adjustment (42) (1) (6) (1) (3) – (53) At 31 December 2010 9,567 622 948 503 1,155 111 12,906 Additions 239 (7) 16 35 2,377 (25) 2,635 Acquisition of a subsidiary 189 67 12 24 42 4 338 Disposals (278) (2) (35) (10) (43) – (368) Transfer 1,568 26 118 30 (1,752) (17) (27) Other 59 1 (1) 24 47 1 131 Translation adjustment (503) (17) (46) 2 (88) – (652) At 31 December 2011 10,841 690 1,012 608 1,738 74 14,963 Depreciation and impairment At 1 January 2009 (2,857) (63) (276) (125) – – (3,321) Depreciation charge for the year (1,003) (25) (106) (56) – – (1,190) Disposals 125 1 9 9 – – 144 Other (30) – (6) (7) – – (43) Translation adjustment 86 5 6 5 – – 102 At 31 December 2009 (3,679) (82) (373) (174) – – (4,308) Depreciation charge for the year (1,135) (47) (150) (72) – – (1,404) Disposals 116 4 12 8 – – 140 Other (39) 1 (13) (10) – – (61) Translation adjustment 17 – 4 2 – – 23 At 31 December 2010 (4,720) (124) (520) (246) – – (5,610) Depreciation charge for the year (1,327) (46) (152) (118) – – (1,643) Disposals 266 – 33 10 – – 309 Impairment (136) (25) (10) (23) (22) (6) (222) Translation adjustment 322 4 30 35 – – 391 At 31 December 2011 (5,595) (191) (619) (342) (22) (6) (6,775) Net book value At 1 January 2009 4,527 305 439 280 1,202 59 6,812 At 31 December 2009 4,311 271 396 234 625 24 5,861 At 31 December 2010 4,847 498 428 257 1,155 111 7,296 At 31 December 2011 5,246 499 393 266 1,716 68 8,188

F-87 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

11.1 Capitalized borrowing costs VimpelCom capitalized interest in the cost of long lived assets in the amount of US$ 30 , US$ 31 and US$ 48 in 2011, 2010 and 2009, respectively. The rate used to determine the amount of borrowing costs eligible for capitalization is 8.0%, 10.8 % and 8.1% for the years ended 31 December 2011, 31 December 2010 and 31 December 2009, respectively.

F-88 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

12 Intangible assets The total gross carrying value and accumulated amortization of VimpelCom’s intangible assets consisted of the following at 31 December:

Telecommu- nications Software licenses, considered frequencies to be Brands Customer Telephone Other and intangible and relation- line intangible permissions Goodwill assets trademarks ships capacity assets Total Cost At 1 January 2009 1,513 3,481 878 37 467 167 426 6,968 Additions 24 – 95 – 1 3 4 127 Disposals (1) – (43) (16) – – – (60) Transfer – – 3 (1) 25 – (27) – Other 1 – (58)(2) 35 (2) (32)(58) Translation adjustment (116) (189) (45) (1) (9) (13) (32) (405) At 31 December 2009 1,421 3,292 830 17 519 155 339 6,572 Additions 55 – 123 – – 12 7 198 Acquisition of a subsidiary 130 3,477 182 177 816 – – 4,782 Disposals – – (31) – – – – (31) Transfer 1 – 42 – 86 – (90) 39 Other – – 8 – 3 (7) 20 24 Translation adjustment (6) (47) (6) (1) 6 (1) (13) (68) At 31 December 2010 1,601 6,722 1,148 193 1,430 159 263 11,516 Additions 64 – 137 – 1 10 5 217 Acquisition of a subsidiary 201 453 9 6 38 1 – 708 Disposals (73) – (33)– – (1) (1)(108) Transfer 2 – 3 – (14) (10) 12 (7) Other 10 – 15 (4) (25) (14) 47 29 Translation adjustment (61) (152) (43) (1) (33) (2) (17) (309) At 31 December 2011 1,744 7,023 1,236 194 1,397 143 309 12,046 Amortization and impairment At 1 January 2009 (638) – (510) (28) (56) (52) (202) (1,486) Amortization charge for the year (172) – (137) (4) (27) (13) (87) (440) Disposals – – 37 15 – 12 – 64 Transfer (2) – 44 4 (44) 4 57 63 Translation adjustment 40 – 19 2 (4) 3 9 69 At 31 December 2009 (772) – (547) (11) (131) (46) (223) (1,730) Amortization charge for the year (175) – (206) (8) (182) (10) (37) (618) Disposals – – 28 – – – – 28 Transfer 2 – (5) – (37) – 37 (3) Translation adjustment 12 – 4 – 4 – (1) 19 At 31 December 2010 (933) – (726) (19) (346) (56) (224) (2,304)

Amortization charge for the year (193) – (183) (18) (173) (43) (3) (613) Disposals 69 – 30 – – – 2 101 Impairment (128) (126) (4) – – – – (258) Transfer (1) – (9) – 11 8 (14) (5) Translation adjustment 27 – 35 1 18 3 10 94 At 31 December 2011 (1,159) (126) (857) (36) (490) (88) (229) (2,985)

F-89 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Telecommu- nications Software licenses, considered frequencies to be Brands Customer Telephone Other and intangible and relation- line intangible permissions Goodwill assets trademarks ships capacity assets Total Net book value At 1 January 2009 875 3,481 368 9 411 115 224 5,482 At 31 December 2009 649 3,292 283 6 388 109 116 4,843 At 31 December 2010 668 6,722 422 174 1,084 103 39 9,212 At 31 December 2011 585 6,897 379 158 907 55 80 9,061

Telecommunication licenses not in use mainly comprise of the LTE licenses in Uzbekistan, for which the business operations have not yet been started, in the amount of US$ 29 as of 31 December 2011.

F-90 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

13 Impairment testing of assets 13.1 Carrying amount of goodwill and cash-generating units Goodwill acquired through business combinations have been allocated to the cash-generating units (CGU) for impairment testing as follows:

31 December 31 December 31 December 1 January CGU's 2011 2010 2009 2009 Russia 2,710 2,622 2,608 2,685 Ukraine 3,417 3,429 – – Kyrgyzstan 174 139 139 170 Kazakhstan 246 243 260 313 Uzbekistan 154 154 154 154 Armenia 115 122 118 146 Laos 68 – – – Tadjikistan 13 13 13 13 Total 6,897 6,722 3,292 3,481

As a result of further integration between fixed line and mobile businesses, compared to 2009 and 2010 the Company changed the methodology of allocation of goodwill to CGU’s for Russia and Armenia whereas starting from 2011 the goodwill is no longer tested on the levels of Russia Mobile, Russia Fixed, Armenia Mobile and Armenia Fixed but rather on a country level.

The Company performed its annual impairment test as at 1 October. The Company considers the relationship between market capitalization and its book value, among other factors, when reviewing for indicators of impairment. As of the reporting dates the market capitalization of the Group was not below the book value of its equity. As a result of reviewing all relevant indicators, no additional impairment testing was performed at the respective year-ends.

The recoverable amounts of the CGU’s except for Vietnam and Cambodia have been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a period of five years for all CGUs. The pre-tax discount rate applied to cash flow projections is stated in the table below and cash flows beyond the five year period are extrapolated using a terminal growth rate stated in the table below. The recoverable amounts of Vietnam and Cambodia CGU’s have been determined based on the fair value less cost of sale ("FVLCS") basis representing liquidating value of the assets. FVLCS was determined based on expected proceeds from sale of property and equipment and intangible assets mainly represented by telecommunication licenses.

F-91 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

CGU's 2011 2010 2009 Discount rate (functional currency) Russia 12.70% 14.10% 14.60% Ukraine 15.50% 15.40% n.a. Kyrgyzstan 19.60% 15.60% 17.00% Kazakhstan 12.70% 13.20% 15.10% Uzbekistan 10.50% 13.40% 16.00% Armenia 11.80% 13.90% 16.70% Laos 13.00% n/a n/a Tadjikistan 15.20% 13.40% 15.90%

Terminal growth rate Russia 3.50% 3.50% 3.50% Ukraine 5.00% 4.50% n/a Kyrgyzstan 3.00% 3.00% 3.00% Kazakhstan 3.00% 3.00% 3.00% Uzbekistan 2.00% 3.00% 3.00% Armenia 4.00% 3.00% 3.00% Laos 2.00% n/a n/a Tadjikistan 2.00% 3.00% 3.00%

The Company estimates revenue growth rates and operating income margin for each reporting unit and each future year. These growth rates vary based on numerous factors, including size of market, GDP (Gross Domestic Product), foreign currency projections, traffic growth, market share and others. The forecast of operating income margin is based on the next year budget and assumes cost optimization initiatives which are part of ongoing operations as well as regulatory and technological changes know to date (such as telecommunication license issues, price regulation etc.).

The discount rate was initially determined in US$ based on the risk free rate for 20-year maturity bonds of the United States Treasury adjusted for a risk premium to reflect both the increased risk of investing in equities and the systematic risk of the specific operating company. Equity market risk premium is 5% and the systematic risk, beta, represents median of the raw betas of the entities comparable in size and geographic footprint with the ones of VimpelCom Ltd. ("Peer Group") since the Company is part of VimpelCom Ltd. group. Debt risk premium is the medium of Standard&Poors long term credit rating of the Peer Group. Weighted average cost of capital is determined based on forward-looking debt-to-equity ratio representing the median five-year capital structure for each entity from the Peer Group. The discount rate in functional currency is adjusted for long-term inflation forecast.

F-92 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The five-year average growth rate during forecasted period and terminal operating margin during forecasted period for the major CGU’s are presented in the table below:

CGU's 2011 2010 2009 Average growth rate during forecasted period Russia 4.70% 4.80% 4.00% Ukraine 4.70% 6.60% n/a Kyrgyzstan 9.80% 9.30% 9.50% Kazakhstan 5.90% 6.90% 5.70% Uzbekistan 9.20% 10.00% 13.30% Armenia 1.30% 2.30% 8.60% Laos 12.00% n/a n/a Tadjikistan 6.00% 1.60% 11.60%

Terminal operating margin Russia 30.70% 36.50% 37.60% Ukraine 38.10% 40.90% n/a Kyrgyzstan 42.00% 38.30% 55.00% Kazakhstan 41.70% 28.80% 38.00% Uzbekistan 30.50% 30.00% 48.60% Armenia 26.30% 23.40% 44.70% Laos 36.00% n/a n/a Tadjikistan 32.70% 23.00% 28.40%

The results of recoverable amount analyses were corroborated with other value indicators where available, such as the Company’s market capitalization, comparable company earnings multiples and research analyst estimates.

An increase in the discount rate by one percentage point or a reduction in revenue growth by 10% would result in a decrease in the combined recoverable amount of the reporting units as of impairment test date for 2011 of approximately US$ 3.5 (or 9.8%) and US$ 1.8 (or 4.8%) respectively. For the cash generating units discussed above, the relative decreases in value in use of cash generation units as of the impairment test date for 2011 would be:

1%age point increase 10% decrease in in discount rate revenue growth Russia 9.80% 4.70% Ukraine 8.90% 4.40% Kazakhstan 9.60% 4.00% Kyrgyzstan 6.10% 6.60% Armenia 10.80% 2.40% Uzbekistan 12.60% 10.80% Tajikistan 7.40% 6.20%

The result of the impairment test in 2011 indicated impairment in Vietnam and Cambodia CGU’s as the value in use for these CGU’s was negative. The Company recorded goodwill impairment of US$ 126 and property and equipment of US$ 223 and telecommunication licenses of US$ 143 as well as other assets of US$ 34. In 2010 and 2009, the impairments tests indicated that there was no impairment of goodwill as the estimated recoverable amount of the cash generating units exceeded the carrying values of their net assets.

F-93 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

To illustrate the respective CGU’s headroom as of the impairment test date and the magnitude of potential goodwill impairments relative to future changes in recoverable amount, had the recoverable amount of the following material cash generating units been hypothetically lower by the percentages listed below, the CGU’s carrying amount value would have exceeded recoverable amount as of the impairment test date by approximately the following amounts set forth in the table.

CGU's Headroom 10% 20% 30% Ukraine 638 – (537) (1,158) Laos 12,935 – (12,185) (24,746) Armenia 76,988 – (20,240) (68,854) Kyrgyzstan 83,154 – (8,501) (54,329)

The following table illustrates breakeven points in measuring of CGU’s recoverable amount (in p.p.):

Decrease in Increase of revenue growth CGU's WACC by by

Ukraine 1.2% 30.0%

Kyrgyzstan 0.80% 13.10% Armenia 0.80% 37.10% Laos 1.50% 7.50%

For CGU’s not included in the tables above, there is no reasonable possible change which would result in impairment.

F-94 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

14 Inventories Inventory consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Telephone handsets and accessories for sale 114 89 20 79 SIM-Cards 19 14 19 17 Scratch cards 7 9 4 7 Info materials 4 4 3 12 Equipment for sale 2 2 9 13 Other inventory 22 20 8 17 Total 168 138 63 145

Write-off of inventories for the years ended 31 December 2011, 31 December 2010 and 31 December 2009 were not significant.

F-95 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

15 Financial assets and liabilities VimpelCom uses derivative instruments, including swaps, forward contracts and options to manage certain foreign currency and interest rate exposures. The Company views derivative instruments as risk management tools and does not use them for trading or speculative purposes. The Company has not designated any of its derivative contracts as formal hedges in 2011, 2010 and 2009.

Derivatives are considered to be economic hedges, however all derivatives are accounted for on a fair value basis and the changes in fair value are recorded in the income statement, except for options over non-controlling interests. The changes in carrying value are recorded in either equity or in the income statement, as further described below.

Cash flows from derivative instruments are reported in the section in the statement of cash flows where the underlying cash flows are recorded.

15.1 Financial assets The Company has the following financial assets at:

31 December 31 December 31 December 2011 2010 2009 1 January 2009

Financial instruments at fair value through OCI Available for sale financial assets 95 158 - - Financial instruments at fair value through profit or loss Derivatives not designated as hedges Foreign exchange contracts 110 Derivatives over non-controlling interest 73 14 19 76 Derivatives designated as hedges Interest rate exchange contracts 136 - - -

Total financial Instruments at fair value 304 172 19 186

Loans granted, deposits and other financial assets Long term-loans granted 3,454 681 328 350 Short term deposits 16 37 425 - Long-term deposits - 2 79 - Bank deposits 16 39 504 - Restricted cash - 33 - - Interest receivable 111 19 16 32 Other loans granted 15 - 4 4 Total loans granted, deposits and other financial assets 3,596 772 852 386

Total other financial assets 3,900 944 871 572

Total current 93 99 441 142 Total non-current 3,807 845 430 430

F-96 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

15.2 Loan receivable Loans to related parties are further described in Note 23

15.2.1 Crowell In February 2008, the Company loaned US$ 350 to Crowell, the non-controlling shareholder in the Company’s subsidiaries – Limnotex and Menacrest. The loan bore 10% annual interest rate and was collaterized by 25% of shares in Limnotex. The maturity of the loan was 18 months. In May 2009, the key terms of the loan agreement were changed replacing the pledge by 100% shares in Menacrest, interest rate to US$ 10 per annum and maturity to February 2014. The changes required derecognition of the previous loan and recognition of a new one at the fair value. The difference between the carrying value of the loan derecognized and the fair value of the new one amounted to US$ 78 and was offset against decrease of liability to non-controlling interest in Menacrest. On 20 October 2010, part of the loan was settled through the offset of purchase price of 50.1% of interest in Menacrest at the amount of US$ 150 (Note 4). In August 2011, the loan and unpaid interest were forgiven as a part of the restructuring transaction in exchange for release of commitment to exercise the call option for 28.5% shares of Limnotex (Note 7).

15.3 Available-for-sale financial assets Available-for sale financial assets include shares of VimpelCom Ltd. The fair value of the quoted equity shares is determined by reference to published price quotations in an active market. On 21 April 2010, VimpelCom Ltd. successfully completed an exchange offer for OJSC VimpelCom shares (including shares represented by ADSs, and acquired approximately 98% of OJSC VimpelCom’s outstanding shares (including shares represented by ADSs). As part of stock-based compensation program of VimpelCom Ltd. (Note 19), VC ESOP N.V., a subsidiary of the Company, holds shares of VimpelCom Ltd. The number of shares was 10,078,608 VimpelCom Ltd. shares as of 31 December 2011, 10,508,608 VimpelCom Ltd. shares as of 31 December 2010 and 11,327,205 VimpelCom Ltd. Shares as of 21 April 2010.

15.4 Impairment on available-for-sale financial investments For available-for-sale financial investments, the Company assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.

Based on these criteria, the Company identified an impairment on available-for-sale investment quoted shares of US$ 58 , US$ 40 and nil, which is recognized within other non-operating losses in the income statement (Note 21) for the years ended 31 December 2011, 2010 and 2009 respectively.

15.5 Interest rate exchange contracts In connection with the offering of our US$ 500 6.2546% notes due March 2017 and US$ 1,500 7.5043% notes due March 2022 on June 22, 2011, the Company entered into interest rate swap transactions to effectively swap the fixed interest rates on the five-year and 10-year notes for floating interest rates based on three-month U.S. dollar LIBOR. The weighted average spread over LIBOR for the five-year notes is 4.187%, and for the 10-year notes is 4.375%. We entered into these swap transactions effective June 29, 2011, with Barclays Bank plc, BNP Paribas, HSBC Bank plc, ING Bank N.V., The Royal Bank of Scotland plc and UBS A.G.

F-97 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The swap transactions have a term extending through the maturity of the June Bonds, but the Company has an option to terminate and unwind them at any time through fair value settlement mechanism. On each of 1 March 2015 and 1 March 2018, the fair value of the interest rate swap transactions related to the notes due March 2022 shall be reset to zero by adjusting the spread over the U.S. dollar LIBOR to the then prevailing swap rate to maturity.

15.6 Financial liabilities The Company has the following financial liabilities at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Financial instruments at fair value through profit or loss Bank loans and bonds at fair value Bank loans and bonds, principle 2,000 – – – Fair value adjustment to bank loans and – – – bonds, principle 184 Interest accrued related to financial – – – liabilities at fair value 73 Discounts, unamortized fees related to – – – financial liabilities at fair value (33) Derivatives not designated as hedges Foreign exchange contracts – – 4 9 Derivatives over non-controlling interest 391 690 845 850 Total financial instruments at fair value 2,615 690 849 859

Other financial liabilities at amortized cost Bank loans and bonds at amortized cost Bank loans and bonds, principle 8,891 5,420 7,138 8,183 Interest accrued 115 67 101 90 Discounts, unamortized fees (68) (54) (101) (84) Equipment financing at amortized cost Equipment financing principle 393 246 256 212 Interest accrued 1 1 1 1 Promissory note 12,972 16,217 – – Loans from others at amortized costs Loans from others principle 18 – 3 110 Interest accrued – – 1 5 Total other financial liabilities at amortized cost 22,322 21,897 7,399 8,517

Total other financial liabilities 24,938 22,588 8,249 9,376

Total current 1,513 1,228 1,907 2,011 Total non-current 23,425 21,360 6,342 7,365

F-98 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

15.7 Description of other financial liabilities 15.7.1 Foreign exchange contracts During 2008 the Company entered into a number of option agreement (zero-cost collar) with various banks and received a right to purchase US dollars in the total amount of US$ 1,496 for Russian rubles at a specified range of Russian rubles per one US dollar in exchange for granting to the same banks a right to sell the same amount of US dollars to VimpelCom at a specified range of Russian rubles per one US dollar. Options were exercisable at various dates ranging from August 2008 to March 2009 and were fully exercised in as of 31 December 2010.

15.8 Interest-bearing bank loans and bonds, loans from related parties The Company has the following borrowings, interest-bearing bank loans and bonds:

Principle amount outstandings as of: 31 31 31 December December December 1 January Lender Interest rate MaturitySecurity 2011 2010 2009 2009 Loan participation June Bonds LIBOR + 4% -7.5% 2014-2021 notes 2,200 – – – Loan participation Eurobonds 2021 7.8% 2021 notes 1,000 – – – Loan participation Eurobonds 2018 9.1% 2018 notes 1,000 1,000 1,000 1,000 Loan participation Eurobonds 2016 6.5% 2016 notes 1,100 – – – Eurobonds 2013 8.4% 2013 Bank loan 801 801 801 1,000 2009 - Sberbank 8.4%-17.5% 2021 Rouble bonds 3,460 1,429 1,437 829 Ruble Bonds 2015 8.3% 2015 Rouble bonds 621 656 – – Ruble Bonds 2014 15.2% 2014 Rouble bonds 311 328 331 – Loan participation Ruble Bonds 2013 9.1% 2013 notes 311 329 331 340 Loan participation UBS (Luxembourg) S.A. 8.3% 2016 notes – 600 600 600 Loan participation UBS (Luxembourg) S.A. 8.4% 2011 notes – 185 185 300 Loan participation UBS (Luxembourg) S.A. 8.0% 2010 notes – – 279 300 Related-party UBS (Luxembourg) S.A. 10.0% 2009 loan – – – 217 Citibank International plc 6M LIBOR + 0.1% 2012 Bank loan 12 28 45 61 US$3,500 million Loan Facility (Facility B) LIBOR + 1.5% 2010 Bank loan – – 1,170 2,000 EUR600 million Loan Facility EURIBOR + 2.3% 2010 Bank loan – – 632 777

F-99 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Principle amount outstandings as of: 31 31 31 December December December 1 January Lender Interest rate MaturitySecurity 2011 2010 2009 2009 Svenska Handelsbanken EKN AB 6M LIBOR + 0.325% 2010 guarantee – – 58 82 US$275 million Loan Facility LIBOR + 1.5% 2012 Bank loan – – 190 275 EKN Unicredit - HVB AB SEK Rate+0,75% 2016 guarantee 101 124 90 – 6 month MOSPRIME + EKN HSBC 0.08% 2014 guarantee 24 35 45 57 Network Cisco 16.0% 2012 equipment 10 26 40 – EHECA BayernLB (Hermes2) 6 month LIBOR + 0.38% 2012 guarantee 9 19 28 38 Sinosure Huawei 6 month LIBOR+2,1% 2016 guarantee 20 27 19 – Network Huawei 8.0% 2008 equipment 6 6 15 29 EKN HSBC 3M MOSPRIME+1,05% 2017 guarantee 154 – – – Network Cisco 7.3% 2014 equipment 36 – – – Libor 6m+ 5.5%, cap at Network Huawei 7% 2014 equipment 12 – – – Other 114 71 102 598 Total bank loans and borrowings 11,302 5,666 7,397 8,504 Less current portion (945) (1,658) (1,803) (1,806) Long-term portion of bank loans and borrowings 10,357 4,008 5,594 6,698

15.9 Equipment financing obligations VimpelCom has entered into agreements with different equipment vendors for the purchase and installation of mobile telecommunications GSM network equipment. These agreements allow for the expenditures to be deferred similar to a long term debt agreement. In such cases no cash flows are presented in the statement of cash flows as part of investing activities but rather as part of financing.

15.10 Derivatives over non-controlling interest – Put and call options 15.10.1 Limnotex On 27 June 2008, the Company entered into call and put option agreements over 25% of the shares of the subsidiary Limnotex, which owns 100% of KaR-Tel, Kazakhstan, which was amended at 29 May 2009. The call option had an exercise price that was based on EBITDA (Earning Before Income Taxes, Depreciation and Amortization) and net debt of KaR-Tel and was exercisable in a period of 3 years beginning on the date on which KaR-Tel’s financial results for the year 2011 are available. The put option had a fixed exercise price of US$ 550 and was exercisable in the period 1 January 2010 to 31 December 2010 and further amended at 29 May 2009 to the period 1 January 2013 to 31 December 2013. The put option granted to the non- controlling interests give rise to a financial liability which is initially measured at the present value of the redemption amount.

F-100 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Therefore the Company accounted for a liability regarding these arrangements of US$ 686 and US$ 597 as of 31 December 2010 and 31 December 2009 respectively, representing the fair value of the underlying redemption amount whereas the change in fair value is recorded in equity. The expected undiscounted outcomes of the liability for 2010 are within a range of US$ 787 to US$ 1,006 (2009: US$ 718 to US$ 848). The outcome is influenced by changes in the following variables:

Effect increase Effect decrease Increase Decrease variable on variable on Variable variable variable liability liability EBITDA KaR-Tel +10% -10% US$ 65 US$ (66) Discount rate +1 p.p. -1 p.p. US$ (9) US$ 8

As the Company concluded there is no present access to benefits over all shares held by non- controlling shareholders, subsequent changes in the carrying amount are recognized in equity.

On 24 August 2011 the put and call options in Limnotex were amended (Note 7). After the amendments, Crowell holds two put options for Limnotex shares: the first put option for 13.5% is exercisable during 2013 at a fixed price of US$ 297 and the second put option for 15% is exercisable during 2017 at a fixed price of US$ 330. The put option granted to the non- controlling interests give rise to a financial liability which is initially measured at the present value of the redemption amount. Therefore the Company accounted for a liability regarding these arrangements of US$ 391 as of 31 December 2011, representing the fair value of the underlying redemption amount whereas the change in fair value is recorder in equity since there is no present access to benefits over all shares held by non-controlling shareholders. The outcome is dependent on discount rate – in case the rate increases for 1 pp the liability will decrease for US$ 12, in case the rate decreases for 1 pp the liability will increase for US$ 13.

The call options as amended allow the Company to acquire the total of 28.5% of Limnotex shares. Both options are exercisable during the period between April 2012 and May 2018. The call option does not give the Company present ownership rights. Therefore the option is accounted for as a financial asset at fair value through profit or loss and amounts to US$ 72 as of 31 December 2011, representing the fair value of the option as of 31 December 2011. The fair value of the options was determined based on expected exercise period at May 2018 and estimated exercise price of US$ 1,453. The outcome is influenced by changes in the following variables:

Increase Decrease Effect increase Effect decrease Variable variable variable variable on asset variable on asset Exercise period + 1 year - 1 years US$ 2 US$ 4 Exercise price +10% -10% US$ (10) US$ (13)

15.10.2 Menacrest Ltd On 11 February 2008 the Company acquired two call options of 50.1% and 49.9% respectively over the shares of the subsidiary Menacrest Ltd, Cyprus, which owns 100% of Sky Mobile, Kyrgyzstan. The first call option was exercisable at any time before a certain date in 2010 and its price was fixed. The call option gave the Company present ownership through its current access to the underlying benefits, and as a result a financial liability has been recognized to the non- controlling shareholder under the call option, with changes in the carrying value recognized in the income statement.

F-101 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

In May 2009 the call option terms were amended allowing the Company to use fair value market option of the exercise price linked to the value of the underlying shares in Menacrest. A decrease in value of the liability was offset against the loss from derecognition of the Loan to Crowell. Under the amended terms the Company lost the present ownership access to the underlying benefits. Subsequent changes to the liability are therefore recognized in equity. The first call option exercise period was prolonged to February 2014 and the call option has to be exercised at its end. The first call option was exercised on 20 October 2010 (Note 4).

The second call option had an exercise price that was based on the highest of a fixed price and a formula based on EBITDA minus net debt. The option was exercisable at any time up to three months following the date of issue of the Menacrest’s financial statements 2014. The call option did not give the Company present ownership rights. Therefore the option was accounted for as a financial asset at fair value through profit or loss and accounted for as an asset regarding these arrangements of US$ 9 as of 31 December 2010 and 2009, representing the fair value of the option as of 31 December 2010. In case each of the variables to the formula changes by 10% it will not have a material impact on the value of asset.

In August 2011 the terms of both options were amended as a part of the Restructuring transaction (Note 28).

Derivatives over non-controlling interest had impact on converting the Company’s financial statements from US GAAP to IFRS which is further described in Note 4.

15.10.3 Euroset VimpelCom owns a 50% minus 1 share indirect stake in Euroset and has call and put options over shares in Euroset. On 20 December 2011, VimpelCom took a decision not to exercise a call option to acquire an additional 25% stake in Euroset Holding. N.V. before expiration of the call option. Another call option over the 25% and one share in Euroset might become exercisable in case of certain triggering events. No such events occurred before the issuance of these financial statements. The option, if it becomes exercisable, will give the right to VimpelCom to acquire additional shares in Euroset. The exercise price of the option is determined under a formula linked to certain inputs that depend on the timing of the exercise of the options and certain other conditions.

15.10.4 Other options The Company entered into call and put options over non-controlling interest of its subsidiaries and additional interest in its associates which are not significant in aggregate. The total balance of financial assets recognized in this respect as of 31 December 2011, 2010 and 2009 was nil, US$ 5 and US$ 10 respectively. The total balance of financial liabilities recognized in this respect was nil, US$ 4 and US$ 46 as of 31 December 2011, 2010 and 2009 respectively. In case each of the variables to the valuation of options changes by an increase or a decrease by 10% it will not have material impact on the consolidated financial statements.

F-102 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

15.11 Hedging activities and derivatives 15.11.1 Derivatives not designated as hedging instruments The Company uses foreign currency denominated borrowings and forward currency contracts to manage some of its transaction exposures. These currency forward contracts are not designated as cash flow, fair value or net investment hedges and are entered into for periods consistent with currency transaction exposures, generally from one to 24 months.

15.12 Fair values Set out below is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments that are carried in the consolidated financial statements as at 31 December (based on future cash flows discounted at current market rates):

Carrying value Fair value 31 Decem- 31 Decem- 31 Decem- 1 January 31 Decem- 31 Decem- 31 Decem- 1 January ber 2011 ber 2010 ber 2009 2009 ber 2011 ber 2010 ber 2009 2009 Financial instruments at fair value through OCI Available for sale financial assets 95 158 - - 95 158 - - Financial instruments at fair value through profit or loss Derivatives not designated as hedges Foreign exchange contracts - - - 110 - - - 110 Derivatives over non- controlling interest 73 14 19 76 73 14 19 76 Derivatives designated as hedges Interest rate exchange contracts 136 - - - 136 - - - Total financial Instruments at fair value, assets 304 172 19 186 304 172 19 186

Loans granted, deposits and other financial assets Long term-loans granted 3,454 681 328 350 3,454 681 325 346 Bank deposits 16 39 504 - 16 39 504 - Restricted cash - 33 - - - 33 - - Interest receivable 111 19 16 32 111 19 16 32 Other loans granted 15 - 4 4 15 - 4 4 Total loans granted, deposits and other financial assets 3,596 772 852 386 3,596 772 849 382 Trade and other receivables 658 616 664 553 658 616 664 553 Cash and cash equivalents 767 8511,451 935 767 851 1,451935 Total financial assets 5,325 2,411 2,986 2,060 5,325 2,411 2,983 2,056

F-103 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Carrying value Fair value 31 Decem- 31 Decem- 31 Decem- 1 January 31 Decem- 31 Decem- 31 Decem- 1 January ber 2011 ber 2010 ber 2009 2009 ber 2011 ber 2010 ber 2009 2009 Financial instruments at fair value through profit or loss Bank loans and bonds at fair value 2,224 - - - 2,184 - - - Derivatives not designated as hedges Derivatives of non- controlling interest 391 690 845 850 391 690 845 850 Foreign exchange contracts - -4 10 - - 410 Total financial Instruments at fair value, liabilities 2,615 690 849 860 2,575 690 849 860 Promissory note 12,972 16,217 0 0 10,635 16,196 0 0 Other financial liabilities at amortized cost 9,350 5,680 7,399 8,517 9,103 6,092 7,736 7,451 Total other financial liabilities at amortized cost 22,322 21,8977,399 8,517 19,738 22,288 7,7367,451 Trade and other payables 1,396 1,010 761 1,123 1,396 1,010 761 1,123 Total financial liabilities 26,333 23,597 9,009 10,499 23,709 23,989 9,346 9,434

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The fair values were estimated based on quoted market prices of our bonds, derived from market prices or by using discounted cash flows under the agreement at the rate applicable for the instruments with similar maturity and risk profile.

15.13 Fair value hierarchy As at 31 December 2011, 2010 and 2009 the Company held financial instruments carried at fair value on the statement of financial position in accordance with IAS 39.

The Company measures the fair value of quoted equity securities by reference to published price quotations in an active market (Level 1).

The Company measures the fair value of derivatives except for options related to business combinations on a recurring basis, using observable inputs (Level 2), such as LIBOR, EURIBOR and swap curves, basis swap spreads and foreign exchange rates, floating rates for US$ using income approach with present value techniques.

The Company measures the fair value of options related to business combinations on a recurring basis, using unobservable inputs (Level 3), such as projected redemption amounts, volatility, fair value of underlying shares using income approach with present value techniques and Black-Scholes model.

The following table provides the disclosure of fair value measurements separately for each major class of assets and liabilities measured at fair value.

F-104 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

15.14 Fair value types

As of December 31, 2011 Description (Level 1) (Level 2) (Level 3) Financial instruments at fair value through OCI Available for sale financial assets 95 – – Financial instruments at fair value through profit or loss Derivatives not designated as hedges Derivatives over non-controlling interest – 73 Derivatives designated as hedges – Interest rate exchange contracts – 136 – Total financial instruments at fair value, assets 95 136 73 Bank loans and bonds, equipment financing at fair value Bank loans and bonds, principle – 2,184 – Derivatives not designated as hedges Derivatives over non-controlling interest – – 391 Total financial instruments at fair value, liabilities – 2,184 391

As of December 31, 2010 Description (Level 1) (Level 2) (Level 3) Financial instruments at fair value through OCI Available for sale financial assets 158 – – Financial instruments at fair value through profit or loss Derivatives not designated as hedges Derivatives over non-controlling interest – – 14 Derivatives designated as hedges Interest rate exchange contracts – – – Total financial instruments at fair value, assets 158 – 14

Derivatives not designated as hedges Derivatives over non-controlling interest – – 690 Total financial instruments at fair value, liabilities – – 690

F-105 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

As of December 31, 2009 Description (Level 1) (Level 2) (Level 3)

Financial instruments at fair value through profit or loss Derivatives not designated as hedges Derivatives over non-controlling interest – – 19 Total financial instruments at fair value, assets – – 19

Derivatives not designated as hedges Foreign exchange contracts – 4 – Derivatives over non-controlling interest – – 845 Total financial instruments at fair value, liabilities – 4 845

As of January 1, 2009 Description (Level 1) (Level 2) (Level 3)

Financial instruments at fair value through profit or loss Derivatives not designated as hedges Foreign exchange contracts – – 110 Derivatives over non-controlling interest – – 76 Total financial Instruments at fair value, assets – – 186

Derivatives not designated as hedges Foreign exchange contracts – 9 – Derivatives over non-controlling interest – – 851 Total financial instruments at fair value, liabilities – 9 851

The movement of financial instruments measured at the fair value using unobservable inputs (Level 3) is presented below:

Attribution Change in Change in Acquired in As of to non- fair value fair value business As of 31 December controlling reported in reported combina- 31 December 2011 interest earnings in equity tions 2010 Financial instruments at fair value through profit or loss Derivatives not designated as hedges Derivatives over non- controlling interest – – (5) – – 5 Other financial instruments Derivatives over non– controlling interest 73 – 5 59 – 9 Total financial Instruments, assets 73 – – 59 – 14

F-106 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Attribution Change in Change in Acquired in As of to non- fair value fair value business As of 31 December controlling reported in reported combina- 31 December 2011 interest earnings in equity tions 2010 Financial instruments at fair value through profit or loss Derivatives over non- controlling interest – – (4) – – 4 Other financial instruments Derivatives over non- controlling interest 390 56 – (352) – 686 Total financial Instruments at fair value, liabilities 390 56 (4) (352) – 690

Attribution Change in Change in Acquired in As of to non- fair value fair value business As of 31 December controlling reported in reported combina- 31 December 2010 interest earnings in equity tions 2009 Financial instruments at fair value through profit or loss Derivatives not designated as hedges Derivatives over non- controlling interest 5 - (5) – – 10 Other financial instruments Derivatives over non- controlling interest 9 – – – – 9 Total financial Instruments, assets 14 – (5) – – 9

Financial instruments at fair value through profit or loss Derivatives over non- controlling interest 4 – (42) – – 46 Other financial instruments Derivatives over non- controlling interest 686 25 – (137) – 798 Total financial Instruments at fair value, liabilities 690 25 (42) (137) – 844

F-107 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Attribution Change in Change in Acquired in As of to non- fair value fair value business As of 31 December controlling reported in reported combina- 1 January 2009 interest earnings in equity tions 2009 Financial instruments at fair value through profit or loss Derivatives not designated as hedges Derivatives over non- controlling interest 10 – – (23) 7 26 Other financial instruments at fair value Derivatives over non- controlling interest 9 – (40) – – 49 Total financial Instruments, assets 19 – (40) (23) 7 75

Financial instruments at fair value through profit or loss Derivatives over non- controlling interest 47 – (3) – – 50 Other financial instruments at fair value Derivatives over non- controlling interest 798 15 (73) 56 – 800 Total financial Instruments at fair value, liabilities 845 15 (77) 56 – 850

F-108 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

16 Trade and other receivables Trade and other receivables consisted of the following at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009

Trade accounts receivable, gross 691 663 698 585 Allowance for doubtful accounts (79) (79) (59) (32) Trade accounts receivable, net 612 584 639 553 Roaming discounts 46 32 25 – 658 616 664 553

As at 31 December 2011 trade receivables at initial value of US$ 70 (2010: US$ 69 and 2009: US$ 59) were impaired and fully provided for. See below for the movements in the allowance for impairment of receivables: 2011 2010 2009 Balance as of 1 January 79 59 32 Acquisition of a subsidiary 1 11 – Provision for bad debts 48 46 56 Accounts receivable written off (45) (36) (19) Foreign currency translation adjustment (4) (1) (10) Balance as of 31 December 79 79 59

As at 31 December the ageing analysis of trade receivables is as follows.

Neither past due nor Past due but not impaired Total impaired < 30 days 30-120 days > 120 days 31 December 2011 612 116 295 91 110 31 December 2010 584 55 339 94 96 31 December 2009 639 26 360 124 129 1 January 2009 553 12 340 153 48

F-109 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

17 Cash and cash equivalents Cash and cash equivalents consisted of the following items as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Cash at banks and on hand 682 381 912 714 Short-term deposits with the original maturity of less than 90 days 85 470 539 221 Total cash and cash equivalents 767 851 1,451 935

Cash at banks earn interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.

At 31 December 2011, the Company has Revolving Credit Facilities available maturing in November 2014. The facilities are for the amounts of RUB 15,000 and are not utilized at 31 December 2011. At 31 December 2010, 31 December 2009 and 1 January 2009 the Company did not have available undrawn committed borrowing facilities.

The cash balances as of 31 December 2011 in Vietnam of US$ 140 (2010 and 2009 nil) and Uzbekistan of US$ 17 (2010: US$ 40 and 2009: US$ 102) are restricted due to local government or central bank regulations.

F-110 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

18 Issued capital and reserves The authorized share capital of the Company consists of 70,000,000 shares of EUR 1 nominal value each. The issued and paid-up capital as at December 31, 2011 consists of 15,099,998 shares (December 31, 2010: 15,099,998) of EUR 1 nominal value each, all of which are fully paid-up.

566,443 shares of OJSC VimpelCom held by VC ESOP N.V., a subsidiary of VimpelCom, as of 31 December 2009 were treated as treasury shares in the accompanying consolidated financial statements are recorded at cost.

Share options exercised in each respective year have been settled using the treasury shares of the Company till 21 April 2010 and shares of VimpelCom Ltd. for the period after 21 April 2010. The reduction in the treasury shares equity component is equal to the cost incurred to acquire the shares, on a weighted average basis. Any excess between the cash received from employees and reduction in treasury shares in recorded in share premium.

18.1 Nature and purpose of reserves 18.1.1 Other capital reserves Share-based payment transactions The share-based payment transactions reserve is used to recognize the value of equity-settled share-based payment transactions provided to employees, including key management personnel, as part of their remuneration. Refer to the Note 19 for further details of these plans.

18.1.2 Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.

F-111 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

19 Share-based payments 19.1 Stock option plans The Company participates in the Amended and Converted VimpelCom 2000 Stock Option Plan (the "2000 Plan") and the VimpelCom 2010 Stock Option Plan (the "2010 Plan" and together with the 2000 Plan, the "Plans"). The 2000 Plan and the 2010 Plan state that the maximum aggregate number of shares (ADS) of VimpelCom Ltd. authorized to be issued which are 21,000,000 (adjusted to VimpelCom Ltd. shares) and 7,000,000, respectively.

The shares held by VC ESOP N.V., a subsidiary of VimpelCom, (10,078,608 VimpelCom Ltd. Shares as of 31 December 2011 and 10,508,608 VimpelCom Ltd. Shares as of 31 December 2010) were treated as available-for-sale financial assets in the accompanying consolidated financial statements. 566,443 of OJSC VimpelCom shares were treated as treasury shares as of 31 December 2009.

The Plans are administered by a committee ("Committee"), which, as of 31 December 2011, consisted of the Compensation Committee of VimpelCom Ltd.'s Supervisory Board (the "Board"). The Committee has the power to determine the terms and conditions of grants under the Plan, including the number of options to be granted, the exercise price and the vesting schedule.

The options granted by OJSC VimpelCom prior to completion of the Exchange Offer on 21 April 2010, continue to be governed by the 2000 Plan (previously adopted by OJSC VimpelCom), with certain adjustments as were necessary to cause the 2000 Plan to apply to the Company’s common shares. All the information presented in this Note related to the period prior to 21 April 2010 have been recast accordingly. Upon the Exchange Offer, 111,660 stock options of participants who left OJSC VimpelCom before 21 April 2010 were converted into SARs and forfeited as of 31 December 2010.

In 2010, VimpelCom Ltd.’s Board adopted the 2010 Plan for the issue of stock options to directors, senior managers and other employees of VimpelCom Ltd. and its subsidiaries. An option, upon vesting, entitles the holder to purchase one common share of the VimpelCom Ltd. at the price determined by the Committee.

In June 2010, the Committee approved the issuance of up to 1,250,000 options to senior managers of VimpelCom Ltd. and its subsidiaries. The exercise price is ranging from US$ 15.14 to US$ 16.65 per option. These options generally vest over three years subject to achievement of key performance indicators. 150,000 and 455,555 options were granted to the employees of the Company during 2011 and 2010 respectively.

In December 2010, 2,855,000 options were approved to be issued by the Committee under the 2010 Plan with the exercise price of US$ 16.74 per option to senior managers of VimpelCom Ltd. and its subsidiaries. 2,765,000 options were granted on 22 July 2011 to the employees of the Company.

In 2011 certain senior managers were granted 142,500 options. The exercise price is ranging from US$ 10.48 to US$ 12.60 per option. These options generally vest over two or three years subject to achievement of key performance indicators.

F-112 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

19.2 SAR plan In 2009, OJSC VimpelCom’s Board adopted a SAR plan for senior managers and employees. Following the completion of the Exchange Offer, the plan was modified to provide that it will be administered by the Company’s CEO and the Committee determines the aggregate number of SARs that may be granted. A SAR, upon vesting, entitles the holder to receive a cash amount per SAR equal to any excess of the NYSE closing price of an ADS on the exercise date over the price at which such SAR was granted. In 2009, OJSC VimpelCom’s Board authorized the granting of 2,266,000 SARs.

On 26 November 2009 and on 18 January 2010, 2,050,760 and 71,200 of SARs, respectively, were granted, 50% of which were to become vested on 1 June 2010 and 50% were to become vested on 1 June 2011 if the growth of KPIs exceeds certain parameters in 2009 as compared to 2008. If this condition is was not met, 100% of SARs granted were to vest on 1 June 2011 if the growth of KPIs exceeded certain parameters in 2010 as compared to 2009. Also, upon the Exchange Offer, 111,660 stock options were converted into SARs and were forfeited as of 31 December 2010. The obligation under this plan is classified in other non-financial liabilities in the balance sheet.

The following table summarizes the activity for the Plans and SARs:

Number of SARs (units) Options SARs 2011 2010 2009 2011 2010 2009 Options/SARs outstanding, beginning of year 4,325,493 6,601,000 11,445,940 1,590,660 2,016,440 – Options/SARs transferred to parent company (205,000) (538,140) – – (151,200) – Options/SARs granted or converted from ESOP 1,921,667 231,200 1,815,000 580,000 182,860 2,050,760 Options/SARs exercised (130,000) (720,260) (1,943,420) (90,960) (115,160) – Options/SARs modified or converted to SARs – (111,660) (3,630,000) – – – Options/SARs forfeited (2,887,820) (1,136,647) (1,086,520) (211,240) (342,280) (34,320) Options/SARs outstanding, end of year 3,024,340 4,325,493 6,601,000 1,868,460 1,590,660 2,016,440 Options/SARs fully vested and exercisable, end of year 1,174,340 3,785,740 5,487,320 1,288,460 777,320 –

No stock options expired in the years ended 31 December 2011, 2010 or 2009.

F-113 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The following table summarizes the weighted-average exercise prices of options and SARs for the year ended 31 December 2011.

Stock options Stock options plan 2010 plan 2000 SARs The number of options/SARs outstanding , beginning of year 133,333 4,192,160 1,590,660 Weighted-average exercise price of options/SARs outstanding, US$ per option/SAR 16.7 18.7 13.4 Weighted-average grant-date fair value at the beginning of the year, US$ per option/SAR 6.6 1.2 11.7 The number of options/SARs granted or converted from ESOP 1,921,667 – – Weighted-average exercise price of options/SARs granted, US$ per option/SAR 16.7 – – Weighted-average grant-date fair value of options/SARs granted during the year, US$ per option/SAR 1.8 – – The number of options/SARs exercised – (130,000) (90,960) The number of options/SARs forfeited/modified/converted to SARs – (2,887,820) (211,240) Weighted-average exercise price of options/SARs forfeited, US$ per option/SAR – 19.9 14.7 The number of options/SARs outstanding, end of year 2,055,000 974,340 1,288,460 Weighted-average exercise price of options/SARs outstanding, US$ per option/SAR 16.7 16.3 13.2 Weighted-average grant-date fair value at the end of the year, US$ per option/SAR 2.1 1.4 11.8 Out of the options/SARs outstanding at the end of the year the number of options/SARs fully vested and exercisable 200,000 974,340 1,288,460

19.3 Valuation approach The fair value of the options has been estimated using a Black Scholes option pricing model. The fair value of each grant is estimated on the date of grant (or date of modification). In estimating the fair value, the Company used significant assumptions.

Expected term of the options was determined based on analysis of historical behavior of stock option participants. Expected volatility of VimpelCom’s shares was estimated based on the historical volatility of the shares on the New York Stock Exchange over the period equal to the expected life of the option granted and other factors.

The dividend yield was included into the model based on expected dividend payment. The risk free rate was determined using the rate on the United States Government Bonds, having a remaining term to maturity equal to the expected life of the options, approximated where applicable. Forfeiture rate was determined as an average for the historic experience for all grants.

F-114 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The following table illustrates the major assumptions of the Black Scholes model for the options and SARs for the years ended 31 December:

2011 2010 2009 Expected volatility 91% – 184% 39% – 107% 92% – 138% The weighted-average expected term (in years) 1.48 1.76 1.80 Expected dividend yield 1.8% – 2.2% 2.2% – 3.9% 0% – 2.2% Risk free interest rate 5.3% – 11.2% 4.8% – 5.9% 7.0% – 9.77% Forfeiture rate 0.07 0.07 0.06

The total expenses recognized in these consolidation financial statement with respect to stock- based compensation were US$ 1.1 US$ 1.1 US$ 1.8 for the year ended 31 December 2011, 2010 and 2009 respectively. The total unrecognized expenses with respect to stock-based compensation were US$ 2.3 as of 31 December 2011.

F-115 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

20 Provisions The following table summarizes the movement in provisions for the years ended 31 December 2011, 31 December 2010 and 31 December 2009:

Tax Income provisions Provision for taxes other than decommis- Legal Other Total provisions income tax sioning provisions provision provisions At 1 January 2011 26 11 93 49 – 179 Acquisition of a subsidiary – – – – – – Arising during the year 36 13 26 3 16 94 Utilized – – (11) (34) – (45) Reclassification – – 1 – – 1 Unused amounts reversed (2) – – (1) – (3) Translation adjustment (1) (2) (6) – – (9) Discount rate adjustment and imputed interest (change in estimates) – – 9 – – 9 At 31 December 2011 59 22 112 17 16.00 226 Total current 2011 29 22 – 17 16 84 Total non-current 2011 30 – 112 – – 142 At 1 January 2010 74 11 42 – – 127 Acquisition of a subsidiary – 1 – 1 – 2 Arising during the year 24 2 15 48 – 89 Unused amounts reversed (74) (3) – – – (77) Translation adjustment 2 – – – – 2 Discount rate adjustment and imputed interest (change in estimates) – – 36 – – 36 At 31 December 2010 26 11 93 49 – 179

Total current – 11 – 49 – 60 Total non-current 26 – 93 – – 119

Tax Income provisions Provision for taxes other than decommis- Legal Other Total provisions income tax sioning provisions provision provisions At 1 January 2009 44 6 49 – – 99 Arising during the year 53 5 8 – – 66 Utilized (23) – – – – (23) Translation adjustment – – (2) – – (2) Discount rate adjustment and imputed interest (change in estimates) – – (13) – – (13) At 31 December 2009 74 11 42 – – 127

Total current – 11 – – – 11 Total non-current 74 – 42 – – 116

F-116 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

20.1.1 Income tax provision A provision has been recognized for the uncertainties related to income taxes where it is probable that the Company will have cash outflows. Management is unable to reliably predict the outcome of any tax examinations and the materiality of their impact on VimpelCom’s consolidated financial statements, if any.

20.1.2 Non-income tax provisions A provision has been recognized for the uncertainties related to other taxes where it is probable that the Company will have cash outflows.

20.1.3 Provision for decommissioning VimpelCom has certain legal obligations related to rented sites for base stations. These legal obligations include obligations to remediate leased land and other locations on which base stations are located.

20.1.4 Legal provisions A provision has been recognized for the uncertainties related to legal claims (Note 25 where it is probable that the Company will have cash outflows.

F-117 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

21 Other non-operating (gains)/losses Other non-operating (gains)/losses consisted of the following for the years ended 31 December.

21.1 Other non-operating gains/losses breakdown:

2011 2010 2009 Change of fair value of derivatives over non- controlling interest (2) (38) 52 Impairment of available-for-sale financial asset 58 40 – Reclassification of current period earnings of exchange differences on translation of foreign operations for equity interest in acquiree in business combination achieved in stages 43 – – Remeasurement of previously held investment in GTEL-Mobile 40 – – Loss from early debt retirement – – 19 Other gains/losses 32 3 (2) 171 5 69

Please refer to Note 7 for further details of reclassification of current period earning of exchange differences on translation of foreign operations for equity interest in acquiree in business combination achieved in stages and remeasurement of previously held investment in GTEL-Mobile.

Please refer to Note 15 for further details of change in fair value of available-for-sale financial assets.

F-118 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

22 Other non-financial assets and liabilities Other non-current non-financial assets consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Deferred costs related to connection fees 80 27 11 - Long-term advances - - 29 56 Long-term input VAT - 9 28 41 Other long-term assets 6 47 25 29 Other non-financial assets, non- current 86 83 93 126

Other non-current non-financial liabilities consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Long-term deferred revenue 42 43 36 29 Other non-current liabilities 8 3 13 11 Other non-financial liabilities, non-current 50 46 49 40

Other current non-financial assets consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Advances to suppliers 89 173 118 180 Input value added tax 132 136 97 182 Prepaid taxes 6 44 1 4 Deferred costs related to connection fees 39 17 7 3 Others 22 38 16 25 Other non-financial assets, current 288 408 239 394

Other current non-financial liabilities consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Customer advances, net of VAT 456 459 376 425 Customer deposits 72 33 28 30 Other taxes payable 172 202 193 120 Due to employees 124 105 114 106 Short-term deferred revenue 33 41 30 18 Other non-financial liabilities, current 857 840 741 699

F-119 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

23 Related parties The consolidated financial statements include the financial statements of the Company and the following most significant subsidiaries listed in the table:

% of ownership interest held by the group As of As of As of As of Country of 31 December 31 December 31 December 1 January Subsidiaries incorporation 2011 2010 2009 2009 OJSC Vimpel-Communication Operating Russia 100.00% 100.00% 100.00% 100.00% CJSC Kyivstar Operating Ukraine 100.00% 100.00% 100.00% 100.00% Tacom LLC Operating Tadjikistan 98.00% 90.00% 80.00% 80.00% Kar-Tel TOO Operating Kazakhstan 71.50% 75.00% 75.00% 75.00% Teta-Telecom TOO Operating Kazakhstan 75.00% 75.00% 74.99% 74.99% CJSC Sakhalin Telecom Operating Russia 89.61% 89.61% 89.61% 89.61% Golden Telecom TOO Operating Ukraine 100.00% 100.00% 80.00% 80.00% Sotelco Ltd. Operating Cambodia 90.00% 90.00% 90.00% 90.00% Buzton JV Ltd. Operating Uzbekistan 54.00% 54.00% 54.00% 54.00% SA Telecom TOO Operating Kazakhstan 100.00% 100.00% 100.00% 100.00% CJSC Rascom Operating Russia 54.00% 54.00% 54.00% 54.00% Mobitel Ltd. Operating Georgia 51.00% 51.00% 51.00% 51.00% Sky Mobile LLC Operating Kyrgyzstan 71.50% 50.10% 0.00% 0.00% Armenia Telephone Company CJSC Operating Armenia 100.00% 100.00% 100.00% 100.00% Unitel LLC Operating Uzbekistan 100.00% 100.00% 100.00% 93.01% PJSC Ukrainian RadioSystems Operating Ukraine 100.00% 100.00% 100.00% 100.00% JSC GTEL-Mobile Operating Vietnam 49.00% 40.00% 40.00% 40.00% VimpelCom Lao Co., Ltd. Operating Laos 78.00% 0.00% 0.00% 0.00% Ararima Enterprises Limited Holding Cyprus 100.00% 100.00% 100.00% 100.00% Atlas Trade Limited Holding BVI 90.00% 90.00% 90.00% 90.00% VimpelCom Finance B.V. Holding Netherlands 100.00% 100.00% 100.00% 100.00% VC ESOP N.V. Holding Belgium 99.90% 99.90% 99.90% 99.90% Limnotex Developments Ltd. Holding Cyprus 71.50% 75.00% 75.00% 75.00% LLC VimpelCom Finance Holding Russia 100.00% 100.00% 100.00% 100.00% LLC VimpelCom-Invest Holding Russia 100.00% 100.00% 100.00% 100.00% USA Golden Telecom, Inc. Holding (Delaware) 100.00% 100.00% 100.00% 100.00% Menacrest Limited Holding Cyprus 71.50% 50.10% 0.00% 0.00% Aridus Corporation Holding Seychelles 71.50% 50.10% 0.00% 0.00% British Virgin Freevale Enterprises Holding Islands 100.00% 100.00% 100.00% 66.70% VimpelCom Holding Laos B.V. Holding Netherlands 78.00% 0.00% 0.00% 0.00% Silkway Holding B.V. Holding Netherlands 100.00% 100.00% 100.00% 100.00%

F-120 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

23.1 Shareholders and other related parties As of 31 December 2011 the Company is a wholly-owned subsidiary of VimpelCom Amsterdam B.V. which is owned by VimpelCom Ltd. As of 31 December 2011 VimpelCom Ltd. is primarily owned by three major shareholders: Weather II, Telenor and Alfa. VimpelCom Ltd. has no ultimate controlling shareholder.

The following table provides the total amount of transactions that have been entered into with related parties and balances of accounts with them for the relevant financial years:

For the year For the year For the year ended and as of ended and as of ended and as of 31 December 31 December 31 December As of 1 January 2011 2010 2009 2009 Revenue from Alfa 10 19 20 Revenue from Telenor 62 5 3 Revenue from associates 86 100 41 Revenue from other related parties 13 39 10 171 163 74 Services from Alfa 8 6 6 Services from Telenor 57 4 2 Services from associates 221 203 132 Services from other related parties 1 47 10 287 260 150 Interest income from VimpelCom LTD 191 9 – – Interest expense to VIP Amsterdam B.V. 512 82 – – Accounts receivable from Alfa 1 2 3 4 Accounts receivable from Telenor 10 2 – – Accounts receivable from associates 81 83 237 164 Accounts receivable from other related parties 43 58 8 – 838 236 248 168 Non-current account receivable from associates 2 5 1 2 Long-term loan granted to VimpelCom Ltd. 3,454 505 – – Interest receivable from VimpelCom Ltd. 40 8 – – 3,496 518 1 2

Accounts payable to Alfa – – – – Accounts payable to Telenor 10 2 – – Accounts payable to associates 26 4 2 5 Accounts payable to other related parties 15 6 1 – 51 12 3 5 Promissory note to VIP Amsterdam B.V. (Note 1) 12,972 16,217 Long-term account payable to associates Other gain from related parties 13 6 – – Other gain from associates – – – – Other loss from Alfa – – – – Other loss from associates – – – –

F-121 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The Company provides loans to VimpelCom Ltd. and its subsidiaries. On 16 March 2011 VimpelCom made an agreement to grant unsecured loan facility to VimpelCom Amsterdam B.V., the subsidiary of VimpelCom Ltd. and the parent of the Company, in the maximum amount of US$ 500. On 21 March 2011, VimpelCom granted US$ 250 and on 29 April 2011 another US$ 250. On 17 May 2011, VimpelCom Amsterdam B.V. repaid part of this loan in the total amount US$ 250,000. On 8 June 2011, the loan was increased by a tranche of US$ 245, and on 30 June 2010 by a tranche of US$ 4. As of 31 December 2011, the principal amount of debt was fully repaid. The loan matures on 21 March 2013. Interest rate for 4 tranches made under this loan agreement is LIBOR+0.25% per annum. The loan is denominated in US dollars.

On 13 May 2011, VimpelCom granted an unsecured loan to VimpelCom Amsterdam Finance B.V., a subsidiary of VimpelCom Ltd., in the total amount of US$ 2,610. On 20 May 2011 and 30 June 2011, VimpelCom Amsterdam Finance B.V. repaid part of this loan in the total amount US$ 53 , and US$ 1 , respectively. On 31 August 2011, the loan was increased by a tranche of US$ 34. On 7 October 2011, the loan was increased by a tranche of US$ 20, on 28 October 2011 by a tranche of US$ 100 , on 17 November 2011 by a tranche of US$ 21 and on 23 November 2011 by a tranche of US$ 30. Under the agreement, VimpelCom may grant additional US$ 240. As of 31 December 2011, the principal amount of debt outstanding under this loan agreement was US$ 2,908. The loan matures on 31 May 2014. The interest rate is 8.72% per annum. The loan is denominated in US dollars.

In addition to a loan of US$ 37 granted on 13 December 2010, on 29 April and 23 June 2011, VimpelCom granted loans of US$ 50 and US$ 13 to VimpelCom Ltd. As of 31 December 2011, the principal amount of debt outstanding under this loan agreement was US$ 70.The loan matures on 13 December 2012. The interest rate is LIBOR+0.25% per annum. The loan is denominated in US dollars.

In May 2011, accrued interest on loan with VimpelCom Ltd. in the amount of US$ 9 was added to loan principal of US$ 468. As of 31 December 2011, the principal amount of debt outstanding under this loan agreement was US$ 476. The loan matures on 31 December 2070. The interest rate is LIBOR+7.5% per annum. The loan is denominated in US dollars.

Outstanding balances and transactions with Alfa relate to operations with VimpelCom’s Ltd. shareholder Eco Telecom (a member of the Alfa group companies), its consolidated subsidiaries, its direct owners and their consolidated subsidiaries. In particular, VimpelCom has contracts with Alfa Insurance (member of the Alfa group of companies) to provide the Company with property and equipment liability insurance; the General Service Agreement with Altimo for provision of general management, legal and regulatory services, treasury services, finance and reporting services as well as tax services. The Company also has contracts to provide fixed telecommunication service to Eco Telecom and its subsidiaries.

VimpelCom maintains bank accounts in Alfa Bank (member of the Alfa group of companies), which are used for payroll and other payments in the ordinary course of business. The balances in these bank accounts were US$ 41 , US$ 9 and US$ 177 at 31 December 2011, 2010 and 2009.

F-122 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Outstanding balances and transactions with Telenor relate to operations with VimpelCom’s shareholder Telenor East Invest AS, its consolidated subsidiaries, its direct owners and their consolidated subsidiaries. In particular, VimpelCom has roaming contracts with ProMonte Montenegro, DTAC/UCOM Thailand, Telenor Serbia, Telenor Mobil AS Norway, Pannon GSM Telecommunications Ltd. Hungary, Telenor Mobile Sweden Norway; the General Agreement for provision of personnel and General Services Agreement for provision of general management, legal and regulatory services, treasury services, finance and reporting services as well as tax services with Telenor Russia AS. VimpelCom also has a contract to provide fixed telecommunication service to Telenor Mobile Holding AS Norway.

Outstanding balances and transactions with associates relate to operations with VimpelCom’s equity investees (Note 8). Euroset transactions mainly represent dealer commission payments for the acquisition of new subscribers and commission for payments receipts. Operations with associates also include purchase of bill delivery services from Firma Kurier. OJSC VimpelCom has a contract with CJSC Rascom of providing fixed telecommunication services.

Outstanding balance and transactions with other related parties among others include operations with joint ventures (Note 8).

23.2 Terms and conditions of transactions with related parties Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended December 2010, VimpelCom has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

23.3 Compensation of key management personnel of the Company The amounts disclosed in the table are the amounts recognized as an expense during the reporting period related to key management personnel:

2011 2010 2009 Short-term employee benefits 13 10 13 Share-based payment transactions 1 1 3 Total compensation paid to key management personnel 14 11 16

Our senior managers are eligible to participate in our stock option plans and stock appreciation rights, or SARs, plan.

F-123 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

24 Employee benefits Selling, general and administrative expenses include the following amounts of employee benefits for the years, ended December 31:

2011 2010 2009 Salaries and wages including bonus payments 941 628 603 Stock based payments 1 3 4 Other employee benefits 40 29 40 Employee benefits 982 660 647

The following chart sets forth the number of our employees at 31 December 2011, 2010 and 2009:

2011 2010 2009 Russia 31,701 30,059 27,165 Asia 1,553 359 262 Ukraine 5,740 4,224 2,005 CIS 7,655 7,366 6,925 Total 46,649 42,008 36,357

F-124 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

25 Commitments, contingencies and uncertainties 25.1 Risks 25.1.1 Currency control risks The imposition of currency exchange controls or other similar restrictions on currency convertibility in CIS countries and particularly in Uzbekwistan could limit VimpelCom’s ability to convert local currencies in a timely manner or at all. Any such restrictions could have a material adverse effect on VimpelCom's business, financial condition and results of operations. The continued success and stability of the economies of these countries will be significantly impacted by their respective governments’ continued actions with regard to supervisory, legal and economic reforms.

25.1.2 Domestic and global economy risks The economy of countries where VimpelCom operates is vulnerable to market downturns and economic slowdowns elsewhere in the world. In 2011 the respective governments continued to take measures to support the economy in order to overcome the consequences of the global financial crisis. Despite some indications of recovery there continues to be uncertainty regarding further economic growth, access to capital and cost of capital, which could negatively affect the Company’s future financial position, results of operations and business prospects.

While management believes it is taking appropriate measures to support the sustainability of VimpelCom’s business in the current circumstances, unexpected further deterioration in the areas described above could negatively affect the Company’s results and financial position in a manner not currently determinable.

25.2 Legislation risks In the ordinary course of business, VimpelCom may be party to various legal and tax proceedings, and subject to claims, certain of which relate to the developing markets and evolving fiscal and regulatory environments in which VimpelCom operates. In the opinion of management, VimpelCom’s liability, if any, in all pending litigations, other legal proceedings or other matters, other than what is discussed in this Note, will not have a material effect upon the financial condition, results of operations or liquidity of VimpelCom.

VimpelCom’s operations and financial position will continue to be affected by political developments in the countries in which VimpelCom operates including the application of existing and future legislation, telecom and tax regulations. These developments could have a significant impact on VimpelCom’s ability to continue operations. VimpelCom does not believe that these contingencies, as related to its operations, are any more significant than those of similar enterprises in such countries.

25.3 Tax risks The tax systems in the markets VimpelCom operates in are unpredictable and give rise to significant uncertainties, which could complicate our tax planning and business decisions. Tax laws in many of the emerging markets in which we operate have been in force for a relatively short period of time as compared to tax laws in more developed market economies. Tax authorities in our markets are often arbitrary in their interpretation of tax laws, as well as in their enforcement and tax collection activities.

F-125 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

In the countries where VimpelCom operates, many tax laws and related regulations were introduced in previous periods as well as in 2011 which were not always clearly written, and their interpretation is subject to the opinions of the local tax inspectors and officials of the Ministry of Finance. Instances of inconsistent opinions between local, regional and federal tax authorities and Ministry of Finance are not unusual.

Management believes that it has paid or accrued all taxes that are applicable. Where uncertainty exists, VimpelCom has accrued tax liabilities based on management’s best estimate.

25.4 Commitments 25.4.1 Telecom Licenses Capital Commitments VimpelCom’s ability to generate revenues in all countries it operates is dependent upon the operation of the wireless telecommunications networks authorized under its various licenses under GSM-900/1800 and "3G" (UMTS / WCDMA) mobile radiotelephony communications services (as of 31 December 2010) and "4G" (LTE) granted in 2011. Under the license agreements operating companies are subject to certain commitments like territory or population coverage, level of capital expenditures, number of base stations to be fulfilled within the certain timeframe. After expiration of the license operating companies might be subject to additional payments for renewals.

25.4.2 Russia Apple On 31 March 2011, VimpelCom and Apple signed an amendment to the agreement to purchase iPhones. Under the amendment, 958,540 iPhone handsets (being the difference between 1,500,000 iPhone handsets per the original agreement and the amount actually purchased by the Company from Apple through 31 March 2011) should be purchased starting 1 April 2011 and before 31 March 2013, including 435,000 iPhone handsets to be purchased before 31 March 2012. If VimpelCom does not comply with newly agreed schedule and certain other terms of amendments, then according to the agreement it could become liable for the shortfall in orders of iPhone handsets that existed as of 31 March 2011, less any iPhone units actually purchased by VimpelCom after this date. Management is of the opinion that no provisions should be recorded with this respect.

25.5 Contingencies and uncertainties The company is involved in several legal proceedings relating to the normal conduct of its business, such as claims for regulatory and employment issues as well as general liability. The company does not expect any liability arising from any of these legal proceedings to have a material effect on its results of operations, liquidity, capital resources or financial position. The company believes it has provided for all probable liabilities deriving from the normal course of business.

25.6 Anti-monopoly claim The Federal Anti-Monopoly Service in Russia ("FAS") commenced proceedings against OJSC VimpelCom and OJSC MTS alleging conspiracy with respect to price on I-Phones. The penalty for such violations could result in fines of up to 15.0% of the revenues derived from the relevant services. On 26 April 2012, FAS passed a verdict that OJSC VimpelCom and OJSC MTS were guilty of concerted action with respect to the pricing of iPhone 4 handsets. FAS also stated that both parties voluntarily discontinued the violations of law in question.

F-126 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

We do not anticipate fines that would be material to the financial position of the Company. The question of fines will be reviewed by FAS separately in administrative proceedings.

25.7 Russian tax claims In the Russian Federation, VimpelCom’s predominant market, there were many tax laws and related regulations introduced in previous periods as well as in 2011 which were not always clearly written, and their interpretation is subject to the opinions of the local tax inspectors and officials of the Ministry of Finance. Instances of inconsistent opinions between local, regional and federal tax authorities and Ministry of Finance are not unusual. Management believes that it has paid or accrued all taxes that are applicable. Where uncertainty exists, VimpelCom has accrued tax liabilities based on management’s best estimate.

Based on the audit of the tax records for 2009, the tax authorities issued a tax claim against the Company’s subsidiary VC-Invest in the amount of RUR 314 million (including RUR 55 million in fines and penalties) which is approximately US$ 10 (including US$ 2 in fines and penalties) did not agree with the claim, and filed a lawsuit. The Court satisfied lawsuit in all amount in the first and second instances. The tax inspectorate did not appeal the decisions in higher Court of Cassation.

On 21 January 2011, VimpelCom received a report from the tax authorities regards to tax audit for the period from 2007 to 2008. The amount of claims was RUR 1,191 million which is approximately US$ 37 at the exchange rate as of 31 December 2011. The Company recorded a provision of RUR 844 million which is approximately US$ 26 at the exchange rate as of 31 December 2011. The Company has appealed tax audit report in the court. The court satisfied lawsuit in all amount the first instance. The tax inspectorate appealed this decision in the second instance and Court passed an opinion in favor of VimpelCom. The tax inspectorate appealed this decision in the second instance and Court passed an opinion in favour of VimpelCom. The tax inspectorate can appeal the court decision.

25.8 KaR-Tel litigation with ex-shareholders On 10 January 2005, KaR-Tel received an "order to pay" ("Order to Pay") issued by The Savings Deposit Insurance Fund, a Turkish state agency responsible for collecting state claims arising from bank insolvencies (the "Fund"), in the amount of approximately US$ 4,910,000 at the exchange rate as of 31 December 2010 (stated as approximately Turkish lira 7.55 quadrillion and issued prior to the introduction of the New Turkish Lira, which became effective as of 1 January 2005). The Order to Pay, dated as of 7 October 2004, was delivered to KaR-Tel by the Bostandykski Regional Court of Almaty. The Order to Pay does not provide any information regarding the nature of, or basis for, the asserted debt, other than to state that it is a debt to the Turkish Treasury and the term for payment was 6 May 2004.

On 17 January 2005, KaR-Tel delivered to the Turkish consulate in Almaty a petition to the Turkish court objecting to the propriety of the order and requesting the Turkish court to cancel the Order to Pay and stay of execution proceedings in Turkey. The petition was assigned to the 4th Administrative Court in Turkey, and it should be reviewed pursuant to applicable law.

On 1 June 2006, KaR-Tel received formal notice of the 4th Administrative Court's ruling that the stay of execution request was denied. KaR-Tel’s Turkish counsel has advised KaR-Tel that the stay request is being adjudicated separately from the petition to cancel the Order to Pay. KaR-Tel submitted an appeal of the ruling with respect to the stay application.

F-127 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

On 1 June 2006, KaR-Tel also received the Fund's response to its petition to cancel the order. In its response, the Fund asserts, among other things, that the order to pay was issued in furtherance of its collection of approximately Turkish lira 7.55 quadrillion (prior to the introduction of the New Turkish Lira, which became effective as of 1 January 2005) in claims against the Uzan group of companies that were affiliated with the Uzan family in connection with the failure of T. Imar Bankasi, T.A.S. The Fund's response to KaR-Tel’s petition claims that the Uzan group of companies includes KaR-Tel, Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S are Turkish companies that owned an aggregate 60% of the equity interests in KaR-Tel until their interests were redeemed by KaR-Tel in November 2003 in accordance with a decision of the Review Panel of the Supreme Court of Kazakhstan. In July 2006, KaR-Tel submitted its response, dated 30 June 2006, to the Fund’s response via the Kazakh Ministry of Justice, to be forwarded to the 4th Administrative Court of Istanbul. In its response, KaR-Tel denied in material part the factual and legal assertions made by the Fund in support of the order to pay.

On 11 December 2008, KaR-Tel received a Decision of Territorial Court of Istanbul dated 12 December 2007, wherein the Court rejected KaR-Tel’s appeal with respect to the stay of execution request.

On 20 October 2009, KaR-Tel filed with Sisli 3d Court of the First Instance in Istanbul a claim to recognize in the Republic of Turkey the decision of the Almaty City Court of the Republic of Kazakhstan dated 6 June 2003 regarding, among other things, compulsory redemption of equity interests in KaR-Tel owned by Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S., which was confirmed by the Civil Panel of the Supreme Court of the Republic of Kazakhstan on 23 June 2003, as amended by the resolution of the Review Panel of the Supreme Court of the Republic of Kazakhstan dated 30 October 2003 ("Recognition Claim"). On 20 October 2009, KaR-Tel also filed with the 4th Administrative Court of Istanbul a petition asking the Court to treat the recognition of the Kazakhstan court decision as a precedential issue and to stay the proceedings in relation to the order to pay.

On 28 September 2010, Sisli 3d Court of the First Instance in Istanbul reviewed the Recognition Claim and ruled in favor of KaR-Tel recognizing the Kazakhstan Court judgments on the territory of the Republic of Turkey. The court decision is appealable by defendants.

On 25 October 2010, the 4th Administrative Court of Istanbul reviewed KaR-Tel’s petition to annul the Payment Order and has ruled in favor of KaR-Tel. The Court has recognized the Order to Pay as illegal and annulled it. The court decision has been appealed by the Fund. On 18 February 2011 KaR-Tel submitted its responses to the motion on appeal. On 20 April 2011, the Fund submitted its response to KaR-Tel’s reply and appeal petition. The court file was sent by the Court to the Councel of State for the appeal proceedings.

As to the Recognition Claim, the defendants, Rumeli Telecom AS and Telsim Mobil Telekommunikasyon Hizmetleri AS, have appealed the decision of Sisli 3d Court of the First Instance in Istanbul, which has ruled in favor of KaR–Tel recognizing the Kazakhstan Court judgments on the territory of the Republic of Turkey. The Company submitted its responses to such motion on appeal on 20 January 2011. The court file was sent to the Supreme Court for the appeal proceedings.

F-128 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

As of 22 March 2012 the Fund’s and KaR-Tel’s appeals on the Decision of 4th Administrative Court of Istanbul dated 25 October 2010 has been reviewed by the Prosecution Office of the Council of State and has been sent to the 13th Chamber of the Council of State for review on the merits.

The Company continues to believe that the Fund's claim is without merit, and KaR-Tel will take whatever further actions it deems necessary and appropriate to protect itself against the Fund's claim.

25.9 Kyrgyzstan Since November 2006, the Chief Executive Officer and directors of the Company have received several letters from OJSC Mobile TeleSystems ("MTS") and its representatives claiming that Sky Mobile’s Kyrgyz telecom business and its assets were misappropriated from Bitel, an MTS affiliate, and demanding that the Company not purchase Sky Mobile, directly or indirectly, or participate or assist in the sale of Sky Mobile to any other entities. These letters have suggested that MTS will take any and all legal action necessary against the Company in order to protect MTS’s interest in Bitel and Bitel’s assets. As of the date hereof, management is not aware of any pending legal action against the Company in connection with this matter except for the litigation against Sky Mobile discussed in the paragraph below.

Sky Mobile is a co-defendant in a litigation in the Isle of Man. The litigation was brought by affiliates of MTS against various companies and individuals directly or indirectly associated with Alfa Group and/or Altimo and Sky Mobile. The claimants allege that the Kyrgyz judgment determining that an Altimo affiliate was the rightful owner of an interest in the equity of Bitel prior to the asset sale between Sky Mobile and Bitel was wrongfully obtained and that Bitel shares and assets were misappropriated. The legal proceedings in this matter are pending.

At this time the Company is unable to assess the likelihood of the ultimate outcome of this litigation and its effect on the Company’s operating results and financial position.

25.10 Kazakhstan 25.10.1 The 1st Roaming Claim against KaR-Tel: Threshold amounts On 14 May 2010, the Antimonopoly Agency of Kazakhstan ("the Agency") initiated an investigation of the alleged breach of antimonopoly laws of Kazakhstan by all three Kazakhstan GSM-operators (KaR-Tel, GSM Kazakhstan OAO Kazakhtelecom LLP (trademarks KCell, Active), and Mobile Telecom Systems LLP (trade mark Neo), by abuse of dominant position through infringement of consumers' rights by way of determination of a threshold (minimal) amount of money on consumer's account required for rendering (switching on and off) roaming services ("the Threshold Amounts").

Further, the Agency decided to consider investigations, jointly with FAS, of Kazakhstan antimonopoly law breaches with respect to all the three Kazakhstan GSM-operators, including KaR-Tel, as well as operator-partners in the Russian Federation on indications of anticompetitive concerted actions and agreements as to establishing and (or) price maintenance as well as use of per-minute step of tarification.

F-129 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The Agency also decided to make a proposal to the Ministry of Telecommunications and Information of Kazakhstan as to earlier transfer to per-second tarification for roaming services (date determined by law is 1 January 2012), and to conduct an evaluation of roaming tariffs.

On 21 June 2010, the Agency completed the part of its investigation related to the Threshold Amounts and alleged that all three Kazakhstan GSM-operators abused their dominant position through infringement of customers' lawful rights by way of establishing the Threshold Amounts.

On 3 July 2010, the Agency initiated an administrative procedure with respect to all the three Kazakhstan GSM operators, including KaR-Tel, and issued the protocol on administrative offence ("the Protocol"). The Agency filed with the Administrative Court a claim based on the Protocol. The Company estimates KaR-Tel’s share of administrative fines amounting to KZT 11.6 billion (the equivalent to US$ 79 as of 3 July 2010). KaR-Tel believes that the claim of the Agency is without merits and intends to protect its rights and lawful interest in courts of Kazakhstan. On 16 July 2010, KaR-Tel filed a claim to recognize as illegal and annul the acts of the Agency, which have served as a procedural basis for the Protocol.

On 19 October 2010 the Interregional Economic Court of Astana has ruled in favor of KaR-Tel and recognized as illegal, null and void all acts of the Agency and its territorial branch, which have served as procedural basis for the Protocol. The decision has not come into force and was appealable by the Agency.

On 15 November 2010, KaR-Tel received copy of the Agency's appeal on the decision. On 13 December 2010 the Court of Appeals upheld the decision of 19 October 2010 in favor of KaR-Tel. On 17 February 2011 the Court of Cassation reviewed the cassation petition of the Agency and upheld both the decision of 19 October 2010 and the resolution of the Court of Appeals of 13 December 2010. As a result, the decision of 19 October 2010 that has recognized all acts of the Agency and its territorial branch, which have served as procedural basis for the Protocol, as illegal, null and void, has come into force. Although the decision has come into full force and effect, it is still subject to appeal by the Agency in supervisory appeal order within 1 year from the date of receipt by the Agency of the Resolution of the Court of Cassation.

On 21 October 2011, the General Prosecutor of the Republic of Kazakhstan has filed a protest to the Supreme Court of Kazakhstan appealing in a supervisory review order the Decision of the Interregional Economic Court of Astana of 19 October 2010, which rendered unlawful and void all acts of the Antimonopoly Agency, as well as Decision of the Appeals Chamber of Astana City Court of 13 December 2010, which upheld the Economic Court decision. On 27 October 2011, KaR-Tel has received a notice from the Supreme Court of Kazakhstan indicating that the said protest has been accepted for review and the hearing will take place on 16 November 2011. The Company believes that the General Prosecutor’s protest is without merits and intends to defend its position in the Court.

On 16 November 2011, the Supervisory Chamber of the Supreme Court of Kazakhstan issued a Decision that overturned the Decision of the Interregional Economic Court of Astana of 19 October 2010, and Decision of the Appeals Chamber of Astana City Court of 13 December 2010. The Supreme Court sent the case back for the new consideration in administrative proceedings to the Interregional Administrative court of Almaty.

F-130 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

On 26 December 2011, the Interregional Administrative Court of Almaty accepted the request of the Company to discontinue proceedings and to return the Protocol to the Agency for rectification of deficiencies resulting from the Agency’s wrongful indication of the whole amount of revenues received by the Company for the purpose of calculation of the administrative fines instead of the amount of revenues received from monopolistic activity. The Agency has rectified the deficiencies in the protocol and filed the amended protocol with the Court. On June 15, 2012 the Interregional Administrative Court reviewed the protocol and resolved that the Company abused its significant market power by introducing the threshold amounts for offline roaming. In the meantime the Court has accepted one of the Company’s defense arguments and calculated 10% administrative fine not on the basis of total revenue of the Company for the period under consideration, but only on the basis of revenues received from offline roaming, where CAMEL- roaming allowing online billing is not available, thus reducing administrative fine from KZT 11.6 billion (around US$ 79) to KZT 155 million around US$ 1). The decision is subject to appeal by the public prosecutor’s office within 1 year from the date thereof. The Company is considering whether it will appeal the decision. The decision does not hinder the Company’s opportunity to use the threshold amounts under certain cap in accordance with newly introduced Telecommunication Services Regulations.

No provisions were made in relation to this case in the accompanying condensed consolidated financial statements.

25.10.2 The 2nd Roaming Claim Against KaR-Tel: Concerted actions high roaming tariffs The Agency has continued another part of its investigation - with respect to concerted actions of Kazakhstan and Russian GSM-mobile operators on establishing and/or preservation of tariffs ("Concerted Actions Investigation"). On 25 October 2010, the Agency completed the Concerted Actions Investigation and reclassified alleged concerted actions of KaR-Tel and other Russian and Kazakhstan GSM-operators into establishing monopolistically high tariffs. On 3 November 2010, the Agency initiated an administrative procedure and issued a new protocol on administrative offence, according to which the Agency has found KaR-Tel and the other two Kazakhstan GSM-operators liable for abuse of their dominant position on the market by way of establishing monopolistically high roaming tariffs ("the New Protocol").

Under Kazakhstan laws, the Agency has lodged the New Protocol into administrative court, and the court is to review the matter and to decide on the merits and on applicable fines.

On 23 November 2010, KaR-Tel filed a claim with Astana Interregional Economic Court against the Agency requesting the Court to recognize illegal and to annul acts of the Agency preceding the New Protocol.

On 24 February 2011, the Interregional Economic Court of Astana has ruled in favor of KaR-Tel and recognized as illegal, null and void all acts of the Agency and its territorial branch, which have served as procedural basis for the Protocol. The decision was received on 28 February 2011. The decision of 28 February 2011 came into force on 30 March 2011. Although the decision has come into full force and effect, it is still subject to appeal by the Agency in supervisory appeal order within one year from the date of decision coming into force.

F-131 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

While the Company does not agree with the New Protocol and has successfully challenged the acts on which the New Protocol is based, the court decision may be appealed, and the ultimate resolution of this matter could result in a loss of KZT 9.900 billion (the equivalent to US$ 67 as of 31 December 2010) in excess of the amount accrued.

On 25 November 2011, the Agency appealed to the Supreme Court of Kazakhstan in a supervisory review order the Decision of the Interregional Economic Court of Astana of 24 February 2011, which recognized as illegal, null and void all acts of the Agency. On 11 January 2012, the Supervisory Chamber of the Supreme Court of Kazakhstan reviewed the protest and overturned the Decision of the Interregional Economic Court of Astana of 24 February 2011. The Supreme Court sent the case back for the new consideration in administrative proceedings to the Interregional Administrative court of Almaty. On 1 March 2012 the Interregional Administrative court of Almaty ruled in favor of KaR-Tel and recognized the protocol of the Agency as illegal, null and void.

The decision of the Interregional Administrative court of Almaty will remain subject to appeal for one year. The ultimate resolution of this matter could result in a loss of KZT9.900 billion (the equivalent to US$ 67 as of 31 December 2011) in excess of the amount accrued.

25.11 Dominant Market Position On October 10, 2011, Kar-Tel was recognized by the Agency as dominant in the market of interconnection. When a company is recognized as having a dominant position, it will be subject to special reporting obligations to the national regulatory authority, higher scrutiny in anti- monopoly/competition issues and price control and potential price regulation (e.g., tariff caps). The company does not agree with this decision of the antimonopoly authority. The company filed a claim to the Interregional Economic Court of Astana against the Agency requesting that the court recognize as illegal. On 26 December 2011, the court ruled and rejected the claim of the Kar-Tel. Kar-Tel have appealed the decision. The appeal proceedings in this matter are pending. The decision on this claim could have an adverse effect on our business, financial condition and results of operations. We believe that Kar-Tel did not violate the legislation.

25.12 Pledges and guarantees The Company and its subsidiaries did not pledge any collateral as at 31 December 2011, 2010 and 2009.

25.13 Guarantee in favour of VimpelCom Amsterdam B.V. On March 31, 2011, VimpelCom Amsterdam B.V., a wholly-owned subsidiary of VimpelCom Ltd., signed a one year Bridge Facility Agreement (with the possible extension for 6 months), with six international banks: Barclays, BNP Paribas, Citi, RBS, ING and HSBC in the total amount of US$2,500,000. The Facility bears annual interest at a rate of LIBOR + 0.85% from (and including) the Signing Date to (but excluding) the date falling three months after the Signing Date; LIBOR + 1.15% from (and including) the date falling three months after the Signing Date to (but excluding) the date falling six months after the Signing Date; LIBOR + 1.75% from (and including) the date falling six months after the Signing Date to (but excluding) the date falling nine months after the Signing Date; LIBOR + 2.25% from (and including) the date falling nine months after the Signing Date to (but excluding) the date falling twelve months after the Signing Date; LIBOR + 3.0% (and including) the date falling 12 months after the Signing Date. On April 14, 2011, VimpelCom Amsterdam B.V. drew down the loan in the amount of US$2,200,000. VimpelCom has guaranteed this Bridge Facility Agreement. None triggering events under the guarantee occurred. The Company believes that probability of these events is zero.

F-132 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

26 Financial risk management 26.1 Operating lease commitments Operating lease payments for each of the succeeding five years are committed as follows:

2011 2010 2009 Less than 1 year 155 104 14 Between 1 and 5 years 191 269 33 More than 5 years 105 177 24 Total 451 550 71

Operating lease commitments mainly relate to the lease of base station sites and office spaces.

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company has loan and other receivables, trade and other receivables, and cash and short-term deposits that arrive directly from its operations. The Company views derivative instruments as risk management tools and does not use them for trading or speculative purposes.

The Company is exposed to market risk, credit risk and liquidity risk.

The Company’s senior management oversees the management of these risks. The Company’s senior management is supported by the Treasury committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company’s senior management that the Company’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with Group policies and Group risk appetite. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes shall be undertaken.

The Supervisory Board reviews and agrees policies for managing each of these risks which are summarized below.

26.2 Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, and derivative financial instruments. The sensitivity analyses in the following sections relate to the position as at 31 December in 2011, 2010 and 2009. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant and on the basis of the hedge designations in place at 31 December 2011 (2010 and 2009: none). The analyses exclude the impact of movements in market variables on the carrying value of pension and other post-retirement obligations (insignificant for the Company), provisions and on the non-financial assets and liabilities of foreign operations.

F-133 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

26.3 Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company long-term debt obligations with floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. To manage this, the Company enters into interest rate swaps, in which the Company agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are not designated to hedge underlying debt obligations.

At 31 December 2011, after taking into account the effect of interest rate swaps, approximately 82% of the Company’s borrowings are at a fixed rate of interest (2010: 96%).

26.4 Interest rate sensitivity The following table demonstrates the sensitivity to a reasonably possible change in floating interest rates on loans and borrowings. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings as follows. (There is only as insignificant impact on the Company’s equity):

Increase/decrease in Effect on profit before basis points tax 2011 Euro 100 - US Dollar 100 1 Other currencies 100 1

Euro -100 - US Dollar -100 (1) Other currencies -100 (1)

2010 Russian Ruble 100 2 US Dollar 100 3 Ukrainian Hryvnia 100 2 Other currencies 100 1

Russian Ruble -100 (2) US Dollar -100 (3) Ukrainian Hryvnia -100 (2) Other currencies -100 (1)

2009 Euro 100 (4) Russian Ruble 100 (3) US Dollar 100 3 Other currencies 100 1

Euro -100 4 Russian Ruble -100 3 US Dollar -100 (3) Other currencies -100 (1)

F-134 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility as in prior years.

26.5 Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the debt at subsidiary level denominated in currencies other than the functional currency, the Company’s operating activities (predominantly capital expenditures at subsidiary level denominated in a different currency from the subsidiary’s functional currency) and the Company’s net investments in foreign subsidiaries.

The Company manages its foreign currency risk by selectively hedging net transaction exposures that are expected to occur within a maximum 24-month period.

Where the nature of the hedge relationship is not an economic hedge, it is the Company’s policy to negotiate the terms of the hedging derivatives to match the terms of the underlying hedge items to maximize hedge effectiveness.

The Company hedges part of its exposure to fluctuations on the translation into US dollar of its foreign operations by holding net borrowings in foreign currencies and can use foreign currency swaps and forwards for this purpose as well.

26.6 Foreign currency sensitivity The following table demonstrates the sensitivity to a reasonably possible change in the exchange rate of the RUB, UAH and KZT (the major currencies creating exposures in the Group), with all other variables held constant, of the Company’s profit before tax (due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives) and the Company’s equity (due to changes in the fair value of forward exchange contracts designated as cash flow hedges and net investment hedges). The Company’s exposure to foreign currency changes for all other currencies is not material.

Effect on profit Change in foreign exchange rate before tax

2011 10% depreciation currencies against US$ (42) 10% appreciation currencies against US$ 38

2010 10% depreciation currencies against US$ (158) 10% appreciation currencies against US$ 143

2009 10% depreciation currencies against US$ (381) 10% appreciation currencies against US$ 347 10% depreciation currencies against EUR (63) 10% appreciation currencies against EUR 57

F-135 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The movement on the post-tax effect is a result of a change in the fair value of derivative financial instruments not designated in a hedging relationship and monetary assets and liabilities denominated in currencies other than the functional currency of the entity. Although the derivatives have not been designated in a hedge relationship, they act as a commercial hedge and will offset the underlying transactions when they occur.

26.7 Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade accounts receivable consist of amounts due from subscribers for airtime usage and amounts due from dealers and subscribers for equipment sales. In certain circumstances, VimpelCom requires deposits as collateral for airtime usage. In addition, VimpelCom has introduced a prepaid service GSM network. Equipment sales are typically paid in advance of delivery, except for equipment sold to dealers on credit terms. VimpelCom’s credit risk arising from its trade accounts receivable from subscribers is mitigated due to the large number of its active subscribers (subscribers in the registered subscriber base who were a party to a revenue generating activity in the past three months and remain in the base at the end of the reported period), of which approximately 95% subscribed to a prepaid service as of 31 December 2011 (2010: 94%) and, accordingly, do not give rise to credit risk.

VimpelCom’s credit risk arising from its trade accounts receivable from dealers is mitigated due to the large number of dealers. Management periodically reviews the history of payments and credit worthiness of the dealers. The Company also has receivables from other local and international operators from interconnect and roaming services provided to their customers, as well as receivables from customers using fixed-line services, such as business services, wholesale services and services to residents. Receivables from other operators for roaming services are settled through clearing houses.

VimpelCom holds available cash in bank accounts as well as other financial assets with financial institutions in countries of its operations. To manage credit risk associated with such asset holdings, VimpelCom allocates its available cash to a variety of local banks and local affiliates of international banks within the limits set forth by its treasury policy. Management periodically reviews the credit worthiness of the banks with which it holds assets.

26.7.1 Trade receivables Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of the customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.

F-136 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

The requirement for an impairment is analyzed at each reporting date on an individual basis for major clients. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actually incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 15. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

26.7.2 Financial instruments and cash deposits Credit risk from financial assets held with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits over US$ 50 million are reviewed and approved by the Company’s Supervisory Board. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure.

The Company’s maximum exposure to credit risk for the components of the statement of financial position at 31 December 2010 and 2009 is the carrying amounts as illustrated in Note 15, and for derivative financial instruments the carrying amounts as noted in Note 15.

26.8 Liquidity risk The Company monitors its risk to a shortage of funds using a recurring liquidity planning tool. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, debentures, preference shares, financial and operating leases. The Company’s policy is that not more than 35% of borrowings should mature in a single year. 13% of the Company’s debt will mature in less than one year at 31 December 2011 (2010: 27%, as of 31 December 2009: 26%) based on the carrying value of bank loans, equipment financing and loans from others reflected in the financial statements. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available.

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments.

Less than More than 1 year 1-3 years 3-5 years 5 years At 31 December 2011 2012 2013-2014 2015-2016 >= 2017 Total Bank loans and bonds 1,615 3,700 3,952 5,751 15,018 Promissory note – – – 22,042 22,042 Equipment financing 133 199 102 28 462 Loans from others 7 7 7 57 78 Derivatives over non- controlling interest – 297 – 333 630 Trade and other payables 1,396 – – – 1,396 Total 3,151 4,203 4,061 28,211 39,626

F-137 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

Less than More than 1 year 1-3years 3-5 years 5 years At 31 December 2010 2011 2012-2013 2014-2015 >= 2016 Total Bank loans and bonds 2,057 2,515 1,237 1,853 7,662 Promissory note – – 17,338 – 17,338 Equipment financing 95 115 66 41 317 Loans from others – – – – – Derivatives over non- controlling interest – 820 – – 820 Trade and other payables 1,010 – – – 1,010 Total 5,172 3,450 18,641 1,894 27,147

Less than More than 1 year 1-3 years 3-5 years 5 years At 31 December 2009 2010 2011-2012 2013-2014 >= 2015 Total Bank loans and bonds 2,361 3,496 1,519 1,994 9,370 Equipment financing 129 159 56 24 368 Loans from others 4 – – – 4 Derivatives over non- controlling interest – 873 201 – 1,074 Trade and other payables 761 – – – 761 Total 3,255 4,528 1,776 2,018 11,577

26.9 Capital management The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. Following to the acquisition of Wind Telecom by VimpelCom Ltd. the Company’s primary objective was shifted to ensure that it follows the corporate credit rating of VimpelCom Ltd. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2011, 2010 and 31 December 2009.

The Net indebtedness to EBITDA ratio is an important measure to assess the capital structure in light of maintaining a strong credit rating. Net indebtness represents the nominal amount of interest-bearing debt and guarantees given less cash and cash equivalents and current and non-current bank deposits.

The required ratio is <3.5 for some of the debt. The ratio is calculated based on consolidated financial statements of OJSC VimpelCom prepared under IFRS. In case this ratio is breached OJSC VimpelCom will have an Event of Default. No such events occurred for the years ended 31 December 2011, 2010 and 2009. The Company was in compliance with all other loan covenants.

F-138 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

27 Events after the reporting period 27.1 Significant change in financial liabilities On 2 February 2012, OJSC VimpelCom signed a loan facility agreement with CISCO SYSTEMS FINANCE INTERNATIONAL. The loan was a ruble denominated export credit facility for a total amount of RUR 1,550 million. The facility is to finance equipment provided to OJSC VimpelCom by CISCO on a reimbursement basis. The facility bears interest at a rate of 7.95% per annum. On 2 March 2012, OJSC VimpelCom drew down RUR 1,550 million (the equivalent to approximately US$ 53 as of 2 March 2012).

On 20 March 2012, OJSC VimpelCom issued Russian ruble-denominated bonds, in an aggregate principal amount of RUR25,000 million, which is the equivalent of approximately US$ 856 at the exchange rate of the Central Bank of Russia as of 20 March 2010. The bonds have a ten-year maturity with a put option in 3 years and bear an annual interest rate of 8.85%. Interest will be paid semiannually.

On 26 March 2012, OJSC VimpelCom issued Russian ruble-denominated bonds, in an aggregate principal amount of RUR10,000 million which is the equivalent of approximately US$ 340 at the exchange rate of the Central Bank of Russia as of 26 March 2010. The bonds have a ten-year maturity with a put option in 3 years and bear an annual interest rate of 8.85%. Interest will be paid semiannually.

The proceeds of the offerings will be used for OJSC VimpelCom’s general corporate purposes including refinancing of the existing debt.

On 20 April 2012 OJSC VimpelCom repaid debt to Sberbank in the amount of RUR 10,000 million under one-year non-revolving loan facility, which was signed and drawdowned in December 2011.

27.2 Loans to related parties In the period from 1 January 2012 to 25 March 2012 OJSC VimpelCom granted additional loan tranches in the total amount of US$ 71 to VimpelCom Amsterdam Finance B.V. under the agreement dated 15 April 2011.

In the period from 1 January 2012 to 25 March 2012, OJSC VimpelCom granted additional loan tranches in the total amount of US$ 25 to VimpelCom Ltd. under the agreement dated 10 December 2010.

27.3 Russian anti-monopoly claim In April 2012, VimpelCom Ltd. was named as a third party in a claim brought by FAS against Telenor East Holding II AS (“Telenor East”) and Weather Investments II S.à r.l. (“Weather II”) in the Moscow Arbitration Court. The claim was filed by FAS on the alleged basis that Telenor East’s 15 February 2012 purchase of 234 million convertible preferred shares in VimpelCom from Weather II violated relevant Russian law whereunder a company controlled by a foreign state may not exercise control over a Russian entity having strategic importance for the national defense and state security.

F-139 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

FAS is asking the court to (i) invalidate the share purchase agreement between Telenor East and Weather II of 15 February 2012, (ii) invalidate the option agreement between Telenor East and Weather II of 15 February 2012; (iii) oblige Telenor East to return the convertible preferred shares to Weather II and (iv) oblige VimpelCom, Telenor East and Altimo Coöperatief U.A. to enter into a shareholders’ agreement on substantially the same terms as the 4 October, 2009 shareholder agreement relating to VimpelCom Ltd., which terminated on 10 December 2011.

In April 2012, VimpelCom Ltd. was named as a third party in a claim brought by the Russian Federal Antimonopoly Service (“FAS”) against Telenor East Holding II AS (“Telenor East”) and Weather Investments II S.à r.l. (“Weather II”) in the Moscow Arbitration Court. The claim was filed by FAS on the alleged basis that Telenor East’s 15 February 2012 purchase of 234 million convertible preferred shares in VimpelCom from Weather II violated relevant Russian law whereunder a company controlled by a foreign state may not exercise control over a Russian entity having strategic importance for the national defense and state security. FAS is asking the court to (i) invalidate the share purchase agreement between Telenor East and Weather II of 15 February 2012, (ii) invalidate the option agreement between Telenor East and Weather II of15 February 2012; (iii) oblige Telenor East to return the convertible preferred shares to Weather II and (iv) oblige VimpelCom, Telenor East and Altimo Coöperatief U.A. to enter into a shareholders’ agreement on substantially the same terms as the October 4, 2009 shareholders agreement relating to VimpelCom, which terminated on 10 December 2011.

In connection with its claim, on 24 April 2012 FAS obtained from the Moscow Arbitration Court an order for interim relief which prohibits VimpelCom Ltd. and the Company from voting their shares in OJSC VimpelCom at shareholder meetings of OJSC VimpelCom, to change the OJSC VimpelCom Board of Directors and approve major transactions and interested party transactions, as such terms are defined under Russian law. The injunction order also prohibits Telenor and Weather II from (i) voting their shares of VimpelCom Ltd. to change the composition of its Supervisory Board and (ii) exercising their rights under their option agreement of 15 February, 2012.

On 25 May 2012, VimpelCom Ltd. announced that the Moscow Arbitration Court issued a new, expanded injunction order in connection with the FAS claim. The injunction order states that it prohibits each of VimpelCom Ltd. and its wholly-owned subsidiaries, OJSC VimpelCom and the Company, and their respective management bodies (CEOs and members of the boards of directors) from giving effect to the resolutions of the Annual General Shareholders Meeting (“AGM”) of the OJSC VimpelCоm, which was held on 21 May 2012, including: — prohibiting the payment of dividends to shareholders of OJSC VimpelCom based on the results of operations in 2011, and the transfer of the cash intended for dividend distribution to the accounts of OJSC VimpelCom or other companies with foreign banks; — prohibiting the external auditors elected at the OJSC VimpelCom AGM from exercising the powers conferred on them; — prohibiting the board of directors of OJSC VimpelCom elected at the OJSC VimpelCom AGM from exercising their powers pursuant to the charter of OJSC VimpelCom; and — prohibiting the taking of other actions and steps designated to transfer the indicated funds out of our Russian subsidiary OJSC VimpelCom.

A hearing on the merits of the FAS claim is currently scheduled to take place on 17 October 2012. Unless it is lifted on appeal, the injunction will be in force until a decision by the court on the merits of the FAS claim comes into effect.

F-140 VimpelCom Holdings B.V. (a wholly-owned subsidiary of VimpelCom Ltd.)

(All amounts in millions of US dollars unless otherwise stated)

OJSC VimpelCom intends to appeal this extended injunction order. At the moment OJSC VimpelCom is conducting a comprehensive analysis of the scope and potential impact on the business of OJSC “VimpelCom” and its financial position. Based on the preliminary analysis OJSC VimpelCom does not expect any substantial risks for its operations, including realization of the current and planned investment projects.

27.4 Sale of GTEL-Mobile On 20 April 2012 VimpelCom signed an agreement to sell its entire indirect 49% stake in GTEL Mobile to GTEL Transmit and Infrastructure Service One Member Company Limited, or "GTEL Transmit", a related party of the our Vietnamese local partner, Global Telecommunications Corporation, or "GTEL," for cash consideration of US$ 45. The sale was completed on 23 April 2012, as of completion of the sale, VimpelCom has no further obligations or liabilities to GTEL or GTEL Mobile and GTEL Mobile is obligated to discontinue the use of the Beeline trademark after a six months transition period.

F-141

Unaudited Interim Condensed Consolidated Financial Statements

Open Joint Stock Company “Vimpel-Communications”

For the three- and nine-month periods ended September 30, 2012 and 2011

F-142 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim consolidated income statements

for the three and nine months ended 30 September 2012

Three months ended Nine months ended 30 September 30 September 2012 2011 2012 2011 Note (unaudited) (unaudited) (unaudited) (unaudited) (All amounts in thousands of US dollars unless otherwise stated) Service revenues 2,701,068 2,745,840 7,834,245 7,760,375 Sale of equipment and accessories 84,719 71,022 239,807 199,259 Other revenues 7,013 3,048 15,985 9,808 Total operating revenues 2,792,800 2,819,910 8,090,037 7,969,442

Operating expenses Service costs 725,552 734,586 2,109,780 2,031,270 Cost of equipment and accessories 79,909 88,681 221,744 241,352 Selling, general and administrative expenses 746,352 871,816 2,285,063 2,431,575 Depreciation 354,172 366,455 1,087,954 1,053,669 Amortization 89,676 108,408 284,346 311,724 Impairment loss 12 17,613 – 10,342 – Loss on disposals of non-current assets 11 21,595 24,418 119,393 39,215 Total operating expenses 2,034,869 2,194,364 6,118,622 6,108,805 Operating profit 757,931 625,546 1,971,415 1,860,637

Finance costs 212,718 214,523 635,620 582,090 Finance income (94,863) (89,144) (268,041) (161,734) Net foreign exchange loss (income) 101,233 (57,734) (59,821) (174,108) Net other non-operating losses 33,768 15,846 24,751 91,624 Shares of profit of associates and joint ventures accounted for using the equity method (39,113) (13,728) (58,732) (33,317) Profit before tax 544,188 555,783 1,697,638 1,556,082 Income tax expense 8 111,259 137,299 390,995 381,972 Profit for the period 432,929 418,484 1,306,643 1,174,110

Attributable to: Owners of the parent 418,067 418,321 1,268,825 1,146,097 Non-controlling interest 14,862 163 37,818 28,013 432,929 418,484 1,306,643 1,174,110

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-143 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim consolidated statements of comprehensive income

for the three and nine months ended 30 September 2012

Three months ended Nine months ended 30 September 30 September 2012 2011 2012 2011 Note (unaudited) (unaudited) (unaudited) (unaudited) (All amounts in thousands of US dollars unless otherwise stated) Profit for the period 432,929 418,484 1,306,643 1,174,110

Other comprehensive income (loss) Cash flow Hedge Reserve 13 (2,526) – (2,526) – Reclassification to other non- operating losses of accumulated exchange differences on translation of foreign operations for equity interest in acquiree in business combination achieved in stages – – – 43,100 Share of exchange differences on translation of foreign operations of associates and joint ventures accounted for using the equity method 25,253 (40,683) 16,984 (37,406) Net gain arising on revaluation of available-for-sale financial assets at fair value through other comprehensive income 13 35,830 – 22,483 – Exchange differences on translation of foreign operations 253,810 (579,856) 119,548 (228,073) Other comprehensive income(loss) for the period, net of tax 312,367 (620,539) 156,489 (222,379) Total comprehensive income(loss) for the period, net of tax 745,296 (202,055) 1,463,132 951,731

Attributable to: Owners of the parent 724,671 (203,288) 1,422,514 915,696 Non-controlling interests 20,625 1,233 40,618 36,035 745,296 (202,055) 1,463,132 951,731

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-144 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim consolidated statements of financial position

as of 30 September 2012

30 September 31 December 2012 2011 Note (unaudited) (audited) (All amounts in thousands of US dollars unless otherwise stated) Assets Non-current assets Property and equipment 9 7,350,437 7,245,361 Intangible assets 10 1,009,633 1,217,158 Goodwill 10 3,575,304 3,479,464 Investments in associates and joint ventures 462,601 388,155 Deferred tax asset 8,947 – Financial assets 13 4,623,270 3,669,369 Other non-current non-financial assets 14 17,904 85,208 Total non-current assets 17,048,096 16,084,715 Current assets Inventories 83,530 152,454 Other current non-financial assets 14 249,622 262,110 Trade and other receivables 687,405 634,756 Current income tax asset 71,277 128,255 Other current financial assets 13 713,165 26,392 Cash and cash equivalent 15 718,357 653,461 Total current assets 2,523,356 1,857,428 Assets of disposal group classified as held for sale 6 146,554 1,473 Total assets 19,718,006 17,943,616

Equity and liabilities Equity Equity attributable to equity owners of the parent 6,083,201 5,284,888 Non-controlling interests (9,925) 35,056 Total equity 6,073,276 5,319,944 Non-current liabilities Financial liabilities 13 8,348,964 8,466,250 Provisions 206,196 138,227 Other non-current non-financial liabilities 14 40,614 49,734 Deferred tax liability 448,537 450,086 Total non-current liabilities 9,044,311 9,104,297 Current liabilities Trade and other payables 999,294 1,317,507 Dividends payable 16 614,308 – Other current non-financial liabilities 14 838,596 714,849 Financial liabilities 13 1,639,558 1,392,519 Current income tax payable 4,655 10,488 Provisions 59,178 84,012 Total current liabilities 4,155,589 3,519,375 Liabilities of disposal group classified as held for sale 6 444,830 – Total equity and liabilities 19,718,006 17,943,616

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-145 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim consolidated statement of changes in equity

for the three months ended 30 September 2012

Attributable to owners of the parent Other Other Non- Issued Capital capital Retained comprehen- controlling Total Note capital surplus reserves earnings sive income Total interest equity (All amounts in thousands of US dollars unless otherwise stated) As of 30 June 2012 (unaudited) 92 1,433,396 303,016 4,497,238 (880,148) 5,353,594 (12,513) 5,341,081 Profit for the period – – – 418,067 – 418,067 14,862 432,929 Cash flow Hedge Reserve 13 – – – – (2,526) (2,526) – (2,526) Share of foreign currency translation of associates and joint ventures accounted for using the equity method – – – – 25,253 25,253 – 25,253 Available-for-sale financial asset at fair value through other comprehensive income 13 – – – – 35,830 35,830 – 35,830 Foreign currency translation – – – – 248,047 248,047 5,763 253,810 Total comprehensive income – – – 418,067 306,604 724,671 20,625 745,296 Dividends declared 16 – – – – – – (398) (398) Divestment – – – – – – 125 125 Changes in fair value of liability in respect of put options over non-controlling interests in subsidiaries – – 5,240 – (485) 4,755 (17,764) (13,009) Share-based compensation accrual – – 179 – – 179 – 179 As of 30 September 2012 (unaudited) 92 1,433,396 308,436 4,915,305 (574,028) 6,083,201 (9,925) 6,073,276

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-146 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim consolidated statement of changes in equity

for the nine months ended 30 September 2012

Attributable to owners of the parent Other Other Non- Issued Capital capital Retained comprehen- controlling Total Note capital surplus reserves earnings sive income Total interest equity (All amounts in thousands of US dollars unless otherwise stated) As of 31 December 2011 92 1,433,396 311,932 4,265,292 (725,825) 5,284,887 35,055 5,319,942 Profit for the period – – – 1,268,824 – 1,268,824 37,819 1,306,643 Cash flow Hedge Reserve 13 – (2,526) (2,526) – (2,526) Share of foreign currency translation of associates and joint ventures accounted for using the equity method – – – – 16,984 16,984 – 16,984 Available-for-sale financial asset at fair value through other comprehensive income 13 – – – – 22,483 22,483 – 22,483 Foreign currency translation – – (1,444) – 118,193 116,749 2,799 119,548 Total comprehensive income – – (1,444) 1,268,824 155,134 1,422,514 40,618 1,463,132 Dividends declared 16 – – – (618,811) – (618,811) (398) (619,209) Acquisition of non-controlling interest 4 – – (9,551) – – (9,551) 644 (8,907) Divestments – – – – 114 114 (43,673) (43,559) Changes in fair value of liability in respect of put options over non-controlling interests in subsidiaries 13 – – 7,858 – (3,451) 4,407 (42,171) (37,764) Share-based compensation accrual – – (359) – – (359) – (359) As of 30 September 2012 (unaudited) 92 1,433,396 308,436 4,915,305 (574,028) 6,083,201 (9,925) 6,073,276

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-147 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim consolidated statement of changes in equity

for the three months ended 30 September 2011

Attributable to owners of the parent Other Other Non- Issued Capital capital Retained comprehen- controlling Total Note capital surplus reserves earnings sive income Total interest equity (All amounts in thousands of US dollars unless otherwise stated) As of 30 June 2011 (unaudited) 92 1,433,396 (12,114) 4,888,039 (53,802) 6,255,611 314,001 6,569,612 Profit for the period – – – 418,321 – 418,321 163 418,484 Share of foreign currency translation of associates and joint ventures accounted for using the equity method – – – – (40,683) (40,683) – (40,683) Foreign currency translation (580,926) (580,926) 1,070 (579,856) Total comprehensive income – – – 418,321 (621,609) (203,288) 1,233 (202,055) Dividends declared 16 – – – – – – (444) (444) Changes in fair value of liability in respect of put options over non-controlling interests in subsidiaries 13 – – (8,592) – – (8,592) (19,387) (27,979) Restructuring of shareholding in consolidated subsidiaries – – 264,074 – (5,473) 258,601 (10,263) 248,338 Share-based compensation accrual – – 603 – – 603 – 603 As of 30 September 2011 (unaudited) 92 1,433,396 243,972 5,306,360 (680,884) 6,302,936 285,139 6,588,075

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-148 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim consolidated statement of changes in equity

for the nine months ended 30 September 2011

Attributable to owners of the parent Other Other Non- Issued Capital capital Retained comprehen- controlling Total Note capital surplus reserves earnings sive income Total interest equity (All amounts in thousands of US dollars unless otherwise stated) As of 31 December 2010 92 1,433,396 29,562 4,443,079 (445,009) 5,461,120 (25,066) 5,436,054 Profit for the period – – – 1,146,098 – 1,146,098 28,012 1,174,110 Reclassification of current period earnings of exchange differences on translation of foreign operations for equity interest in acquiree in business combination achieved in stages – – – – 43,100 43,100 – 43,100 Share of foreign currency translation of associates and joint ventures accounted for using the equity method – – – – (37,406) (37,406) – (37,406) Foreign currency translation – – – – (236,096) (236,096) 8,023 (228,073) Total comprehensive income – – – 1,146,098 (230,402) 915,696 36,035 951,731 Dividends declared 16 – – – (282,817) – (282,817) (444) (283,261) Changes in fair value of liability in respect of put options over non-controlling interests in subsidiaries 13 – – (43,502) – – (43,502) (43,443) (86,945) Acquisition of non-controlling interest – – (5,998) – – (5,998) 307,336 301,338 Restructuring of shareholding in consolidated subsidiaries – – 264,074 – (5,473) 258,601 (10,263) 248,338 Acquisition of subsidiaries – – (391) – – (391) 20,985 20,594 Share-based compensation accrual – – 226 – – 226 – 226 As of 30 September 2011 (unaudited) 92 1,433,396 243,971 5,306,360 (680,884) 6,302,935 285,140 6,588,075

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-149 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Interim consolidated statements of cash flows

for the nine months ended 30 September 2012

Nine month ended 30 September 2012 2011 Note (unaudited) (unaudited) (All amounts in thousands of US dollars unless otherwise stated) Operating activities Profit for the period 1,306,643 1,174,110 Income tax expense 8 390,995 381,972 Profit before tax 1,697,638 1,556,082 Non-cash adjustment to reconcile profit before tax to net cash flows: Depreciation 1,087,954 1,053,669 Impairment loss 10,342 – Amortization 284,346 311,724 Loss on disposals of non-current assets 119,393 39,215 Finance income (268,041) (161,734) Finance costs 635,620 582,090 Other non-operating losses 24,751 91,624 Net foreign exchange income (59,821) (174,108) Shares of profit of associates and joint ventures accounted for using the equity method (58,732) (33,317) Movements in provisions 35,511 17,394 Operating cash flow before working capital adjustments, before interest and income taxes 3,508,961 3,282,639 Working capital adjustments Change in trade and other receivables and prepayments (88,986) (266,970) Change in inventories 23,286 (59,352) Change in trade and other payables 109,815 289,295 Interest and income taxes Interest paid (529,802) (398,234) Interest received 13,544 144,284 Income tax paid (337,666) (369,590) Net cash flows from operating activities 2,699,152 2,622,072 Investing activities Proceeds from sale of property, plant and equipment and intangible assets 34,924 65,136 Purchase of property, plant and equipment and intangible assets (1,421,441) (1,670,893) Outflow for loan granted (774,056) (3,506,462) Receipts from loans granted 72,794 309,769 Net cash deposited (660,224) (77,239) Proceeds from sale of available-for-sale financial asset 7,787 3,801 Receipts from associates – 12,500 Net cash outflow from sale of a subsidiary (82,176) – Acquisition of a subsidiaries, net of cash acquired (1,494) (496,738) Receipt of dividends 1,155 – Net cash flows used in investing activities (2,822,731) (5,360,126) Financing activities Net proceeds from exercise of share options – 1,151 Acquisition of non-controlling interest (8,819) (3,750) Proceeds from borrowings net of fees paid 1,262,917 4,027,077 Repayment on borrowings (1,041,861) (603,664) Dividends paid to equity holders of the parent – (285,409) Net cash flows from financing activities 212,237 3,135,405 Net increase in cash and cash equivalents 88,659 397,351 Effect of exchange rate changes on cash and cash equivalents (11,518) (43,528) Cash and cash equivalents at beginning of period 653,461 650,557 Cash classified as asset held for sale (12,244) – Cash and cash equivalents at end of period 718,357 1,004,380 The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-150 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements

for the three and nine months ended 30 September 2012

(All amounts in thousands of US dollars unless otherwise stated)

1. General information

Open Joint Stock Company "Vimpel-Communications" (OJSC "VimpelCom", "VimpelCom", the "Company", the "Group" or "we") was registered in the Russian Federation ("Russia") on 15 September 1992 as a closed joint stock company, re-registered as an open joint stock company on 28 July 1993 and began full-scale commercial operations in June 1994.

The registered office of VimpelCom is located at Russian Federation, 127083 Moscow, Ulitsa 8 Marta, dom 10, building 14.

In these notes, VimpelCom, the Company, the Group or "we" also refers to Open Joint Stock Company "Vimpel-Communications"’s consolidated subsidiaries.

In these notes United States dollar amounts are presented in thousands, except for share amounts and as otherwise indicated.

VimpelCom Ltd., the ultimate controlling shareholder of the Company, was incorporated in Bermuda on 5 June 2009, as an exempted company under the name New Spring Company Ltd., which was subsequently changed to VimpelCom Ltd. on 1 October 2009. VimpelCom Ltd. was formed to recapitalize OJSC "VimpelCom" and acquire CJSC "Kyivstar G.S.M." ("Kyivstar"). Altimo Holdings & Investments Limited ("Altimo") and Telenor ASA ("Telenor") together with certain of their respective affiliates were the two major shareholders in each of the companies.

VimpelCom earns revenues by providing voice, data and other telecommunication services through a range of wireless, fixed and broadband internet services, as well as selling related equipment and accessories. As of 30 September 2012, the Company operated telecommunications services in Russia, Kazakhstan, Ukraine, Armenia, Tajikistan, Uzbekistan, Georgia, Kyrgyzstan, Cambodia and Laos primarily under the "Beeline" brand name.

The unaudited interim condensed consolidated financial statements of the Company for the nine months ended 30 September 2012 were authorized for issue by General director on 17 December 2012.

2. Basis of the interim condensed consolidated financial statements

2.1. Basis of preparation

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting.

These interim condensed consolidated financial statements do not include all the information and disclosures required for a complete set of consolidated financial statements and should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2011 prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.

F-151 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

2. Basis of the interim condensed consolidated financial statements (continued)

2.1. Basis of preparation (continued)

VimpelCom maintains its accounting records and prepares its financial statements in accordance with the Regulations on Accounting, Reporting and tax legislation in the Russian Federation. VimpelCom’s subsidiaries outside the Russian Federation maintain their accounting records in accordance with local regulations and tax legislation. The accompanying interim consolidated financial statements have been prepared from these accounting records and adjusted as necessary in order to comply with IFRS.

The interim condensed consolidated financial statements have been prepared on a historical cost basis, unless disclosed otherwise.

The interim condensed consolidated financial statements are presented in United States dollars ("US dollars" or "US$") which is the functional and reporting currency of our controlling shareholder VimpelCom Ltd. Amounts are presented in thousands, unless otherwise indicated and all values are rounded to the nearest thousand (USD thousand) except when otherwise indicated.

The preparation of these consolidated financial statements required management to apply accounting policies and methodologies based on complex, subjective judgments and estimates based on past experience and assumptions determined from time to time to be reasonable and realistic based on the related circumstances. The use of these estimates and assumptions affects the amounts reported in the statement of financial position and the income statement as well as the notes. The final amounts for items for which estimates and assumptions were made in the consolidated financial statements may differ from those reported in these statements due to the uncertainties that characterize the assumptions and conditions on which the estimates are based.

2.2. Basis of consolidation

The interim condensed consolidated financial statements comprise the financial statements of the Company and its subsidiaries as of 30 September 2012. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

Intercompany accounts and transactions within the Company have been eliminated.

Non-controlling interests are reported in the consolidated statement of financial position as a separate component of equity. Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the owners of the parent.

2.3. New standards, interpretations and amendments thereof

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2011.

The following amendments to IFRSs standards did not have any impact on the accounting policies, financial position or performance of the Group at the reporting date.

F-152 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

2. Basis of the interim condensed consolidated financial statements (continued)

2.3. New standards, interpretations and amendments thereof(continued)

Amendments to IAS 12 Income taxes: Recovery of Underlying Assets

This amendment to IAS 12 includes a rebuttable presumption that the carrying amount of investment property measured using the fair value model in IAS 40 will be recovered through sale and, accordingly, that any related deferred tax should be measured on a sale basis. The presumption is rebutted if the investment property is depreciable and it is held within a business model whose objective is to consume substantially all of the economic benefits in the investment property over time, rather than through sale. Specifically, IAS 12 will require that deferred tax arising from a non-depreciable asset measured using the revaluation model in IAS 16 should always reflect the tax consequences of recovering the carrying amount of the underlying asset through sale. Effective implementation date is for the annual periods beginning on or after 1 January 2012.

Amendments to IFRS 7 Disclosures – Transfers of financial assets

The IASB issued an amendment to IFRS 7 that enhances disclosures for financial assets. These disclosures relate to assets transferred (as defined under IAS 39). If the assets transferred are not derecognised entirely in the financial statements, an entity has to disclose information that enables users of financial statements to understand the relationship between those assets which are not derecognised and their associated liabilities. If those assets are derecognised entirely, but the entity retains a continuing involvement, disclosures have to be provided that enable users of financial statements to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those derecognised assets. Effective implementation date is for annual periods beginning on or after 1 July 2011 with no comparative requirements.

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income

The amendments to IAS 1 change the grouping of items presented in Other Comprehensive Income ("OCI"). Items that would be reclassified (or recycled) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified.

The amendments do not change the nature of the items that are currently recognised in OCI, nor do they impact the determination of whether items in OCI are reclassified through profit or loss in future periods. These amendments are applied retrospectively in accordance with the requirements of IAS 8 for changes in accounting policy. Effective implementation date is for annual periods beginning on or after 1 July 2012 with early adoption permitted.

The company did not early adopt any standard, interpretation or amendment that has been issued but is not yet effective.

F-153 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Seasonality of operations

Due to seasonality of the Group’s operations, higher revenues and operating profits are usually expected in the third quarter of the year and the month of December. These expectations are mainly attributable to the increased demand for telecommunication services during peak holiday seasons from private customers. This information is provided to allow for a proper appreciation of the results, however management has concluded that this does not constitute a "highly seasonal" business as described by IAS 34 Interim Financial Reporting.

4. Acquisition of non-controlling interest

On 11 March 2012 VimpelCom acquired the non-controlling interest of 13% share in LLC "Sakhalin Telecom", VimpelCom’s fixed-line subsidiary in Sakhalin region, for the total cash consideration of RUR 113 million (the equivalent to US$ 3,825 as of 12 March 2012). On 13 March 2012 Company acquired the non-controlling interest of 10.39% of shares of CJSC "ST Mobile", VimpelCom’s mobile subsidiary in Sakhalin region, for cash consideration of RUR 147 million (the equivalent to US$ 4,955 as of 13 March 2012). After transaction OJSC "VimpelCom" became a holder of 99.2% participatory interest of LLC "Sakhalin Telecom" and 100% shares of CJSC "ST Mobile".

5. Sale of GTEL-Mobile

On 20 April 2012 VimpelCom signed an agreement to sell its entire indirect 49% stake in GTEL Mobile to GTEL Transmit and Infrastructure Service One Member Company Limited, or "GTEL Transmit", a related party of our Vietnamese local partner, Global Telecommunications Corporation, or "GTEL" for cash consideration of US$ 45,000. The sale was completed on 23 April 2012. VimpelCom has no further obligations or liabilities to GTEL or GTEL Mobile and GTEL Mobile as a result of the completion of the sale. The net result from sale of US$ 850 was reported as Other non-operating loss in the interim consolidated income statement.

6. Disposal groups

Ukrainian Radio Systems

On 21 September 2012 VimpelCom signed an agreement to sell its entire indirect 100% stake in PJSC "Ukrainian Radio Systems" ("URS"), a subsidiary operated in Ukraine, to our related party Kyivstar for cash consideration of US$ 0.005. The sale was completed on 1 October 2012.

Assets and liabilities of URS qualify as a disposal group under IFRS 5 Non-current assets held for sale and discontinued operations and therefore have been presented as assets of disposal group classified as held for sale and liabilities of disposal group classified as held for sale as of 30 September 2012 in the accompanying condensed consolidated financial statements.

F-154 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

6. Disposal groups (continued)

Ukrainian Radio Systems (continued)

As of 30 September 2012 the major classes of assets and liabilities of URS were as follows:

30 September 2012 Assets of disposal group classified as held for sale Property and equipment 19,774 Intangible assets 2,764 Other current assets 26,107 Cash 11,209 Total assets of the disposal group 59,854

Liabilities of disposal group classified as held for sale Trade and other payables 28,759 Other current non-financial Liabilities 6,280 Provisions, current 432 Current financial liabilities 357,655 Total liabilities of the disposal group 393,126 Total net assets of the disposal group (333,272)

Sotelco

VimpelCom intends to dispose its entire indirect 90.0% stake in Sotelco Ltd. ("Sotelco"). Assets and liabilities of Sotelco qualify as a Disposal Group under IFRS 5 Non-current assets held for sale and discontinued operations and therefore are reclassified in the Statement of Financial Position as of 30 September 2012 in the accompanying condensed consolidated financial statements.

As of 30 September 2012 Sotelco’s (100%) carrying values were as follows:

30 September 2012 Assets of disposal group classified as held for sale Property and equipment 29,953 Intangible assets 26,182 Other non-current non-financial assets 15,537 Trade accounts receivable 2,394 Inventory 852 Other current assets 1,231 Cash 1,035 Total assets of the disposal group 77,184

Liabilities of disposal group classified as held for sale Non-current financial liabilities 28,236 Provisions, non-current 2,950 Other current non-financial Liabilities 6,105 Trade and other payables 8,582 Current financial liabilities 5,831 Total liabilities of the disposal group 51,704 Total net assets of the disposal group 25,480

F-155 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

7. Segment information

Management analyzes the operating segments separately because of different economic environments and stages of development in different geographical areas, requiring different investment and marketing strategies. Management does not analyze assets by reportable segments. The segment data for acquired operations are reflected herein from the date of their respective acquisition.

VimpelCom defined Russia, CIS (including Georgia), Ukraine as operating segments based on the business activities in different geographical areas.

"All other" category includes Asia and headquarter expenses and other unallocated adjustments and eliminations.

Prior to 1 January 2012, management evaluated the performance of its segments on a regular basis primarily based on earnings before interest, tax, depreciation, amortization and impairment loss ("adjusted EBITDA") as calculated based on US Generally Accepted Accounting Principles. Beginning in 2012, while still utilizing the same measure of segment performance, the information analysed by the management is based on IFRS. Information for comparative periods was adjusted to IFRS and is presented below accordingly.

Financial information by reportable segment for the three and nine month periods ended 30 September 2012 and 30 September 2011 is presented in the following tables.

Information by reportable segments for the three months ended 30 September 2012

Russia Ukraine CIS Total All other Group Revenue External customers 2,310,314 16,362 453,977 2,780,653 12,147 2,792,800 Inter-segment 16,183 1,920 23,998 42,101 (42,101) – Total revenue 2,326,497 18,282 477,975 2,822,754 (29,954) 2,792,800 Adjusted EBITDA 1,005,354 5,214 234,376 1,244,944 (3,957) 1,240,987 Other disclosures Capital expenditures 321,227 929 90,450 412,606 35,802 448,408

Information by reportable segments for the nine months ended 30 September 2012

Russia Ukraine CIS Total All other Group Revenue External customers 6,775,507 68,724 1,197,826 8,042,057 47,980 8,090,037 Inter-segment 43,613 7,345 69,667 120,625 (120,625) – Total revenue 6,819,120 76,069 1,267,493 8,162,682 (72,645) 8,090,037 Adjusted EBITDA 2,900,256 5,759 577,606 3,483,621 (10,171) 3,473,450 Other disclosures Capital expenditures 819,553 6,877 255,876 1,082,306 221,630 1,303,936

F-156 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

7. Segment information (continued)

Information by reportable segments for three months ended 30 September 2011

Russia Ukraine CIS Total All other Group Revenue External customers 2,378,537 32,859 393,003 2,804,399 15,511 2,819,910 Inter-segment 18,482 5,660 36,597 60,739 (60,739) – Total revenue 2,397,019 38,519 429,600 2,865,138 (45,228) 2,819,910 Adjusted EBITDA 961,056 5,056 197,711 1,163,823 (36,694) 1,127,129 Other disclosures Capital expenditures 457,344 910 179,985 638,239 27,469 665,708

Information by reportable segments for the nine months ended 30 September 2011

Russia Ukraine CIS Total All other Group Revenue External customers 6,743,769 104,159 1,080,992 7,928,920 40,522 7,969,442 Inter-segment 46,752 14,749 88,858 150,359 (150,359) – Total revenue 6,790,521 118,908 1,169,850 8,079,279 (109,837) 7,969,442 Adjusted EBITDA 2,797,041 16,455 532,011 3,345,507 (80,779) 3,264,728 Other disclosures Capital expenditures 1,197,641 2,729 384,903 1,585,273 51,029 1,636,302

The following table provides the breakdown of operating revenues from external customers by mobile and fixed line services:

Information by reportable segments for the three months three months nine months nine months ended ended ended ended 30 September 30 September 30 September 30 September 2012 2011 2012 2011 Mobile 2,373,871 2,401,189 6,818,967 6,746,088 Fixed line 418,929 418,721 1,271,070 1,223,354 Total revenue 2,792,800 2,819,910 8,090,037 7,969,442

These business activities include the following operations: mobile primarily include activities for the providing of wireless telecommunication services to the Company's subscribers and other operators while fixed line primarily include all activities for providing wireline telecommunication services, broadband and consumer Internet. VimpelCom provides both mobile and fixed line services in Russia, Ukraine and CIS.

The Company’s management does not review total assets and total liabilities per segment, and therefore this information has not been presented in these statements.

F-157 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

7. Segment information (continued)

The following table provides the reconciliation of consolidated adjusted EBITDA to consolidated profit:

Three months ended Nine months ended 30 September 30 September 2012 2011 2012 2011 Adjusted EBITDA 1,240,987 1,127,129 3,473,450 3,264,728 Reconciliation adjustments – (2,302) – 517 Depreciation (354,172) (366,455) (1,087,954) (1,053,669) Amortization (89,676) (108,408) (284,346) (311,724) Impairment loss (17,613) – (10,342) – Loss on disposals of non- current assets (21,595) (24,418) (119,393) (39,215) Finance income 94,863 89,144 268,041 161,734 Finance costs (212,718) (214,523) (635,620) (582,090) Other non-operating losses (33,768) (15,846) (24,751) (91,624) Shares of profit of associates and joint ventures accounted for using the equity method 39,113 13,728 58,732 33,317 Net foreign exchange income (loss) (101,233) 57,734 59,821 174,108 Income tax expense (111,259) (137,299) (390,995) (381,972) Profit for the period 432,929 418,484 1,306,643 1,174,110

8. Income taxes

Current tax is the expected tax expense, payable or receivable on the taxable income or loss for the year or period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods.

Income tax expense consisted of the following for the periods ended 30 September:

Three months ended Nine months ended 30 September 30 September 2012 2011 2012 2011 Current income taxes 115,593 108,811 421,328 395,671 Deferred income taxes (4,334) 28,488 (30,333) (13,699) Income tax expense reported 111,259 137,299 390,995 381,972

There was immaterial tax effect of foreign currency hedge derivatives on other comprehensive income during nine months ended 30 September 2012.

The Company's effective income tax rate decreased during the three-month period ended 30 September 2012 as compared to the three-month period ended 30 September 2011 primarily due to lower income not recognized for tax purposes offset by decrease in anticipated future dividends and decrease in tax losses carry forward. The Company’s effective tax rate did not change significantly due to the decrease in tax losses carry forward and change in anticipated future dividends during the nine-month period ended 30 September 2012 as compared to the nine- month period ended 30 September 2011.

F-158 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

9. Property and equipment

Nine months ended 30 September Note 2012 2011 Opening net book value as of 1 January 7,245,361 6,390,190 Additions 1,201,199 1,513,810 Net book value of assets disposed 11 (136,774) (34,260) Translation adjustment 228,104 (321,620) Depreciation charge (1,087,954) (1,053,669) Assets classified as held for sale 6 (65,121) – Impairment 12 (17,168) – Disposal of subsidiary 5 (17,210) – Acquisition of subsidiary – 338,040 Closing net book value as of 30 September 7,350,437 6,832,491

10. Intangible assets and goodwill

Nine months ended 30 September 2012 2011 Other Other intangible intangible Note assets Goodwill assets Goodwill Opening net book value as of 1 January 1,217,158 3,479,464 1,379,597 3,293,026 Additions 106,079 – 149,667 22,304 Reclassification 7,735 (7,735) – – Net book value of assets disposed 11 (38,403) – (6,990) – Translation adjustment 30,357 103,575 2,457 (137,395) Acquisition of subsidiary – – 164,517 443,407 Amortization charge (284,346) – (311,724) – Assets classified as held for sale 6 (28,947) – – – Closing net book value as of 30 September 1,009,633 3,575,304 1,377,524 3,621,342

Goodwill is tested for impairment annually (at 1 October) and when circumstances indicate the carrying value may be impaired. The Company’s impairment test for goodwill is primarily based on value-in-use calculations that use a discounted cash flow model. The key assumptions used to determine the recoverable amount for the different cash generating units were disclosed in the annual financial statements for the year ended 31 December 2011.

There was no impairment of goodwill during the nine month periods ended 30 September 2012 and 2011.

F-159 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

11. Loss on disposals of non-current assets

Assets with a net book value of US$ 61,438 and US$ 175,177 were disposed of by the Group during the three and nine months ended 30 September 2012, respectively, and US$ 24,492 and US$ 41,250 during for the three and nine months ended 30 September 2011, respectively, resulting in a net loss on disposal of US$ 21,595 and US$ 119,393 for the three and nine months ended 30 September 2012, respectively, and net loss of US$ 24,418 and US$ 39,215 for the three and nine months, ended 30 September 2011, respectively.

The main part of the loss for nine months ended 30 September 2012 relates to the write off of Ukraine assets in amount of US$ 63,171. Loss on disposal did not change significantly during the three months ended 30 September 2012 as compared to three months ended 30 September 2011.

12. Impairment loss

The impairment loss recognized in profit and loss during three months ended 30 September 2012 relates to the warehouse building in the centre of Moscow owned by LLC Investment consulting agency "Center of Commercial Property", a subsidiary of OJSC VimpelCom. The company decided to offer the building for sale in the third quarter of 2012 year. According to the requirements of IFRS 5 Non-current assets held for sale and discontinued operations the building was remeasured at its fair value resulting on recognition of impairment loss in amount of US$ 17,168.

13. Financial assets and liabilities

Description of derivative financial instruments

VimpelCom uses derivative instruments, including swaps, forward contracts and options to manage certain foreign currency and interest rate exposures. The Company views derivative instruments as risk management tools and does not use them for trading or speculative purposes.

All derivatives are accounted for on a fair value basis and the changes in fair value are recorded in the income statement, except for liability under put options over non-controlling interests and derivative instruments which are cash flow hedges when the change in fair value is recorded in other comprehensive income. Cash flows from derivative instruments are reported in the same section of the statement of cash flows as the cash flows from the underlying instrument.

The Company may enter into business combinations which include options (call, put, or a combination of both) over the shares of the non-controlling interest.

Where call options lead to the establishment of control, then the proportions of the acquiree’s subsequent profits or losses and changes in equity allocated to the parent and non-controlling interests will be based on the present ownership interest, only to the extent that the Group does not have current access to the economic benefits of the shares of non-controlling interest. To the extent the call option provides a present ownership (through current access to the underlying economic benefits) a gross liability is recognized, whereby any changes in the liability are recognized in profit and loss. If the call option does not provide present ownership it is recorded as a derivative asset at fair value through profit and loss.

F-160 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Financial assets and liabilities (continued)

Description of derivative financial instruments (continued)

Where there are put options granted to the non-controlling interest, then a financial liability is recognized. These liabilities are initially measured at the present value of the redemption amount and are subsequently measured in accordance with IAS 39. Where the Group does not have a present ownership interest in the outstanding shares, then at each period end the difference between the financial liability and the non-controlling interest (which reflects its share of the profit and losses, and changes in equity, of the acquiree) is accounted for as an equity transaction. Where the put option does provide a present ownership interest, the changes in the liability are recognized in profit or loss.

Financial assets

The Company has the following financial assets at:

30 September 31 December 2012 2011 Financial assets at fair value through profit or loss Derivatives over non-controlling interest 76,831 72,741 Financial assets at fair value through other comprehensive income Available-for-sale financial asset 109,707 95,444 Total financial assets at fair value 186,538 168,185

Loans granted, deposits and other financial assets Long term loans granted 4,200,283 3,454,047 Short term deposits 681,443 16,574 Interest receivable 259,693 44,744 Other loans granted 8,478 12,211 Total loans granted, deposits and other financial assets 5,149,897 3,527,576 Total financial assets 5,336,435 3,695,761

Total current 713,165 26,392 Total non-current 4,623,270 3,669,369

Significant change in financial assets

Loans granted and Interest receivable

Loans granted and Interest receivable are generally represented by loans granted to related parties and the amount of interest due on them and further described in Note 17.

Available-for-sale financial assets

Available-for sale financial assets include investment in shares of VimpelCom Ltd. The fair value of the quoted equity shares is determined by reference to the published price quotations in an active market. As part of stock-based compensation program of VimpelCom Ltd., VC ESOP N.V., a subsidiary of the Company, holds shares of VimpelCom Ltd. The number of shares was 9,219,057 and 10,078,608 VimpelCom Ltd.’s shares as of 30 September 2012 and 31 December 2011, respectively.

F-161 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Financial assets and liabilities (continued)

Significant change in financial assets (continued)

For available-for-sale financial investments, the Company assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.

The Company identified a gain on available-for-sale investment quoted shares of US$ 22,483 which was recognised within other comprehensive income in the statement of changes in equity for the period ended 30 September 2012. The Company recognized an impairment of US$ 57,049 on an available-for-sale investment quoted shares in the income statement for the period ended 30 September 2011.

Short term deposits

Pursuant to the Ruling on Granting Injunctive Relief in respect of the Federal Anti-Monopoly Service claim, enforcement proceedings were initiated and an Order prohibiting dividend distribution No. 23176/12/39/77 dated 31 May 2012 was issued. Pursuant to Order No. 23176/12/39/77 dated 31 May 2012 the cash on deposit and current accounts in the amount of RUR 2,105 million (the equivalent to US$ 68,086 at exchange rate for 30 September 2012) and US$ 500,000 intended for 2011 dividend distribution has been restricted (Note 18).

Financial liabilities

The Company has the following financial liabilities at:

30 September 31 December 2012 2011 Financial liabilities at fair value Derivatives over non-controlling interest 428,287 390,697 Foreign exchange contracts 13,156 – Total financial liabilities at fair value 441,443 390,697

Financial liabilities at amortised cost Short-term bank loans, bonds and equipment financing 1,479,289 1,347,030 Long-term bank loans, bonds and equipment financing 7,948,655 8,129,307 Total bank loans, bonds and equipment financing 9,427,944 9,476,337 Finance lease 32,584 16,923 Unamortized balance of fair value adjustment on interest free Kyivstar loan – (72,490) Unamortized fees (59,862) (68,034) Interest payable 146,413 115,336 Total financial liabilities at amortised cost 9,547,079 9,468,072 Total financial liabilities 9,988,522 9,858,769

Total current 1,639,558 1,392,519 Total non-current 8,348,964 8,466,250

F-162 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Financial assets and liabilities (continued)

Significant change in financial liabilities

On 2 February 2012, OJSC VimpelCom signed a loan facility agreement with CISCO Systems Finance International. The loan was a ruble denominated export credit facility for a total amount of RUR 1,550 million. The facility is to finance equipment provided to OJSC VimpelCom by CISCO on a reimbursement basis. The facility bears interest at a rate of 7.95% per annum. On 2 March 2012, OJSC VimpelCom drew down RUR 1,550 million (the equivalent to US$ 52,921 as of 2 March 2012).

On 20 March 2012, OJSC VimpelCom issued Russian ruble-denominated bonds, in an aggregate principal amount of RUR 25 billion, equivalent to US$ 855,508 at the exchange rate of the Central Bank of Russia on the same date. The bonds have a ten-year maturity with a put option in 3 years and bear an annual interest rate of 8.85%. Interest will be paid semi-annually. On 26 March 2012, OJSC VimpelCom issued Russian ruble-denominated bonds, in an aggregate principal amount of RUR 10 billion, equivalent to US$ 340,092 at the exchange rate of the Central Bank of Russia on the same date. The bonds have a ten-year maturity with a put option in 3 years and bear an annual interest rate of 8.85%. Interest will be paid semi-annually. The proceeds of the offerings will be used for OJSC VimpelCom’s general corporate purposes including refinancing of the existing debt.

On 20 April 2012, OJSC VimpelCom repaid RUR 10 billion (the equivalent to US$ 338,843 as of 20 April 2012) owed to Sberbank pursuant to a one-year non-revolving loan facility, which was signed and drawn down in December 2011.

On 27 August 2012, OJSC VimpelCom partially repaid debt to Sberbank in the amount of RUR 5 billion (the equivalent to US$ 157,184 as of 27 August 2012) according to the payment schedule under RUR10 billion non-revolving loan facility, which was signed on 28 August 2009. As of 30 September 2012 the outstanding debt under this agreement is RUR 5 billion, equivalent to US$ 161,724 as of 30 September 2012.

On 27 September 2012, OJSC VimpelCom partially repaid debt to Sberbank in the amount of RUR 2.2 billion (the equivalent to US$ 71,610 as of 27 September 2012) according to the payment schedule under non-revolving loan facility signed on 14 February 2008 with availability limit US$ 750,000, which was fully drawn down in rubles. As of 30 September 2012 the outstanding debt under this agreement is RUR 2.2 billion, equivalent to US$ 72,316 as of 30 September 2012.

Interest free loan and the related unamortized balance of fair value adjustment from Kyivstar was reported as Liabilities directly associated with assets held for sale as part of the disposal group due to a planned sale of URS (Note 6).

F-163 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Financial assets and liabilities (continued)

Derivatives over non-controlling interest – Put and call options

Limnotex

The Company entered into put and call option agreements in relation to its subsidiary, Limnotex Developments Ltd. ("Limnotex"), the 100% owner of a KaR-Tel, Kazakhstan. Pursuant to the put agreement, – Crowell Investments Limited ("Crowell"), a non-controlling shareholder of Limnotex, holds two put options for Limnotex shares: the first put option for 13.5% of Limnotex shares is exercisable during 2013 at a fixed price of US$ 297,000 and the second put option for 15% of Limnotex shares is exercisable during 2017 at a fixed price of US$ 330,000. The put option granted to Crowell gives rise to a financial liability calculated as the fair value of the underlying redemption (US$ 428 287 as of 30 September 2012 and US$ 390,697 as of 31 December 2011). The change in fair value is recorded in equity since there is no present access to benefits over the shares held by Crowell.

The two call options allow the Company to acquire the total of 28.5% of Limnotex shares held by Crowell at a multiple of EBITDA. Both options are exercisable during the period between April 2012 and May 2018. The call options do not give the Company present ownership rights. The call options are accounted for as a financial asset. Change in fair value of US$ 4,090 was recorded in the interim consolidated income statement with the fair value of the option amounting to US$ 76,831 as of 30 September 2012 (31 December 2011: US$ 72,741). The fair value of the options was determined based on expected exercise period in May 2018 and an estimated exercise price of US$ 1,452,700.

Euroset

VimpelCom owns a 50% minus 1 share indirect stake in Euroset, a distributor of mobile phone services and equipment in Russia, and owns call option allowing it to acquire a further 25% and one share in Euroset, which becomes exercisable in case of certain triggering events. No such events occurred before the issuance of these financial statements. The exercise price of the option is determined under a formula linked to certain inputs that depend on the timing of the exercise of the options and certain other conditions.

Foreign exchange contracts

During August and September 2012 OJSC VimpelCom entered into short-term forward and zero- cost collar agreements with several banks for a total notional amount of US$ 1,258,262, in order to protect the cash flows of its short-term financial and non-financial obligations denominated in USD from adverse USD-RUB movement. As of 30 September 2012 the notional amount outstanding of the derivative contracts was US$ 1,243,262. Derivative contracts with notional amounts of US$ 1,051,567 have been designated as a hedging instrument to hedge cash flows of the financial obligations. The fair value of these derivatives is US$ 8,335 negative and it was recognized in the accounting records as a liability in the line "Foreign exchange contracts". The effective portion of changes in fair value of foreign exchange contracts was recognized in the cash flow hedge reserve line in the interim consolidated statement of changes in equity in the amount US$ (2,526). The ineffective portion of changes in fair value of foreign exchange contracts was recognized in the amount US$ 751 as other non-operating loss. The remaining change in fair value was recognized in the same lines as where the underlying hedged items affect the profit and loss. The fair value of the derivative contracts to which no hedge accounting is applied amounts to US$ 4,821, which was recognized as other non-operating loss and a liability in the line "Foreign exchange contracts".

F-164 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Financial assets and liabilities (continued)

Fair values

Set out below is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments that are carried in the interim condensed consolidated financial statements as of period end (based on future cash flows discounted at the current market rates):

Carrying value Fair value 30 September 31 December 30 September 31 December 2012 2011 2012 2011 Financial assets at fair value through profit or loss Derivatives over non-controlling interest 76,831 72,741 76,831 72,741 Financial assets at fair value through other comprehensive income Available-for-sale financial asset 109,707 95,444 109,707 95,444 Total financial assets at fair value through profit or loss and other comprehensive income 186,538 168,185 186,538 168,185

Loans granted, deposits and other financial assets Long term-loans granted 4,200,283 3,454,047 4,200,283 3,454,047 Bank deposits 681,443 16,574 681,443 16,574 Interest receivable 259,693 44,744 259,693 44,744 Other loans granted 8,478 12,211 8,478 12,211 Total loans granted, deposits and other financial assets 5,149,897 3,527,576 5,149,897 3,527,576 Trade and other receivables 687,405 634,756 687,405 634,756 Cash and cash equivalents 718,357 653,461 718,357 653,461 Total financial assets 6,742,197 4,983,978 6,742,197 4,983,978

Financial liabilities at fair value through profit or loss Derivatives over non-controlling interest 428,287 390,697 428,287 390,697 Foreign exchange contracts 13,156 – 13,156 – Total financial liabilities at fair value through profit or loss 441,443 390,697 441,443 390,697 Financial liabilities at amortised cost 9,547,079 9,468,072 9,831,866 9,304,232 Trade and other payables 999,294 1,317,507 999,294 1,317,507 Dividends payable 614,308 – 614,308 – Total financial liabilities 11,602,124 11,176,276 11,886,911 11,012,436

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The fair values were estimated based on quoted market prices of our bonds, derived from market prices or by using discounted cash flows under the agreement at the rate applicable for the instruments with similar maturity and risk profile.

F-165 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Financial assets and liabilities (continued)

Fair value hierarchy

As at 30 September 2012 the Company held financial instruments carried at fair value on the statement of financial position in accordance with IAS 39 Financial Instrument: Recognition and Measurement.

The Company measures the fair value of derivatives except for the options related to the business combinations on a recurring basis, using observable inputs (Level 2), such as LIBOR, EURIBOR and swap curves, basis swap spreads and foreign exchange rates, and floating rates for US$ using income approach with present value techniques.

The Company measures the fair value of the options related to the business combinations on a recurring basis, using unobservable inputs (Level 3), such as projected redemption amounts, volatility, fair value of underlying shares using income approach with present value techniques and Black-Scholes model.

The following table provides the disclosure of fair value measurements separately for each major class of assets and liabilities measured at fair value.

As of 30 September 2012 (Level 1) (Level 2) (Level 3) Financial assets at fair value through profit or loss Derivatives over non-controlling interest – – 76,831 Financial assets at fair value through other comprehensive income Available-for-sale financial asset 109,707 – – Total financial assets at fair value 109,707 – 76,831

Financial liabilities at fair value through profit or loss Derivatives of non-controlling interest – – 428,287 Foreign exchange contracts – 13,156 – Total financial liabilities at fair value – 13,156 428,287

14. Other current non-financial assets and liabilities

Other non-current non-financial assets consisted of the following as of:

30 September 31 December 2012 2011 Deferred costs related to connection fees 10,807 79,598 Other long-term assets 7,097 5,610 Other non-current non-financial assets 17,904 85,208

F-166 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

14. Other current non-financial assets and liabilities (continued)

Other current non-financial assets consisted of the following as of:

30 September 31 December

2012 2011 Advances to suppliers 80,974 75,443 Input value added tax 131,907 131,663 Prepaid taxes 7,821 4,267 Deferred costs related to connection fees 11,125 28,779 Other assets 17,795 21,958 Other current non-financial assets 249,622 262,110

Other non-current non-financial liabilities consisted of the following as of:

30 September 31 December 2012 2011 Long-term deferred revenue 40,451 41,633 Other non-current liabilities 163 8,101 Other non-current non-financial liabilities 40,614 49,734

Other current non-financial liabilities consisted of the following as of:

30 September 31 December 2012 2011 Customer advances, net of VAT 307,071 369,392 Customer deposits 46,846 55,194 Other taxes payable 312,488 159,471 Due to employees 126,151 98,095 Short-term deferred revenue 37,075 32,697 Other liabilities 8,965 – Other current non-financial liabilities 838,596 714,849

15. Cash and cash equivalents

Cash and cash equivalents consisted of the following items as of:

30 September 31 December 2012 2011 Cash at banks and on hand 554,682 498,489 Short-term deposits with the original maturity of less than 90 days 163,675 154,972 Total cash and cash equivalents 718,357 653,461

Cash at banks earn interest at floating rates based on daily bank rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.

F-167 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Cash and cash equivalents (continued)

The cash balances as of 30 September 2012 in Uzbekistan of US$ 76,612 (31 December 2011: US$ 16,606) are restricted for the use of the Company due to the local government central bank regulations. The local government and the central bank restrictions have effect on international payments only, while such cash can be used for transactions within the country.

16. Dividends

30 September 30 September 2012 2011 Dividends declared during the nine months ended 30 September 2011 Final dividend for year 2010 – 282,817 Dividends declared during the nine months ended30 September 2012 Final dividend for year 2011 618,811 – Total 618,811 282,817

On 21 May 2012, in the Annual General Meeting of Shareholders the decision was adopted (i) to pay annual dividends to holders of common registered shares based on financial results for the year ended 31 December 2011 in the amount of 370.00 roubles (the equivalent to 0,012 US dollars at average exchange rate for May, 2012) per common share for the total amount of RUR 18,973.98 million (the equivalent to US$ 618,811 at average exchange rate for May, 2012) for all common registered shares in the aggregate; and (ii) to pay annual dividends to holders of preferred registered shares of type "A" based on financial results for the year ended 31 December 2011 in the amount of 0.025 kopecks (the equivalent to 0.00001 US dollars at average exchange rate for May, 2012) per preferred type "A" registered share for a total amount of 1,606.65 rubles (the equivalent to 0,051 US dollars at average exchange rate for May, 2012) for all preferred type "A" registered shares in the aggregate. In accordance with Russian tax legislation, VimpelCom will withhold a tax from the dividend payment in the amount of RUR 948.70 million (the equivalent to US$ 30,101 at average exchange rate for September, 2012). The payment of dividends was prohibited based on the Ruling on Granting Injunctive Relief in the FAS proceedings issued by Moscow Arbitration Court (Note 18).

17. Related parties

As of 30 September 2012 the Company is a wholly-owned subsidiary of VimpelCom Ltd. As of 30 September 2012 VimpelCom Ltd. is primarily owned by two major shareholders: Telenor East Holdings II AS and Alfa Group Consortium. VimpelCom Ltd. has no ultimate controlling shareholder.

Effective from 15 August 2012, all entities affiliated with Weather Investments II S.à r.l. are no longer considered to be related to VimpelCom as a result of a change in VimpelCom Ltd’s shareholder structure on that date.

F-168 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

17. Related parties (continued)

The following table provides the total amount of transactions that have been entered into with related parties and balances of accounts with them for the relevant financial periods:

For the three For the three months ended months ended 30 September 30 September 2012 2011 Revenue from Alfa Group 1,452 1,803 Revenue from Telenor 420 525 Revenue from Kyivstar 12,870 10,344 Revenue from associates 16,539 20,648 Revenue from other related parties 592 – 31,873 33,320 Services from Alfa Group 24 11 Services from Telenor 754 937 Services from Kyivstar 20,169 28,903 Services from associates 49,201 96,335 Services from other related parties 1,054 – 71,202 126,186 Finance income from VimpelCom Ltd. or its subsidiaries 81,885 69,528 Finance costs from Kyivstar 19,996 22,419 Other gain from other related parties 1,085 347 Other loss from associates – 57 Other loss from other related parties 2,568 –

For the nine For the nine months ended months ended 30 September 30 September 2012 2011 Revenue from Alfa Group 4,547 5,468 Revenue from Telenor 981 1,325 Revenue from Kyivstar 36,186 24,812 Revenue from associates 40,736 88,184 Revenue from other related parties 3,872 – 86,322 119,789 Services from Alfa Group 81 187 Services from Telenor 2,185 2,289 Services from Kyivstar 77,657 73,537 Services from associates 147,664 192,005 Services from other related parties 7,958 – 235,545 268,018 Finance income from VimpelCom Ltd. or its subsidiaries 245,935 120,110 Finance costs from Kyivstar 56,775 67,637 Other gain from other related parties 8,634 5,422 Other loss from associates 316 174 Other loss from other related parties 4,265 –

F-169 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

17. Related parties (continued)

30 September 31 December 2012 2011 Accounts receivable from Alfa Group 474 1,191 Accounts receivable from Telenor 260 453 Accounts receivable from Kyivstar 4,451 7,728 Accounts receivable from associates 58,232 83,149 Accounts receivable from other related parties 17,879 12,501 81,296 105,022 Assets directly associated with assets classified as held for sale Accounts receivable from Kyivstar 23,585 –

Accounts payable to Alfa Group – 71 Accounts payable to Telenor 818 609 Accounts payable to Kyivstar 15,718 5,532 Accounts payable to associates 30,481 25,510 Accounts payable to other related parties 13,932 14,477 60,949 46,199

Long-term loan granted to VimpelCom Ltd. or its subsidiaries 4,191,315 3,454,047 Interest receivable from VimpelCom Ltd. or its subsidiaries 254,251 40,022 Long-term and short-term loans from associates 8,988 212 4,454,554 3,494,281 Dividends payable to VimpelCom Ltd. or its subsidiaries 613,709 –

Liabilities directly associated with assets classified as held for sale Accounts payable to Kyivstar 27,654 – Short-term loan from Kyivstar, principal amount 373,076 – Short-term loan from Kyivstar, fair value adjustment (15,421) – Long-term loan from VimpelCom Ltd. or its subsidiaries 11,600 – 396,909 –

On 13 May 2011, VimpelCom granted an unsecured loan to VimpelCom Amsterdam Finance B.V., a subsidiary of VimpelCom Ltd., in the total amount of US$ 2,610,000. In the period from 20 May 2011 to 30 June 2011, VimpelCom Amsterdam Finance B.V. repaid part of this loan in the total amount US$ 54,285. In the period from 31 August 2011 to 23 November 2011, the loan was increased by the tranches in the total amount of US$ 204,298. In the period from 30 September 2011 to 31 December 2011, accrued interest on loan with VimpelCom Amsterdam Finance B.V. in the amount of US$ 147,835 was added to loan principal. In the period from 1 January 2012 to 24 April 2012 OJSC VimpelCom granted additional loan tranches in the total amount of US$ 239,987 to VimpelCom Amsterdam Finance B.V. under the agreement dated 15 April 2011. On 12 May 2012 US$ 72,700 was repaid. As of 30 September 2012 the principal amount of debt outstanding under this loan agreement was US$ 3,075,135. Under the agreement, VimpelCom may grant additional US$ 72,700. The loan matures on 31 May 2014. The interest rate is 8.72% per annum. The loan is denominated in US dollars.

F-170 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

17. Related parties (continued)

On 13 December 2010, VimpelCom granted a loan to VimpelCom Ltd. in the total amount of US$ 37,000 under the agreement dated 10 December 2010. In the period from 29 April 2011 to 23 June 2011, VimpelCom granted loans in the total amount of US$ 63,000 to VimpelCom Ltd. In the period from 30 September 2011 to 31 December 2011, VimpelCom Ltd. repaid part of this loan in the total amount US$ 30,000. In the period from 1 January 2012 to 25 April 2012, OJSC VimpelCom granted additional loan tranches in the total amount of US$ 30,000 to VimpelCom Ltd. As of 30 September 2012, the principal amount of debt outstanding under this loan agreement was US$ 100,000. The interest rate is LIBOR+0.25% per annum. From 1 January 2012 the interest rate was changed to 6.5% per annum. The loan matures on 13 December 2012. The loan is denominated in US dollars.

In May 2011, accrued interest on loan with VimpelCom Ltd. in the amount of US$ 8,699 was added to loan principal of US$ 467,500. In May 2012 accrued interest on the loan with VimpelCom Ltd. under the agreement for the year 2011 in amount of US$ 39,981 was added to loan principal. As of 30 September 2012, the principal amount of debt outstanding under this loan agreement was US$ 516,180. The loan matures on 31 December 2070. The interest rate is LIBOR+7.5% per annum. The loan is denominated in US dollars.

On 30 August 2011, VimpelCom granted an unsecured loan to VimpelCom Holdings B.V. in the total amount of US$ 50,000. As of 31 December 2011, the principal amount of debt was fully repaid. In the period from 1 January 2012 to 3 May 2012, OJSC VimpelCom granted additional loan tranches in the total amount of US$ 500,000 to VimpelCom Holdings B.V. under the agreement dated 22 August 2011. The loan matures on 30 August 2014. Interest rate for the first tranche made under this loan agreement is LIBOR+0.25% per annum. From 1 January 2012 the interest rate was changed to 6.5% per annum. The loan is denominated in US dollars.

Related parties (disposal groups)

On 23 November 2010, the Company received short-term reimbursable interest-free financial aid (the loan) of UAH 4,000,000 thousand from Kyivstar, the entity under common control. On 9 December 2011 the Company received a new tranche of reimbursable interest-free financial aid of UAH 105,000 thousand (equivalent to US$ 13,142 at the exchange rate as of 31 December 2011). At initial recognition this facility was stated at fair value of UAH 86,494 thousand (equivalent to US$ 10,826 at the exchange rate as of 31 December 2011). Loss on initial recognition at fair value was charged directly to equity as distributions to shareholders. In 2011, the Company repaid UAH 901,000 thousand (equivalent to US$ 112,771 at the exchange rate as of 31 December 2011) of this interest-free financial aid according to the agreement terms. On 14 November 2011 the Company signed an amendment to the loan agreement, whereby maturity of the loan was prolonged to 31 December 2012.Therewith, the difference between fair value and nominal amount of the abovementioned interest-free financial aid, net of deferred tax effect, was charged directly to equity as distributions to shareholders. In the period from 1 January 2012 to 30 September 2012 OJSC VimpelCom repaid part of this loan in the total amount of US$ 27,935. As of 30 September 2012, the notional amount of debt outstanding under this loan agreement was US$ 373,076.

F-171 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties

Commitments

Telecom Licenses Capital Commitments

VimpelCom’s ability to generate revenues in all countries it operates is dependent upon the operation of the wireless telecommunications networks authorized under its various licenses under GSM-900/1800 and "3G" (IMT-2000 / WCDMA / UMTS) mobile radiotelephony communications services (as of 30 September 2012) and "4G" (LTE) granted in 2011-2012. Under the license agreements operating companies are subject to certain commitments like territory or population coverage, level of capital expenditures, and number of base stations to be fulfilled within a certain timeframe. After expiration of the license, our operating companies might be subject to additional payments for renewals as well as new license capital and other commitments.

On 12 July 2012 OJSC VimpelCom has been awarded licenses to provide services over the LTE standard and its further modifications. The licenses allow the Company to provide services using radio-electronic devices via networks that use the LTE standard and its further modifications in the territory of the Russian Federation. The licenses were provided on condition that the Company will invest at least RUR 15 billion (equivalent to US$ 468,590 at the average exchange rate for the third quarter 2012) annually – starting from 12 July 2012 till 1 December 2019 – to assure the technical feasibility of providing services in the territory of the Russian Federation in compliance with the awarded licenses. Acquisition-related costs of RUR 401 million (equivalent to US$ 12,213 at the exchange rate as of 12 July 2012) have been capitalized to "Intangible assets" in the interim consolidated statement of financial position as of 30 September 2012.

Apple

On 31 March 2011, VimpelCom and Apple signed an amendment to the agreement to purchase iPhones. Under the amendment, 958,540 iPhone handsets (being the difference between 1,500,000 iPhone handsets per the original agreement and the amount actually ordered by the Company from Apple through 31 March 2011) should be ordered starting 1 April 2011 and before 31 March 2013. If VimpelCom does not comply with newly agreed schedule and certain other terms of amendments, then according to the agreement it could become liable for the shortfall in orders of iPhone handsets that existed as of 31 March 2011, less any iPhone units actually ordered by VimpelCom after this date. Management is of the opinion that no provisions should be recorded with respect to this matter.

Contingencies and uncertainties

The Company is involved in several legal proceedings relating to the normal conduct of its business, such as claims for regulatory and employment issues as well as general liability. The Company believes it has provided for all probable liabilities deriving from the normal course of business. The Company does not expect any liability arising from any other of these legal proceedings to have a material effect on its results of operations, liquidity, capital resources or financial position.

F-172 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties (continued)

Contingent tax liabilities

Multinational groups of the size of VimpelCom are exposed to varying degrees of uncertainty related to tax planning and regulatory reviews and audits. VimpelCom accounts for its income taxes on the basis of its own internal analyses, supported by external advice. VimpelCom continually monitors its global tax position, and whenever uncertainties arise, VimpelCom assesses the potential consequences and either accrues the liability or discloses a contingent liability in its financial statements, depending on the strength of the company’s position and the resulting risk of loss.

Anti-Monopoly Service claim (FAS proceedings) – Pricing of iPhone

The Federal Anti-Monopoly Service ("FAS") in Russia commenced proceedings against OJSC VimpelCom and OJSC MTS to look into the alleged price collusion with respect to the sale prices of iPhones. On 26 April 2012 the FAS has issued a decision pursuant to which OJSC VimpelCom and OJSC MTS were found guilty of price fixing in that they acted in concert to fix identical wholesale prices for iPhone4 Black 16 Gb and iPhone4 Black 32 Gb during the period from September 2010 to April 2011. Since both parties voluntarily ceased the alleged wrongdoings the antimonopoly case was terminated. On 17 July 2012 FAS announced the operative part of its Order to impose administrative liability upon VimpelCom pursuant to which a minimum fine was imposed upon VimpelCom in the amount of RUR 18.2 million (the equivalent to US$ 558 as of 17 July 2012). OJSC VimpelCom decided not to appeal FAS order and to pay this fine.

Russian Anti-Monopoly Proceedings (Telenor East and Weather Investments II)

In April 2012 the Federal Anti-Monopoly Service of the Russian Federation ("FAS") filed a claim with the Moscow Arbitration Court against Telenor East Holding II AS (Norway) ("Telenor East"), Weather Investments II S.a.r.l. (Luxembourg) ("Weather Investments II") seeking to invalidate the following transactions: (1) Share Purchase Agreement dated 15 February 2012 between Telenor East AS and Weather Investments II; (2) Option Agreement dated 15 February 2012 between Telenor East and Weather Investments II and application of the consequences of invalidity of the above transactions: to order Telenor East to return to Weather Investments II the shares purchased under the share purchase agreement dated 15 February 2012; and to order VimpelCom Ltd., Telenor East and Altimo Coöperatief U.A. (The Netherlands) to enter into a shareholders agreement on the terms not materially different from those of the Shareholders Agreement of 4 October 2009 with respect to VimpelCom Ltd. which was terminated on 10 December 2011, subject to preliminary approval of FAS.

VimpelCom Ltd. together with OJSC VimpelCom, LLC Altimo, Vimplecom Holdings B.V. (The Netherlands), Altimo Cooperatief U.A. were joined as third parties in the lawsuit filed by the Federal Anti-Monopoly Service of the Russian Federation against Telenor East and Weather Investments II in the Moscow Arbitration Court.

In its claim FAS asserted that 234 million of convertible preferred shares of VimpelCom were purchased by Telenor East on 15 February 2012 from Weather Investments II in breach of the provisions of the Russian laws whereunder a company controlled by a foreign government may not exercise control over a Russian company having strategic importance for defense of the country and national security.

F-173 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties (continued)

On 24 April 2012 the Moscow Arbitration Court issued a Ruling Granting the Injunctive Relief pursuant to which VimpelCom Ltd. and VimpelCom Holdings B.V. are prohibited from voting at the general shareholders meetings of OJSC VimpelCom on matters related to a change of the members of the management bodies, and passing resolutions on approval of major transactions and interested party transactions. The Ruling also prohibits Telenor and Weather Investments II from (i) changing the members of the management bodies of VimpelCom Ltd. and (ii) exercising their rights under the option agreement dated 15 February 2012. Telenor East filed an appeal against the Ruling on Granting the Injunctive Relief. The date of the hearing on appeal of Telenor East is set to 24 September 2012. On 24 September 2012 the Arbitration Court dismissed the appeal of Telenor East.

On 23 May 2012 the Moscow Arbitration Court issued a new Ruling on Granting Injunctive Relief in the FAS proceedings. The Ruling provides that VimpelCom Ltd, OJSC VimpelCom, VimpelCom Holdings B.V., and their management bodies (CEOs and directors) pending effectiveness of the judicial act entered on the merits of the dispute in this case are prohibited from giving effect to the resolutions of the Annual General Shareholders Meeting ("AGM") of OJSC VimpelCom held on 21 May 2012, including:

► prohibit payment to the shareholders of OJSC VimpelCom of the dividends based on the results of operations in 2011, and transfer of the cash intended for dividend distribution to the accounts of OJSC VimpelCom or other companies with foreign banks;

► prohibit the external auditors elected at the Annual General Shareholders Meeting of OJSC VimpelCom from exercising the powers conferred onto them;

► prohibit the board of directors of OJSC VimpelCom elected at the Annual General Shareholders Meeting of OJSC VimpelCom from exercising their powers pursuant to the charter of OJSC VimpelCom;

► prohibit other actions and steps designed to transfer the funds from the accounts of OJSC VimpelCom.

OJSC VimpelCom, Weather Investments II and Telenor East filed appeals against the court’s Ruling dated 23 May 2012. The appeals were scheduled for hearing on 12 November 2012. On 12 November 2012 the Arbitration Court dismissed the appeals of OJSC VimpelCom, Weather Investments II and Telenor East.

The case was set for trial on 17 October 2012. If such Rulings are not reversed by the court of appeals, they will remain in place until effectiveness of the judicial act in this case. On 17 October 2012 Moscow Arbitration Court held a preliminary hearing. The case was set for trial on 27 November 2012. In the course of court hearings held on 27 November 2012, the Federal Anti- Monopoly Service of Russia filed a request to withdraw its claim and its motion for injunctive relief. The court accepted the request and motion to withdraw. The court hearings have been adjourned until 30 November 2012. On 30 November 2012 the court passed a decision to dismiss the case following the motion from the Federal Anti-Monopoly Service to withdraw its claim. The injunction has been fully lifted. A notice of appeal may be filed within 30 days of the decision.

F-174 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties (continued)

Russian tax claims

In the Russian Federation, VimpelCom’s predominant market, there were many tax laws and related regulations introduced in previous periods as well as in 2012, which were not always clearly written, and their interpretation is subject to the opinions of the local tax inspectors and officials of the Ministry of Finance. Instances of inconsistent opinions between local, regional and federal tax authorities and Ministry of Finance are not unusual. Management believes that it has paid or accrued all taxes that are applicable. Where uncertainty exists, VimpelCom has accrued tax liabilities based on management’s best estimate.

On 21 January 2011, VimpelCom received a report from the tax authorities regards to tax audit for the period from 2007 to 2008. The amount of claims was RUR 1,191 million which is approximately US$ 38,523 at the exchange rate as of 30 September 2012. The Company recorded a provision of RUR 844 million which is approximately US$ 27,299 at the exchange rate as of 30 September 2012. The Company filed an appeal against tax audit report to the court. The courts of first and second instance satisfied a Company’s claim in full amount. The tax inspectorate has filed an appeal against the lower court decision to a higher court. Court of cassation 30 November 2012 issued a decision that upheld the position of VimpelCom in full amount. The tax inspectorate may challenge the decision in Supreme Arbitration Court.

Kazakhstan

The 1st Roaming Claim Against KaR-Tel: Threshold amounts

On 14 May 2010, the Antimonopoly Agency of Kazakhstan ("the Agency") initiated an investigation of the alleged breach of antimonopoly laws of Kazakhstan by all three Kazakhstan GSM-operators (KaR-Tel, GSM Kazakhstan OAO Kazakhtelecom LLP (trademarks KCell, Active), and Mobile Telecom Systems LLP (trade mark Neo), by abuse of dominant position through infringement of consumers' rights by way of determination of a threshold (minimal) amount of money on consumer's account required for rendering (switching on and off) roaming services ("the Threshold Amounts").

Further, the Agency decided to consider investigations, jointly with FAS, of Kazakhstan antimonopoly law breaches with respect to all the three Kazakhstan GSM-operators, including KaR-Tel, as well as operator-partners in the Russian Federation on indications of anticompetitive concerted actions and agreements as to establishing and (or) price maintenance as well as use of per-minute step of billing.

The Agency also decided to make a proposal to the Ministry of Telecommunications and Information of Kazakhstan as to earlier transfer to per-second billing for roaming services (date determined by law is 1 January 2012), and to conduct an evaluation of roaming tariffs.

On 21 June 2010, the Agency completed the part of its investigation related to the Threshold Amounts and alleged that all three Kazakhstan GSM-operators abused their dominant position through infringement of customers' lawful rights by way of establishing the Threshold Amounts.

F-175 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties (continued)

On 3 July 2010, the Agency initiated an administrative procedure with respect to all the three Kazakhstan GSM operators, including KaR-Tel, and issued the protocol on administrative offence ("the Protocol"). The Agency filed with the Administrative Court a claim based on the Protocol. The Company estimates KaR-Tel’s share of administrative fines amounting to KZT 11.6 billion (the equivalent to US$ 78,655 as of 3 July 2010). KaR-Tel believes that the claim of the Agency is without merits and intends to protect its rights and lawful interest in courts of Kazakhstan. On 16 July 2010, KaR-Tel filed a claim to recognize as illegal and annul the acts of the Agency, which have served as a procedural basis for the Protocol.

On 19 October 2010 the Interregional Economic Court of Astana has ruled in favor of KaR-Tel and recognized as illegal, null and void all acts of the Agency and its territorial branch, which have served as procedural basis for the Protocol.

On 15 November 2010, KaR-Tel received copy of the Agency's appeal on the decision. On 13 December 2010 the Court of Appeals upheld the decision of 19 October 2010 in favor of KaR-Tel. On 17 February 2011 the Court of Cassation reviewed the cassation petition of the Agency and upheld both the decision of 19 October 2010 and the resolution of the Court of Appeals of 13 December 2010. As a result, the decision of 19 October 2010 that has recognized all acts of the Agency and its territorial branch, which have served as procedural basis for the Protocol, as illegal, null and void, has come into force. Although the decision has come into full force and effect, it is still subject to appeal by the Agency in supervisory appeal order within 1 year from the date of receipt by the Agency of the Resolution of the Court of Cassation.

On 21 October 2011, the General Prosecutor of the Republic of Kazakhstan has filed a protest to the Supreme Court of Kazakhstan appealing in a supervisory review order the Decision of the Interregional Economic Court of Astana of 19 October 2010, which rendered unlawful and void all acts of the Antimonopoly Agency, as well as Decision of the Appeals Chamber of Astana City Court of 13 December 2010, which upheld the Economic Court decision. On 27 October 2011, KaR-Tel has received a notice from the Supreme Court of Kazakhstan indicating that the said protest has been accepted for review and the hearing took place on 16 November 2011.

On 16 November 2011, the Supervisory Chamber of the Supreme Court of Kazakhstan issued a Decision that overturned the Decision of the Interregional Economic Court of Astana of 19 October 2010, and Decision of the Appeals Chamber of Astana City Court of 13 December 2010. The Supreme Court sent the case back for the new consideration in administrative proceedings to the Interregional Administrative court of Almaty.

On 26 December 2011, the Interregional Administrative Court of Almaty accepted the request of the Company to discontinue proceedings and to return the Protocol to the Agency for rectification of deficiencies resulting from the Agency’s wrongful use of total revenues recorded by the Company for the purpose of calculation of the administrative fines instead of the amount of revenues received from alleged monopolistic activity.

F-176 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties (continued)

The Agency has rectified the deficiencies in the protocol and filed the amended protocol with the Court. On 15 June 2012 the Interregional Administrative Court reviewed the protocol and resolved that the Company abused its significant market power by introducing the threshold amounts for offline roaming. In the meantime the Court has accepted one of the Company’s defense arguments and calculated 10% administrative fine not on the basis of total revenue of the Company for the period under consideration, but only on the basis of revenues received from offline roaming, where CAMEL-roaming allowing online billing is not available, thus reducing administrative fine from KZT 11.6 billion (around US$ 77,822 as of 15 June 2012) to KZT 155 million around US$ 1,043 as of 15 June 2012). On 16 August 2012 the administrative fine was paid. The decision is subject to appeal by the public prosecutor’s office within 1 year from the date thereof. The decision does not hinder the Company’s opportunity to use the threshold amounts under certain cap in accordance with newly introduced Telecommunication Services Regulations. The Company did not accrue the respective provision as of 30 September 2012.

The 2nd Roaming Claim Against KaR-Tel: Concerted actions high roaming tariffs

The Agency has continued another part of its investigation – with respect to concerted actions of Kazakhstan and Russian GSM-mobile operators on establishing and/or preservation of tariffs ("Concerted Actions Investigation"). On 25 October 2010, the Agency completed the Concerted Actions Investigation and reclassified alleged concerted actions of KaR-Tel and other Russian and Kazakhstan GSM-operators into establishing monopolistically high tariffs. On 3 November 2010, the Agency initiated an administrative procedure and issued a new protocol on administrative offence, according to which the Agency has found KaR-Tel and the other two Kazakhstan GSM-operators liable for abuse of their dominant position on the market by way of establishing monopolistically high roaming tariffs ("the New Protocol").

Under Kazakhstan laws, the Agency has lodged the New Protocol into administrative court, and the court is to review the matter and to decide on the merits and on applicable fines.

On 23 November 2010, KaR-Tel filed a claim with Astana Interregional Economic Court against the Agency requesting the Court to recognize illegal and to annul acts of the Agency preceding the New Protocol.

On 24 February 2011, the Interregional Economic Court of Astana has ruled in favor of KaR-Tel and recognized as illegal, null and void all acts of the Agency and its territorial branch, which have served as procedural basis for the Protocol. The decision was received on 28 February 2011. The decision of 28 February 2011 came into force on 30 March 2011.

On 25 November 2011, the Agency appealed to the Supreme Court of Kazakhstan in a supervisory review order the Decision of the Interregional Economic Court of Astana of 24 February 2011, which recognized as illegal, null and void all acts of the Agency. On 11 January 2012, the Supervisory Chamber of the Supreme Court of Kazakhstan reviewed the protest and overturned the Decision of the Interregional Economic Court of Astana of 24 February 2011. The Supreme Court sent the case back for the new consideration in administrative proceedings to the Interregional Administrative court of Almaty. On 1 March 2012 the Interregional Administrative court of Almaty ruled in favor of KaR-Tel and recognized the protocol of the Agency as illegal, null and void.

F-177 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties (continued)

The decision of the Interregional Administrative court of Almaty will remain subject to appeal for one year. The ultimate resolution of this matter could result in a loss of KZT 9.900 billion (the equivalent to US$ 65,958 as of 30 September 2012).

KaR-Tel litigation with ex-shareholders

On 10 January 2005, KaR-Tel received an "order to pay" ("Order to Pay") issued by The Savings Deposit Insurance Fund, a Turkish state agency responsible for collecting state claims arising from bank insolvencies (the "Fund"), in the amount of approximately US$ 4,910 at the exchange rate as of 31 December 2010 (stated as approximately Turkish lira 7.55 quadrillion and issued prior to the introduction of the New Turkish Lira, which became effective as of 1 January 2005). The Order to Pay, dated as of 7 October 2004, was delivered to KaR-Tel by the Bostandykski Regional Court of Almaty. The Order to Pay does not provide any information regarding the nature of, or basis for, the asserted debt, other than to state that it is a debt to the Turkish Treasury and the term for payment was 6 May 2004.

On 17 January 2005, KaR-Tel delivered to the Turkish consulate in Almaty a petition to the Turkish court objecting to the propriety of the order and requesting the Turkish court to cancel the Order to Pay and stay of execution proceedings in Turkey. The petition was assigned to the 4th Administrative Court in Turkey, to be reviewed pursuant to applicable law.

On 1 June 2006, KaR-Tel received formal notice of the 4th Administrative Court's ruling that the stay of execution request was denied. KaR-Tel’s Turkish counsel has advised KaR-Tel that the stay request is being adjudicated separately from the petition to cancel the Order to Pay. KaR-Tel submitted an appeal of the ruling with respect to the stay application.

On 1 June 2006, KaR-Tel also received the Fund's response to its petition to cancel the order. In its response, the Fund asserts, among other things, that the Order to Pay was issued in furtherance of its collection of approximately Turkish lira 7.55 quadrillion (prior to the introduction of the New Turkish Lira, which became effective as of 1 January 2005) in claims against the Uzan group of companies that were affiliated with the Uzan family in connection with the failure of T. Imar Bankasi, T.A.S. The Fund's response to KaR-Tel’s petition claims that the Uzan group of companies includes KaR-Tel, Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S are Turkish companies that owned an aggregate 60% of the equity interests in KaR-Tel until their interests were redeemed by KaR-Tel in November 2003 in accordance with a decision of the Review Panel of the Supreme Court of Kazakhstan. In July 2006, KaR-Tel submitted its response, dated 30 June 2006, to the Fund’s response via the Kazakh Ministry of Justice, to be forwarded to the 4th Administrative Court of Istanbul. In its response, KaR-Tel denied in material part the factual and legal assertions made by the Fund in support of the Order to Pay.

On 11 December 2008, KaR-Tel received a Decision of Territorial Court of Istanbul dated 12 December 2007, wherein the Court rejected KaR-Tel’s appeal with respect to the stay of execution request.

F-178 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties (continued)

On 20 October 2009, KaR-Tel filed with Sisli 3d Court of the First Instance in Istanbul a claim to recognize in the Republic of Turkey the decision of the Almaty City Court of the Republic of Kazakhstan dated 6 June 2003 regarding, among other things, compulsory redemption of equity interests in KaR-Tel owned by Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S., which was confirmed by the Civil Panel of the Supreme Court of the Republic of Kazakhstan on 23 June 2003, as amended by the resolution of the Review Panel of the Supreme Court of the Republic of Kazakhstan dated 30 October 2003 ("Recognition Claim"). On 20 October 2009, KaR-Tel also filed with the 4th Administrative Court of Istanbul a petition asking the Court to treat the recognition of the Kazakhstan court decision as a precedential issue and to stay the proceedings in relation to the order to pay.

On 28 September 2010, Sisli 3d Court of the First Instance in Istanbul reviewed the Recognition Claim and ruled in favor of KaR-Tel recognizing the Kazakhstan Court judgments on the territory of the Republic of Turkey. The court decision is appealable by defendants.

On 25 October 2010, the 4th Administrative Court of Istanbul reviewed KaR-Tel’s petition to annul the Payment Order and has ruled in favor of KaR-Tel. The Court has recognized the Order to Pay as illegal and annulled it. The court decision has been appealed by the Fund. On 18 February 2011 KaR-Tel submitted its responses to the motion on appeal. On 20 April 2011, the Fund submitted its response to KaR-Tel’s reply and appeal petition. The court file was sent by the Court to the Councel of State for the appeal proceedings.

As to the Recognition Claim, the defendants, Rumeli Telecom AS and Telsim Mobil Telekommunikasyon Hizmetleri AS, have appealed the decision of Sisli 3d Court of the First Instance in Istanbul, which has ruled in favor of KaR-Tel recognizing the Kazakhstan Court judgments on the territory of the Republic of Turkey. The Company submitted its responses to such motion on appeal on 20 January 2011. The court file was sent to the Supreme Court for the appeal proceedings. On 11 July 2012, the Supreme Court upheld the ruling of Sisli 3d Court of the First Instance in Istanbul.

As of 22 March 2012 the Fund’s and KaR-Tel’s appeals on the Decision of 4th Administrative Court of Istanbul dated 25 October 2010 has been reviewed by the Prosecution Office of the Council of State and has been sent to the 13th Chamber of the Council of State for review on the merits.

The Company continues to believe that the Fund's claim is without merit, and KaR-Tel will take whatever further actions it deems necessary and appropriate to protect itself against the Fund's claim.

F-179 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties (continued)

Kyrgyzstan

Since November 2006, the Chief Executive Officer and directors of the Company have received several letters from OJSC Mobile TeleSystems ("MTS") and its representatives claiming that Sky Mobile’s Kyrgyz telecom business and its assets were misappropriated from Bitel, an MTS affiliate, and demanding that the Company not purchase Sky Mobile, directly or indirectly, or participate or assist in the sale of Sky Mobile to any other entities. These letters have suggested that MTS will take any and all legal action necessary against the Company in order to protect MTS’s interest in Bitel and Bitel’s assets. As of the date hereof, management is not aware of any pending legal action against the Company in connection with this matter except for the litigation against Sky Mobile discussed in the paragraph below.

Sky Mobile is a co-defendant in a litigation in the Isle of Man. The litigation was brought by affiliates of MTS against various companies and individuals directly or indirectly associated with Alfa Group and/or Altimo and Sky Mobile. The claimants allege that the Kyrgyz judgment determining that an Altimo affiliate was the rightful owner of an interest in the equity of Bitel prior to the asset sale between Sky Mobile and Bitel was wrongfully obtained and that Bitel shares and assets were misappropriated. The legal proceedings in this matter are pending.

At this time the Company is unable to assess the likelihood of the ultimate outcome of this litigation and its effect on the Company’s operating results and financial position.

Dominant Market Position

On October 10, 2011, Kar-Tel was recognized by the Agency as dominant in the market of interconnection. When a company is recognized as having a dominant position, it will be subject to special reporting obligations to the national regulatory authority, higher scrutiny in anti- monopoly/competition issues and price control and potential price regulation (e.g., tariff caps). The company does not agree with this decision of the antimonopoly authority. The company filed a claim to the Interregional Economic Court of Astana against the Agency requesting that the court recognize as illegal. On 26 December 2011, the court ruled and rejected the claim of the Kar-Tel. Kar-Tel has appealed the decision. On 8 August 2012, the Court of Appeals rejected the appeal of the Kar-Tel and upheld the decision of 26 December 2011. KaR-Tel appealed the decision to the Court of cassation. On 18 October 2012 Court of cassation rejected the appeal of the Kar-Tel. On 12 November 2012, Kar-Tel submitted the application for supervisory review of the decision of 26 December 2011 to the Supreme Court. The decision on this claim could have an adverse effect on our business, financial condition and results of operations. We believe that Kar-Tel did not violate the legislation.

Pledges and guarantees

The Company and its subsidiaries did not pledge any collateral as of 30 September 2012.

F-180 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the unaudited interim condensed consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Commitments, contingencies and uncertainties (continued)

Contingencies and uncertainties (continued)

Guarantee in favour of VimpelCom Holdings B.V.

On 29 June 2011, VimpelCom Holdings B.V., a subsidiary owned by VimpelCom Ltd., completed an offering of an aggregate principal amount of US$ 2,200,000 notes (the "June Bonds"), split between three-year, five-year and 10-year tranches, for the primary purpose of refinancing the outstanding principal amount of US$ 2,200,000 under the Bridge Facility Agreement. The three-year US$ 200,000 issue bears interest at an annual rate of three-month LIBOR plus 4.0%, payable quarterly and is due in June 2014. The long five-year US$ 500,000 issue bears interest at an annual rate of approximately 6.25% payable semiannually and is due in March 2017. The long ten-year US$ 1,500,000 issue bears interest at an annual rate of approximately 7.50% payable semiannually and is due in March 2022. VimpelCom has guaranteed the June Bonds. No triggering events under the guarantee occurred. The Company believes that probability of these events is remote.

Guarantee in favour of VimpelCom Amsterdam B.V.

12 December 2011 VimpelCom Amsterdam B.V., a subsidiary owned by VimpelCom Ltd., completed a committed revolving credit facility of approximately US$ 495,000. The three years credit facility for VimpelCom Amsterdam B.V. is committed by ten relationship banks. This facility is composed of US$ 225,000 and EUR 204,518 thousand and is guaranteed by the Company. No triggering events under the guarantee occurred. The Company believes that probability of these events is remote.

19. Events after the reporting period

Change in financial liabilities

On 9 October 2012, VimpelCom signed a Facility Agreement with HSBC Bank PLC and Nordea Bank AB (publ) for a Russian ruble denominated Swedish export credit facility supported by EKN for the total amount of US$ 199,716 to be drawn down in rubles. The facility is to finance equipment and services provided to VimpelCom by a Swedish supplier – Ericsson AB on a reimbursement basis. The facility bears interest at a rate of MosPRIME (Moscow indicative independent interbank offered rate) plus 1.00% p.a. On 23 October 2012 VimpelCom drew down RUR 6,151 million (the equivalent to US$ 199,015 as of 23 October 2012).

Euroset

On 6 December 2012, VimpelCom acquired 0.1% of the shares of Euroset Holding N.V. ("Euroset"), the biggest wireless equipment retailer in the Russian Federation, to increase its ownership interest to 50% of Euroset. The shares were issued by Euroset to OJSC VimpelCom subsidiary simultaneously with the acquisition of the other 50% of the shares of Euroset by Lefbord Investments Limited, a company owned by OJSC MegaFon and Garsdale Services Investment Limited. As part of the transaction our fully owned subsidiary Ararima Enterprises Limited ("Ararima") paid US$ 2.3 million to Alpazo Limited, the previous 50.1% shareholder of Euroset, as compensation for dilution of its shareholding resulting from issuance of additional shares to Ararima. All previous call and put option arrangements have been terminated.

F-181

Consolidated Financial Statements

Open Joint Stock Company “Vimpel-Communications”

Years ended December 31, 2011, 2010 and 2009

with Report of Independent Auditor

F-182

Ernst & Young LLC ООО «Эрнст энд Янг» Sadovnicheskaya Nab., 77, bld. 1 Россия, 115035, Москва Moscow, 115035, Russia Садовническая наб., 77, стр. 1 Tel: +7 (495) 705 9700 Тел: +7 (495) 705 9700 +7 (495) 755 9700 +7 (495) 755 9700 Fax: +7 (495) 755 9701 Факс: +7 (495) 755 9701 www.ey.com ОКПО: 59002827

Report of Independent Auditors

The Board of Directors and Shareholders of OJSC Vimpel-Communications

We have audited the accompanying consolidated statements of financial position of Open Joint Stock Company Vimpel- Communications (a wholly-owned subsidiary of VimpelCom Ltd.) (“VimpelCom”) as of 31 December 2011, 2010 and 2009 and the related consolidated income statements, statements of comprehensive income, changes in equity, and cash flows for the years then ended. These financial statements are the responsibility of VimpelCom's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of VimpelCom’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of VimpelCom’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our report dated 2 May 2012, we expressed a qualified opinion because we were unable to satisfy ourselves as to the carrying value of VimpelCom’s investment in an associate stated at $355,024 thousand and $313,690 thousand at 31 December 2011 and 2010, respectively, and its equity in earnings of that associate of $69,010 thousand and $93,637 thousand, which is included in profit for the years then ended. Subsequently, we were able to satisfy ourselves as to the carrying value and equity in earnings of the aforementioned associate as presented above. Accordingly, our present opinion on the financial statements referred to in the first paragraph above, as presented herein, is different from that expressed in our previous report.

In our opinion, the financial statements referred to in the first paragraph above present fairly, in all material respects, the consolidated financial position of VimpelCom at 31 December 2011, 2010 and 2009 and the consolidated results of its operations and its cash flows for the years then ended, in conformity with International Financial Reporting Standards.

/s/ Ernst&Young LLC

15 January 2013

F-183 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated income statement

Year ended 31 December Note 2011 2010 2009 (All amounts in thousands of US dollars unless otherwise stated)

Service revenues 10,339,584 9,363,638 8,691,327 Sale of equipment and accessories 314,696 190,520 109,959 Other revenues 13,851 16,251 12,128 Total operating revenues 10,668,131 9,570,409 8,813,414

Operating expenses Service costs 2,752,871 2,163,720 1,895,605 Cost of equipment and accessories 376,507 209,696 110,677 Selling, general and administrative expenses 3,297,297 2,884,013 2,481,625 Depreciation 1,413,151 1,236,475 1,190,313 Amortization 416,099 379,580 440,000 Impairment loss 13 526,275 – – Loss on disposals of non-current assets 45,435 41,190 77,292 Total operating expenses 8,827,635 6,914,674 6,195,512

Operating profit 1,840,496 2,655,735 2,617,902

Finance costs 782,091 538,563 602,620 Finance income (240,732) (67,170) (57,755) Net foreign exchange loss (income) (183,108) 9,263 403,712 Other non-operating losses 22 138,213 4,785 68,759 Shares of profit of associates and joint ventures accounted for using the equity method 8 (65,496) (89,521) (2,689) Profit before tax 1,409,528 2,259,815 1,603,255

Income tax expense 10 486,611 485,311 431,250 Profit for the year 922,917 1,774,504 1,172,005

Attributable to: Owners of the parent 1,061,027 1,728,925 1,141,538 Non-controlling interest (138,110) 45,579 30,467

The accompanying notes are an integral part of these consolidated financial statements.

F-184 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of comprehensive income

Year ended 31 December Note 2011 2010 2009 (All amounts in thousands of US dollars unless otherwise stated)

Profit for the year 922,917 1,774,504 1,172,005

Other comprehensive loss Shares of exchange differences on translation of foreign operations of associates and joint ventures accounted for using the equity method (41,390) (17,928) (20,900) Reclassification to other non-operating losses of accumulated exchange differences on translation of foreign operations for equity interest in acquiree in business combination achieved in stages 7 43,100 – – Exchange differences on translation of foreign operations (268,564) (48,125) (355,281) Other comprehensive loss for the year, net of tax (266,854) (66,053) (376,181) Total comprehensive income for the year, net of tax 656,063 1,708,451 795,824

Attributable to: Owners of the parent 788,609 1,668,088 767,288 Non-controlling interests (132,546) 40,363 28,536 656,063 1,708,451 795,824

The accompanying notes are an integral part of these consolidated financial statements.

F-185 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of financial position

31 December 31 December 31 December 1 January Note 2011 2010 2009 2009 (All amounts in thousands of US dollars unless otherwise stated) Assets Non-current assets Property and equipment 11 7,245,361 6,390,190 5,860,598 6,812,019 Intangible assets 12 4,696,622 4,672,623 4,843,041 5,481,913 Investments in associates and joint ventures 8 388,155 569,358 523,663 541,995 Financial assets 15 3,669,369 845,427 430,354 429,664 Other non-current non-financial assets 23 85,208 76,985 93,467 126,752 Total non-current assets 16,084,715 12,554,583 11,751,123 13,392,343

Current assets Inventories 14 152,454 128,745 62,879 144,762 Other current non-financial assets 23 262,110 397,318 239,034 394,256 Trade and other receivables 16 634,756 590,034 664,068 553,163 Current income tax asset 10 128,255 30,055 9,255 150,780 Other current financial assets 15 26,392 98,825 441,175 142,417 Cash and cash equivalents 17 653,461 650,557 1,450,717 934,722 Total current assets 1,857,428 1,895,534 2,867,128 2,320,100

Assets classified as held for sale 1,473 36,206 – – Total assets 17,943,616 14,486,323 14,618,251 15,712,443

Equity and liabilities Equity Equity attributable to equity owners of the parents 18 5,284,888 5,461,120 4,163,866 3,752,407 Non-controlling interests 18 35,056 (25,066) 38,327 61,103 Total equity 5,319,944 5,436,054 4,202,193 3,813,510

Non-current liabilities Financial liabilities 15 8,466,250 5,137,244 6,342,138 7,365,159 Provisions 21 138,227 112,408 116,475 92,593 Other non-current non-financial liabilities 23 49,734 45,902 49,203 40,476 Deferred tax liability 10 450,086 413,193 479,923 536,472 Total non-current liabilities 9,104,297 5,708,747 6,987,739 8,034,700

Current liabilities Trade and other payables 24 1,317,507 967,233 760,951 1,122,536 Other current non-financial liabilities 23 714,849 670,779 741,059 698,976 Financial liabilities 15 1,392,519 1,642,134 1,907,440 2,011,034 Current income tax payable 10 10,488 3,521 8,057 25,245 Provisions 21 84,012 57,855 10,812 6,442 Total current liabilities 3,519,375 3,341,522 3,428,319 3,864,233 Total equity and liabilities 17,943,616 14,486,323 14,618,251 15,712,443

The accompanying notes are an integral part of these consolidated financial statements.

F-186 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of changes in equity

Attributable to the owners of the parent Foreign Other currency Non- Issued Capital Treasury capital Retained translation controlling Total Note capital surplus shares reserves earnings reserve Total interest equity (All amounts in thousands of US dollars unless otherwise stated)

As at 1 January 2009 92 1,433,396 (239,649) 12,030 2,546,538 – 3,752,407 61,103 3,813,510 Profit for the year – – – – 1,141,538 – 1,141,538 30,467 1,172,005 Share of exchange differences on translation of foreign operations of associates and joint ventures accounted for using the equity method – – – – – (20,900) (20,900) – (20,900) Exchange differences on translation of foreign operations – – – – – (353,350) (353,350) (1,931) (355,281) Total comprehensive income – – – – 1,141,538 (374,250) 767,288 28,536 795,824

Dividends declared 19 – – – – (319,216) – (319,216) (22,294) (341,510) Changes in fair value of options over non-controlling interests in subsidiaries – – – (51,257) – – (51,257) (15,347) (66,604) Acquisition of non-controlling interest 7 – – – 3,598 – (9,922) (6,324) (13,671) (19,995) Exercise of options 20 – – 16,228 2,974 – – 19,202 – 19,202 Share-based payment transactions 20 – – – 1,766 – – 1,766 – 1,766 As at 31 December 2009 92 1,433,396 (223,421) (30,889) 3,368,860 (384,172) 4,163,866 38,327 4,202,193

The accompanying notes are an integral part of these consolidated financial statements.

F-187 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of changes in equity (continued)

Attributable to the owners of the parent Foreign Other currency Non- Issued Capital Treasury capital Retained translation controlling Total Note capital surplus shares reserves earnings reserve Total interest equity (All amounts in thousands of US dollars unless otherwise stated)

As at 31 December 2009 92 1,433,396 (223,421) (30,889) 3,368,860 (384,172) 4,163,866 38,327 4,202,193 Profit for the year – – – – 1,728,925 – 1,728,925 45,579 1,774,504 Share of exchange differences on translation of foreign operations of associates and joint ventures accounted for using the equity method – – – – – (17,928) (17,928) – (17,928) Exchange differences on translation of foreign operations – – – – – (42,909) (42,909) (5,216) (48,125) Total comprehensive income – – – – 1,728,925 (60,837) 1,668,088 40,363 1,708,451

Dividends declared 19 – – – – (654,706) – (654,706) (73,419) (728,125) Interest free loan from an entity under common control – – – 91,373 – – 91,373 – 91,373 Exchange of treasury shares to available-for-sale financial assets – – 223,421 (18,372) – – 205,049 – 205,049 Changes in fair value of options over non-controlling interests in subsidiaries – – – (10,400) – – (10,400) (24,870) (35,270) Acquisition of non-controlling interest 7 – – – (3,264) – – (3,264) (5,467) (8,731) Share-based payment transactions 20 – – – 1,114 – – 1,114 – 1,114 As at 31 December 2010 92 1,433,396 – 29,562 4,443,079 (445,009) 5,461,120 (25,066) 5,436,054

The accompanying notes are an integral part of these consolidated financial statements.

F-188 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of changes in equity (continued)

Attributable to the owners of the parent Foreign Other currency Non- Issued Capital Treasury capital Retained translation controlling Total Note capital surplus shares reserves earnings reserve Total interest equity (All amounts in thousands of US dollars unless otherwise stated) As at 31 December 2010 92 1,433,396 – 29,562 4,443,079 (445,009) 5,461,120 (25,066) 5,436,054 Profit for the year – – – – 1,061,027 – 1,061,027 (138,110) 922,917 Reclassification to other non- operating losses of accumulated exchange differences on translation of foreign operations for equity interest in acquiree in business combination achieved in stages – – – – – 43,100 43,100 – 43,100 Share of exchange differences on translation of foreign operations of associates and joint ventures accounted for using the equity method – – – – – (41,390) (41,390) – (41,390) Exchange differences on translation of foreign operations – – – 2,925 – (277,053) (274,128) 5,564 (268,564) Total comprehensive income – – – 2,925 1,061,027 (275,343) 788,609 (132,546) 656,063 Dividends declared 19 – – – – (1,238,814) – (1,238,814) (444) (1,239,258) Interest free loan from an entity under common control – – – 80,687 – – 80,687 – 80,687 Changes in fair value of options over non-controlling interests in subsidiaries – – – (53,421) – – (53,421) (59,440) (112,861) Acquisition of non-controlling interest 7 – – – (12,591) – – (12,591) 241,830 229,239 Restructuring of shareholding in consolidated subsidiaries – – – 264,074 – (5,473) 258,601 (10,263) 248,338 Acquisition of new subsidiaries – – – (391) – – (391) 20,985 20,594 Share-based payment transactions – – – 1,088 – – 1,088 – 1,088

The accompanying notes are an integral part of these consolidated financial statements.

F-189 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

As at 31 December 2011 92 1,433,396 – 311,933 4,265,292 (725,825) 5,284,888 35,056 5,319,944

The accompanying notes are an integral part of these consolidated financial statements.

F-190 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Consolidated statement of cash flows

2011 2010 2009 Note IFRS IFRS IFRS (All amounts in thousands of US dollars unless otherwise stated) Operating activities Profit for the year 922,917 1,774,504 1,172,005 Income tax expense 10 486,611 485,311 431,250 Profit before tax 1,409,528 2,259,815 1,603,255 Non-cash adjustment to reconcile profit after tax to net cash flows: Depreciation and impairment of property and equipment 1,413,151 1,236,475 1,190,313 Impairment loss 526,275 – – Amortization 416,099 379,580 440,000 Loss on disposals of non-current assets 45,435 41,190 77,292 Finance income (240,732) (67,170) (57,755) Finance costs 782,091 538,563 602,620 Other non-operating losses 138,213 4,785 68,759 Net foreign exchange loss (income) (183,108) 9,263 403,712 Shares of profit of associates and joint ventures accounted for using the equity method (65,496) (89,521) (2,689) Movements in provisions 34,163 49,377 27,907 Operating cash flow before working capital adjustments, before interest and income taxes 4,275,619 4,362,357 4,353,414 Working capital adjustments Change in trade and other receivables and prepayments (318,620) (123,598) 156,732 Change in inventories (62,072) (50,288) 64,927 Change in trade and other payables 305,791 (74,960) (64,021) Interest and income taxes Interest paid (620,700) (538,460) (532,012) Interest received 218,747 49,267 51,714 Income tax paid (462,491) (609,840) (428,761) Net cash flows from operating activities 3,336,274 3,014,478 3,601,993

Investing activities Proceeds from sale of property, equipment and intangible assets 104,265 11,492 – Purchase of property, equipment and intangible assets (2,539,021) (1,596,691) (1,022,857) Outflow for loan granted (3,747,878) (537,357) – Inflows/(outflows) from deposits and loans granted 981,192 478,097 (488,580) Proceeds from sale of available-for-sale financial asset 3,801 – – Receipts from/(Investments in) associates 12,500 – (12,500) Acquisition of a subsidiary, net of cash acquired (544,594) (195,734) – Net cash flows used in investing activities (5,729,735) (1,840,193) (1,523,937)

Financing activities Net proceeds from exercise of share options 1,151 7,339 18,142 Acquisition of non-controlling interest (12,950) (12,594) (18,198) Proceeds from borrowings net of fees paid 4,696,336 1,673,885 1,217,177 Repayment of borrowings (1,018,997) (2,898,291) (2,432,862) Dividends paid to equity holders of the parent (1,225,064) (654,170) (316,096) Dividends paid to non-controlling interests (275) (72,370) (31,444) Net cash flows from/(used in) financing activities 2,440,201 (1,956,201) (1,563,281)

Net increase/decrease in cash and cash equivalents 46,740 (781,916) 514,775 Net foreign exchange difference (43,836) (18,244) 1,220 Cash and cash equivalents at beginning of period 650,557 1,450,717 934,722 Cash and cash equivalents at end of period 653,461 650,557 1,450,717

The accompanying notes are an integral part of these consolidated financial statements.

F-191 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements

for the year ended 31 December 2011

(All amounts in thousands of US dollars unless otherwise stated)

1. General information

Open Joint Stock Company "Vimpel-Communications" (OJSC "VimpelCom", "VimpelCom", the "Company", the "Group" or "we") was registered in the Russian Federation ("Russia") on 15 September 1992 as a closed joint stock company, re-registered as an open joint stock company on 28 July 1993 and began full-scale commercial operations in June 1994. On 20 November 1996, Open Joint Stock Company "Vimpel-Communications" completed an initial public offering of its common stock on the New York Stock Exchange ("NYSE") through the issuance of American Depositary Shares ("ADS"). On 14 May 2010, OJSC VimpelCom ADS were delisted from the NYSE.

The registered office of VimpelCom is located at Russian Federation, 127083 Moscow, Ul. 8 Marta, 10, build. 14.

In these notes, VimpelCom, the Company, the Group or "we" also refers to Open Joint Stock Company "Vimpel-Communications"’s consolidated subsidiaries.

In these notes United States dollar amounts are presented in thousands, except for share amounts and as otherwise indicated.

VimpelCom Ltd., the ultimate controlling shareholder of the Company, was incorporated in Bermuda on 5 June 2009, as an exempted company under the name New Spring Company Ltd., which was subsequently changed to VimpelCom Ltd. on 1 October 2009. VimpelCom Ltd. was formed to recapitalize OJSC "VimpelCom" and acquire CJSC "Kyivstar G.S.M." ("Kyivstar"). Altimo Holdings & Investments Limited ("Altimo") and Telenor ASA ("Telenor") together with certain of their respective affiliates were the two major shareholders in each of the companies.

After the completion of the offer, the affiliates of Altimo contributed to VimpelCom Ltd’s subsidiary VimpelCom Holdings B.V. 99.99% of their ownership interests in Storm LLC, which in turn owns 43.5% of outstanding shares in Kyivstar, one of the leading providers of mobile telecommunications services in Ukraine, in exchange for 6,557,635 VimpelCom Holdings B.V. common shares, and to VimpelCom Ltd. 0.01% of their ownership interests in Storm LLC in exchange for 13,120 VimpelCom Ltd. common shares. Affiliates of Telenor contributed their Kyivstar’s shares (56.5% of equity) to VimpelCom Holdings B.V. in exchange for 8,524,363 VimpelCom Holdings B.V. shares. Affiliates of Altimo and affiliates of Telenor subsequently exchanged their shares in VimpelCom Holdings B.V. for shares in VimpelCom Ltd.

On 25 May 2010, VimpelCom Ltd. served a squeeze-out demand notice to VimpelCom demanding that the remaining shareholders of VimpelCom sell their shares to VimpelCom Ltd. The squeeze- out process was completed on 6 August 2010. As a result, VimpelCom Ltd. became the sole shareholder of VimpelCom.

VimpelCom earns revenues by providing voice, data and other telecommunication services through a range of wireless, fixed and broadband internet services, as well as selling equipment and accessories. As of 31 December 2011, the Company operated telecommunications services in Russia, Kazakhstan, Ukraine, Armenia, Tajikistan, Uzbekistan, Georgia, Kyrgyzstan, Vietnam Cambodia and Laos primarily under the "Beeline" brand name.

The consolidated financial statements of the Company for the year ended 31 December 2011 were authorized for issue by General director on 15 January 2013.

10 300415511 v2 F-192 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

2. Basis of the consolidated financial statements

2.1. Basis of preparation

These consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), effective at the time of preparing the consolidated financial statements and applied by VimpelCom.

VimpelCom maintains its records and prepares its financial statements in accordance with Russian accounting and tax legislation. VimpelCom’s foreign subsidiaries maintain their accounting records in accordance with local accounting and tax legislation.

For all periods up to and including the year ended 31 December 2010, OJSC VimpelCom prepared its consolidated financial statements in accordance with generally accepted accounting principles in the United States ("US GAAP"). VimpelCom was considered a first-time adopter of IFRS for these financial statements. Therefore in the first VimpelCom group consolidated IFRS financial statements as of 31 December 2011, VimpelCom stated that the consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB. These financial statements include certain supplemental disclosures in the form of reconciliations from US GAAP to IFRS as issued by the IASB to disclose the changes in the basis of presentation from US GAAP basis- financial statements. Refer to Note 4 for information on the Company’s adoption of IFRS.

The consolidated financial statements have been prepared on a historical cost basis, unless disclosed otherwise.

The consolidated financial statements are presented in United States dollars ("US dollars" or "US$") which is the functional and reporting currency of our controlling shareholder VimpelCom Ltd. Amounts are presented in thousands, unless otherwise indicated and all values are rounded to the nearest thousand (USD thousand) unless otherwise indicated.

2.2. Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as of 31 December 2011.

Subsidiaries (Note 25) are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

All intercompany accounts and transactions within the Company have been eliminated.

Non-controlling interests are reported in the consolidated statement of financial position as a separate component of equity. Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the Company. We refer to Note 15 for the effect of options over non-controlling interests.

F-193 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies

Business combinations

Business combinations are accounted for using the acquisition method. The cost of the acquisition, being the total consideration transferred, is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree and the amount of any non-controlling interest in the acquiree. The aggregate consideration transferred is allocated to the underlying assets acquired, including any intangible assets identified, and liabilities assumed based on their respective estimated fair values. Determining the fair value of assets acquired and liabilities assumed requires the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, licenses and other assets’ lives and market multiples, among other items. The results of operations of acquired companies are included in the consolidated financial statements from the date of acquisition.

For each business combination VimpelCom elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share in the recognized amounts of the acquiree’s identifiable net assets. Acquisition costs are expensed in the income statement as incurred.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date and the difference is recognized through profit or loss.

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with IAS 39 Financial Instruments: Recognition and Measurement ("IAS 39") either in profit or loss or as a change to other comprehensive income depending on the classification of financial instrument. If the contingent consideration is classified as equity, it is not remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of IAS 39, it is measured in accordance with the appropriate IFRS standards.

Goodwill is initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the Group’s previously held equity interest in the acquiree, if any, over the fair value of the net amounts of identifiable assets acquired and liabilities assumed at the acquisition date. After initial recognition, goodwill is carried at cost less any accumulated impairment losses.

In the event the acquisition is achieved in stages, goodwill is recognized at the time when the company obtains control over the entity.

If the consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.

Goodwill is not amortised but is tested for impairment on at least an annual basis or when impairment indicators are observed.

The Group may enter into business combinations which include options (call, put, or a combination of both) over the shares of the non-controlling interest.

F-194 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Business combinations (continued)

Where there are call options, the Group considers the implications on control. Where call options lead to the establishment of control, then the proportions of the acquiree’s subsequent profits or losses and changes in equity allocated to the parent and non-controlling interests will be based on the present ownership interest, only to the extent that the Group does not have current access to the economic benefits of the shares of non-controlling interest. To the extent the call option provides a present ownership (through current access to the underlying economic benefits) a gross liability is recognized, whereby any changes in the liability are recognized in profit and loss. If the call option does not provide present ownership it is recorded as a derivative asset at fair value through profit and loss.

Where there are put options granted to the non-controlling interest, then a financial liability is recognized. These liabilities are initially measured at the present value of the redemption amount and are subsequently measured in accordance with IAS 39. Where the Group does not have a present ownership interest in the outstanding shares, then at each period end the difference between the financial liability and the non-controlling interest (which reflects its share of the profit and losses, and changes in equity, of the acquiree) is accounted for as an equity transaction. Where the put option does provide a present ownership interest, the changes in the liability are recognized in profit or loss.

Common-control transactions

For business combinations exercised under common control VimpelCom measures the net assets of the transaction at the carrying amounts in the accounts of the transferor.

Investment in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee without control or joint control over those policies, and is assumed if the company holds, directly or indirectly, 20 percent or more but less than 50 percent of the voting power of the investee, unless it can be clearly demonstrated that it does not have significant influence.

Investments in associates are incorporated in the financial statements of the Group using the equity method of accounting. Under the equity method, the investment in associate is initially recognized at cost and is adjusted in subsequent periods for the post acquisition changes in the company’s share of the net assets of the associate and impairment recognized in accordance with IAS 39 and IAS 36 Impairment of Assets. Losses of an associate in excess of the Groups’ interest in that associate are recognized only to the extent that the Group has incurred a legal or constructive obligation or made payments on behalf of the associate.

The financial statements of the associate are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

Upon loss of significant influence VimpelCom measures and recognises its remaining investment at its fair value. Any difference between the carrying amount of the former associate upon loss of significant influence and the fair value of the remaining investment and proceeds from disposal are recognised in profit and loss.

F-195 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Interest in joint ventures

The Group has interests in joint ventures which are jointly controlled entities, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. The agreements require unanimous agreement for financial and operating decisions among the venturers. VimpelCom recognises its interests in the joint ventures using the equity method. The financial statements of the joint ventures are prepared for the same reporting period as the group. Adjustments are made where necessary to bring the accounting policies in line with those of the Group.

Upon loss of joint control VimpelCom measures and recognises its remaining investments at its fair value unless it is recognised as investments in associates. Any difference between the carrying amount of the former jointly controlled entities upon loss of joint control and the fair value of the remaining investment and proceeds from disposal are recognised in profit or loss. When the remaining investments constitute significant influence, it is accounted for as investment in an associates.

Foreign currency translation

The consolidated financial statements of the Group are presented in US dollars, whereas Russian rouble is VimpelCom’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions denominated in foreign currencies are initially recognized at the functional currency rate prevailing on the date of the transaction. Monetary assets and liabilities are retranslated to the functional currency using the closing rate at balance sheet date. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in foreign currencies are translated in the functional currency at the rate prevailing on the initial transaction dates. Non-monetary items carried at fair value are translated in the functional currency at the date when the fair value was determined.

On consolidation the assets and liabilities of foreign operations are translated into US dollars at the rate of exchange prevailing at the reporting date and their income statements are translated at the weighted average exchange rate for the period. The exchange rate differences arising on translation for consolidation are recognized in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in the income statement.

Revenue recognition

VimpelCom generates revenues from providing voice, data and other telecommunication services through a range of wireless, fixed and broadband Internet services, as well as selling equipment and accessories. Revenues are stated net of value-added tax and sales tax charged to customers.

F-196 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Wireless services

Service revenues include revenues from airtime charges from contract and prepaid subscribers, monthly contract fees, interconnect revenue, roaming charges and charges for value added services ("VAS"). Service revenue is generally recognized when the services (including VAS and roaming revenue) are rendered.

Sale of prepaid cards, used as a method of cash collection, is accounted for as customer advances for future services. Prepaid cards usually do not have expiration dates but are subject to statutory period of limitation, and unused balances are added to service revenue only when statutory period of limitation has lapsed and when the Company determines that, based on a historical statistics, there is a remote possibility that prepaid cards will be activated. Also, VimpelCom uses E-commerce systems, retail offices and agent locations as channels for receiving customer payments.

Revenues from mobile equipment sales, such as handsets, are recognized in the period in which the equipment is sold to either a network customer or, if sold via an intermediary, when the significant risks and rewards have passed to the intermediary.

Interconnect revenue (transit traffic) is generated when the Company receives traffic from mobile or fixed subscribers of other operators and that traffic terminates on VimpelCom’s network. Revenue is recognized on a gross or net basis depending on the amount of control over the traffic routing and hence exposure to risks and rewards.

VAS includes short messages ("SMS"), multimedia messages ("MMS"), caller number identification, call waiting, data transmission, mobile Internet, downloadable content and other services. The content revenue relating to VAS is presented net of related costs when the Company acts as an agent of the content providers and gross when the Company acts as the primary obligor of the transaction.

More specifically, the accounting for revenue sharing agreements and delivery of content depends on the analysis of the facts and circumstances surrounding these transactions. Thus, an analysis is performed using the following criteria in order to determine if the revenue must be recognized on: • a gross basis – when VimpelCom: 1. is the primary obligor in the transaction with respect to the end-customer; for instance, it has discretion in supplier selection, it is involved in the determination of content specification (service or product); 2. bears inventory risk; 3. has reasonable latitude in setting the price invoiced to the end-customer; 4. bears the credit risk. • a net basis – when: 1. the service provider is responsible for the service and for setting the price to be paid by the subscriber; 2. the content provider is responsible for supplying the content to the end-customer and for setting the price.

VimpelCom charges subscribers a fixed monthly fee for the use of certain services. Such fees are recognized as revenue in the respective month.

F-197 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Sales of equipment

Revenues from mobile equipment sales, such as handsets, are recognized in the period in which the equipment is sold to either a network customer or, if sold via an intermediary, when the significant risks and rewards have passed to the intermediary.

Interconnect and roaming revenue

Interconnect revenue (transit traffic) is generated when the Company receives traffic from mobile or fixed subscribers of other operators and that traffic terminates on VimpelCom’s network. Revenue is recognized on a gross or net basis depending on the amount of control over the traffic routing and hence exposure to risks and rewards.

The Group recognizes mobile usage and roaming service revenue based on minutes of traffic processed or contracted fee schedules when the services are rendered. Roaming revenues include both revenues from VimpelCom customers who roam outside of their home country network and revenues from other wireless carriers for roaming by their customers on VimpelCom’s network. Revenues due from foreign carriers for international roaming calls are recognized in the period in which the call occurs.

Fixed-line services

Revenue from traditional voice services and other service contracts is accounted for when the services are provided. Revenue from Internet services is measured primarily by monthly fees and internet-traffic volume which has not been included in monthly fees. Payments from customers for fixed-line equipment are not recognized as revenue until installation and testing of such equipment are completed and accepted by the customer. Domestic Long Distance / International Long Distance ("DLD/ILD") and zonal revenues are recorded gross or net depending on the contractual arrangements with the end-users. More specifically, the Company recognizes DLD/ILD and zonal revenues from local operators net of payments to these operators for interconnection and agency fees when local operators establish end-user tariffs and assume credit risk since the Company is not the primary obligor in the transaction.

Connection fees

VimpelCom defers upfront telecommunications connection fees. The deferral of revenue is recognized over the estimated average subscriber life or the minimum contractual term. The Company also defers direct incremental costs related to connection fees for fixed line subscribers, in an amount not exceeding the revenue deferred.

Multiple elements agreements ("MEA")

MEA are agreements under which VimpelCom provides more than one service. Services/products may be provided under different agreements or in groups of agreements which are interrelated in such extent that in fact they are elements of one agreement. In the event of a MEA, each element is accounted for separately if it can be distinguished from the other elements and has a fair value on a standalone basis. The customer’s perspective is important in determining whether the transaction contains multiple elements or is just a single element arrangement. The relative fair value method is applied in determining the value to be allocated to each element of a MEA. Fair value is determined as the selling price of the individual item. If an item has not been supplied by the Group yet, but is sold by other suppliers, the fair value is the price at which the items are sold by the other suppliers.

F-198 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Multiple elements agreements ("MEA") (continued)

Some tariffs include bundle rollovers which effectively allow customers to rollover unused minutes from one month to the following month. For these tariffs, the portion of the access fee representing the fair value of the rolled over minutes is deferred until the service is delivered.

Classification of non-operating items

The Company distinguishes results of operations into operating and non-operating parts depending on the nature of the transaction. All the results that directly relate to operations are classified as operating items ignoring whether they involve cash, occur irregularly, infrequently, or are unusual in amount. All the results that do not directly relate to operations such as sale of investments, changes in fair value of investments and other financial instruments are classified as non- operating.

Interest income/expense

For all financial instruments measured at amortized cost interest income or expense is recorded using the effective interest rate, which is the rate that exactly discounts the estimated future cash payments or receipts based on the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income/or expense is included in financing income/costs in the consolidated income statement.

Dividends

Dividend income from the entities other than those accounted for under equity method is recognized in the income statement on the date the entity's right to receive payments is established. Dividends from the entities accounted for under equity method reduce the carrying amount of investment.

Taxation

Income tax expense (tax income) represents the aggregate amount determined on the profit or loss for the period in respect of current tax and deferred tax.

In cases when the tax relates to items that are charged directly to equity, the tax is also charged directly to equity.

Current income tax

Current tax for the current and prior periods, to the extent unpaid, is recognized as a liability. If the amount already paid in respect of current and prior period exceeds the amount due for those periods, the excess is recognized as an asset.

Current tax liabilities (assets) for the current and prior period is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.

F-199 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Taxation (continued)

Uncertain tax position

Uncertain tax positions are accounted for in accordance with IAS 12 or IAS 37 depending on the type of tax. According to IAS 12 a provision for uncertain income tax position is provided for when as a result of past event and based on technical merits it is probable that future economic benefits will flow from the entity and a reliable estimate can be made of the amount of the obligation.

For provisions for taxes other than income tax the Company follows the general policy on provisions.

Deferred taxation

Deferred taxes are recognized for the taxes recoverable or payable in future periods in respect of deductible or taxable temporary differences. A temporary difference arises where the carrying amount of an asset and liability is different from its corresponding tax bases.

Deferred tax liabilities are generally recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from: a) the initial recognition of goodwill; or b) the initial recognition of an asset or liability in a transaction which • is not a business combination; and • at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.

Deferred tax assets are also recognized for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which unused tax losses and unused tax credits can be utilized.

Deferred tax is recognized for all taxable temporary differences associated with investments in subsidiaries, branches and associates, and interests in joint ventures except to the extent that the parent, investor or venturer is able to control the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when the entity has a legally enforceable right to set off current tax assets against current tax liabilities, and when they relate to income taxes levied by the same taxation authority on either the same taxable entity, or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

F-200 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Taxation (continued)

The carrying amount of deferred tax assets is reviewed at each reporting period date and adjusted to reflect changes in probability that sufficient taxable profits will be available to allow all or part of the assets to be recovered.

Property and equipment

Property and equipment (P&E) are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.

The costs of an item of P&E include: • its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; • any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. This includes capitalizing the internal labour cost of technical departments involved in the network development; • initial cost estimations of dismantling and removing the item and restoring the site at which it is located, with an equal obligation recognized; • costs of installation and assembly of a connection line between the client and the Company’s network; • costs of site preparation, e.g. creating a foundation for the installation of connections; and • professional fees, e.g. for engineers.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

Telecommunication equipment 7-20 years Buildings and constructions 15-50 years Office and measuring equipment 3-10 years Other equipment 3-10 years

Equipment acquired under a finance lease arrangement is depreciated on a straight-line basis over its estimated useful life or the lease term, whichever is shorter.

Repair and maintenance costs which do not meet capitalization requirements are expensed as incurred.

The carrying amount of an item of P&E is derecognized on disposal or when no future economic benefits are expected from its use. The gain or loss from derecognition of an item of P&E is calculated as the difference between the net proceeds from disposal, if any, and the carrying amount of the item, and is included in the income statement when derecognized.

The asset’s residual values, useful lives and methods of depreciation are reviewed at the end of each financial year, adjusted prospectively if appropriate.

F-201 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time (longer than six months) to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards associated with ownership of leased asset to the lessee. All other leases are classified as operating leases. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date.

Finance lease – VimpelCom as lessee

At the commencement of a finance lease term the Company recognizes the assets and liabilities in its statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments as determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

The discount rate to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. If it is impracticable to determine the interest rate implicit in the lease, the lessee’s incremental borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognized as an asset.

Operating lease – VimpelCom as lessee

The rental payable under operating lease is recognized as operating lease expenses in the income statement on a straight-line basis over the lease term unless another systematic basis is more representative of the time pattern of the user’s benefit. No asset is capitalized. If the periodic payments or part of the periodic payments has been prepaid, the Company recognizes these prepayments in the statement of financial position.

Intangible assets (excluding Goodwill)

Intangible assets acquired separately are measured initially at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets (excluding eligible development costs) are not capitalized and expenditure is reflected in the income statement in the year when the expenditure is incurred. The costs of the intangible assets acquired as part of a business combination is their fair value at acquisition date.

Intangible assets with an indefinite useful life and also intangible assets not yet available for their intended use, are tested for impairment at least annually as of 1 October to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. Change in the useful life of an intangible asset from indefinite to finite life is treated on a prospective basis. Any impairment to the asset is charged to the income statement in the year in which it arises.

F-202 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Intangible assets (excluding Goodwill) (continued)

Intangible assets with a finite useful life are amortized over that life on a systematic basis. The amortization method used reflects the pattern in which the asset's future economic benefits are expected to be consumed by the Group. If that pattern cannot be determined reliably, the straight- line method is used. For intangible assets associated with customer relationships the Company uses declining balance amortization pattern based on value contribution the customers bring. For other intangible assets the straight-line method is used. The amortization charge for each period is recognized in profit or loss. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at each financial year-end.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the income statement when the asset is derecognized, if any.

Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset may be impaired. If there is such an indication or when annual impairment testing is required the Company estimates the recoverable amount of the asset. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s ("CGU") fair value less costs to sell and its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Unless otherwise disclosed, recoverable amount represents value in use.

The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company’s CGU’s to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations are recognized in the income statement in a separate line item.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

F-203 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Goodwill

Goodwill is tested for impairment annually as at 1 October and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGU’s) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

Financial instruments

Financial assets or liabilities

Initial recognition and measurement

When a financial asset or financial liability in the scope of IAS 39 is recognized initially, it is measured at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability (except for a financial asset or financial liability at fair value through profit or loss, in which case transaction costs are expensed).

Subsequent measurement of financial assets

Financial assets are classified into the following categories: • Fair value through profit and loss • Loans and receivables • Held to maturity • Available for sale • Derivatives designated as hedging instruments in an effective hedge

The Company determines the classification of its financial assets at initial recognition.

The subsequent measurement of financial assets depends on their classification as follows:

Fair value through profit and loss ("FVTPL")

Financial assets at fair value through profit and loss are in principle acquired for the purpose of selling in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments as defined by IAS 39. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognized in the income statement.

The reclassification to loans and receivables, available-for-sale or held to maturity depends on the nature of the asset. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation, these instruments cannot be reclassified after initial recognition.

F-204 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Financial instruments (continued)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement loans and receivables with maturity longer than one year are subsequently measured at amortized costs using the effective interest rate ("EIR") method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The amortization based on EIR is included in the income statement. After initial measurement, receivables with maturity shorter than one year are subsequently measured at historical costs less allowance for uncollectible amounts.

Held-to-maturity

Non-derivative financial assets quoted in an active market with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has the positive intention and ability to hold it to maturity.

After initial measurement, held-to-maturity investments are measured at amortized cost using the effective interest rate method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in the income statement.

Available for sale

The available for sale classification contains non-derivative financial assets that are designated as available for sale or are not classified as loans and receivables, held-to-maturity or FVTPL.

After initial measurement, available for sale financial assets are subsequently measured at fair value with unrealized gains and losses recognized in other comprehensive income in the available for sale reserve. When the asset is derecognized, the cumulative gain or loss is recognized in other operating income. When the asset is determined to be impaired, the cumulative loss is reclassified to the income statement and removed from the available for sale reserve. The fair value of the quoted equity shares is determined by reference to published price quotations in an active market.

Derecognition of financial assets

A financial asset is derecognized when: a) the contractual rights to the cash flows from the financial asset have expired; or b) the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either a) the Group has transferred substantially all the risks and rewards of the asset, or b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

F-205 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Financial instruments (continued)

Modification or exchanges of debt commitments

An exchange between an existing borrower and lender of debt instruments is accounted for as an extinguishment of the original financial liability or asset and the recognition of a new financial liability or assets if the terms of the instruments are substantially different. ‘Substantially different’ has been met if the net present value of the cash flows under the new terms (including any fees paid net of any fees received) discounted at the original effective interest rate is at least 10% different from the discounted present value of the remaining cash flows of the original debt instrument.

Impairment of financial assets

A financial asset or a group of financial assets is impaired and impairment losses are incurred if there is objective evidence of impairment as a result of a past event that occurred subsequent to the initial recognition of the asset.

The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or group of assets may be impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is evaluated against the original cost of the investment and the Company considers 30% decline to be significant. ‘Prolonged’ against the period in which the fair value has been below its original cost and the Company considers 6-month period to be prolonged.

For the purpose of collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (for example, on the basis of a credit risk evaluation or grading process that considers asset type, industry, geographical location, collateral type, past-due status and other relevant factors).

For assets carried at amortized cost, the impairment loss is the difference between the asset’s carrying amount and the present value of estimated future cash flows at the original EIR (excluding future expected credit losses that have not yet been incurred). For assets classified as available- for-sale, the impairment loss is the difference between the original cost of the asset and its fair value.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. Financial assets together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Company.

F-206 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Financial instruments (continued)

Subsequent measurement of financial liabilities

Financial liabilities are classified as those at fair value through profit or loss (including trading liabilities), derivatives designated as hedging instruments and other (i.e. accounts payable, notes payable). Financial liabilities are classified as held for trading if they are acquired for the purpose of repurchase in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as effective hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Trading liabilities (including derivatives when they have negative fair values) are measured at fair value. The changes in fair value are included in the net profit or loss for the period. All other (non-trading) financial liabilities are carried at amortized cost (i.e. loan payables).

Derecognition of financial liabilities

The Company removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expires.

Offsetting of financial instruments

A financial asset or liability is only offset when the Company: 1. has a current enforceable legal right to offset the recognized amounts; and 2. intends either to settle on a net basis or to realize the asset and sell the liability simultaneously.

Fair value of financial instruments

The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is not active, the fair value could be determined by using an appropriate valuation technique, such as recent arm's length market transactions between knowledgeable, willing parties, of another instrument that is substantially the same. Other valuation techniques could be the discounted cash flow analysis and option pricing models.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data

F-207 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Financial instruments (continued)

Derivative financial instruments and hedge accounting

Initial recognition and subsequent measurement

The Company uses derivative instruments such as forwards, interest rate swaps and forward rate agreements, futures, options and others. Such derivative instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

When a contract is entered into the instrument is initially recognized at fair value, with subsequent changes in fair value being recognized as a financial component of income.

Inventories

Inventories are valued at the lower of cost and net realizable value. The costs of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Inventories are expensed by applying the weighted-average cost method.

The net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost of making the sale.

Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at the banks and on hand and highly liquid investments with an original maturity of less than 90 days.

Convertible preference shares

The Company has issued convertible shares of preferred stock that entitles its holder to one vote per convertible preferred share, voting together with the common shares as a single class, except where cumulative voting applies when electing directors. Convertible preferred shares do not have dividend rights. The holders of convertible preferred shares, in the event of our winding-up or dissolution, are not entitled to any payment or distribution in respect of our surplus assets.

Treasury shares

Treasury shares are shares which have been issued by the Company and subsequently reacquired directly by the Company or through consolidated subsidiaries. No loss or gains are recognized in the income statement as a result of the purchase. The consideration paid or received is deducted from equity and is shown as a separate item in the consolidated statement of changes in equity.

F-208 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Provisions

General

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are discounted to their present value if the effect of the time value of money is material. In order to calculate the present value, a pre-tax risk free rate that reflects current market assessments of the time value of money and the risks specific to the liability is used. In some cases, a part or all of the expenditure required to settle a provision is expected to be reimbursed by another party. The reimbursement is recognized only if it is virtually certain that the reimbursement will be received when the obligation is settled. The reimbursement is treated as a separate asset.

Contingent liabilities and assets are not recognized on the statement of financial position.

Provision for decommissioning

Decommissioning liabilities are measured at the best estimate of the costs required to settle the obligation. Decommissioning liabilities are discounted using a pre-tax interest rate that reflects current market assessments of the time value of money and the risk specific to the liability. According to IFRIC 1, decommissioning liabilities can be remeasured due to revisions of the amounts or timing of the original cash flows and due to changes in the current market based discount rates. Such changes are added to or deducted from the related asset, with any reductions in excess of the carrying amount of the asset recognized as a gain in the current period.

Legal provisions

A provision has been recognized for uncertainties related to legal claims based on managements’ best estimate of the expenditure required to settle the present obligation at the balance sheet date using the weighted average probability of cash outflows.

Share-based payments

Certain of the Group’s employees are entitled to equity-settled share-based payments. These payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

F-209 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

3. Significant accounting policies (continued)

Share-based payments (continued)

VimpelCom uses the Black-Scholes model for determining the fair value at the grant date.

The Company also has share-based compensation in the form of cash settled stock appreciation rights ("SARs") and Phantom plans which it offers a selected group of directors and senior management. These instruments are classified as liabilities on the basis that there is a put feature that enables the participant to sell the shares back to VimpelCom for a cash payment. The cost of these share plans is remeasured based on fair value of the instruments on each reporting date and is required to be recognized over the period during which the employees are required to provide services in exchange for the equity-based compensation. Any changes in fair value at the date of settlement are recognized in the income statement.

In situations where equity instruments are used and some or all of the goods or services received by the entity as consideration cannot be specifically identified, the unidentified goods or services received (or to be received) are measured as the difference between the fair value of the share- based payment transaction and the fair value of any identifiable goods or services at the grant date.

Consolidated statement of cash flows

The Company presents cash flows from operating activities using the indirect method. Interest paid and received are recorded in the net cash flows from operating activities. Cash flows from derivative instruments are reported in the section in the statement of cash flows where the underlying cash flows are recorded.

4. First time adoption of IFRS

These consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), effective at the time of preparing the consolidated financial statements and applied by VimpelCom. These are the first consolidated financial statements of the Company prepared in accordance with IFRS therefore we disclose the reconciliation from the financial statements prepared under US GAAP to IFRS as at 31 December 2010 and 2009 as well as the elections taken by the Company in its adoption of IFRS.

In preparing these consolidated financial statements, the Company’s opening statement of financial position was prepared as at 1 January 2009, the date of transition to IFRS.

IFRS has been applied retrospectively, except for certain optional and mandatory exemptions from full retrospective application, as provided for by IFRS 1 (Revised 2009) First-Time Adoption of International Financial Reporting Standards, as detailed below.

F-210 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

4. First time adoption of IFRS (continued)

Business combinations

The Company has elected to apply IFRS 3 (Revised) Business Combinations ("IFRS 3") retrospectively starting from 26 June 2008. As a result, IFRS 3 is applied to all subsequent business combinations. Accordingly, IAS 27 Consolidated and Separate Financial Statements ("IAS 27") is applied from 26 June 2008 onwards. Business combinations that occurred prior to 26 June 2008 have not been restated.

Upon adoption of IFRS, transaction costs that were capitalized are recorded to equity. Under IFRS the Company has a policy choice to recognize the net assets of the non-controlling interest at fair value or at the proportionate share in the recognized amounts of the acquiree’s identifiable net assets, whereas under US GAAP these were measured at the proportionate share of the acquiree’s identifiable net assets.

Concurrently with the election to apply IFRS 3, the Company also applies IAS 27 as of the same date. Therefore an increase in the Company’s ownership interest that does not result in a loss of control is accounted for as an equity transaction as of that date, whereas under US GAAP increases in the Company’s ownership interest were accounted for applying acquisition accounting.

Had the Company not elected to apply IFRS 3 and IAS 27 to prior business combinations occurred before the date of transition to IFRS, there would be no adjustments related to such transactions as compared to US GAAP.

Derivative instruments over noncontrolling interests and interests in associates

In accordance with IAS 39 Financial Instruments derivative instruments over non-controlling interests in subsidiaries or interests in associates qualify under the definition of financial instruments and are measured at their fair value, whereas they may not qualify as derivative instruments under US GAAP. There is no IFRS 1 exemptions for the Company in this respect.

Carrying value of long-lived assets and deemed cost approach

VimpelCom chose applying the deemed-cost approach in accordance with IFRS 1 and used US GAAP carrying values for certain items of property and equipment and intangible assets as at 1 January 2009 that have been impaired under US GAAP since they are broadly comparable to fair value. For the remainder of long-lived assets the Company did not use "deemed cost" IFRS 1 exemption and accounted for such long-lived assets as though applicable IFRS were always applied.

Cumulative translation differences

Under IAS 21 The Effects of Changes in Foreign Exchange Rates differences from the translation of financial statements prepared in a currency other than the presentation currency of the parent must be recognized as a separate component of equity. In line with the principle of retrospective application of IFRS, these differences would be required to be determined retrospectively. According to the exemption in IFRS 1, cumulative translation differences may be deemed to be zero at the date of transition. In the case of subsequent disposal of the entity concerned, only translation differences that arose after the date of transition to IFRS are recognized in profit or loss. VimpelCom has applied this exemption.

F-211 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

4. First time adoption of IFRS (continued)

Cumulative translation differences (continued)

Had the Company not opted for resetting the accumulated translation difference, our equity would be different which may result in a different net result from the disposal of a subsidiary or associate entity where functional currency is different from US$.

Borrowing costs

The Company has applied the transitional provisions in IAS 23 Borrowing Costs and capitalizes borrowing costs on qualifying assets as of 1 January 2009, and where the construction was commenced as of and after the date of transition 1 January 2009. Borrowing costs capitalized under US GAAP prior to 1 January 2009 have not been adjusted.

Had the Company not opted for applying this exemption, we may have had different balances related to capitalized interest in the balance of P&E and intangible assets.

Provisions

The Company has elected to use the IFRS 1 exemption relating to recognition of historical changes in the measurement of decommissioning liabilities and therefore measures the decommissioning liabilities in accordance with IAS 37 as at 1 January 2009.

Had the Company not elected to use this exemption, then the carrying amounts of the related assets may have been different.

Leases

The Company opted to use the IFRS 1 exemption relating to not re-evaluating the determination of lease arrangements because VimpelCom had made the same determination of whether an arrangement contains a lease in accordance with US GAAP.

Had the Company not elected to use this exemption, we may have had to change the balance of lease obligations and assets obtained under such agreements in the situation that the conclusion of lease classification was different under IFRS.

Estimates

The estimates at 1 January 2009 and 31 December 2009 are consistent with those made for the same dates in accordance with US GAAP (after adjustments to reflect any differences in accounting policies). However for the year ended 31 December 2010 the tax provisions have been reassessed under IAS 10 Events after the Reporting Period that require adjustment in the respective year.

F-212 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

4. First time adoption of IFRS (continued)

Reclassifications

The Company changed the presentation of certain items in the consolidated statement of financial position and consolidated income statement as compared to the presentation used under US GAAP.

The most significant reclassifications related to the presentation of: • software [including annual updates] which is an integral part of telecommunication equipment in property and equipment instead of a separate item in the statement of financial position and prepayments with respect to annual updates of software which were included in other current assets; • other software and frequency permissions as part of intangible assets instead of a separate line item for software and other non-current assets for frequency permissions; • fees associated with borrowings as part of financial liabilities instead of other non-current assets; • amounts payable and receivable in connection with income taxes as separate items instead being part of taxes payable and other current assets; • loans and interest receivable and payable as financial assets and liabilities respectively; • provisions in a separate line item; • provisions for litigation and allowance for bad debts classified as selling, general and administrative expenses, which were included in other gains and loss; • deferred taxes which under US GAAP were classified as current or non-current depending on the classification of the items which give rise to a temporary difference to be netted whilst under IFRS deferred taxes are only presented as ‘non-current’.

Group reconciliation of equity as at 1 January 2009 (date of transition to IFRS)

Equity attributable to equity owner of Non-controlling Total Note the parents interests equity As reported under US GAAP 4,107,489 32,754 4,140,243 Limnotex acquisition 1 (420,720) – (420,720) Menacrest consolidation 2 49,302 28,349 77,651 Other options 3 23,319 – 23,319 Other adjustments 6 (6,983) – (6,983) As reported under IFRS 3,752,407 61,103 3,813,510

F-213 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

4. First time adoption of IFRS (continued)

Reclassifications (continued)

Group reconciliation of equity as at 31 December 2009

Equity attributable to equity owner of Non-controlling Total Note the parents interests equity As reported under US GAAP 4,506,543 1,966 4,508,509 Limnotex acquisition 1 (332,544) 4,074 (328,470) Limnotex options 1 (88,795) – (88,795) Menacrest consolidation 2 21,141 32,287 53,428 Other options 3 12,460 – 12,460 Investments in associates 4 38,452 – 38,452 Other adjustments 6 6,609 – 6,609 As reported under IFRS 4,163,866 38,327 4,202,193

Group reconciliation of equity as at 31 December 2010

Equity attributable to equity owner of Non-controlling Total Note the parents interests equity As reported under US GAAP 5,409,951 142,064 5,552,015 Limnotex acquisition 1 (324,167) 7,584 (316,583) Limnotex options 1 (164,238) – (164,238) Manacrest consolidation 2 69,174 (174,714) (105,540) Other options 3 50,023 – 50,023 Investments in associates 4 74,784 – 74,784 Income tax uncertainties 5 99,622 – 99,622 Treasury shares 158,049 – 158,049 Other adjustments 6 87,922 – 87,922 As reported under IFRS 5,461,120 (25,066) 5,436,054

Group reconciliation of total comprehensive income for the year ended 31 December 2009

Other Total Non- Profit for comprehen- comprehen- controlling The owners Note the year sive income sive income interest of the parent As reported under US GAAP 1,117,331 (377,781) 739,550 6,055 733,495 Limnotex acquisition 1 16,296 75,954 92,250 (5,121) 97,371 Menacrest consolidation 2 (2,807) (73,379) (76,186) 30,891 (107,077) Other options 3 (10,859) – (10,859) – (10,859) Investments in associates 4 38,452 – 38,452 – 38,452 Income tax uncertainties 5 8,708 – 8,708 – 8,708 Other adjustments 6 4,884 (975) 3,909 (3,289) 7,198 As reported under IFRS 1,172,005 (376,181) 795,824 28,536 767,288

F-214 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

4. First time adoption of IFRS (continued)

Reclassifications (continued)

Group reconciliation of total comprehensive income for the year ended 31 December 2010

Other Total Non- Profit for comprehen- comprehen- controlling The owners Note the year sive income sive income interest of the parent As reported under US GAAP 1,619,180 (60,326) 1,558,854 17,727 1,541,127 Limnotex acquisition 1 14,041 (2,153) 11,888 3,510 8,378 Menacrest consolidation 2 21,741 (3,573) 18,168 19,127 (959) Other options 3 37,563 – 37,563 – 37,563 Investments in associates 4 36,332 – 36,332 – 36,332 Income tax uncertainties 5 90,648 – 90,648 – 90,648 Other adjustments 6 (45,001) (1) (45,002) (1) (45,001) As reported under IFRS 1,774,504 (66,053) 1,708,451 40,363 1,668,088

Material adjustments to the statement of cash flows

The consolidated statement of cash flows have been adjusted to reflect purchases of annual updates of software which are an integral part of telecommunication equipment as investing activity.

The consolidation of Menacrest for IFRS purposes resulted in an increase of net cash flows from operating activities of US$ 60,000, an increase in net cash used in investing activities of US$ 60,000 and dividends paid to noncontrolling interest of US$ 17,000 for the year ended 31 December 2009. No other impact adjustments were recorded for the year ended 31 December 2010.

Notes to the reconciliation of equity as at 1 January 2009, 31 December 2009 and 31 December 2010 and profit for the years ended 31 December 2009 and 31 December 2010

Note 1 – Limnotex acquisition and Limnotex options

The Company elected to restate business combinations starting from the acquisition of LLC Komtel in June 2008 and to apply IAS 27 as of that date. In accordance with IFRS a change in ownership interest without loss of control leads to the carrying amounts of the controlling and non-controlling interest being adjusted to reflect the changes in their relative interest in the subsidiary. The difference between the fair value of the consideration paid and the amount by which the non-controlling interest is adjusted is recognized in equity, while US GAAP effective in 2008 required purchase accounting.

On 1 July 2008, VimpelCom acquired 25% of Limnotex in addition to existing controlling stake of 50% plus one share. In addition, VimpelCom entered into a put and call option agreement over the remaining 25% shares. The agreement was recognized as a redeemable noncontrolling interest under US GAAP. Under IFRS the put option granted to the non-controlling interest gives rise to a financial liability. As the Company concluded that they do not have present access to the benefits of all the shares held by the non-controlling shareholders, changes in the carrying amount of the financial liability (Note 15) are recognized in equity.

F-215 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

4. First time adoption of IFRS (continued)

Reclassifications (continued)

For the year ended 31 December 2009, the amortization expense was decreased by US$ 17,526 and deferred tax expense was decreased by US$ 1,230. Net profit of US$ 4,074 was attributable to non-controlling interest and US$ 12,222 to the owners of the parent.

For the year ended 31 December 2010, the amortization expense was decreased by US$ 17,544 with a corresponding deferred tax expense decrease of US$ 3,504. Net profit of US$ 3,510 was attributable to non-controlling interest and US$ 10,531 to the owners of the parent.

Note 2 – Menacrest consolidation

In comparison to US GAAP effective in 2009, the definition of control differs under IAS 27. As a result Menacrest Limited ("Menacrest") and its subsidiaries Aridus and Sky Mobile are included as subsidiaries in the consolidated financial statements in accordance with IFRS that were not included in the consolidated financial statements in accordance with US GAAP. In addition, the Company received two call options to acquire up to 100% of interest in Menacrest which were not recognized under US GAAP but qualify as derivatives under IFRS. As a part of the Menacrest acquisition, VimpelCom granted Crowell Investments Limited ("Crowell"), the owner of Menacrest, a loan of US$ 350,000 on 13 February 2008 (the "Original Crowell Loan Agreement") and subsequently re-negotiated its terms by decreasing the interest rate and increasing the maturity of the loan (the "Revised Crowell Loan Agreement") which resulted in required de-recognition of the original loan and recognition of the new one.

The original terms were bearing interest rate of 10% per annum and the loan was secured by 25% of the shares of Limnotex Developments Limited ("Limnotex"). The revised terms were bearing fixed annual amount and the security was amended to 100% of Menacrest, which owned 100% of the share capital of Sky Mobile, a mobile operator in Kyrgyzstan, holding GSM and 3G licenses to operate over the entire territory of Kyrgyzstan.

Crowell granted the Company two call options (the "Call Option Agreement") over the issued share capital of Menacrest.

On 29 May 2009, VimpelCom agreed to amend the Revised Crowell Loan Agreement in that the term of the loan facility was extended until 11 February 2014 and interest rate has been changed to be a fixed amount per annum starting from the effective date of the amendment. Also, the security interest granted by Crowell to VimpelCom over 25% of the shares of Limnotex was replaced by a security interest over 100% of the shares of Menacrest.

As a result of the Call Option Agreement, control is deemed to have been established over Menacrest, and Sky Mobile as its subsidiary, on the basis that the call options were exercisable at the date of acquisition in February 2008. Since that date precedes June 2008, after which the business combinations have been converted under IFRS 3R, in accordance with IFRS 1, paragraph "C4j", the financial statements of VimpelCom as of 1 January 2009 have been adjusted to include the original Sky Mobile carrying values as of 28 March 2008 (the date at which Menacrest acquired Sky Mobile) plus the subsequent movements to 1 January 2009. At transition date, the Company had present access to the benefits of 50.1% of the non-controlling interest. Since the call option over Menacrest was in the money and likely to be exercised a liability has been recognized of US$ 330,000. VimpelCom has elected to measure the non-controlling interest in the acquiree at the proportionate share of net assets of Menacrest. The difference between the carrying values of the assets and liabilities of Sky Mobile, the non-controlling interest of Menacrest and the liability recognized has been recognized as goodwill. 4. First time adoption of IFRS (continued)

F-216 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

Reclassifications (continued)

The values of the consolidated assets and liabilities of Menacrest and Sky Mobile as of 1 January 2009 in accordance with IFRS 1 were as follows:

As of 1 January 2009 Assets Cash and cash equivalents 20,039 Other current assets 11,541 Property and equipment (6 years weighted average remaining useful life) 95,634 Intangible assets 37,231 Other non-current assets 5,159 169,604 Liabilities Current liabilities 56,099 Long-term liabilities 56,994 113,093 Total identifiable net assets acquired 56,511

Non-controlling interest 28,349 Goodwill arising on acquisition 301,448 Purchase consideration transferred 329,610

The recognized goodwill is expected to be realized from the potential of the Kyrgyzstan telecommunication market development.

Before June 2009, 49.9% of equity over Menacrest was classified as non-controlling interest, after that date, when the Company had lost the present access to the benefits of interest ownership of Menacrest, – 100% of equity over Menacrest was classified as non-controlling interest.

On 20 October 2010, the Company exercised the first call option to acquire 50.1% of the issued share capital of Menacrest. The remaining 49.9% of Menacrest was owned by Crowell. On the same date the pledge over 100% of Menacrest shares was released by the Company.

The consideration for the 50.1% share capital of Menacrest in the amount of US$ 150,000 has been set off against part of the debt of Crowell to the Company under the Crowell Loan Agreement (Note 15). As Menacrest was already consolidated at the time the first call option was exercised, the transaction was accounted for as a repayment of liability instead of as an equity transaction under US GAAP.

Note 3 – Other options

In accordance with IFRS derivative instruments over non-controlling interests in subsidiaries or interests in associates qualify under the definition of financial instruments and are measured at their fair value.

F-217 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

4. First time adoption of IFRS (continued)

Reclassifications (continued)

VimpelCom was granted call options and issued put options over the non-controlling interest in its subsidiaries (Tacom, Mobitel, Dicom) and associates (Euroset and M.I.P.R.). The table below represents the fair value of the options.

31 December 31 December 1 January 2010 2009 2009 Financial assets Tacom 1,349 3,286 3,765 Mobitel 3,986 7,131 – M.I.P.R. – – 22,294

Financial liabilities Euroset 41 43,173 48,445 Dicom 3,715 3,228 2,740

The change in fair value was recognized in income statement of the respective period.

Note 4 – Investments in associates

This adjustment is the proportionate impact of applying IFRS to the financial statements of associates.

Note 5 – Income tax uncertainties

Under US GAAP uncertainties in income taxes were recognized as of the reporting dates and were not revised as of the transition date. However for the year ended 31 December 2010 the tax provisions have been reassessed under IAS 10 Events after the Reporting Period that require adjustment in the respective year.

Note 6 – Other adjustments

Among others these adjustments include different treatment of shares of VimpelCom Ltd. owned by the Company and its subsidiaries. Under US GAAP those shares were accounted for as treasury shares whereas they meet definition of financial assets available-for-sale under IFRS. Please see Note 15 for further details.

5. Significant accounting judgements, estimates and assumptions

The preparation of these consolidated financial statements required management to apply accounting policies and methodologies based on complex, subjective judgments, estimates based on past experience and assumptions determined from time to time to be reasonable and realistic based on the related circumstances. The use of these estimates and assumptions affects the amounts reported in the statement of financial position and the income statement as well as the notes. The final amounts for items for which estimates and assumptions were made in the consolidated financial statements may differ from those reported in these statements due to the uncertainties that characterize the assumptions and conditions on which the estimates are based.

F-218 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

5. Significant accounting judgements, estimates and assumptions (continued)

Certain accounting principles require a higher degree of subjective judgment in making estimates and judgements and for which changes in the underlying conditions could significantly affect the consolidated financial statements are briefly described below.

Accounting judgements

Consolidation of GTEL-Mobile

In 2011, the Company made certain changes in the joint-venture agreement on our investment in Vietnam with the government and the Charter of GTEL-Mobile. The definition of control under IAS 27 provides for the basic guidance whether the company can actually direct activities of the entity which is considered a judgemental area. Based on these agreed changes, the Company made a significant judgement that it had obtained control over activities of GTEL-Mobile since it has a right to appoint the General Director being the major governing body of GTEL-Mobile for day-to-day operations. Also the Company had a right to unilaterally approve certain decisions in the Board of Directors of the GTEL-Mobile which were considered the most significant in managing the operations of GTEL-Mobile. As a result, the Company determined that it should consolidate GTEL-Mobile effective 26 April 2011. The consolidation of GTEL-Mobile impacted the financial statements as a joint venture previously accounted for as an equity investment became a subsidiary.

Critical accounting estimates

A critical accounting estimate is one which is both important to the presentation of the Group’s financial position and results and requires management’s most difficult, subjective or complex judgements, often as a result of the need to make important estimates based on assumptions about the outcome of matters that are inherently uncertain.

Management evaluates such estimates on an ongoing basis, based upon historical results and experience, consultations with experts, trends and other methods which management considers reasonable under the circumstances, as well as forecasts as to how these might change in the future.

Revenue recognition

The Group’s revenues primarily consist of revenues from sale of services and periodic subscriptions. The Group offers subscribers, via multiple element arrangements or otherwise, a number of different services with different price plans, and provides discounts of various types and forms, often in connection with different campaigns, over the contractual or average customer relationship period. The Group also sells wholesale products to other operators and vendors in different countries and across borders. Management has to make estimates related to revenue recognition, relying to some extent, on information from other operators on values of services delivered. Management also makes estimates of the final outcome in instances where the other parties dispute the amounts charged. Furthermore, management has to estimate the average customer relationship for revenue that is initially recognised as deferred revenue in the statement of financial position and recognised in the income statement over a future period, e.g. connection fee. Management also applies judgement in evaluating gross or net presentation of revenue and associated fees. In this case, among others, the main factor is whether the Company is considered as the primary obligor in the transactions.

F-219 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

5. Significant accounting judgements, estimates and assumptions (continued)

Critical accounting estimates (continued)

Business combinations

We have entered into certain acquisitions in the past and may make additional acquisitions in the future. For the larger acquisitions, third-party valuation experts are engaged to assist in determining and allocating the fair values of the assets acquired and liabilities assumed. Our financial statements are impacted by the manner in which we allocate the purchase price in a business combination, as assets that are considered to be subject to depreciation will reduce future operating results, whereas goodwill and certain other intangible assets are of a non- amortizing nature, therefore there is no income statement impact. As part of our purchase price allocation, it is necessary to determine the purchase price paid, which includes the fair value of securities issued and any contingent consideration.

After the purchase price is established, we have to allocate that to the underlying assets acquired and liabilities assumed, therefore assets and liabilities that are not originally reflected in the acquired entity need to be assessed and valued. This process requires significant judgment on our part as to what those assets and liabilities are and how they should be valued. Significant acquired intangible assets that have been recognised by the Group in connection with business combinations include customer bases, customer contracts, brands, licenses, service concession rights, roaming agreements and software. The significant tangible assets primarily include networks. The valuation of the individual assets, in particular intangible assets related to assets such as customer intangibles, brands, etc., require us to make significant assumptions, including, among others, the expected future cash flows, the appropriate interest rate to value those cash flows and expected future customer churn rates. All of these factors, which are generally developed in conjunction with the guidance and input of professional valuation specialists, require judgment and estimates. A change in any of these estimates or judgments could change the amount of the purchase price to be allocated to the particular asset or liability. The resulting change in the purchase price allocation to a non-goodwill asset or liability has a direct impact on the residual amount of the purchase price that cannot be allocated, referred to as "goodwill." See below Note 7 for further information about significant business combinations.

Impairment of long-lived assets

The Group has made significant investments in property and equipment, intangible assets, goodwill and other investments.

Goodwill, other intangible assets with indefinite useful life and intangible assets not yet brought into use are tested for impairment annually or more often if indicators of impairment exist, whereas other assets are tested for impairment when circumstances indicate there may be a potential impairment. Factors that indicate impairment which trigger impairment testing include, but are not limited to the following: significant fall in market values; significant underperformance relative to historical or projected future operating results; significant changes in the use of the assets or the strategy for the overall business, including assets that are decided to be phased out or replaced and assets that are damaged or taken out of use; significant negative industry or economic trends; significant loss of market share; significant unfavourable regulatory decisions and significant cost overruns in the development of assets.

F-220 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

5. Significant accounting judgements, estimates and assumptions (continued)

Critical accounting estimates (continued)

Estimating recoverable amounts of assets and companies must in part be based on management’s evaluations, including determining appropriate cash-generating units, determining the discount rate, estimates of future performance, revenue generating capacity of the assets and assumptions of the future market conditions.

A significant part of the Group’s operations is in countries with emerging markets. The political and economical situation in these countries may change rapidly and global financial turmoil and recession will potentially have a significant impact on these countries. During the financial crisis in 2008-2009 there were strong indications of increased country risk in the most exposed markets, which was reflected in the discount rates. Moreover recessionary effects and debt crisis in Europe in 2011 as well as increased macroeconomic risks impacted our assessment of cash flow forecasts and the discount rates applied. Changes in circumstances and in management’s evaluations and assumptions may give rise to impairment losses in the relevant periods.

There are significant variations between different markets with respect to growth, mobile penetration, Average Revenue Per User ("ARPU"), market share and similar parameters, resulting in differences in earnings before interest, tax, depreciation and amortization ("EBITDA") margins. The future developments of EBITDA margins are important in the Group’s impairment assessments, and the long-term estimates of EBITDA margins are highly uncertain. In particular, this is the case for emerging markets that are still not in a mature phase.

See below Note 13 for further information about goodwill and other long-lived assets impairment test.

Depreciation and amortization of non-current assets

Depreciation and amortization expenses are based on management estimates of residual value, amortization method and the useful life of property and equipment and intangible assets. Estimates may change due to technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the amortization or depreciation charges. Technological developments are difficult to predict and our views on the trends and pace of development may change over time. Some of the assets and technologies, in which the Group invested several years ago, are still in use and provide the basis for the new technologies. Critical estimates in the evaluations of useful lives for intangible assets include, but are not limited to, estimated average customer relationship based on churn, remaining license or concession period and expected developments in technology and markets.

The useful lives of property and equipment and intangible assets are reviewed at least annually taking into consideration the factors mentioned above and all other important relevant factors. Estimated useful lives for similar types of assets may vary between different entities in the Group due to local factors such as growth rate, maturity of the market, history and expectations for replacements or transfer of assets, climate and quality of components used. The actual economic lives of intangible assets may be different than our estimated useful lives, thereby resulting in a different carrying value of our intangible assets with finite lives. We continue to evaluate the amortization period for intangible assets with finite lives to determine whether events or circumstances warrant revised amortization periods. A change in estimated useful lives is a change in accounting estimate, and depreciation and amortization charges are adjusted for prospectively.

F-221 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

5. Significant accounting judgements, estimates and assumptions (continued)

Critical accounting estimates (continued)

Deferred tax assets and uncertain tax positions

Deferred tax assets are recognised to the extent that it is probable that the assets will be realised. Significant judgement is required to determine the amount that can be recognised and depends foremost on the expected timing, level of taxable profits as well as tax planning strategies and the existence of taxable temporary differences. The judgements relate primarily to losses carried forward in some of the Group’s foreign operations. When an entity has a history of recent losses the deferred tax asset arising from unused tax losses is recognised only to the extent that there is convincing evidence that sufficient future taxable income will be generated. Estimated future taxable income is not considered such evidence unless that entity has demonstrated the ability by generating significant taxable income for this year or there are certain other events providing sufficient evidence of future taxable income. New transactions and the introduction of new tax rules may also affect the judgements due to uncertainty concerning the interpretation of the rules and any transitional rules. Provisions for uncertain tax positions are recognized when it is probable that a tax position will not be sustained and the amount is reliably measurable. The expected resolution of uncertain tax positions is based upon managements’ judgement of the likelihood of sustaining a position taken through tax audits, tax courts and/or arbitration, if necessary. Circumstances and interpretations of the amount or likelihood may change through the settlement process. See below Note 10 for further information about income tax position and Note 27 about uncertainty in tax positions.

Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets, their fair value is determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

Provisions

The Group is subject to various legal proceedings, disputes and claims including regulatory discussions related to the Group’s business, licenses, tax positions, investments etc., the outcomes of which are subject to significant uncertainty. Management evaluates, among other factors, the degree of probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of loss. Unanticipated events or changes in these factors may require the Group to increase or decrease the amount to be accrued for any matter or accrue for a matter that has not been previously accrued because it was not considered probable or a reasonable estimate could not be made.

Through the operations in many emerging markets, the Group is involved in legal proceedings, including regulatory discussions. Accordingly, management’s estimates relating to legal proceedings and regulatory issues in these countries involve a relatively higher level of uncertainty.

F-222 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

6. New accounting pronouncements not yet adopted

Phase I of IFRS 9 Financial Instruments was issued in November 2009 and is effective for annual periods beginning on or after 1 January 2015. The standard introduces changes to the classification and measurement of financial assets and the requirements relating to financial liabilities in relation to the presentation of changes in fair value due to credit risks and the removal of an exemption from measuring certain derivative liabilities at fair value. The Company is currently assessing the impact of the standard on its results, financial position and cash flows.

The Company has also not adopted the following pronouncements, all of which were issued by the IASB on 12 May 2011 and which are effective for annual periods beginning on or after 1 January 2013. The Company has not completed its assessment of the impact of these pronouncements on the consolidated results, financial position or cash flows of the Group. • IFRS 10 Consolidated Financial Statements, which replaces parts of IAS 27, and all of SIC-12, builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The remainder of IAS 27 Separate Financial Statements, now contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates only when an entity prepares separate financial statements and is therefore not applicable in the Group’s consolidated financial statements. • IFRS 11 Joint Arrangements, which replaces IAS 31 Interests in Joint Ventures and SIC-13, Jointly Controlled Entities – Non-monetary Contributions by Venturers, requires a single method, known as the equity method, to account for interests in jointly controlled entities which is consistent with the accounting treatment currently applied to investments in associates. The proportionate consolidation method currently applied to the Group’s interests in joint ventures is prohibited. • IAS 28 Investments in Associates and Joint Ventures, was amended as a consequence of the issuance of IFRS 11. In addition to prescribing the accounting for investment in associates, it now sets out the requirements for the application of the equity method when accounting for joint ventures. The application of the equity method has not changed as a result of this amendment. • IFRS 12 Disclosure of Interest in Other Entities, is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The standard includes disclosure requirements for entities covered under IFRS 10 and IFRS 11. • IFRS 13 Fair Value Measurement provides guidance on how fair value should be applied where its use is already required or permitted by other standards within IFRS, including a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS.

F-223 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

6. New accounting pronouncements not yet adopted (continued)

Other amendments resulting from Improvements to the following standards and interpretations did not have any impact on the accounting policies, financial position or performance of the Group: • IFRS 3 Business Combinations (Contingent consideration arising from business combination prior to adoption of IFRS 3 (as revised in 2008)) • IFRS 3 Business Combinations (The measurement options available for non-controlling interest) • IFRS 3 Business Combinations (Un-replaced and voluntarily replaced share-based payment awards) • IAS 27 Consolidated and Separate Financial Statements • IAS 34 Interim Financial Statements • IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

7. Business combinations and other significant transactions

Acquisitions in 2011

Eltel

On 21 January 2011, VimpelCom acquired 100% of the share capital of Closed Joint Stock Company Eltel ("Eltel"), one of the leading alternative fixed-line providers in St. Petersburg, for the total cash consideration of RUR 1,000 million (equivalent to US$ 33,428 at the exchange rate as of 21 January 2011).

The primarily reason for the acquisition was to enhance VimpelCom’s presence in the Saint- Petersburg telecommunication market (including through transport network) and to increase VimpelCom’s local FTTB (Fiber-To-The-Building) subscribers base.

The acquisition of Eltel is accounted for as a business combination under the "acquisition method", as defined by IFRS 3. The consideration transferred was measured at fair value on the acquisition date.

The fair values of consolidated identifiable assets and liabilities of Eltel as of 21 January 2011, were as follows: 21 January 2011 Cash and cash equivalents 387 Other current assets 1,443 Property and equipment 10,106 Customer Relationships (9 years weighted average remaining useful life) 4,282 Other assets 129 Goodwill 20,152 Total assets acquired 36,499 Current liabilities (1,170) Non-current liabilities (1,901) Total liabilities assumed (3,071) Total consideration transferred 33,428

F-224 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

7. Business combinations and other significant transactions (continued)

Acquisitions in 2011 (continued)

The excess of the purchase consideration over the fair value of the identifiable net assets of Eltel amounted to US$ 20,152 and was recorded as goodwill. The goodwill was assigned to the Russia CGU and is expected to be realized from the potential of "business to business" telecommunication market development in the future, as well as synergies with VimpelCom’s operations. This goodwill is not deductible for tax purposes.

VimpelCom Lao

On 9 March 2011, VimpelCom acquired 100% ownership interest in VimpelCom Holding Laos B.V. (Netherlands), formerly Millicom Holding Laos B.V., which holds a 78% interest in VimpelCom Lao (formerly Millicom Lao) Co., Ltd. ("VimpelCom Lao") a cellular telecom operator with operations in the Lao People’s Democratic Republic (PDR). The remaining 22% of VimpelCom Lao is owned by the Government of the Lao PDR, as represented by the Ministry of Finance.

The reason for the acquisition was gaining access to the new market of Lao PDR.

The acquisition of VimpelCom Lao is accounted for as a business combination under the "acquisition method," as defined by IFRS 3. The consideration transferred was measured at fair value on the acquisition date. The total cash consideration transferred was approximately US$ 69,833.

The fair values of consolidated identifiable assets and liabilities of VimpelCom Lao as of 9 March 2011, were as follows: 9 March 2011 Cash and cash equivalents 3,112 Other current non-financial assets 8,739 Property and equipment 48,578 Licenses (10 years weighted average remaining useful life) 9,100 Goodwill 67,300 Other non-current assets 3,336 Total assets acquired 140,165

Current liabilities (36,161) Non-current liabilities (14,474) Total liabilities assumed (50,635) Non-controlling interest (19,697) Total consideration transferred 69,833

The non-controlling interest was valued based on the fair value of 22% stake using discounted cash flows analysis ("DCF") adjusted for control premium.

The excess of the purchase consideration over the fair value of the identifiable net assets of Millicom Lao amounted to US$ 67,300 and was recorded as goodwill. The goodwill was assigned to the Laos CGU and is expected to be realized from the potential development of telecommunication market in Laos as well as synergies with VimpelCom’s operations in South- East Asia. This goodwill is not deductible for tax purposes.

F-225 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

7. Business combinations and other significant transactions (continued)

Acquisitions in 2011 (continued)

GTEL-Mobile

On 29 March 2011, VimpelCom agreed with GTEL, its local partner in Vietnam, on a financing plan for their investment, GTEL-Mobile, that could result in the Company providing investments in total of up to US$ 500,000 through 2013. The Company completed the first stage of the financing plan by paying US$ 196,000 for the newly issued shares and thereby increasing its stake in GTEL-Mobile from 40% to 49% on 26 April 2011. All proceeds from this financing will be used for GTEL-Mobile’s development.

The Company agreed to invest another US$ 304,000 under this plan, which would increase its economic interest in GTEL-Mobile from 49% to 65%. The additional financing and equity increase are subject to meeting certain performance targets by GTEL-Mobile and obtaining further regulatory approvals. Based on 2011 performance those targets have not been met and as a result the Company was released from its obligation to finance GTEL-Mobile.

The primary reason for the increase in ownership was expanding VimpelCom’s operations in Vietnam.

In conjunction with the financing agreements described above, VimpelCom and GTEL agreed on certain changes to the joint venture agreement and charter of GTEL-Mobile. Under the revised agreement, VimpelCom is assigned with the operational management of GTEL-Mobile, by way of substantial control over adoption of annual budgets and appointment of the General Director of GTEL-Mobile who is granted with wide authority with respect of day-to-day operations.

Based on these agreed changes, VimpelCom started consolidating GTEL-Mobile from 26 April 2011 onwards.

The increase in ownership in GTEL-Mobile and subsequent consolidation is accounted for as a business combination achieved in stages, as defined by IFRS 3. The acquisition achieved in stages requires remeasurement of previously held equity interest in the acquiree at its acquisition- date fair value and recognizing the resulting gain or loss, if any, in earnings. As of the acquisition date the fair value of previously held interest was US$ 157,523 representing the fair value of 40% stake based on DCF adjusted for control premium. The resulting loss of US$ 39,620 was recognized as other non-operating losses item of accompanied income statement. In prior reporting periods, the Company recognized a portion of changes in the value of its equity interest in GTEL-Mobile associated with foreign currency translation in other comprehensive income. As of the acquisition date, the respective accumulated foreign currency translation adjustment of US$ 43,100 was reclassified from other comprehensive income and included in the current period earnings as other non-operating losses item of accompanied income statement.

F-226 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

7. Business combinations and other significant transactions (continued)

Acquisitions in 2011 (continued)

The fair values of consolidated identifiable assets and liabilities of GTEL-Mobile as of 26 April 2011, were as follows: 26 April 2011 Cash and cash equivalents 206,245 Other current non-financial assets 7,259 Property and equipment 147,734 Licenses (14.6 years weighted average remaining useful life) 143,000 Goodwill 126,500 Other non-current non-financial assets 1,252 Total assets acquired 631,990

Current liabilities (38,608) Non-current liabilities (3,911) Total liabilities assumed (42,519)

Non-controlling interest (235,948) Previously held 40% interest (157,523) Total cash contribution 196,000

The non-controlling interest was valued based on 51% stake of total value of the equity based on DCF adjusted for a control premium.

The excess of the purchase consideration over the fair value of the identifiable net assets of GTEL-Mobile amounted to US$ 126,500 and was recorded as goodwill. The goodwill was assigned to the Vietnam CGU and was expected to be realized from the potential development of telecommunication market in Vietnam as well as synergies with VimpelCom’s operations in South- East Asia. This goodwill is not deductible for tax purposes. This goodwill was impaired as of 1 October 2011, due to negative market trends in Vietnamese market in late 2011 which resulted in a negative business enterprise value of Vietnam CGU (Note 13). Subsequent to 31 December 2011 the Company signed an agreement to sell its investments in GTEL-Mobile (Note 28).

NTC

On 7 June 2011, VimpelCom acquired 90% of the share capital of OJSC "New Telephone Company" ("NTC") for the total consideration of RUR 10,835 million (equivalent to US$ 390,083 at the exchange rate as of 7 June 2011). On 21 October 2011, VimpelCom completed acquisition of additional 10% of the outstanding NTC shares. The total acquisition price is US$ 438,359.

The primarily reason for the acquisition was to enhance VimpelCom’s presence in Primorskiy region telecommunication market and to increase VimpelCom’s local mobile subscribers base.

The acquisition of NTC is accounted for as a business combination under the "acquisition method", as defined by IFRS 3. The consideration transferred was measured at fair value on the acquisition date.

F-227 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

7. Business combinations and other significant transactions (continued)

Acquisitions in 2011 (continued)

The fair values of consolidated identifiable assets and liabilities of NTC as of 7 June 2011, were as follows: 7 June 2011 Cash and cash equivalents 2,138 Other current non-financial assets 25,098 Property and equipment 119,643 Trademarks (3 years weighted average remaining useful life) 5,733 Customer Relationships (7.7 years weighted average remaining useful life) 22,143 Licenses (10.3 years weighted average remaining useful life) 56,327 Number capacity (10.3 years weighted average remaining useful life) 1,377 Software (9.4 years weighted average remaining useful life) 3,489 Other non-current non-financial assets 4,625 Goodwill 230,886 Total assets acquired 471,459 Current liabilities (12,683) Non-current liabilities (20,417) Total liabilities assumed (33,100) Total consideration transferred 438,359

The excess of the purchase consideration over the fair value of the identifiable net assets of NTC amounted to US$ 230,886 and was recorded as goodwill. The goodwill was assigned to Russia CGU and is expected to be realized from the potential of "business to business" telecommunication market development in the future, as well as synergies with VimpelCom’s operations. This goodwill is not deductible for tax purposes. The acquisition-related costs incurred in the transactions were treated as expenses under IFRS 3.

Restructuring of shareholding in Kazakhstan and Kyrgyzstan

On 24 August 2011, a restructuring transaction ("Restructuring transaction") with Crowell Investments Limited ("Crowell") was completed. As a result of the Restructuring transaction, VimpelCom Finance B.V., a subsidiary of the company, became the legal and beneficial owner of 71.5% shares in the issued share capital of the combined Limnotex (resulting in 71.5% indirect shareholding of VimpelCom Finance B.V. in LLP KaR-Tel ("KaR-Tel") and Sky Mobile, while the non-controlling 28.5% of Limnotex shares are now held by Crowell. Before the transaction, VimpelCom Group (via OJSC Vimpel-Communications and VimpelCom Finance B.V.) held indirectly 75.0% in KaR-Tel and 50.1% in Sky Mobile.

At the same time, the Company’s call option to acquire 49.9% of the issued share capital of Menacrest was terminated, while Crowell’s put and VimpelCom’s call options for the 25% of Limnotex shares (Note 15) were amended. After the amendments, Crowell holds two put options for Limnotex shares: the first put option for 13.5% is exercisable during 2013 at a fixed price of US$ 297,000 and the second put option for 15% is exercisable during 2017 at a fixed price of US$ 330,000. In turn the Company holds two call options for Limnotex shares (for 13.5% and 15%) and both are exercisable at an EBITDA multiple during the period between April 2012 and May 2018. As a part of the transaction, VimpelCom terminated the loan agreement with Crowell and was released from its commitment to exercise the call option for the 25% of Limnotex shares.

F-228 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

7. Business combinations and other significant transactions (continued)

Restructuring of shareholding in Kazakhstan and Kyrgyzstan (continued)

The existing dividend mandate from Crowell to Menacrest (allowing VimpelCom to receive 49.9% Menacrest dividends payable to Crowell) was cancelled. In accordance with new dividend mandates, VimpelCom Finance B.V. will receive 100% Menacrest dividends payable to Limnotex and 3.5% Limnotex dividends payable to Crowell.

The Restructuring transaction was accounted for as an equity transaction reflecting exchange of 21.4% in Menacrest for 3.5% in Limnotex. Simultaneously the termination of the loan was offset by the release of liability to exercise the call option for the 25% of Limnotex shares. In addition the fair value of the call options for the total 28.5% of Limnotex shares at the amount of US$ 68,000 were recognized as financial assets and the redemption value of the put options for the total of 28.5% of Limnotex shares at the amount of US$ 391,000 was recorded as financial liabilities.

The following table presents amounts of revenue and profit or loss attributable to the owners of the parent (before intercompany eliminations) of the material acquirees since the acquisition date included in the consolidated statement of comprehensive income of the Company for the year ended 31 December 2011: Acquired entity contribution from acquision date till 31 December 2011, before Acquisition eliminating intercompany date transactions Eltel 21 January 2011 Revenue 14,430 Profit for the year 2,657 Vimpelcom Lao 9 March 2011 Revenue 28,501 Profit for the year 1,740 GTEL-Mobile 26 April 2011 Revenue 13,049 Loss for the year (310,711) NTC 7 June 2011 Revenue 59,697 Profit for the year 6,946

Unaudited consolidated pro forma revenue and profit attributable to the owners of the parent (before elimination of intercompany transactions) for the year ended 31 December 2011 as though the acquisition date for all material business combinations (as presented in the table above) had been 1 January 2011 is US$ 10,703,943 and US$ 1,054,451 respectively.

F-229 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

7. Business combinations and other significant transactions (continued)

Foratec

On 29 July 2010, VimpelCom acquired 100% of the share capital of Closed Joint Stock Company Foratec Communication ("Foratec"), one of the leading alternative fixed-line providers in Urals region of Russia. The primary reason for the acquisition of Foratec was enhancing VimpelCom presence in Ural Region, including business services market.

The total value of the transaction amounted to RUR 1,120 million (equivalent to US$ 37,096 at the exchange rate as of 29 July 2010). The acquisition was recorded under the acquisition method of accounting. The fair value of acquired identifiable net assets of Foratec amounted to US$ 13,381. The excess of the acquisition cost over the fair value of the identifiable net assets amounted to US$ 23,715. This amount was recorded as goodwill, was mainly assigned to the Russia CGU and is subject to annual impairment tests. The recognized goodwill is expected to be realized primarily from the synergies of combining of VimpelCom’s and Foratec's regional operations. This goodwill is not deductible for tax purposes.

Other transactions

Tacom

On 30 July 2010, VimpelCom increased its ownership interest in limited liability company Tacom, a consolidated Tajikistan subsidiary of VimpelCom, from 80% to 90% by acquiring an additional 10% ownership interest for a total cash consideration of US$ 10,300. The transaction was accounted for as a decrease in noncontrolling interest and an increase in equity.

LLC Golden Telecom (Ukraine)

On 30 December 2009, VimpelCom increased its ownership interest in LLC Golden Telecom, a consolidated Ukrainian subsidiary of VimpelCom, from 80% to 100% by acquiring the 20% ownership interest it did not already own for a total cash consideration of US$ 18,200. The transaction was accounted for as a decrease in noncontrolling interest and an increase in equity.

8. Investments in associates and joint ventures

The Company has the following investments in and carrying values of associates and joint ventures:

Percentage of 31 December 31 December 31 December 1 January ownership 2011 2010 2009 2009 Joint ventures GTEL – Mobile 40.0% – 223,275 265,797 306,027 Rascom 54.0% 31,555 28,952 26,840 23,409

Associates Euroset 49.9% 355,024 313,690 226,495 208,127 Others 1,576 3,441 4,531 4,432 Total 388,155 569,358 523,663 541,995

F-230 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

8. Investments in associates and joint ventures (continued)

GTEL-Mobile was a joint venture at 31 December 2010 as there was a joint control situation with the local Government of Vietnam.

On 26 April 2011, the Company increased its ownership interest in GTEL-Mobile and therefore consolidated GTEL-Mobile (Note 7).

Investment in Rascom does not qualify as a subsidiary, because we do not have ability to direct financial and operating activities of Rascom, and as result, we do not control Rascom. Therefore, the Company accounts for this investment under the equity method.

The following table includes summarized consolidated financial information of the investments in the most significant associates Euroset and joint venture GTEL-Mobile (for the years ended 31 December 2010 and 2009) which are held by the Company as at and for the years:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Share of the associate’s statement of financial position: Current assets 367,505 273,847 369,818 504,204 Non-current assets 165,616 318,592 354,816 304,289 Current liabilities 516,455 481,649 552,872 752,722 Non-current liabilities 45,198 24,300 129,435 2,872 Equity (28,532) 86,490 42,327 52,899 Goodwill from acquisition 383,556 450,475 449,965 461,255 Carrying amount of the investment 355,024 536,965 492,292 514,154

2011 2010 2009 Share of the associate’s revenue and profit: Revenue 1,164,668 1,017,816 875,434 Profit for the year 64,789 62,439 774 Share of profit of associates reported 64,789 62,439 774

9. Segment information

Management analyzes the operating segments separately because of different economic environments and stages of development in different geographical areas, requiring different investment and marketing strategies. Management does not analyze assets by reportable segments separately. The segment data for acquired operations are reflected herein from the date of their acquisitions.

The Management Board of VimpelCom utilizes multiple views of data to measure segment performance. However, the dominant measurements are consistent with VimpelCom’s consolidated financial statements and, accordingly, are reported on the same basis herein. Intersegment revenues are eliminated in consolidation. Intersegment revenues may be accounted for at amounts different from sales to unaffiliated companies. The accounting policies of the segments are the same as those of VimpelCom.

F-231 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

9. Segment information (continued)

Historically management analyzed the Russian operations as two separate segments, one for fixed line and one for mobile. Following the acquisition of Wind Telecom by VimpelCom Ltd., starting 15 April 2011, VimpelCom defined Russia, CIS (including Georgia), Ukraine as operating segments based on the business activities in different geographical areas. The comparative information has been revised accordingly.

"All other" category includes Asia mobile, headquarter expenses and other unallocated adjustments and eliminations.

Historically management evaluated the performance of its segments on a regular basis primarily based on revenue and operating income before depreciation, amortization and impairment loss ("adjusted OIBDA"). Following the acquisition of Wind Telecom by VimpelCom Ltd., VimpelCom concluded that earnings before interest, tax, depreciation, amortization and impairment loss ("adjusted EBITDA") is a more appropriate measure for both internal and external reporting because it is more widely used amongst European-based analysts and investors to assess the performance of an entity and compare it with other market players.

Adjusted EBITDA differs from adjusted OIBDA for certain non-operating items recorded in other gain/loss. Items historically excluded from adjusted OIBDA but accounted in adjusted EBITDA generally include: • litigation provisions (including provisions for taxes other than income tax provisions, penalties, and fines) and legal fines income; • write-offs of current assets (including VAT non recoverable).

All recorded in the selling, general and administrative expenses item of accompanying income statement.

Based on management decision, the above adjustments were not included in the Russia business unit’s adjusted EBITDA.

Information analyzed by our management for all the years presented was based on US GAAP. Financial information by reportable segment for the years ended 31 December 2011, 2010 and 2009 is presented in the following tables.

Information by reportable segments, 31 December 2011 Year ended 31 December 2011

Russia CIS Ukraine Total All other Group Revenue External customers 9,002,534 1,469,857 133,543 10,605,934 62,197 10,668,131 Inter-segment 61,836 119,352 18,223 199,411 (199,411) – Total revenue 9,064,370 1,589,209 151,766 10,805,345 (137,214) 10,668,131 EBITDA 3,641,211 703,577 2,988 4,347,776 (102,851) 4,244,925

Other disclosures Capital expenditures 2,006,676 624,747 5,291 2,636,714 86,080 2,722,794

F-232 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

9. Segment information (continued)

Information by reportable segments, 31 December 2010 Year ended 31 December 2010

Russia CIS Ukraine Total All other Group Revenue External customers 8,123,576 1,266,591 158,418 9,548,585 21,824 9,570,409 Inter-segment 38,024 87,359 29,503 154,886 (154,886) – Total revenue 8,161,600 1,353,950 187,921 9,703,471 (133,062) 9,570,409 EBITDA 3,775,320 615,300 28,743 4,419,363 (48,562) 4,370,801

Other disclosures Capital expenditures 1,557,074 437,169 48,421 2,042,664 40,854 2,083,518

Information by reportable segments, 31 December 2009 Year ended 31 December 2009 All other adjustments and Russia CIS Ukraine Total eliminations Group Revenue External customers 7,424,507 1,219,593 163,314 8,807,414 6,000 8,813,414 Inter-segment 24,279 54,399 39,742 118,420 (118,420) – Total revenue 7,448,786 1,273,992 203,056 8,925,834 (112,420) 8,813,414 EBITDA 3,696,103 640,267 36,163 4,372,533 (38,100) 4,334,433

Other disclosures Capital expenditures 619,471 113,879 19,811 753,161 68,000 821,161

The following table provides the breakdown of operating revenues from external customers by mobile and fixed line services:

Breakdown of revenue per mobile and fixed line

2011 2010 2009 Fixed line 1,638,403 1,470,796 1,435,476 Mobile line 9,029,728 8,099,613 7,377,938 Total 10,668,131 9,570,409 8,813,414

These business activities include the following operations: mobile primarily include activities for the providing of wireless telecommunication services to the Company's subscribers and other operators while fixed line primarily include all activities for providing wireline telecommunication services, broadband and consumer Internet. VimpelCom provides both mobile and fixed line services in Russia, Ukraine and CIS.

The Company’s management does not review total assets and total liabilities per segment, and therefore this information has not been presented in these statements. Neither are depreciation and amortization reviewed per segment.

F-233 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

9. Segment information (continued)

The following table provides the reconciliation of consolidated US GAAP adjusted EBITDA to IFRS consolidated profit for the year:

Reconciliation between adjusted EBITDA and profit for the year

2011 2010 2009 EBITDA 4,244,925 4,370,801 4,334,433

Reconciliation adjustments (3,469) (57,821) (8,926) Depreciation (1,413,151) (1,236,475) (1,190,313) Amortization (416,099) (379,580) (440,000) Impairment loss (526,275) – – Loss on disposals of non-current assets (45,435) (41,190) (77,292) Finance costs (782,091) (538,563) (602,620) Finance income 240,732 67,170 57,755 Other non-operating losses (138,213) (4,785) (68,759) Shares of profit of associates and joint ventures accounted for using the equity method 65,496 89,521 2,689 Net foreign exchange (loss)/income 183,108 (9,263) (403,712) Income tax expense (486,611) (485,311) (431,250) Profit for the year 922,917 1,774,504 1,172,005

Reconciliation adjustments primarily represent differences relating to the classification of operating expenses. Adjusted OIBDA 2009 as reported in prior financial statements was adjusted to take into account the consolidation of Menacrest and it’s operating subsidiary Sky Mobile in the year ended 31 December 2009 as required by IFRS (Note 4).

10. Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss account except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences, carry forward of unused tax losses and the carry forward of unused tax credits. Current and deferred tax also includes withholding tax on dividends and any tax liability arising from the declaration of dividends.

F-234 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

10. Income taxes (continued)

Income tax expense consisted of the following for the years ended 31 December:

Years ended 31 December 2011 2010 2009 Current income taxes 455,157 555,341 459,326 Deferred taxes 31,454 (70,030) (28,076) Income tax expense reported 486,611 485,311 431,250

In the table below, we show the reconciliation between the statutory tax rate in the Russian Federation and effective corporate income tax rates for the group, together with the corresponding amounts. 31 December 31 December 31 December 2011 % 2010 % 2009 % Income tax expense computed on income before taxes at statutory tax rate 281,906 20.0% 451,963 20.0% 320,651 20.0% Effect of goodwill impairment 25,300 1.8% – 0.0% – 0.0% Effect of deductible temporary differences not recognized as measured by the change in valuation allowance 156,068 11.1% 24,304 1.1% 33,133 2.1% Effect of non-deductible expenses 40,041 2.8% 17,090 0.8% 38,008 2.4% Effect of non-taxable income – 0.0% – 0.0% – 0.0% Tax effect of intragroup dividends 23,218 1.6% (169) 0.0% 27,904 1.7% Effect of tax claims 1,525 0.1% (37,381) -1.7% 15,841 1.0% Taxable capital contribution – 0.0% – 0.0% 1,818 0.1% Effect of different tax rates in different jurisdictions (33,531) -2.4% (1,064) 0.0% (12,550) -0.8% Effect of group restructuring (Golden Telecom) – 0.0% 46,862 2.1% – 0.0% Other (7,916) -0.6% (16,294) -0.7% 6,445 0.4% Income tax expense reported in the accompanying consolidated financial statements 486,611 34.5% 485,311 21.5% 431,250 26.9%

The applicable (or effective) tax rate amounts to 34.5% in 2011 (2010: 21.5% and 2009: 26.9%). The increase of the tax rate is primarily due to effect of unrecognized DTA (11.1% or US$ 156,068). A significant part of this impact relates to impairment of fixed and intangible assets other than goodwill of Asia companies.

Non recognized deferred tax assets

Deferred corporate income tax assets in respect of deductible temporary differences, for tax losses and other tax credits carried forward (mainly carry forward of non-deductible interest) are recongnized to the extent that the realization of the related tax benefit through future taxable profits is probable.

F-235 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

10. Income taxes (continued)

Non recognized deferred tax assets (continued)

VimpelCom has not recognized deferred corporate income tax in relation to loss carry forward periods for the following amounts:

Recognized Recognized Non recognized Non recognized Tax losses year of expiration losses DTA losses DTA 0-5 years – – 187,747 33,731 6-10 years – – 500,295 106,196 >10 years – – – – Indefinitely 1,666 350 427,275 105,493 Total 1,666 350 1,115,317 245,420

At 31 December 2011, the amount of deductible temporary differences for which no deferred tax asset has been recognised in the balance sheet of VimpelCom amounts to US$ 437,311. The reported non recognized deferred income tax on temporary differences amounts to US$ 104,773.

The following deferred tax balances were calculated by applying the presently enacted statutory tax rate effective to the period in which the temporary differences between the carrying amounts and tax base of assets and liabilities are expected to reverse. The amounts reported in the accompanying consolidated financial statements at 31 December consisted of the following:

31 December 31 December 31 December 1 January Deferred tax liabilities 2011 2010 2009 2009 Deferred tax assets as at 31 December – – – – Deferred tax liabilities as at 31 December 450,086 413,193 479,923 536,472

The following table shows the movements of the deferred tax assets and liabilities in 2011:

Charge to Change in Currency 31 December profit and Affecting enacted tax translation 31 December 2010 Acquisitions loss* equity rate adjustment 2011 Accrued operating and interest expenses, including gain from derivatives 98,408 252 63,410 – (713) (9,578) 151,779 Deferred revenue 25,642 14 586 – (108) (824) 25,310 Bad debts assets 8,866 179 – – – – 9,045 Non-current assets (6,421) 1,274 8,604 1,834 224 2,676 8,191 Other current assets – 164 (6,926) – (132) 427 (6,467) Undistributed retained earnings of subsidiaries (11,987) – (23,215) – – – (35,202) Property and equipment (374,490) (12,365) (74,696) 122 17 16,735 (444,677) Telecommunication licenses (69,047) (9,144) 4,614 – 1,006 113 (72,458) Customer relationships and other intangible assets (93,899) – 3,727 – – 4,706 (85,466) Loss carry-forwards 9,735 – (9,876) – – – (141) Net deferred tax position (413,193) (19,626) (33,772) 1,956 294 14,255 (450,086)

F-236 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

10. Income taxes (continued)

Non recognized deferred tax assets (continued)

The following table shows the movements of the deferred tax assets and liabilities in 2010:

Movements in deferred tax Charge to Change in Currency 31 December profit and enacted tax translation 31 December 2009 Acquisitions loss* rate adjustment 2010 Accrued operating and interest expenses, including gain from derivatives 76,222 145 22,008 – 33 98,408 Deferred revenue 32,661 – (4,773) (2,327) 81 25,642 Bad debts assets 8,604 77 172 – 13 8,866 Loss carry-forwards 6,993 – 2,742 – – 9,735 Non-current assets (9,007) – 2,332 225 29 (6,421) Other current assets – – – – – – Undistributed retained earnings of subsidiaries (19,037) – 7,050 – – (11,987) Property and equipment (376,254) (1,422) (1,333) 3,745 774 (374,490) Telecommunication licenses (89,018) – 19,958 (93) 106 (69,047) Customer relationships and other intangible assets (111,087) (3,028) 22,816 (2,492) (108) (93,899) Net deferred tax position (479,923) (4,228) 70,972 (942) 928 (413,193)

The following table shows the movements of the deferred tax assets and liabilities in 2009:

Movements in deferred tax Charge to Change in Currency 31 December profit and enacted tax translation 31 December 2008 Acquisitions loss* rate adjustment 2009 Accrued operating and interest expenses, including gain from derivatives 16,456 – 60,163 – (397) 76,222 Deferred revenue 68,094 – (32,534) 83 (2,982) 32,661 Bad debts assets 6,911 – 2,158 – (465) 8,604 Loss carry-forwards 3,727 – 3,763 – (497) 6,993 Non-current assets (27,895) – 14,677 223 3,988 (9,007) Other current assets – – – – – – Undistributed retained earnings of subsidiaries – – (18,430) – (607) (19,037) Property and equipment (316,865) – (76,279) (1,530) 18,420 (376,254) Telecommunication licenses (144,379) (3,834) 53,884 (560) 5,871 (89,018) Customer relationships and other intangible assets (142,521) – 24,931 (2,472) 8,975 (111,087) Net deferred tax liabilities (536,472) (3,834) 32,333 (4,256) 32,306 (479,923)

F-237 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

11. Property and equipment

Property and equipment, at cost, consisted of the following at 31 December 2011, 2010 and 2009:

Equipment Land, Office not installed Advances Telecommu- buildings and and assets for long nications and measuring Other under lived equipment constructions equipment equipment construction assets Total Cost At 1 January 2009 7,384,040 368,295 715,319 404,516 1,201,952 57,962 10,132,084 Additions 175,313 2,038 4,327 5,804 482,805 28 670,315 Disposals (66,136) (3,101) (760) (24,080) (80,101) (8,424) (182,602) Transfer 812,180 12,560 74,602 38,424 (903,014) (35,505) (753) Translation adjustment (314,914) (27,446) (24,493) (18,182) (76,578) 9,835 (451,778) At 31 December 2009 7,990,483 352,346 768,995 406,482 625,064 23,896 10,167,266 Additions 282,048 5,654 4,133 5,035 1,440,465 74,380 1,811,715 Acquisition of a subsidiary 20,072 216 802 189 410 – 21,689 Disposals (123,043) (1,142) (13,773) (17,702) (33,932) (232) (189,824) Transfer 635,514 5,316 144,548 108,856 (892,444) 0 1,790 Translation adjustment (38,055) 251 (5,458) 1,883 (2,899) (53) (44,331) At 31 December 2010 8,767,019 362,641 899,247 504,743 1,136,664 97,991 11,768,305 Additions 335,679 18,199 5,510 34,093 2,100,007 27,726 2,521,214 Acquisition of a subsidiary 188,705 66,903 12,123 24,302 42,224 3,783 338,040 Disposals (224,065) (48,208) (24,239) (5,710) (9,627) (52,191) (364,040) Transfer 1,349,086 26,181 100,480 57,389 (1,515,431) (17,073) 632 Translation adjustment (502,858) (16,833) (46,387) (25,310) (88,725) (236) (680,349) At 31 December 2011 9,913,566 408,883 946,734 589,507 1,665,112 60,000 13,583,802 Depreciation and impairment At 1 January 2009 (2,856,688) (62,738) (275,924) (124,715) – – (3,320,065) Depreciation charge for the year (1,002,766) (24,568) (106,449) (56,530) – – (1,190,313) Disposals 94,790 1,456 3,225 2,562 – – 102,033 Translation adjustment 86,110 4,795 6,230 4,542 – – 101,677 At 31 December 2009 (3,678,554) (81,055) (372,918) (174,141) – – (4,306,668) Depreciation charge for the year (1,013,258) (25,095) (128,736) (69,386) – – (1,236,475) Disposals 133,775 4,706 552 970 – – 140,003 Other (please specify) – – – (3,180) – – (3,180) Translation adjustment 22,788 (214) 3,928 1,703 – – 28,205 At 31 December 2010 (4,535,249) (101,658) (497,174) (244,034) – – (5,378,115) Depreciation charge for the year (1,162,721) (29,181) (134,067) (87,182) – – (1,413,151) Disposals 291,008 82 30,153 6,730 – – 327,973 Impairment (136,380) (24,878) (10,142) (23,455) (22,158) (6,009) (223,022) Translation adjustment 294,946 6,404 30,683 15,841 – – 347,874 At 31 December 2011 (5,248,396) (149,231) (580,547) (332,100) (22,158) (6,009) (6,338,441) Net book value At 1 January 2009 4,527,352 305,557 439,395 279,801 1,201,952 57,962 6,812,019 At 31 December 2009 4,311,929 271,291 396,077 232,341 625,064 23,896 5,860,598 At 31 December 2010 4,231,770 260,983 402,073 260,709 1,136,664 97,991 6,390,190 At 31 December 2011 4,665,170 259,652 366,187 257,407 1,642,954 53,991 7,245,361

Capitalized borrowing costs

VimpelCom capitalized borrowing costs in the cost of long lived assets in the amount of US$ 60,888, US$ 30,993 and US$ 48,241 in 2011, 2010 and 2009, respectively. The rate used to determine the amount of borrowing costs eligible for capitalization is 8.0%, 10.8 % and 8.1% for the years ended 31 December 2011, 31 December 2010 and 31 December 2009, respectively.

F-238 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

12. Intangible assets

The total gross carrying value and accumulated amortization of VimpelCom’s intangible assets consisted of the following at 31 December:

Telecommu- nication Software licenses, considered frequencies to be Brands Customer Telephone Other and intangible and relation- line intangible permissions Goodwill assets trademarks ships capacity assets Total Cost At 1 January 2009 1,512,541 3,481,176 878,420 36,625 467,136 167,155 425,550 6,968,603 Additions 24,274 – 106,808 267 1,229 3,331 3,696 139,605 Disposals (31) – (109,039) (17,794) (310) – (346) (127,520) Transfer – – – (850) 60,045 (2,053) (57,122) 20 Translation adjustment (116,248) (188,755) (45,074) (1,251) (9,295) (13,361) (32,346) (406,330) At 31 December 2009 1,420,536 3,292,421 831,115 16,997 518,805 155,072 339,432 6,574,378 Additions 54,668 – 125,475 38 – 11,991 20,921 213,093 Acquisition of a subsidiary 21 32,569 40 – – – 10 32,640 Disposals (128) – (17,720) – – – (40) (17,888) Transfer (215) – 2,971 193 89,289 (6,926) (85,312) – Translation adjustment (5,034) (31,964) (4,659) 257 9,308 (1,062) (12,529) (45,683) At 31 December 2010 1,469,848 3,293,026 937,222 17,485 617,402 159,075 262,482 6,756,540 Additions 66,102 22,304 104,861 107 947 5,016 25,829 225,166 Acquisition of a subsidiary 209,773 469,826 9,459 5,733 31,486 1,500 4 727,781 Disposals (30,483) – (32,406) – (11) (1,470) (1,384) (65,754) Transfer 11,790 – 18,461 (3,199) (35,693) (23,687) 32,328 – Translation adjustment (61,209) (179,482) (43,004) (901) (33,077) (2,360) (16,863) (336,896) At 31 December 2011 1,665,821 3,605,674 994,593 19,225 581,054 138,074 302,396 7,306,837

Amortization and impairment At 1 January 2009 (637,793) – (510,077) (28,339) (56,336) (52,356) (201,789) (1,486,690) Amortization charge for the year (172,580) – (137,166) (4,491) (26,793) (13,291) (85,679) (440,000) Disposals 112 – 81,039 19,874 – 15,276 11,219 127,520 Transfer (1,893) – – – (44,180) – 46,073 – Translation adjustment 39,877 – 18,969 2,288 (4,379) 2,620 8,458 67,833 At 31 December 2009 (772,277) – (547,235) (10,668) (131,688) (47,751) (221,718) (1,731,337) Amortization charge for the year (140,802) – (126,120) (186) (73,395) (10,365) (28,712) (379,580) Disposals 99 – 16,634 11 76 – – 16,820 Transfer 1,712 – (963) 7 (37,726) 216 36,754 – Translation adjustment 3,974 – 4,174 (332) 3,527 42 (1,205) 10,180 At 31 December 2010 (907,294) – (653,510) (11,168) (239,206) (57,858) (214,881) (2,083,917) Amortization charge for the year (175,188) – (123,440) (10,023) (62,324) (42,555) (2,569) (416,099) Disposals 26,771 – 24,328 – 11 – 1,661 52,771 Impairment (142,896) (126,210) (4,144) – – – – (273,250) Transfer (646) – (3,581) (3) 10,390 7,852 (14,012) – Translation adjustment 44,048 – 34,737 1,969 16,717 2,717 10,092 110,280 At 31 December 2011 (1,155,205) (126,210) (725,610) (19,225) (274,412) (89,844) (219,709) (2,610,215)

Net book value At 1 January 2009 874,748 3,481,176 368,343 8,286 410,800 114,799 223,761 5,481,913 At 31 December 2009 648,259 3,292,421 283,880 6,329 387,117 107,321 117,714 4,843,041 At 31 December 2010 562,554 3,293,026 283,712 6,317 378,196 101,217 47,601 4,672,623 At 31 December 2011 510,616 3,479,464 268,983 – 306,642 48,230 82,687 4,696,622

Telecommunication licenses not in use mainly comprise of the LTE licenses in Uzbekistan, for which the business operations have not yet been started, in the amount of US$ 28,909 as of 31 December 2011.

F-239 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Impairment testing of assets

Carrying amount of goodwill and cash-generating units

Goodwill acquired through business combinations have been allocated to the cash-generating units (CGU) for impairment testing as follows:

31 December 31 December 31 December 1 January CGU's 2011 2010 2009 2009 Russia 2,709,966 2,621,132 2,608,645 2,685,457 Kyrgyzstan 245,678 243,024 259,923 313,448 Kazakhstan 174,146 139,412 139,139 170,268 Uzbekistan 154,061 154,061 154,061 154,061 Armenia 115,036 122,334 117,590 144,879 Laos 67,514 – – – Tadjikistan 13,063 13,063 13,063 13,063 Total 3,479,464 3,293,026 3,292,421 3,481,176

As a result of further integration between fixed line and mobile businesses, compared to 2009 and 2010 the Company changed the methodology of allocation of goodwill to CGU’s for Russia and Armenia whereas starting from 2011 the goodwill is no longer tested on the levels of Russia Mobile, Russia Fixed, Armenia Mobile and Armenia Fixed but rather on a country level.

The Company performed its annual impairment test as at 1 October. The Company considers the relationship between market capitalization and its book value, among other factors, when reviewing for indicators of impairment. As of the reporting dates the market capitalization of the Group was not below the book value of its equity. As a result of reviewing all relevant indicators, no additional impairment testing was performed at the respective year-ends.

The recoverable amounts of the CGU’s except for Vietnam and Cambodia have been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a period of five years for all CGUs. The pre-tax discount rate applied to cash flow projections is stated in the table below and cash flows beyond the five year period are extrapolated using a terminal growth rate stated in the table below. The recoverable amounts of Vietnam and Cambodia CGU’s have been determined based on the fair value less cost of sale ("FVLCS") basis representing liquidating value of the assets. FVLCS was determined based on expected proceeds from sale of property and equipment and intangible assets mainly represented by telecommunication licenses.

F-240 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Impairment testing of assets (continued)

Carrying amount of goodwill and cash-generating units (continued)

CGU's 2011 2010 2009 Discount rate (functional currency) Russia 12.7% 14.1% 14.6% Kyrgyzstan 19.6% 15.6% 17.0% Kazakhstan 12.7% 13.2% 15.1% Uzbekistan 10.5% 13.4% 16.0% Armenia 11.8% 13.9% 16.7% Laos 13.0% n/a n/a Tadjikistan 15.2% 13.4% 15.9%

Terminal growth rate Russia 3.5% 3.5% 3.5% Kyrgyzstan 3.0% 3.0% 3.0% Kazakhstan 3.0% 3.0% 3.0% Uzbekistan 2.0% 3.0% 3.0% Armenia 4.0% 3.0% 3.0% Laos 2.0% n/a n/a Tadjikistan 2.0% 3.0% 3.0%

The Company estimates revenue growth rates and operating income margin for each reporting unit and each future year. These growth rates vary based on numerous factors, including size of market, GDP (Gross Domestic Product), foreign currency projections, traffic growth, market share and others. The forecast of operating income margin is based on the next year budget and assumes cost optimization initiatives which are part of ongoing operations as well as regulatory and technological changes know to date (such as telecommunication license issues, price regulation etc.).

The discount rate was initially determined in US$ based on the risk free rate for 20-year maturity bonds of the United States Treasury adjusted for a risk premium to reflect both the increased risk of investing in equities and the systematic risk of the specific operating company. Equity market risk premium is 5% and the systematic risk, beta, represents median of the raw betas of the entities comparable in size and geographic footprint with the ones of VimpelCom Ltd. ("Peer Group") since the Company is part of VimpelCom Ltd. group. Debt risk premium is the mediam of Standard&Poors long term credit rating of the Peer Group. Weighted average cost of capital is determined based on forward-looking debt-to-equity ratio representing the median five-year capital structure for each entity from the Peer Group. The discount rate in functional currency is adjusted for long-term inflation forecast.

F-241 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Impairment testing of assets (continued)

Carrying amount of goodwill and cash-generating units (continued)

The five-year average growth rate during forecasted period and terminal operating margin during forecasted period for the major CGU’s are presented in the table below:

CGU's 2011 2010 2009 Average growth rate during forecasted period Russia 4.7% 4.8% 4.0% Kyrgyzstan 9.8% 9.3% 9.5% Kazakhstan 5.9% 6.9% 5.7% Uzbekistan 9.2% 10.0% 13.3% Armenia 1.3% 2.3% 8.6% Laos 12.0% n/a n/a Tadjikistan 6.0% 1.6% 11.6%

Terminal operating margin Russia (mobile) 30.7% 36.5% 37.6% Kyrgyzstan 42.0% 38.3% 55.0% Kazakhstan 41.7% 28.8% 38.0% Uzbekistan 30.5% 30.0% 48.6% Armenia (mobile) 26.3% 23.4% 44.7% Laos 36.0% n/a n/a Tadjikistan 32.7% 23.0% 28.4%

The results of recoverable amount analyses were corroborated with other value indicators where available, such as the Company’s market capitalization, comparable company earnings multiples and research analyst estimates.

An increase in the discount rate by one percentage point or a reduction in revenue growth by 10% would result in a decrease in the combined recoverable amount of the reporting units as of impairment test date for 2011 of approximately US$ 3,494 (or 9.8%) and US$ 1,753 (or 4.8%) respectively. For the cash generating units discussed above, the relative decreases in value in use of cash generation units as of the impairment test date for 2011 would be:

1%age point increase 10% decrease in in discount rate revenue growth Russia 9.8% 4.7% Kazakhstan 9.6% 4.0% Kyrgyzstan 6.1% 6.6% Armenia 10.8% 2.4% Uzbekistan 12.6% 10.8% Tajikistan 7.4% 6.2%

The result of the impairment test in 2011 indicated impairment in Vietnam and Cambodia CGU’s as the value in use for these CGU’s was negative. The Company recorded goodwill impairment of US$ 126,210 and property and equipment of US$ 223,022 and telecommunication licenses of US$ 142,896 as well as other assets of US$ 34,147. In 2010 and 2009, the impairments tests indicated that there was no impairment of goodwill as the estimated recoverable amount of the cash generating units exceeded the carrying values of their net assets.

F-242 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

13. Impairment testing of assets (continued)

Carrying amount of goodwill and cash-generating units (continued)

To illustrate the respective CGU’s headroom as of the impairment test date and the magnitude of potential goodwill impairments relative to future changes in recoverable amount, had the recoverable amount of the following material cash generating units been hypothetically lower by the percentages listed below, the CGU’s carrying amount value would have exceeded recoverable amount as of the impairment test date by approximately the following amounts set forth in the table.

CGU's Headroom 10% 20% 30% Laos 12,935 – (12,185) (24,746) Armenia 76,988 – (20,240) (68,854) Kyrgyzstan 83,154 – (8,501) (54,329)

The following table illustrates breakeven points in measuring of CGU’s recoverable amount (in p.p.):

Decrease in Increase of revenue growth CGU's WACC by by Kyrgyzstan 0.8% 13.1% Armenia 0.8% 37.1% Laos 1.5% 7.5%

For CGU’s not included in the tables above, there is no reasonable possible change which would result in impairment.

14. Inventories

Inventory consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Telephone handsets and accessories for sale 121,010 88,641 20,255 78,607 SIM-Cards 16,808 12,774 18,572 17,205 Scratch cards 3,704 3,055 4,064 7,000 Info materials 3,703 4,350 3,257 11,829 Equipment for sale 1,601 1,592 8,886 12,918 Other inventory 5,628 18,333 7,845 17,203 Total 152,454 128,745 62,879 144,762

Write-off of inventories for the years ended 31 December 2011, 31 December 2010 and 31 December 2009 were not significant.

F-243 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities

VimpelCom uses derivative instruments, including swaps, forward contracts and options to manage certain foreign currency and interest rate exposures. The Company views derivative instruments as risk management tools and does not use them for trading or speculative purposes. The Company has not designated any of its derivative contracts as formal hedges in 2011, 2010 and 2009.

All derivatives are accounted for on a fair value basis and the changes in fair value are recorded in the income statement, except for options over non-controlling interests. The changes in carrying value are recorded in either equity or in the income statement, as further described below.

Cash flows from derivative instruments are reported in the section in the statement of cash flows where the underlying cash flows are recorded.

Financial assets

The Company has the following financial assets at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Financial assets at fair value through profit or loss Derivatives of non-controlling interest – 5,335 10,417 26,060 Derivatives not designated as hedges – – – 110,000 Including foreign exchange contracts – – – 110,000 Financial assets at fair value through other comprehensive income Available for sale financial asset 95,444 158,049 – – Other financial assets at fair value Derivatives of non-controlling interest 72,741 8,884 8,781 49,550 Total financial assets at fair value 168,185 172,268 19,198 185,610

Loans granted, deposits and other financial assets – – – – Long term-loans granted 3,454,047 680,564 327,732 350,000 Short term deposits 16,574 36,715 425,478 482 Long-term deposits 1,479 78,880 – Bank deposits 16,574 38,194 504,358 482 Restricted cash – 33,222 – – Interest receivable 44,744 20,004 15,697 31,935 Other loans granted 12,211 – 4,544 4,054 Total loans granted, deposits and other financial assets 3,527,576 771,984 852,331 386,471 Total financial assets 3,695,761 944,252 871,529 572,081 Total current 26,392 98,825 441,175 142,417 Total non-current 3,669,369 845,427 430,354 429,664

F-244 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Loan receivable

Loans to related parties are further described in Note 25

Crowell

In February 2008, the Company loaned US$ 350,000 to Crowell, the non-controlling shareholder in the Company’s subsidiaries – Limnotex and Menacrest. The loan bore 10% annual interest rate and was collaterized by 25% of shares in Limnotex. The maturity of the loan was 18 months. In May 2009, the key terms of the loan agreement were changed replacing the pledge by 100% shares in Menacrest, interest rate to US$ 10,000 per annum and maturity to February 2014. The changes required derecognition of the previous loan and recognition of a new one at the fair value. The difference between the carrying value of the loan derecognized and the fair value of the new one amounted to US$ 78,000 and was offset against decrease of liability to non-controlling interest in Menacrest. On 20 October 2010, part of the loan was settled through the offset of purchase price of 50.1% of interest in Menacrest at the amount of US$ 150,000 (Note 4). In August 2011, the loan and unpaid interest were foregiven as a part of the restructuring transaction in exchange for release of commitment to exercise the call option for 28.5% shares of Limnotex (Note 7).

Available-for-sale financial assets

Available-for sale financial assets include investment in shares of VimpelCom Ltd. The fair value of the quoted equity shares is determined by reference to published price quotations in an active market. On 21 April 2010, VimpelCom Ltd. successfully completed an exchange offer for OJSC VimpelCom shares (including shares represented by ADSs, and acquired approximately 98% of OJSC VimpelCom’s outstanding shares (including shares represented by ADSs). As part of stock-based compensation program of VimpelCom Ltd. (Note 20), VC ESOP N.V., a subsidiary of the Company, holds shares of VimpelCom Ltd. The number of shares was 10,078,608 VimpelCom Ltd. shares as of 31 December 2011, 10,508,608 VimpelCom Ltd. shares as of 31 December 2010 and 11,327,205 VimpelCom Ltd. Shares as of 21 April 2010.

Impairment on available-for-sale financial investments

For available-for-sale financial investments, the Company assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.

Based on these criteria, the Company identified an impairment on available-for-sale investment quoted shares of US$ 57,653, US$ 39,661 and nil, which is recognised within other non-operating losses in the income statement (Note 22) for the years ended 31 December 2011, 2010 and 2009 respectively.

F-245 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Financial liabilities

The Company has the following financial liabilities at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Financial liabilities at fair value through profit or loss or through equity Derivatives over non-controlling interest – 3,757 46,401 51,184 Derivatives not designated as hedges – – 4,000 8,500 Including foreign exchange contracts – – 4,000 8,500 Other financial liabilities at fair value Derivatives over non-controlling interest 390,697 686,314 798,382 799,515 Total financial liabilities at fair value 390,697 690,071 848,783 859,199

Financial liabilities at amortised cost Short-term bank loans 1,240,664 1,587,764 1,729,364 1,722,984 Long-term bank loans 7,841,896 4,323,139 5,411,053 6,464,674 Total bank loans 9,082,560 5,910,903 7,140,417 8,187,658 Short-term equipment financing 106,366 69,650 74,368 83,178 Long-term equipment financing 287,411 177,757 183,012 125,057 Equipment financing 393,777 247,407 257,380 208,235 Loans from others 16,923 436 4,147 114,940 Unamortized fees (68,034) (53,722) (100,911) (83,971) Unamortized balance of fair value adjustment on interest free Kyivstar loan (72,490) (81,872) – – Interest payable 115,336 66,155 99,762 90,132 Total financial liabilities at amortised cost 9,468,072 6,089,307 7,400,795 8,516,994 Total financial liabilities 9,858,769 6,779,378 8,249,578 9,376,193 Total current 1,392,519 1,642,134 1,907,440 2,011,034 Total non-current 8,466,250 5,137,244 6,342,138 7,365,159

Description of other financial liabilities

Foreign exchange contracts

During 2008 the Company entered into a number of option agreement (zero-cost collar) with various banks and received a right to purchase US dollars in the total amount of US$ 1,496,000 for Russian rubles at a specified range of Russian rubles per one US dollar in exchange for granting to the same banks a right to sell the same amount of US dollars to VimpelCom at a specified range of Russian rubles per one US dollar. Options were exercisable at various dates ranging from August 2008 to March 2009 and were fully exercised in as of 31 December 2010.

F-246 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Interest-bearing bank loans and bonds, loans from related parties

The Company has the following borrowings, interest-bearing bank loans and bonds:

Interest-bearing loans and 31 December 31 December 31 December 1 January borrowings Interest rate Maturity Security 2011 2010 2009 2009 Loan participation Eurobonds 2021 7.80% 2021 notes 1,000,000 – – – Loan participation Eurobonds 2018 9.10% 2018 notes 1,000,000 1,000,000 1,000,000 1,000,000 Loan participation Eurobonds 2016 6.50% 2016 notes 1,100,000 – – – Loan participation Eurobonds 2013 8.40% 2013 notes 800,647 800,647 800,647 1,000,000 Sberbank 8.4%-17.5% 2009-2021 Bank loan 3,460,312 1,429,477 1,436,555 829,229 Ruble Bonds 2015 8.30% 2015 Rouble bonds 621,193 656,235 – – Ruble Bonds 2014 7.4%-15.2% 2014 Rouble bonds 310,597 328,117 330,642 – Ruble Bonds 2013 9.10% 2013 Rouble bonds 311,366 329,437 330,642 340,363 UBS (Luxembourg) Loan participation S.A. 8.30% 2016 notes – 600,000 600,000 600,000 UBS (Luxembourg) Loan participation S.A. 8.40% 2011 notes – 184,764 184,764 300,000 UBS (Luxembourg) Loan participation S.A. 8.00% 2010 notes – – 278,500 300,000 UBS (Luxembourg) Loan participation S.A. 10.00% 2009 notes – – – 217,234 Kyivstar Loan interest free 2012 Related-party loan 401,011 502,417 – – Citibank International 6m LIBOR + plc 0.1% 2012 Bank loan 11,835 28,288 44,740 61,191 US$ 3,500 million Loan Facility (Facility B) LIBOR + 1.5% 2010 Bank loan – – 1,170,000 2,000,000 EUR600 million Loan EURIBOR + Facility 2.3% 2010 Bank loan – – 632,369 777,186 Svenska 6m LIBOR + Handelsbanken AB 0.325% 2010 EKN guarantee – – 57,671 81,867 US$ 275 million Loan Facility LIBOR + 1.5% 2012 Bank loan – – 190,410 275,000 Other loans 65,599 51,521 83,477 405,588 Total bank loans and borrowings 9,082,560 5,910,903 7,140,417 8,187,658 Less current portion (1,240,664) (1,587,764) (1,729,364) (1,722,984) Long-term portion of bank loans and borrowings 7,841,896 4,323,139 5,411,053 6,464,674

Loan from Kyivstar is further described in Note 25.

F-247 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Equipment financing obligations

VimpelCom has entered into agreements with different equipment vendors for the purchase and installation of mobile telecommunications GSM network equipment. These agreements allow for the expenditures to be deferred similar to a long term debt agreement. In such cases no cash flows are presented in the statement of cash flows as part of investing activities but rather as part of financing. The following table provides a summary of VimpelCom’s material outstanding equipment financing indebtedness, including bank loans obtained for the purposes of financing equipment purchases.

Interest-bearing equipment 31 December 31 December 31 December 1 January financing Interest rate Maturity Security 2011 2010 2009 2009 AB SEK Rate + EKN Unicredit - HVB 0.75% 2016 guarantee 100,634 124,103 90,281 – 6m MOSPRIME + EKN HSBC 0.08% 2014 guarantee 23,660 35,380 45,337 57,041 Network Cisco 16.00% 2012 equipment 10,418 26,031 40,138 – BayernLB EHECA (Hermes2) 6m LIBOR + 0.38% 2012 guarantee 9,451 18,906 28,422 37,824 VimpelCom guarantee, Sinosure Huawei 6m LIBOR+2.1% 2016 guarantee 25,032 26,932 19,351 – Various dates Network Huawei 8.00% through 2008 equipment 6,276 6,427 14,620 29,422 3m MOSPRIME + EKN HSBC 1.05% 2017 guarantee 153,725 – – – Cisco 7.30% 2014 35,563 – – – 6m LIBOR + 5.5%, Huawei cap at 7% 2014 12,019 – – – Others 16,999 9,628 19,231 83,948 Total equipment financing 393,777 247,407 257,380 208,235 Less current portion (106,366) (69,650) (74,368) (83,178) Long-term portion of equipment financing 287,411 177,757 183,012 125,057

F-248 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Derivatives over non-controlling interest – Put and call options

Limnotex

On 27 June 2008, the Company entered into call and put option agreements over 25% of the shares of the subsidiary Limnotex Developments Ltd. ("Limnotex"), which owns 100% of KaR-Tel, Kazakhstan., which was amended at 29 May 2009. The call option had an exercise price that was based on EBITDA (Earning Before Income Taxes, Depreciation and Amortization) and net debt of KaR-Tel and was exercisable in a period of 3 years beginning on the date on which Kar-Tel’s financial results for the year 2011 are available. The put option had a fixed exercise price of US$ 550,000 and was exercisable in the period 1 January 2010 to 31 December 2010 and further amended at 29 May 2009 to the period 1 January 2013 to 31 December 2013. The put option granted to the non-controlling interests give rise to a financial liability which is initially measured at the present value of the redemption amount. Therefore the Company accounted for a liability regarding these arrangements of US$ 686,235 and US$ 597,120 as of 31 December 2010 and 31 December 2009 respectively, representing the fair value of the underlying redemption amount whereas the change in fair value is recorded in equity. The expected undiscounted outcomes of the liability for 2010 are within a range of US$ 786,543 to US$ 1,005,980 (2009: US$ 718,196 to US$ 848,434). The outcome is influenced by changes in the following variables:

Effect increase Effect decrease Increase Decrease variable on variable on Variable variable variable liability liability EBITDA KaR-Tel +10% -10% US$ 65,320 US$ (65,730) Discount rate +1 p.p. -1 p.p. US$ (9,120) US$ 8,120

As the Company concluded there is no present access to benefits over all shares held by non- controlling shareholders, subsequent changes in the carrying amount are recognized in equity.

On 24 August 2011 the put and call options in Limnotex were amended (Note 7). After the amendments, Crowell holds two put options for Limnotex shares: the first put option for 13.5% is exercisable during 2013 at a fixed price of US$ 297,000 and the second put option for 15% is exercisable during 2017 at a fixed price of US$ 330,000. The put option granted to the non- controlling interests give rise to a financial liability which is initially measured at the present value of the redemption amount. Therefore the Company accounted for a liability regarding these arrangements of US$ 390,697 as of 31 December 2011, representing the fair value of the underlying redemption amount whereas the change in fair value is recorder in equity since there is no present access to benefits over all shares held by non-controlling shareholders. The outcome is dependent on discount rate – in case the rate increases for 1 p.p. the liability will decrease for US$ 12,142, in case the rate decreases for 1 p.p. the liability will increase for US$ 12,963.

F-249 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Derivatives over non-controlling interest – Put and call options (continued)

The call options as amended allow the Company to acquire the total of 28.5% of Limnotex shares. Both options are exercisable during the period between April 2012 and May 2018. The call option does not give the Company present ownership rights. Therefore the option is accounted for as a financial asset at fair value through profit or loss and amounts to US$ 72,741 as of 31 December 2011, representing the fair value of the option as of 31 December 2011. The fair value of the options was determined based on expected exercise period at May 2018 and estimated exercise price of US$ 1,452,700. The outcome is influenced by changes in the following variables:

Increase Decrease Effect increase Effect decrease Variable variable variable variable on asset variable on asset Exercise period + 1 year - 1 years US$ 2,100 US$ 4,120 Exercise price +10% -10% US$ (10,245) US$ (13,121)

Menacrest Ltd

On 11 February 2008 the Company acquired two call options of 50.1% and 49.9% respectively over the shares of the subsidiary Menacrest Ltd, Cyprus, which owns 100% of Sky Mobile, Kyrgyzstan. The first call option was exercisable at any time before a certain date in 2010 and its price was fixed. The call option gave the Company present ownership through its current access to the underlying benefits, and as a result a financial liability has been recognized to the non- controlling shareholder under the call option, with changes in the carrying value recognized in the income statement.

In May 2009 the call option terms were amended allowing the Company to use fair value market option of the exercise price linked to the value of the underlying shares in Menacrest. A decrease in value of the liability was offset against the loss from derecognition of the Loan to Crowell. Under the amended terms the Company lost the present ownership access to the underlyinig benefits. Subsequent changes to the liability are therefore recognized in equity. The first call option exercise period was prolonged to February 2014 and the call option has to be exercised at its end. The first call option was exercised on 20 October 2010 (Note 4).

The second call option had an exercise price that was based on the highest of a fixed price and a formula based on EBITDA minus net debt. The option was exercisable at any time up to three months following the date of issue of the Menacrest’s financial statements 2014. The call option did not give the Company present ownership rights. Therefore the option was accounted for as a financial asset at fair value through profit or loss and accounted for as an asset regarding these arrangements of US$ 9,000 as of 31 December 2010 and 2009, representing the fair value of the option as of 31 December 2010. In case each of the variables to the formula changes by 10% it will not have a material impact on the value of asset.

In August 2011 the terms of both options were amended as a part of the Restructuring transaction.

Derivatives over non-controlling interest had impact on converting the Company’s financial statements from US GAAP to IFRS which is further described in Note 4.

F-250 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Derivatives over non-controlling interest – Put and call options (continued)

Euroset

VimpelCom owns a 50% minus 1 share indirect stake in Euroset and has call and put options over shares in Euroset. On 20 December 2011, VimpelCom took a decision not to exercise a call option to acquire an additional 25% stake in Euroset Holding. N.V. before expiration of the call option. Another call option over the 25% and one share in Euroset might become exercisable in case of certain triggering events. No such events occurred before the issuance of these financial statements. The option, if it becomes exercisable, will give the right to VimpelCom to acquire additional shares in Euroset. The exercise price of the option is determined under a formula linked to certain inputs that depend on the timing of the exercise of the options and certain other conditions.

Other options

The Company entered into call and put options over non-controlling interest of its subsidiaries and additional interest in its associates which are not significant in aggregate. The total balance of financial assets recognized in this respect as of 31 December 2011, 2010 and 2009 was nil, US$ 5,335 and US$ 10,417 respectively. The total balance of financial liabilities recognized in this respect was nil, US$ 3,756 and US$ 46,402 as of 31 December 2011, 2010 and 2009 respectively. In case each of the variables to the valuation of options changes by an increase or a decrease by 10% it will not have material impact on the consolidated financial statements.

Hedging activities and derivatives

Derivatives not designated as hedging instruments

The Company uses foreign currency denominated borrowings and forward currency contracts to manage some of its transaction exposures. These currency forward contracts are not designated as cash flow, fair value or net investment hedges and are entered into for periods consistent with currency transaction exposures, generally from one to 24 months.

F-251 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Fair values

Set out below is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments that are carried in the consolidated financial statements as at 31 December (based on future cash flows discounted at current market rates):

Carrying value Fair value 31 December 31 December 31 December 1 January 31 December 31 December 31 December 1 January 2011 2010 2009 2009 2011 2010 2009 2009 Financial assets at fair value through profit or loss Derivatives over non-controlling interest – 5,335 10,417 26,060 – 5,335 10,417 26,060 Derivatives not designated as hedges – – – 110,000 – – – 110,000 Including foreign exchange contracts – – – 110,000 – – – 110,000 Financial assets at fair value through other comprehensive income Available-for-sale financial asset 95,444 158,049 – – 95,444 158,049 – –

Other financial assets at fair value Derivatives over non-controlling interest 72,741 8,884 8,781 49,550 72,741 8,884 8,781 49,550 Total financial assets at fair value through profit or loss and other comprehensive income 168,185 172,268 19,198 185,610 168,185 172,268 19,198 185,610 Loans granted, deposits and other financial assets Long term-loans granted 3,454,047 680,564 327,732 350,000 3,454,047 680,564 327,732 350,000 Bank deposits 16,574 38,194 504,358 482 16,574 38,194 504,358 482 Restricted cash – 33,222 – – – 33,222 – – Interest receivable 44,744 20,004 15,697 31,935 44,744 20,004 15,697 31,935 Other loans granted 12,211 – 4,544 4,054 12,211 – 4,544 4,054 Total loans granted, deposits and other financial assets 3,527,576 771,984 852,331 386,471 3,527,576 771,984 852,331 386,471

Trade and other receivables 634,756 590,034 664,068 553,163 634,756 590,034 664,068 553,163 Cash and cash equivalents 653,461 650,557 1,450,717 934,722 653,461 650,557 1,450,717 934,722 Total financial assets 4,983,978 2,184,843 2,986,314 2,059,966 4,983,978 2,184,843 2,986,314 2,059,966 Financial liabilities at fair value through profit or loss or through equity Derivatives over non-controlling interest – 3,757 46,401 51,184 – 3,757 46,401 51,184 Derivatives not designated as hedges – – 4,000 8,500 – – 4,000 8,500 Including foreign exchange contracts – – 4,000 8,500 – – 4,000 8,500

Other financial liabilities at fair value Derivatives over non-controlling interest 390,697 686,314 798,382 799,515 390,697 686,314 798,382 799,515 Total financial liabilities at fair value 390,697 690,071 848,783 859,199 390,697 690,071 848,783 859,199 Financial liabilities at amortised cost 9,468,072 6,089,307 7,400,795 8,516,794 9,304,232 6,506,973 7,738,434 7,451,421 Trade and other payables 1,317,507 967,233 760,951 1,122,536 1,317,507 967,233 760,951 1,122,536 Total financial liabilities 11,176,276 7,746,611 9,010,529 10,498,529 11,012,436 8,164,277 9,348,168 9,433,156

F-252 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Fair values (continued)

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The fair values were estimated based on quoted market prices of our bonds, derived from market prices or by using discounted cash flows under the agreement at the rate applicable for the instruments with similar maturity and risk profile.

Fair value hierarchy

As at 31 December 2011, 2010 and 2009 the Company held financial instruments carried at fair value on the statement of financial position in accordance with IAS 39.

The Company measures the fair value of quoted equity securities by reference to published price quotations in an active market (Level 1).

The Company measures the fair value of derivatives except for options related to business combinations on a recurring basis, using observable inputs (Level 2), such as LIBOR, EURIBOR and swap curves, basis swap spreads and foreign exchange rates, floating rates for US$ using income approach with present value techniques.

The Company measures the fair value of options related to business combinations on a recurring basis, using unobservable inputs (Level 3), such as projected redemption amounts, volatility, fair value of underlying shares using income approach with present value techniques and Black- Scholes model.

The following table provides the disclosure of fair value measurements separately for each major class of assets and liabilities measured at fair value.

Fair value types As of 31 December 2011 Description (Level 1) (Level 2) (Level 3)

Financial assets at fair value through profit or loss Derivatives of non-controlling interest – – – Financial assets at fair value through other comprehensive income Available-for-sale financial asset 95,444 – – Other financial assets at fair value Derivatives of non-controlling interest – – 72,741 Total financial assets at fair value 95,444 – 72,741

Financial liabilities at fair value through profit or loss Derivatives of non-controlling interest – – – Other financial liabilities at fair value Derivatives of non-controlling interest – – 390,697 Total financial liabilities at fair value – – 390,697

F-253 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Fair value hierarchy (continued)

As of 31 December 2010 Description (Level 1) (Level 2) (Level 3)

Financial assets at fair value through profit or loss Derivatives of non-controlling interest – – 5,335 Financial assets at fair value through other comprehensive income Available-for-sale financial asset 158,049 – – Other financial assets at fair value Derivatives of non-controlling interest – – 8,884 Total financial assets at fair value 158,049 – 14,219

Financial liabilities at fair value through profit or loss Derivatives of non-controlling interest – – 3,757 Other financial liabilities at fair value Derivatives of non-controlling interest – – 686,314 Total financial liabilities at fair value – – 690,071

As of 31 December 2009 Description (Level 1) (Level 2) (Level 3)

Financial assets at fair value through profit or loss Derivatives of non-controlling interest – – 10,417 Financial assets at fair value through other comprehensive income Available-for-sale financial asset – – – Other financial assets at fair value Derivatives of non-controlling interest – – 8,781 Total financial assets at fair value – – 19,198

Financial liabilities at fair value through profit or loss Derivatives of non-controlling interest – – 46,401 Other financial liabilities at fair value Derivatives of non-controlling interest – – 798,382 Total financial liabilities at fair value – – 844,783

F-254 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Fair value hierarchy (continued)

As of 1 January 2009 Description (Level 1) (Level 2) (Level 3)

Financial assets at fair value through profit or loss Derivatives of non-controlling interest – – 26,060 Foreign exchange contracts – 110,000 –

Financial assets at fair value through other comprehensive income Available-for-sale financial asset – – – Other financial assets at fair value Derivatives of non-controlling interest – – 49,550 Total financial assets at fair value – 110,000 75,610

Financial liabilities at fair value through profit or loss Derivatives of non-controlling interest – – 51,184 Other financial liabilities at fair value Derivatives of non-controlling interest – – 799,515 Total financial liabilities at fair value – – 850,699

The movement of financial instruments measured at the fair value using unobservable inputs (Level 3) is presented below:

Attribution Change in Change in Acquired in As of to noncont- fair value fair value business As of 31 December rolling reported in reported in combina- 31 December 2011 interest earnings equity tions 2010 Financial assets at fair value through profit or loss Derivatives not designated as hedges Derivatives over non-controlling interest – – (5,335) – – 5,335 Other financial assets Derivatives over non-controlling interest 72,741 – 4,522 59,335 – 8,884 Total financial assets 72,741 – (813) 59,335 – 14,219

Financial liabilities at fair value through profit or loss Derivatives over non-controlling interest – – (3,757) – – 3,757 Other financial i liabilities Derivatives over non-controlling interest 390,697 56,000 – (351,617) – 686,314 Total financial liabilities at fair value 390,697 56,000 (3,757) (351,617) – 690,071

F-255 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

15. Financial assets and liabilities (continued)

Fair value hierarchy (continued)

Accrual of Change in Change in Acquired in As of noncont- fair value fair value business As of 31 December rolling reported in reported in combina- 31 December 2010 interest earnings equity tions 2009 Financial assets at fair value through profit or loss Derivatives not designated as hedges Derivatives over non-controlling interest 5,335 – (5,082) – – 10,417 Other financial assets Derivatives over non-controlling interest 8,884 – 103 – – 8,781 Total financial assets 14,219 – (4,979) – – 19,198

Financial liabilities at fair value through profit or loss Derivatives over non-controlling interest 3,757 – (42,644) – – 46,401 Other financial liabilities Derivatives over non-controlling interest 686,314 24,870 – (136,938) – 798,382 Total financial liabilities at fair value 690,071 24,870 (42,644) (136,938) – 844,783

Accrual of Change in Change in Acquired in As of noncont- fair value fair value business As of 31 December rolling reported in reported in combina- 1 January 2009 interest earnings equity tions 2009 Financial assets at fair value through profit or loss Derivatives not designated as hedges Derivatives over non-controlling interest 10,417 – – (22,774) 7,131 26,060 Other financial assets at fair value Derivatives over non-controlling interest 8,781 – (40,521) – – 49,302 Total financial assets 19,198 – (40,521) (22,774) 7,131 75,362

Financial liabilities at fair value through profit or loss Derivatives over non-controlling interest 46,401 – (4,783) – – 51,184 Other financial liabilities at fair value Derivatives over non-controlling interest 798,382 15,347 (72,909) 56,429 – 799,515 Total financial liabilities at fair value 844,783 15,347 (77,692) 56,429 – 850,699

F-256 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

16. Trade and other receivables

Trade and other receivables consisted of the following at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Trade accounts receivable, gross 656,981 627,869 698,138 585,107 Allowance for doubtful accounts (70,693) (69,374) (59,070) (31,944) Trade accounts receivable, net 586,288 558,495 639,068 553,163 Roaming discounts 48,468 31,539 25,000 – 634,756 590,034 664,068 553,163

As at 31 December 2011 trade receivables at initial value of US$ 70,693 (2010: US$ 69,394 and 2009: US$ 59,070) were impaired and fully provided for. See below for the movements in the allowance for impairment of receivables:

2011 2010 2009 Balance as of 1 January 69,374 59,070 31,944 Acquisition of a subsidiary 680 1,012 – Provision for bad debts 46,760 44,381 56,160 Accounts receivable written off (42,431) (34,424) (19,048) Foreign currency translation adjustment (3,690) (665) (9,986) Balance as of 31 December 70,693 69,374 59,070

As at 31 December the ageing analysis of trade receivables is as follows.

Neither past Past due but not impaired due nor < 30 30-60 61-90 91-120 > 120 Total impaired days days days days days 31 December 2011 656,981 99,254 325,323 67,365 24,045 12,410 128,584 31 December 2010 627,869 20,189 391,681 72,291 19,490 15,096 109,122 31 December 2009 698,138 26,809 394,501 86,970 20,933 27,869 141,056 1 January 2009 585,107 12,618 360,455 75,827 42,808 42,885 50,514

17. Cash and cash equivalents

Cash and cash equivalents consisted of the following items as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Cash at banks and on hand 498,489 364,550 911,717 713,722 Short-term deposits with the original maturity of less than 90 days 154,972 286,007 539,000 221,000 Total cash and cash equivalents 653,461 650,557 1,450,717 934,722

F-257 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

17. Cash and cash equivalents (continued)

Cash at banks earn interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.

At 31 December 2011, the Company has Revolving Credit Facilities available maturing in November 2014. The facilities are for the amounts of RUB 15,000 and are not utilized at 31 December 2011. At 31 December 2010, 31 December 2009 and 1 January 2009 the Company did not have available undrawn committed borrowing facilities.

The cash balances as of 31 December 2011 in Vietnam of US$ 139,613 (2010 and 2009 nil) and Uzbekistan of US$ 16,606 (2010: US$ 39,743 and 2009: US$ 102,034) are restricted due to local government or central bank regulations.

18. Issued capital and reserves

The Company has 90,000,000 authorized common shares with a nominal value of US$ 0.005 rubles per share, of which 51,281,022 shares were issued as of 31 December 2011 (31 December 2010: 51,281,022; 31 December 2009: 51,281,022; 1 January 2009: 51,281,022) and 51,281,022 shares outstanding as of 31 December 2011 (31 December 2010: 51,281,022; 31 December 2009: 50,714,579; 1 January 2009: 50,617,408).

566,443 shares of OJSC VimpelCom held by VC ESOP N.V., a subsidiary of VimpelCom, as of 31 December 2009 were treated as treasury shares in the accompanying consolidated financial statements are recorded at cost.

Share options exercised in each respective year have been settled using the treasury shares of the Company till 21 April 2010 and shares of VimpelCom Ltd. for the period after 21 April 2010. The reduction in the treasury shares equity component is equal to the cost incurred to acquire the shares, on a weighted average basis. Any excess between the cash received from employees and reduction in treasury shares in recorded in share premium.

Nature and purpose of reserves

Other capital reserves

Share-based payment transactions

The share-based payment transactions reserve is used to recognise the value of equity-settled share-based payment transactions provided to employees, including key management personnel, as part of their remuneration. Refer to the Note 21 for further details of these plans.

F-258 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

18. Issued capital and reserves (continued)

Nature and purpose of reserves (continued)

Convertible preference shares

In 1996, VimpelCom issued 6,426,600 shares of preferred stock. As of 31 December 2011 all of the shares of preferred stock (6,426,600 shares) were owned by VimpelCom Holdings B.V., the subsidiary of VimpelCom’s parent, VimpelCom Ltd. Each share of preferred stock entitles its holder to (i) one vote, (ii) to receive a fixed dividend of 0.001 ruble per share per year and (iii) to receive a fixed liquidation value of 0.005 Russian rubles per share in the event of VimpelCom’s liquidation, to the extent there are sufficient funds available. Each share of preferred stock is convertible into one share of common stock at any time after 30 June 2016, at the election of the holder upon payment to VimpelCom of a conversion premium equal to 100% of the market value of one share of common stock at the time of conversion.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.

19. Dividends paid and proposed

2011 2010 2009 Declared during the year Dividends on ordinary shares Interim dividend for 2009 – – 319,216 First Interim dividend for 2010 282,817 654,706 – First Interim dividend for 2011 955,997 – – Total 1,238,814 654,706 319,216

Proposed for approval (not recognised as a liability as at 31 December) Dividends on ordinary shares Second Interim dividend for 2011 – – – Final dividend for 2010 – 283,950 – Total – 283,950 –

On 17 December 2009, the Extraordinary General Meeting of Shareholders of the Company approved an interim dividend payment based on the operating results for the nine months ended 30 September 2009 in the amount of RUR 190.13 per common share of VimpelCom common stock (equivalent to US$ 0.31 per ADS at the exchange rate as of 17 December 2009), amounting to a total of approximately RUR 9.75 billion (equivalent to US$ 322,871 at the exchange rate as of 17 December 2009). In accordance with Russian tax legislation, VimpelCom is required to withhold a tax of up to 15% on dividend payments which was approximately RUR 1.3 billion (equivalent to US$ 43,049 at the exchange rate as of 17 December 2009).

F-259 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

19. Dividends paid and proposed (continued)

On 7 December 2010, the Extraordinary General Meeting of Shareholders of the Company approved an interim dividend payment based on the operating results for the nine months ended 30 September 2010 in the amount of 394.00 rubles (equivalent to US$ 12.6 at the exchange rate as of 7 December 2010) per common share (for a total of RUR20,204.7 million (equivalent to US$ 645,792 at the exchange rate as of 7 December 2010) for all common registered shares in the aggregate); and (ii) to pay in cash dividends to holders of preferred registered shares of type "A" based on operating results for the nine months ended 30 September 2010 in the amount of 0.075 kopeck (equivalent to US$ 0.002 at the exchange rate as of 7 December 2010) per preferred share. In accordance with Russian tax legislation, VimpelCom is required to withhold a tax of 5% on dividend payments.

Each outstanding share of VimpelCom’s common stock entitles its holder to participate in shareholders meetings, to receive dividends in such amounts as have been validly approved by shareholders, and in the event of VimpelCom’s liquidation, to receive part of VimpelCom’s assets to the extent there are sufficient funds available.

In accordance with Russian legislation, VimpelCom can distribute all profits as dividends or invest them into the operations. Dividends may only be declared from accumulated undistributed and unreserved earnings as shown in the Russian statutory financial statements, not out of amounts previously transferred to reserves.

On 26 April 2011, the Annual General Meeting of Shareholders of the Company approved (i) an annual dividend payment based on 2010 results in the amount of 155.00 rubles (equivalent to 5.54 US dollars at the exchange rate as of 26 April 2011) per common share (for the total amount of RUR 7,948.56 million (equivalent to US$ 282,817 at the average exchange rate for April 2011) for all common registered shares in the aggregate); and (ii) an annual dividend payment to holders of preferred shares based on 2010 results in the amount of 0.025 kopecks (equivalent to 0.001 US dollars at the exchange rate as of 26 April 2011) per preferred type A registered share (for a total amount of 1,606.00 rubles (equivalent to 57 US dollars at the exchange rate as of 26 April 2011) for all preferred type A registered shares in the aggregate). In accordance with Russian tax legislation, VimpelCom withheld a tax from the dividend payment in the amount of RUR 397.43 million (equivalent to US$ 14,197 at the exchange rate as of 26 April 2011).

On 28 November 2011, the Extraordinary General Meeting of Shareholders of the Company approved an interim dividend payment based on operating results for the nine months ended 30 September 2011, (i) in the amount of 575.00 rubles (equivalent to 18.21 US dollars at the exchange rate as of 28 November 2011) per common share (for the total amount of RUR 29,486.59 million (equivalent to US$ 933,746 at the exchange rate as of 28 November 2011) for all common registered shares in the aggregate); and (ii) to holders of preferred type "A" registered shares in the amount of 0.075 kopecks (equivalent to 0.002 US dollars at the exchange rate as of 28 November 2011) per preferred share (for the total amount of 4,819.95 rubles (equivalent to US$ 152.63 at the exchange rate as of 28 November 2011) for all preferred type "A" registered shares in the aggregate). In accordance with Russian tax legislation, in case of Shareholders` approvement, VimpelCom will have to withhold a tax from the dividend payment in the amount of RUR1,474.33 million (equivalent to US$ 46,687 at the exchange rate as of 28 November 2011).

F-260 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

20. Share-based payments

Stock option plans

The Company participates in the Amended and Converted VimpelCom 2000 Stock Option Plan (the "2000 Plan") and the VimpelCom 2010 Stock Option Plan (the "2010 Plan" and together with the 2000 Plan, the "Plans"). The 2000 Plan and the 2010 Plan state that the maximum aggregate number of shares (ADS) of VimpelCom Ltd. authorized to be issued which are 21,000,000 (adjusted to VimpelCom Ltd. shares) and 7,000,000, respectively.

The shares held by VC ESOP N.V., a subsidiary of VimpelCom, (10,078,608 VimpelCom Ltd. Shares as of 31 December 2011 and 10,508,608 VimpelCom Ltd. Shares as of 31 December 2010) were treated as available-for-sale financial assets in the accompanying consolidated financial statements. 566,443 of OJSC VimpelCom shares were treated as treasury shares as of 31 December 2009.

The Plans are administered by a committee ("Committee"), which, as of 31 December 2011, consisted of the Compensation Committee of VimpelCom Ltd.'s Supervisory Board (the "Board"). The Committee has the power to determine the terms and conditions of grants under the Plan, including the number of options to be granted, the exercise price and the vesting schedule.

The options granted by OJSC VimpelCom prior to completion of the Exchange Offer on 21 April 2010, continue to be governed by the 2000 Plan (previously adopted by OJSC VimpelCom), with certain adjustments as were necessary to cause the 2000 Plan to apply to the Company’s common shares. All the information presented in this Note related to the period prior to 21 April 2010 have been recast accordingly. Upon the Exchange Offer, 111,660 stock options of participants who left OJSC VimpelCom before 21 April 2010 were converted into SARs and forfeited as of 31 December 2010.

In 2010, VimpelCom Ltd.’s Board adopted the 2010 Plan for the issue of stock options to directors, senior managers and other employees of VimpelCom Ltd. and its subsidiaries. An option, upon vesting, entitles the holder to purchase one common share of the VimpelCom Ltd. at the price determined by the Committee.

In June 2010, the Committee approved the issuance of up to 1,250,000 options to senior managers of VimpelCom Ltd. and its subsidiaries. The exercise price is ranging from US$ 15.14 to US$ 16.65 per option. These options generally vest over three years subject to achievement of key performance indicators. 150,000 and 455,555 options were granted to the employees of the Company during 2011 and 2010 respectively.

In December 2010, 2,855,000 options were approved to be issued by the Committee under the 2010 Plan with the exercise price of US$ 16.74 per option to senior managers of VimpelCom Ltd. and its subsidiaries. 1,855,000 options were granted on 22 July 2011 to the employees of the Company.

In 2011 certain senior managers were granted 142,500 options. The exercise price is ranging from US$ 10.48 to US$ 12.60 per option. These options generally vest over two or three years subject to achievement of key performance indicators.

F-261 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

20. Share-based payments (continued)

SAR plan

In 2009, OJSC VimpelCom’s Board adopted a SAR plan for senior managers and employees. Following the completion of the Exchange Offer, the plan was modified to provide that it will be administered by the Company’s CEO and the Committee determines the aggregate number of SARs that may be granted. A SAR, upon vesting, entitles the holder to receive a cash amount per SAR equal to any excess of the NYSE closing price of an ADS on the exercise date over the price at which such SAR was granted. In 2009, OJSC VimpelCom’s Board authorized the granting of 2,266,000 SARs.

On 26 November 2009 and on 18 January 2010, 2,050,760 and 71,200 of SARs, respectively, were granted, 50% of which were to become vested on 1 June 2010 and 50% were to become vested on 1 June 2011 if the growth of KPIs exceeds certain parameters in 2009 as compared to 2008. If this condition is was not met, 100% of SARs granted were to vest on 1 June 2011 if the growth of KPIs exceeded certain parameters in 2010 as compared to 2009. Also, upon the Exchange Offer, 111,660 stock options were converted into SARs and were forfeited as of 31 December 2010. The obligation under this plan is classified in other non-financial liabilities in the balance sheet.

The following table summarizes the activity for the Plans and SARs:

Options (units) SARs (units) 2011 2010 2009 2011 2010 2009 Options/SARs outstanding, beginning of year 4,325,493 6,601,000 11,445,940 1,590,660 2,016,440 – Options/SARs transferred to parent company (200,000) (538,140) – – (151,200) – Options/SARs granted or converted from ESOP 1,921,667 231,200 1,815,000 – 182,860 2,050,760 Options/SARs exercised (130,000) (720,260) (1,943,420) (90,960) (115,160) – Options/SARs modified or converted to SARs – (111,660) (3,630,000) – – – Options/SARs forfeited (2,887,820) (1,136,647) (1,086,520) (211,240) (342,280) (34,320) Options/SARs outstanding, end of year 3,029,340 4,325,493 6,601,000 1,288,460 1,590,660 2,016,440 Options/SARs fully vested and exercisable, end of year 1,174,340 3,785,740 5,487,320 1,288,460 777,320 –

No stock options expired in the years ended 31 December 2011, 2010 or 2009.

F-262 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

20. Share-based payments (continued)

SAR plan (continued)

The following table summarizes the weighted-average exercise prices of options and SARs for the year ended 31 December 2011. Stock options Stock options plan 2010 plan 2000 SARs The number of options/SARs outstanding, beginning of year 133,333 4,192,160 1,590,660 Weighted-average exercise price of options/SARs outstanding, US$ per option/SAR 16.7 18.7 13.4 Weighted-average grant-date fair value at the beginning of the year, US$ per option/SAR 6.6 1.2 11.7 The number of options/SARs transferred to parent company – (200,000) – The number of options/SARs granted or converted from ESOP 1,921,667 – – Weighted-average exercise price of options/SARs granted, US$ per option/SAR 16.7 – – Weighted-average grant-date fair value of options/SARs granted during the year, US$ per option/SAR 1.8 – – The number of options/SARs exercised – (130,000) (90,960) The number of options/SARs forfeited/modified/converted to SARs – (2,887,820) (211,240) Weighted-average exercise price of options/SARs forfeited, US$ per option/SAR – 19.9 14.7 The number of options/SARs outstanding, end of year 2,055,000 974,340 1,288,460 Weighted-average exercise price of options/SARs outstanding, US$ per option/SAR 16.7 16.3 13.2 Weighted-average grant-date fair value at the end of the year, US$ per option/SAR 2.1 1.4 11.8 Out of the options/SARs outstanding at the end of the year the number of options/SARs fully vested and exercisable 200,000 974,340 1,288,460

Valuation approach

The fair value of the options has been estimated using a Black Scholes option pricing model. The fair value of each grant is estimated on the date of grant (or date of modification). In estimating the fair value, the Company used significant assumptions.

Expected term of the options was determined based on analysis of historical behavior of stock option participants. Expected volatility of VimpelCom’s shares was estimated based on the historical volatility of the shares on the New York Stock Exchange over the period equal to the expected life of the option granted and other factors.

The dividend yield was included into the model based on expected dividend payment. The risk free rate was determined using the rate on the United States Government Bonds, having a remaining term to maturity equal to the expected life of the options, approximated where applicable. Forfeiture rate was determined as an average for the historic experience for all grants.

F-263 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

20. Share-based payments (continued)

Valuation approach (continued)

The following table illustrates the major assumptions of the Black Scholes model for the options and SARs for the years ended 31 December: 2011 2010 2009 Expected volatility 91%-184% 39%-107% 92%-138% The weighted-average expected term (in years) 1.48 1.76 1.80 Expected dividend yield 1.8%-2.2% 2.2%-3.9% 0%-2.2% Risk free interest rate 5.3%-11.2% 4.8%-5.9% 7.0%-9.77% Forfeiture rate 0.07 0.07 0.06

The total expenses recognized in these consolidation financial statement with respect to stock- based compensation were US$ 1,088 US$ 1,114 US$ 1,766 for the year ended 31 December 2011, 2010 and 2009 respectively. The total unrecognized expenses with respect to stock-based compensation were US$ 2,290 as of 31 December 2011.

21. Provisions

The following table summarizes the movement in provisions for the years ended 31 December 2011, 31 December 2010 and 31 December 2009:

Tax Income provisions Provision for taxes other than decommis- Legal Other Total provisions income tax sioning provisions provision provisions At 1 January 2011 26,605 11,241 85,803 46,614 – 170,263 Acquisition of a subsidiary – – – – – – Arising during the year 35,563 13,155 25,278 2,881 16,606 93,483 Utilised – (98) (10,605) (33,222) – (43,925) Reclassification – – 881 – – 881 Unused amounts reversed (2,076) (460) – – – (2,536) Translation adjustment (731) (1,565) (6,323) (134) (388) (9,141) Discount rate adjustment and imputed interest (change in estimates) – – 13,214 – – 13,214 At 31 December 2011 59,361 22,273 108,248 16,139 16,218 222,239 Total current 2011 29,382 22,273 – 16,139 16,218 84,012 Total non-current 2011 29,979 – 108,248 – – 138,227

At 1 January 2010 74,661 10,812 41,814 – – 127,287 Arising during the year 24,483 2,713 8,019 46,984 – 82,199 Unused amounts reversed (74,089) (2,029) – (362) – (76,480) Translation adjustment 1,550 (255) (346) (8) – 941 Discount rate adjustment and imputed interest (change in estimates) – – 36,316 – – 36,316 At 31 December 2010 26,605 11,241 85,803 46,614 – 170,263 Total current – 11,241 – 46,614 – 57,855 Total non-current 26,605 – 85,803 – – 112,408

F-264 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

21. Provisions (continued)

Tax Income provisions Provision for taxes other than decommis- Legal Other Total provisions income tax sioning provisions provision provisions At 1 January 2009 44,135 6,395 48,505 – – 99,035 Arising during the year 53,652 4,535 8,269 – – 66,456 Utilised (22,973) – – – – (22,973) Translation adjustment (153) (118) (2,167) – – (2,438) Discount rate adjustment and imputed interest (change in estimates) – – (12,793) – – (12,793) At 31 December 2009 74,661 10,812 41,814 – – 127,287 Total current – 10,812 – – – 10,812 Total non-current 74,661 – 41,814 – – 116,475

Income tax provision

A provision has been recognized for the uncertainties related to income taxes where it is probable that the Company will have cash outflows. Management is unable to reliably predict the outcome of any tax examinations and the materiality of their impact on VimpelCom’s consolidated financial statements, if any.

Non-income tax provisions

A provision has been recognized for the uncertainties related to other taxes where it is probable that the Company will have cash outflows.

Provision for decommissioning

VimpelCom has certain legal obligations related to rented sites for base stations. These legal obligations include obligations to remediate leased land and other locations on which base stations are located.

Legal provisions

A provision has been recognized for the uncertainties related to legal claims (Note 28) where it is probable that the Company will have cash outflows.

F-265 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

22. Other non-operating losses

Other non-operating (gains)/losses consisted of the following for the years ended 31 December

2011 2010 2009 Change of fair value of derivatives over non-controlling interest (2,255) (37,666) 51,780 Impairment of available-for-sale financial asset 57,653 39,661 – Reclassification to other non-operating losses of exchange differences on translation of foreign operations for equity interest in acquiree in business combination achieved in stages 43,100 – – Remeasurement of previously held investment in GTEL-Mobile 39,620 – – Crowell loan remeasurement (13,471) – – Loss from early debt retirement – – 19,200 Other gains/losses 13,566 2,790 (2,221) 138,213 4,785 68,759

Please refer to Note 7 for further details of reclassification of current period earning of exchange differences on translation of foreign operations for equity interest in acquiree in business combination achieved in stages and remeasurement of previously held investment in GTEL-Mobile. Please refer to Note 15 for further details of change in fair value of available-for-sale financial assets.

23. Other non-financial assets and liabilities

Other non-current non-financial assets consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Long-term input VAT – 8,723 27,941 41,222 Deferred costs related to connection fees 79,598 26,903 11,080 – Long-term advances – – 29,363 56,486 Other long-term assets 5,610 41,359 25,083 29,044 Other non-current non-financial assets 85,208 76,985 93,467 126,752

Other current non-financial assets consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Advances to suppliers 75,443 164,286 117,801 180,143 Input value added tax 131,663 136,271 96,994 182,045 Prepaid taxes 4,267 43,995 734 4,057 Deferred costs related to connection fees 28,779 15,041 6,505 3,011 Others 21,958 37,725 17,000 25,000 Other current non-financial assets 262,110 397,318 239,034 394,256

F-266 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

23. Other non-financial assets and liabilities (continued)

Other non-current non-financial liabilities consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Long-term deferred revenue 41,633 43,325 35,766 29,470 Other non-current liabilities 8,101 2,577 13,437 11,006 Other non-current non-financial liabilities 49,734 45,902 49,203 40,476

Other current non-financial liabilities consisted of the following as at:

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Customer advances, net of VAT 369,392 368,544 376,121 425,181 Customer deposits 55,194 27,440 28,386 29,557 Other taxes payable 159,471 150,165 193,122 120,119 Due to employees 98,095 84,099 113,368 105,795 Short-term deferred revenue 32,697 40,531 30,062 18,324 Other current non-financial liabilities 714,849 670,779 741,059 698,976

24. Trade and other payables

31 December 31 December 31 December 1 January 2011 2010 2009 2009 Trade payables 1,276,818 931,792 560,521 929,606 Deferred consideration for subsidiaries 1,156 – 145,930 145,930 Deferred consideration for associates – – 12,500 25,000 Other payables 39,533 35,441 42,000 22,000 Trade and other payables 1,317,507 967,233 760,951 1,122,536

Terms and conditions of the above financial liabilities • Trade payables are non-interest bearing and are normally settled on 90 day terms. • Other payables are non-interest bearing and have an average term of 30 days. • For explanations on the Group’s credit risk management processes, refer to Note 29.

F-267 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

25. Related parties

The consolidated financial statements include the financial statements of the Company and the following most significant subsidiaries listed in the table:

% of ownership interest held by the group As of As of As of As of Country of 31 December 31 December 31 December 1 January Subsidiaries incorporation 2011 2010 2009 2009 Sotelco Ltd. Operating Cambodia 90.00% 90.00% 90.00% 90.00% Tacom LLC Operating Tadjikistan 98.00% 90.00% 80.00% 80.00% Kar-Tel TOO Operating Kazakhstan 71.50% 75.00% 75.00% 75.00% Teta-Telecom TOO Operating Kazakhstan 75.00% 75.00% 74.99% 74.99% CJSC Sakhalin Telecom Operating Russia 89.61% 89.61% 89.61% 89.61% Golden Telecom TOO Operating Ukraine 100.00% 100.00% 80.00% 80.00% Buzton JV Ltd. Operating Uzbekistan 54.00% 54.00% 54.00% 54.00% SA Telecom TOO Operating Kazakhstan 100.00% 100.00% 100.00% 100.00% CJSC Rascom Operating Russia 54.00% 54.00% 54.00% 54.00% Mobitel Ltd. Operating Georgia 51.00% 51.00% 51.00% 51.00% Sky Mobile LLC Operating Kyrgyzstan 71.50% 50.10% 0.00% 0.00% Armenia Telephone Company CJSC Operating Armenia 100.00% 100.00% 100.00% 100.00% Unitel LLC Operating Uzbekistan 100.00% 100.00% 100.00% 93.01% PJSC Ukrainian RadioSystems Operating Ukraine 100.00% 100.00% 100.00% 100.00% JSC GTEL-Mobile Operating Vietnam 49.00% 40.00% 40.00% 40.00% VimpelCom Lao Co., Ltd. Operating Laos 78.00% 0.00% 0.00% 0.00% Ararima Enterprises Limited Holding Cyprus 100.00% 100.00% 100.00% 100.00% Atlas Trade Limited Holding BVI 90.00% 90.00% 90.00% 90.00% Vimpelcom Finance B.V. Holding Netherlands 100.00% 100.00% 100.00% 100.00% VC ESOP N.V. Holding Belgium 99.90% 99.90% 99.90% 99.90% Limnotex Developments Ltd. Holding Cyprus 71.50% 75.00% 75.00% 75.00% LLC Vimpelcom Finance Holding Russia 100.00% 100.00% 100.00% 100.00% LLC Vimpelcom-Invest Holding Russia 100.00% 100.00% 100.00% 100.00% Golden Telecom, Inc. Holding USA (Delaware) 100.00% 100.00% 100.00% 100.00% Menacrest Limited Holding Cyprus 71.50% 50.10% 0.00% 0.00% Aridus Corporation Holding Seychelles 71.50% 50.10% 0.00% 0.00% Freevale Enterprises Holding British Virgin Islands 100.00% 100.00% 100.00% 66.70% VimpelCom Holding Laos B.V. Holding Netherlands 78.00% 0.00% 0.00% 0.00% Silkway Holding B.V. Holding Netherlands 100.00% 100.00% 100.00% 100.00%

F-268 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

25. Related parties (continued)

Shareholders and other related parties

As of 31 December 2011 the Company is a wholly-owned subsidiary of VimpelCom Holdings B.V. which is owned by VimpelCom Ltd. As of 31 December 2011 VimpelCom Ltd. is primarily owned by three major shareholders: Weather II, Telenor and Alfa. VimpelCom Ltd. has no ultimate controlling shareholder.

The following table provides the total amount of transactions that have been entered into with related parties and balances of accounts with them for the relevant financial years:

For the year For the year For the year ended and as of ended and as of ended and as of As of 31 December 31 December 31 December 1 January 2011 2010 2009 2009 Revenue from Alfa 9,507 11,152 19,584 – Revenue from Telenor 2,900 2,350 3,474 – Revenue from Kyivstar 43,087 21,949 26,145 – Revenue from associates 85,990 99,566 40,600 – Revenue from other related parties 1,550 9,878 10,024 – 143,034 144,895 99,827 – Services from Alfa 7,702 6,073 6,128 – Services from Telenor 4,185 2,647 2,049 – Services from Kyivstar 95,390 77,609 60,905 – Services from associates 221,292 202,773 131,812 – Services from other related parties 141 10,040 9,780 – 328,710 299,142 210,674 – Accounts receivable from Alfa 1,191 1,513 3,352 3,536 Accounts receivable from Telenor 453 2,412 377 396 Accounts receivable from Kyivstar 7,728 8,955 1,473 393 Accounts receivable from associates 81,472 82,509 236,729 163,871 Accounts receivable from other related parties 12,501 9,403 7,701 – 103,345 104,792 249,632 168,196 Non-current account receivable from associates 1,677 4,905 1,040 2,059 Long-term loan granted to VimpelCom Ltd. 3,454,047 504,500 – – Interest receivable from VimpelСom Ltd 40,022 8,719 – – 3,495,746 518,124 1,040 2,059 Accounts payable to Alfa 71 27 301 434 Accounts payable to Telenor 609 1,101 272 106 Accounts payable to Kyivstar 5,532 4,731 5,396 1,704 Accounts payable to associates 25,510 4,164 1,880 5,248 Accounts payable to other related parties 14,477 3,294 1,362 – 46,199 13,317 9,211 7,492 Short-term debt from Kyivstar (Note 15) 401,011 502,405 – – Interest income from VimpelCom Ltd 190,880 8,719 – – Long-term account payable to associates 212 290 626 666 Other gain from related parties 5,793 35 – – Gain on sale of assets to Kievstar 28,573 – – – Other loss from Alfa 420 486 – – Other loss from associates – 422 – –

F-269 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

25. Related parties (continued)

Shareholders and other related parties (continued)

The Company provides loans to VimpelCom Ltd. and its subsidiaries. On 16 March 2011 VimpelCom made an agreement to grant unsecured loan facility to VimpelCom Amsterdam B.V., the subsidiary of VimpelCom Ltd. and the parent of VimpelCom Holdings B.V., in the maximum amount of US$ 500,000. On 21 March 2011, VimpelCom granted US$ 250,000 and on 29 April 2011 another US$ 250,000. On 17 May 2011, VimpelCom Amsterdam B.V. repaid part of this loan in the total amount US$ 250,000. On 8 June 2011, the loan was increased by a tranche of US$ 245,000, and on 30 June 2010 by a tranche of US$ 3,800. As of 31 December 2011, the principal amount of debt was fully repaid. The loan matures on 21 March 2013. Interest rate for 4 tranches made under this loan agreement is LIBOR + 0.25% per annum. The loan is denominated in US dollars.

On 13 May 2011, VimpelCom granted an unsecured loan to VimpelCom Amsterdam Finance B.V., a subsidiary of VimpelCom Ltd., in the total amount of US$ 2,610,000. On 20 May 2011 and 30 June 2011, VimpelCom Amsterdam Finance B.V. repaid part of this loan in the total amount US$ 52,820, and US$ 1,465, respectively. On 31 August 2011, the loan was increased by a tranche of US$ 33,500. On 7 October 2011, the loan was increased by a tranche of US$ 20,000, on 28 October 2011 by a tranche of US$ 100,000, on 17 November 2011 by a tranche of US$ 20,798 and on 23 November 2011 by a tranche of US$ 30,000. Under the agreement, VimpelCom may grant additional US$ 239,987. As of 31 December 2011, the principal amount of debt outstanding under this loan agreement was US$ 2,907,848. The loan matures on 31 May 2014. The interest rate is 8.72% per annum. The loan is denominated in US dollars.

In addition to a loan of US$ 37,000 granted on 13 December 2010, on 29 April and 23 June 2011, VimpelCom granted loans of US$ 50,000 and US$ 13,000 to VimpelCom Ltd. As of 31 December 2011, the principal amount of debt outstanding under this loan agreement was US$ 70,000.The loan matures on 13 December 2012. The interest rate is LIBOR + 0.25% per annum. The loan is denominated in US dollars.

In May 2011, accrued interest on loan with VimpelCom Ltd. in the amount of US$ 8,699 was added to loan principal of US$ 467,500. As of 31 December 2011, the principal amount of debt outstanding under this loan agreement was US$ 476,199. The loan matures on 31 December 2070. The interest rate is LIBOR + 7.5% per annum. The loan is denominated in US dollars.

On 30 August 2011, VimpelCom granted an unsecured loan to VimpelCom Holdings B.V. in the total amount of US$ 50,000. Under the agreement, VimpelCom may grant additional US$ 450,000. As of 31 December 2011, the principal amount of debt was fully repaid. The loan matures on 30 August 2014. Interest rate for the first tranche made under this loan agreement is LIBOR + 0.25% per annum. The loan is denominated in US dollars.

On 23 November 2010 the Company received short-term reimbursable interest-free financial aid (the loan) of UAH 4,000,000 thousand from Kyivstar, the entity under common control. In 2011, the Company repaid UAH 901,000 thousand (equivalent to US$ 112,771, hereinafter in this paragraph at the exchange rate as of 31 December 2011) of this interest-free financial aid according to the agreement terms. On 14 November 2011 the Company signed an amendment to the loan agreement, whereby maturity of the loan was prolonged to 31 December 2012.Therewith, the difference between fair value and nominal amount of the abovementioned interest-free financial aid, net of deferred tax effect, was charged directly to equity as distributions to shareholders.

F-270 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

25. Related parties (continued)

Shareholders and other related parties (continued)

On 9 December 2011 the Company received a new tranche of reimbursable interest-free financial aid of UAH 105,000 thousand (equivalent to US$ 13,142). At initial recognition this facility was stated at fair value of UAH 86,494 thousand (equivalent to US$ 10,826). Loss on initial recognition at fair value was charged directly to equity as distributions to shareholders.

Outstanding balances and transactions with Alfa relate to operations with VimpelCom’s Ltd. shareholder Eco Telecom (a member of the Alfa group companies), its consolidated subsidiaries, its direct owners and their consolidated subsidiaries. In particular, VimpelCom has contracts with Alfa Insurance (member of the Alfa group of companies) to provide the Company with property and equipment liability insurance; the General Service Agreement with Altimo for provision of general management, legal and regulatory services, treasury services, finance and reporting services as well as tax services. The Company also has contracts to provide fixed telecommunication service to Eco Telecom and its subsidiaries.

VimpelCom maintains bank accounts in Alfa Bank (member of the Alfa group of companies), which are used for payroll and other payments in the ordinary course of business. The balances in these bank accounts were US$ 41,208, 8,780 and US$ 176,500 at 31 December 2011, 2010 and 2009.

Outstanding balances and transactions with Telenor relate to operations with VimpelCom’s shareholder Telenor East Invest AS, its consolidated subsidiaries, its direct owners and their consolidated subsidiaries. In particular, VimpelCom has roaming contracts with ProMonte Montenegro, DTAC/UCOM Thailand, Telenor Serbia, Telenor Mobil AS Norway, Pannon GSM Telecommunications Ltd. Hungary, Telenor Mobile Sweden Norway; the General Agreement for provision of personnel and General Services Agreement for provision of general management, legal and regulatory services, treasury services, finance and reporting services as well as tax services with Telenor Russia AS. VimpelCom also has a contract to provide fixed telecommunication service to Telenor Mobile Holding AS Norway.

Outstanding balances and transactions with associates relate to operations with VimpelCom’s equity investees (Note 8). Euroset transactions mainly represent dealer commission payments for the acquisition of new subscribers and commission for payments receipts. Operations with associates also include purchase of bill delivery services from Firma Kurier. OJSC VimpelCom has a contract with CJSC Rascom of providing fixed telecommunication services.

Outstanding balance and transactions with other related parties among others include operations with joint ventures (Note 8).

Terms and conditions of transactions with related parties

Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended December 2010, VimpelCom has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

F-271 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

25. Related parties (continued)

Compensation of key management personnel of the Company

The amounts disclosed in the table are the amounts recognized as an expense during the reporting period related to key management personnel:

2011 2010 2009 Short-term employee benefits 8,740 8,635 12,800 Share-based payment transactions 1,473 524 3,000 Total compensation paid to key management personnel 10,213 9,159 15,800

Our senior managers are eligible to participate in our stock option plans and stock appreciation rights, or SARs, plan.

26. Employee benefits

Selling, general and administrative expenses include the following amounts of employee benefits for the years, ended December 31: 2011 2010 2009 Employee benefits 857,936 696,163 647,202

The following chart sets forth the number of our employees at 31 December 2011, 2010 and 2009:

2011 2010 2009 Russia 31,701 30,059 27,165 Asia 1,553 359 262 Ukraine 962 1,737 2,005 CIS 7,655 7,366 6,925 Total 41,871 39,521 36,357

27. Commitments, contingencies and uncertainties

Risks

Currency control risks

The imposition of currency exchange controls or other similar restrictions on currency convertibility in CIS countries and particularly in Uzbekistan could limit VimpelCom’s ability to convert local currencies in a timely manner or at all. Any such restrictions could have a material adverse effect on VimpelCom's business, financial condition and results of operations. The continued success and stability of the economies of these countries will be significantly impacted by their respective governments’ continued actions with regard to supervisory, legal and economic reforms.

F-272 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

27. Commitments, contingencies and uncertainties (continued)

Domestic and global economy risks

The economy of countries where VimpelCom operates is vulnerable to market downturns and economic slowdowns elsewhere in the world. In 2011 the respective governments continued to take measures to support the economy in order to overcome the consequences of the global financial crisis. Despite some indications of recovery there continues to be uncertainty regarding further economic growth, access to capital and cost of capital, which could negatively affect the Company’s future financial position, results of operations and business prospects.

While management believes it is taking appropriate measures to support the sustainability of VimpelCom’s business in the current circumstances, unexpected further deterioration in the areas described above could negatively affect the Company’s results and financial position in a manner not currently determinable.

Legislation risks

In the ordinary course of business, VimpelCom may be party to various legal and tax proceedings, and subject to claims, certain of which relate to the developing markets and evolving fiscal and regulatory environments in which VimpelCom operates. In the opinion of management, VimpelCom’s liability, if any, in all pending litigations, other legal proceedings or other matters, other than what is discussed in this Note, will not have a material effect upon the financial condition, results of operations or liquidity of VimpelCom.

VimpelCom’s operations and financial position will continue to be affected by political developments in the countries in which VimpelCom operates including the application of existing and future legislation, telecom and tax regulations. These developments could have a significant impact on VimpelCom’s ability to continue operations. VimpelCom does not believe that these contingencies, as related to its operations, are any more significant than those of similar enterprises in such countries.

Tax risks

The tax systems in the markets VimpelCom operates in are unpredictable and give rise to significant uncertainties, which could complicate our tax planning and business decisions. Tax laws in many of the emerging markets in which we operate have been in force for a relatively short period of time as compared to tax laws in more developed market economies. Tax authorities in our markets are often arbitrary in their interpretation of tax laws, as well as in their enforcement and tax collection activities.

In the countries where VimpelCom operates, many tax laws and related regulations were introduced in previous periods as well as in 2011 which were not always clearly written, and their interpretation is subject to the opinions of the local tax inspectors and officials of the Ministry of Finance. Instances of inconsistent opinions between local, regional and federal tax authorities and Ministry of Finance are not unusual.

Management believes that it has paid or accrued all taxes that are applicable. Where uncertainty exists, VimpelCom has accrued tax liabilities based on management’s best estimate.

F-273 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

27. Commitments, contingencies and uncertainties (continued)

Commitments

Telecom Licenses Capital Commitments

The Company’s ability to generate revenues in all countries it operates is dependent upon the operation of the wireless telecommunications networks authorized under its various licenses under GSM-900/1800 and "3G" (IMT-2000 / WCDMA / UMTS) mobile radiotelephony communications services (as of 30 September 2012) and "4G" (LTE) granted in 2011-2012. Under the license agreements operating companies are subject to certain commitments like territory or population coverage, level of capital expenditures, and number of base stations to be fulfilled within a the certain timeframe. After expiration of the license, our operating companies might be subject to additional payments for renewals as well as new license capital and other commitments.

On 12 July 2012 OJSC VimpelCom was awarded licenses to provide services over the LTE standard and its further modifications. The licenses allow the Company to provide services using radio-electronic devices via networks that use the LTE standard and its further modifications in the territory of the Russian Federation. The licenses were provided on condition that the Company will invest at least RUR 15 billion (equivalent to US$ 493,865 at the exchange rate as of 31 December 2012) annually – starting from 12 July 2012 till 1 December 2019 – to assure the technical feasibility of providing services in the territory of the Russian Federation in compliance with the awarded licenses.

Russia

Apple

On 31 March 2011, VimpelCom and Apple signed an amendment to the agreement to purchase iPhones. Under the amendment, 958,540 iPhone handsets (being the difference between 1,500,000 iPhone handsets per the original agreement and the amount actually purchased by the Company from Apple through 31 March 2011) should be purchased starting 1 April 2011 and before 31 March 2013, including 435,000 iPhone handsets to be purchased before 31 March 2012. If VimpelCom does not comply with newly agreed schedule and certain other terms of amendments, then according to the agreement it could become liable for the shortfall in orders of iPhone handsets that existed as of 31 March 2011, less any iPhone units actually purchased by VimpelCom after this date. Management is of the opinion that no provisions should be recorded with respect to this matter.

Contingencies and uncertainties

The Company is involved in several legal proceedings relating to the normal conduct of its business, such as claims for regulatory and employment issues as well as general liability. The Company believes it has provided for all probable liabilities deriving from the normal course of business. The Company does not expect any liability arising from any other of these legal proceedings to have a material effect on its results of operations, liquidity, capital resources or financial position.

F-274 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

27. Commitments, contingencies and uncertainties (continued)

Anti-Monopoly Service claim (FAS proceedings)

The Federal Anti-Monopoly Service ("FAS") in Russia commenced proceedings against OJSC VimpelCom and OJSC MTS to look into the alleged price collusion with respect to the sale prices of iPhones. On 26 April 2012 the FAS issued a decision pursuant to which OJSC VimpelCom and OJSC MTS were found guilty of price fixing in that they acted in concert to fix identical wholesale prices for iPhone4 Black 16 Gb and iPhone4 Black 32 Gb during the period from September 2010 to April 2011. Since both parties voluntarily ceased the wrongdoings the antimonopoly case was terminated. On 17 July 2012 FAS announced the operative part of its Order to impose administrative liability upon VimpelCom pursuant to which a minimum fine was imposed upon VimpelCom in the amount of RUR 18.2 million (equivalent to US$ 558 at the exchange rate as of 17 July 2012). OJSC VimpelCom decided not to appeal FAS order and to pay this fine.

Russian tax claims

In the Russian Federation, VimpelCom’s predominant market, there were many tax laws and related regulations introduced in previous periods as well as in 2012, which were not always clearly written, and their interpretation is subject to the opinions of the local tax inspectors and officials of the Ministry of Finance. Instances of inconsistent opinions between local, regional and federal tax authorities and Ministry of Finance are not unusual. Management believes that it has paid or accrued all taxes that are applicable. Where uncertainty exists, VimpelCom has accrued tax liabilities based on management’s best estimate.

On 21 January 2011, VimpelCom received a report from the tax authorities regards to tax audit for the period from 2007 to 2008. The amount of claims was RUR 1,191 million which is approximately US$ 36,992 at the exchange rate as of 31 December 2011. The Company recorded a provision of RUR 844 million which is approximately US$ 26,214 at the exchange rate as of 31 December 2011. The Company filed appeal against tax audit report to the court. The courts of first and second instance satisfied a Company’s claim in full amount. The tax inspectorate has filed an appeal against the lower court decision to a higher court. Court of cassation 30 November 2012 issued a decision that upheld the position of VimpelCom in full amount. The tax inspectorate may challenge the decision in Supreme Arbitration Court.

KaR-Tel litigation with ex-shareholders

On 10 January 2005, KaR-Tel received an "order to pay" ("Order to Pay") issued by The Savings Deposit Insurance Fund, a Turkish state agency responsible for collecting state claims arising from bank insolvencies (the "Fund"), in the amount of approximately US$ 4,910 at the exchange rate as of 31 December 2010 (stated as approximately Turkish lira 7.55 quadrillion and issued prior to the introduction of the New Turkish Lira, which became effective as of 1 January 2005). The Order to Pay, dated as of 7 October 2004, was delivered to KaR-Tel by the Bostandykski Regional Court of Almaty. The Order to Pay does not provide any information regarding the nature of, or basis for, the asserted debt, other than to state that it is a debt to the Turkish Treasury and the term for payment was 6 May 2004.

On 17 January 2005, KaR-Tel delivered to the Turkish consulate in Almaty a petition to the Turkish court objecting to the propriety of the order and requesting the Turkish court to cancel the Order to Pay and stay of execution proceedings in Turkey. The petition was assigned to the 4th Administrative Court in Turkey, and it should be reviewed pursuant to applicable law.

F-275 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

27. Commitments, contingencies and uncertainties (continued)

KaR-Tel litigation with ex-shareholders (continued)

On 1 June 2006, KaR-Tel received formal notice of the 4th Administrative Court's ruling that the stay of execution request was denied. KaR-Tel’s Turkish counsel has advised KaR-Tel that the stay request is being adjudicated separately from the petition to cancel the Order to Pay. KaR-Tel submitted an appeal of the ruling with respect to the stay application.

On 1 June 2006, KaR-Tel also received the Fund's response to its petition to cancel the order. In its response, the Fund asserts, among other things, that the Order to Pay was issued in furtherance of its collection of approximately Turkish lira 7.55 quadrillion (prior to the introduction of the New Turkish Lira, which became effective as of 1 January 2005) in claims against the Uzan group of companies that were affiliated with the Uzan family in connection with the failure of T. Imar Bankasi, T.A.S. The Fund's response to KaR-Tel’s petition claims that the Uzan group of companies includes KaR-Tel, Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S are Turkish companies that owned an aggregate 60% of the equity interests in KaR-Tel until their interests were redeemed by KaR-Tel in November 2003 in accordance with a decision of the Review Panel of the Supreme Court of Kazakhstan. In July 2006, KaR-Tel submitted its response, dated 30 June 2006, to the Fund’s response via the Kazakh Ministry of Justice, to be forwarded to the 4th Administrative Court of Istanbul. In its response, KaR-Tel denied in material part the factual and legal assertions made by the Fund in support of the Order to Pay.

On 11 December 2008, KaR-Tel received a Decision of Territorial Court of Istanbul dated 12 December 2007, wherein the Court rejected KaR-Tel’s appeal with respect to the stay of execution request.

On 20 October 2009, KaR-Tel filed with Sisli 3d Court of the First Instance in Istanbul a claim to recognize in the Republic of Turkey the decision of the Almaty City Court of the Republic of Kazakhstan dated 6 June 2003 regarding, among other things, compulsory redemption of equity interests in KaR-Tel owned by Rumeli Telecom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S., which was confirmed by the Civil Panel of the Supreme Court of the Republic of Kazakhstan on 23 June 2003, as amended by the resolution of the Review Panel of the Supreme Court of the Republic of Kazakhstan dated 30 October 2003 ("Recognition Claim"). On 20 October 2009, KaR-Tel also filed with the 4th Administrative Court of Istanbul a petition asking the Court to treat the recognition of the Kazakhstan court decision as a precedential issue and to stay the proceedings in relation to the order to pay.

On 28 September 2010, Sisli 3d Court of the First Instance in Istanbul reviewed the Recognition Claim and ruled in favor of KaR-Tel recognizing the Kazakhstan Court judgments on the territory of the Republic of Turkey. The court decision is appealable by defendants.

On 25 October 2010, the 4th Administrative Court of Istanbul reviewed KaR-Tel’s petition to annul the Payment Order and has ruled in favor of KaR-Tel. The Court has recognized the Order to Pay as illegal and annulled it. The court decision has been appealed by the Fund. On 18 February 2011 KaR-Tel submitted its responses to the motion on appeal. On 20 April 2011, the Fund submitted its response to KaR-Tel’s reply and appeal petition. The court file was sent by the Court to the Councel of State for the appeal proceedings.

F-276 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

27. Commitments, contingencies and uncertainties (continued)

KaR-Tel litigation with ex-shareholders (continued)

As to the Recognition Claim, the defendants, Rumeli Telecom AS and Telsim Mobil Telekommunikasyon Hizmetleri AS, have appealed the decision of Sisli 3d Court of the First Instance in Istanbul, which has ruled in favor of KaR-Tel recognizing the Kazakhstan Court judgments on the territory of the Republic of Turkey. The Company submitted its responses to such motion on appeal on 20 January 2011. The court file was sent to the Supreme Court for the appeal proceedings. On 11 July 2012, the Supreme Court upheld the ruling of Sisli 3d Court of the First Instance in Istanbul.

As of 22 March 2012 the Fund’s and KaR-Tel’s appeals on the Decision of 4th Administrative Court of Istanbul dated 25 October 2010 has been reviewed by the Prosecution Office of the Council of State and has been sent to the 13th Chamber of the Council of State for review on the merits.

The Company continues to believe that the Fund's claim is without merit, and KaR-Tel will take whatever further actions it deems necessary and appropriate to protect itself against the Fund's claim.

Kyrgyzstan

Since November 2006, the Chief Executive Officer and directors of the Company have received several letters from OJSC Mobile TeleSystems ("MTS") and its representatives claiming that Sky Mobile’s Kyrgyz telecom business and its assets were misappropriated from Bitel, an MTS affiliate, and demanding that the Company not purchase Sky Mobile, directly or indirectly, or participate or assist in the sale of Sky Mobile to any other entities. These letters have suggested that MTS will take any and all legal action necessary against the Company in order to protect MTS’s interest in Bitel and Bitel’s assets. As of the date hereof, management is not aware of any pending legal action against the Company in connection with this matter except for the litigation against Sky Mobile discussed in the paragraph below.

Sky Mobile is a co-defendant in a litigation in the Isle of Man. The litigation was brought by affiliates of MTS against various companies and individuals directly or indirectly associated with Alfa Group and/or Altimo and Sky Mobile. The claimants allege that the Kyrgyz judgment determining that an Altimo affiliate was the rightful owner of an interest in the equity of Bitel prior to the asset sale between Sky Mobile and Bitel was wrongfully obtained and that Bitel shares and assets were misappropriated. The legal proceedings in this matter are pending.

At this time the Company is unable to assess the likelihood of the ultimate outcome of this litigation and its effect on the Company’s operating results and financial position.

Kazakhstan

The 1st Roaming Claim Against KaR-Tel: Threshold amounts

On 14 May 2010, the Antimonopoly Agency of Kazakhstan ("the Agency") initiated an investigation of the alleged breach of antimonopoly laws of Kazakhstan by all three Kazakhstan GSM-operators (KaR-Tel, GSM Kazakhstan OAO Kazakhtelecom LLP (trademarks KCell, Active), and Mobile Telecom Systems LLP (trade mark Neo), by abuse of dominant position through infringement of consumers' rights by way of determination of a threshold (minimal) amount of money on consumer's account required for rendering (switching on and off) roaming services ("the Threshold Amounts").

F-277 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

27. Commitments, contingencies and uncertainties (continued)

Kazakhstan (continued)

Further, the Agency decided to consider investigations, jointly with FAS, of Kazakhstan antimonopoly law breaches with respect to all the three Kazakhstan GSM-operators, including KaR-Tel, as well as operator-partners in the Russian Federation on indications of anticompetitive concerted actions and agreements as to establishing and (or) price maintenance as well as use of per-minute step of tarification.

The Agency also decided to make a proposal to the Ministry of Telecommunications and Information of Kazakhstan as to earlier transfer to per-second tarification for roaming services (date determined by law is 1 January 2012), and to conduct an evaluation of roaming tariffs.

On 21 June 2010, the Agency completed the part of its investigation related to the Threshold Amounts and alleged that all three Kazakhstan GSM-operators abused their dominant position through infringement of customers' lawful rights by way of establishing the Threshold Amounts.

On 3 July 2010, the Agency initiated an administrative procedure with respect to all the three Kazakhstan GSM operators, including KaR-Tel, and issued the protocol on administrative offence ("the Protocol"). The Agency filed with the Administrative Court a claim based on the Protocol. The Company estimates KaR-Tel’s share of administrative fines amounting to KZT 11.6 billion (equivalent to US$ 78,655 at the exchange rate as of 3 July 2010). KaR-Tel believes that the claim of the Agency is without merits and intends to protect its rights and lawful interest in courts of Kazakhstan. On 16 July 2010, KaR-Tel filed a claim to recognize as illegal and annul the acts of the Agency, which have served as a procedural basis for the Protocol.

On 19 October 2010 the Interregional Economic Court of Astana has ruled in favor of KaR-Tel and recognized as illegal, null and void all acts of the Agency and its territorial branch, which have served as procedural basis for the Protocol.

On 15 November 2010, KaR-Tel received copy of the Agency's appeal on the decision. On 13 December 2010 the Court of Appeals upheld the decision of 19 October 2010 in favor of KaR-Tel. On 17 February 2011 the Court of Cassation reviewed the cassation petition of the Agency and upheld both the decision of 19 October 2010 and the resolution of the Court of Appeals of 13 December 2010. As a result, the decision of 19 October 2010 that has recognized all acts of the Agency and its territorial branch, which have served as procedural basis for the Protocol, as illegal, null and void, has come into force. Although the decision has come into full force and effect, it is still subject to appeal by the Agency in supervisory appeal order within 1 year from the date of receipt by the Agency of the Resolution of the Court of Cassation.

On 21 October 2011, the General Prosecutor of the Republic of Kazakhstan has filed a protest to the Supreme Court of Kazakhstan appealing in a supervisory review order the Decision of the Interregional Economic Court of Astana of 19 October 2010, which rendered unlawful and void all acts of the Antimonopoly Agency, as well as Decision of the Appeals Chamber of Astana City Court of 13 December 2010, which upheld the Economic Court decision. On 27 October 2011, KaR-Tel has received a notice from the Supreme Court of Kazakhstan indicating that the said protest has been accepted for review and the hearing took place on 16 November 2011.

F-278 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

27. Commitments, contingencies and uncertainties (continued)

Kazakhstan (continued)

On 16 November 2011, the Supervisory Chamber of the Supreme Court of Kazakhstan issued a Decision that overturned the Decision of the Interregional Economic Court of Astana of 19 October 2010, and Decision of the Appeals Chamber of Astana City Court of 13 December 2010. The Supreme Court sent the case back for the new consideration in administrative proceedings to the Interregional Administrative court of Almaty.

On 26 December 2011, the Interregional Administrative Court of Almaty accepted the request of the Company to discontinue proceedings and to return the Protocol to the Agency for rectification of deficiencies resulting from the Agency’s wrongful use of total revenues recorded by the Company for the purpose of calculation of the administrative fines instead of the amount of revenues received from alleged monopolistic activity.

The Agency has rectified the deficiencies in the protocol and filed the amended protocol with the Court. On 15 June 2012 the Interregional Administrative Court reviewed the protocol and resolved that the Company abused its significant market power by introducing the threshold amounts for offline roaming. In the meantime the Court has accepted one of the Company’s defence arguments and calculated 10% administrative fine not on the basis of total revenue of the Company for the period under consideration, but only on the basis of revenues received from offline roaming, where CAMEL-roaming allowing online billing is not available, thus reducing administrative fine from KZT 11.6 billion (equivalent to US$ 77,822 at the exchange rate as of 15 June 2012) to KZT 155 million (equivalent to US$ 1,043 at the exchange rate as of 15 June 2012). On 16 August 2012 the administrative fine was paid. The decision is subject to appeal by the public prosecutor’s office within 1 year from the date thereof. The decision does not hinder the Company’s opportunity to use the threshold amounts under certain cap in accordance with newly introduced Telecommunication Services Regulations.

The 2nd Roaming Claim Against KaR-Tel: Concerted actions high roaming tariffs

The Agency has continued another part of its investigation – with respect to concerted actions of Kazakhstan and Russian GSM-mobile operators on establishing and/or preservation of tariffs ("Concerted Actions Investigation"). On 25 October 2010, the Agency completed the Concerted Actions Investigation and reclassified alleged concerted actions of KaR-Tel and other Russian and Kazakhstan GSM-operators into establishing monopolistically high tariffs. On 3 November 2010, the Agency initiated an administrative procedure and issued a new protocol on administrative offence, according to which the Agency has found KaR-Tel and the other two Kazakhstan GSM-operators liable for abuse of their dominant position on the market by way of establishing monopolistically high roaming tariffs ("the New Protocol").

Under Kazakhstan laws, the Agency has lodged the New Protocol into administrative court, and the court is to review the matter and to decide on the merits and on applicable fines.

On 23 November 2010, KaR-Tel filed a claim with Astana Interregional Economic Court against the Agency requesting the Court to recognize illegal and to annul acts of the Agency preceding the New Protocol.

F-279 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

27. Commitments, contingencies and uncertainties (continued)

Kazakhstan (continued)

On 24 February 2011, the Interregional Economic Court of Astana has ruled in favor of KaR-Tel and recognized as illegal, null and void all acts of the Agency and its territorial branch, which have served as procedural basis for the Protocol. The decision was received on 28 February 2011. The decision of 28 February 2011 came into force on 30 March 2011.

On 25 November 2011, the Agency appealed to the Supreme Court of Kazakhstan in a supervisory review order the Decision of the Interregional Economic Court of Astana of 24 February 2011, which recognized as illegal, null and void all acts of the Agency. On 11 January 2012, the Supervisory Chamber of the Supreme Court of Kazakhstan reviewed the protest and overturned the Decision of the Interregional Economic Court of Astana of 24 February 2011. The Supreme Court sent the case back for the new consideration in administrative proceedings to the Interregional Administrative court of Almaty. On 1 March 2012 the Interregional Administrative court of Almaty ruled in favor of KaR-Tel and recognized the protocol of the Agency as illegal, null and void.

The decision of the Interregional Administrative court of Almaty will remain subject to appeal for one year. The ultimate resolution of this matter could result in a loss of KZT 9.900 billion (equivalent to US$ 66,712 at the exchange rate as of 31 December 2011) in excess of the amount accrued.

Dominant Market Position

On 10 October 2011, Kar-Tel was recognized by the Agency as dominant in the market of interconnection. When a company is recognized as having a dominant position, it will be subject to special reporting obligations to the national regulatory authority, higher scrutiny in anti- monopoly/competition issues and price control and potential price regulation (e.g., tariff caps). The company does not agree with this decision of the antimonopoly authority. The company filed a claim to the Interregional Economic Court of Astana against the Agency requesting that the court recognize as illegal. On 26 December 2011, the court ruled and rejected the claim of Kar-Tel. Kar-Tel has appealed the decision. On 8 August 2012, the Court of Appeals rejected the appeal of Kar-Tel and upheld the decision of 26 December 2011. KaR-Tel appealed the decision to the Court of cassation. On 18 October 2012 Court of cassation rejected the appeal of Kar-Tel. On 12 November 2012, Kar-Tel submitted the application for supervisory review of the decision of 26 December 2011 to the Supreme Court. The decision on this claim could have an adverse effect on our business, financial condition and results of operations. We believe that Kar-Tel did not violate the legislation.

Pledges and guarantees

The Company and its subsidiaries did not pledge any collateral as at 31 December 2011, 2010 and 2009.

F-280 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

27. Commitments, contingencies and uncertainties (continued)

Guarantee in favour of VimpelCom Holdings B.V.

On 29 June 2011, VimpelCom Holdings B.V., a subsidiary owned by VimpelCom Ltd., completed an offering of an aggregate principal amount of US$ 2,200,000 notes (the "June Bonds"), split between three-year, five-year and 10-year tranches, for the primary purpose of refinancing the outstanding principal amount of US$ 2,200,000 under the Bridge Facility Agreement. The three- year US$ 200,000 issue bears interest at an annual rate of three-month LIBOR plus 4.0%, payable quarterly and is due in June 2014. The five-year US$ 500,000 issue bears interest at an annual rate of approximately 6.25% payable semiannually and is due in March 2017. The ten-year US$ 1,500,000 issue bears interest at an annual rate of approximately 7.50% payable semiannually and is due in March 2022. VimpelCom has guaranteed the June Bonds. No triggering events under the guarantee occurred. The Company believes that probability of these events is remote.

Guarantee in favour of VimpelCom Amsterdam B.V.

12 December 2011 VimpelCom Amsterdam B.V., a subsidiary owned by VimpelCom Ltd., completed a committed revolving credit facility of approximately US$ 495,000. The three years credit facility for VimpelCom Amsterdam B.V. is committed by ten relationship banks. This facility is composed of US$ 225,000 and EUR 205 million and is guaranteed by the Company. No triggering events under the guarantee occurred. The Company believes that probability of these events is remote.

Operating lease commitments

Operating lease payments for each of the succeeding five years are committed as follows:

2011 2010 2009 Less than 1 year 146,369 83,111 14,027 Between 1 and 5 years 182,292 205,724 33,803 More than 5 years 105,105 201,740 23,781 Total 433,766 490,575 71,611

Operating lease commitments mainly relate to the lease of base station sites and office spaces.

28. Financial risk management

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company has loan and other receivables, trade and other receivables, and cash and short-term deposits that arrive directly from its operations. The Company views derivative instruments as risk management tools and does not use them for trading or speculative purposes.

The Company is exposed to market risk, credit risk and liquidity risk.

F-281 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

28. Financial risk management (continued)

The Company’s senior management oversees the management of these risks. The Company’s senior management is supported by the Treasury committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company’s senior management that the Company’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with Group policies and Group risk appetite. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes shall be undertaken.

The Supervisory Board reviews and agrees policies for managing each of these risks which are summarized below.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, and derivative financial instruments. The sensitivity analyses in the following sections relate to the position as at 31 December in 2011, 2010 and 2009. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant and on the basis of the hedge designations in place at 31 December 2011 (2010 and 2009: none). The analyses exclude the impact of movements in market variables on the carrying value of pension and other post-retirement obligations (insignificant for the Company), provisions and on the non-financial assets and liabilities of foreign operations.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company long-term debt obligations with floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. To manage this, the Company enters into interest rate swaps, in which the Company agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are not designated to hedge underlying debt obligations.

At 31 December 2011, after taking into account the effect of interest rate swaps, approximately 82% of the Company’s borrowings are at a fixed rate of interest (2010: 96%).

F-282 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

28. Financial risk management (continued)

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in floating interest rates on loans and borrowings. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings as follows. (There is only as insignificant impact on the Company’s equity): Increase/decrease Effect on profit in basis points before tax 2011 Euro 100 178 US dollar 100 1,008 Other currencies 100 877 Euro -100 (178) US dollar -100 (1,008) Other currencies -100 (877)

2010 Russian ruble 100 1,688 US dollar 100 2,769 Ukrainian hryvnia 100 1,770 Other currencies 100 906 Russian ruble -100 (1,688) US dollar -100 (2,769) Ukrainian hryvnia -100 (1,770) Other currencies -100 (906)

2009 Euro 100 (4,446) Russian ruble 100 (3,108) US dollar 100 3,268 Other currencies 100 1,462 Euro -100 4,446 Russian ruble -100 3,108 US dollar -100 (3,268) Other currencies -100 (1,462)

The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility as in prior years.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the debt at subsidiary level denominated in currencies other than the functional currency, the Company’s operating activities (predominantly capital expenditures at subsidiary level denominated in a different currency from the subsidiary’s functional currency) and the Company’s net investments in foreign subsidiaries.

The Company manages its foreign currency risk by selectively hedging net transaction exposures that are expected to occur within a maximum 24-month period.

F-283 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

28. Financial risk management (continued)

Foreign currency risk (continued)

Where the nature of the hedge relationship is not an economic hedge, it is the Company’s policy to negotiate the terms of the hedging derivatives to match the terms of the underlying hedge items to maximise hedge effectiveness.

The Company hedges part of its exposure to fluctuations on the translation into US dollar of its foreign operations by holding net borrowings in foreign currencies and can use foreign currency swaps and forwards for this purpose as well.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in the exchange rate of the RUB, UAH and KZT (the major currencies creating exposures in the Group), with all other variables held constant, of the Company’s profit before tax (due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives) and the Company’s equity (due to changes in the fair value of forward exchange contracts designated as cash flow hedges and net investment hedges). The Company’s exposure to foreign currency changes for all other currencies is not material.

Effect on profit Change in foreign exchange rate before tax

2011 10% depreciation currencies against US$ (41,689) 10% appreciation currencies against US$ 37,899

2010 10% depreciation currencies against US$ (157,592) 10% appreciation currencies against US$ 143,265

2009 10% depreciation currencies against US$ (381,235) 10% appreciation currencies against US$ 346,578 10% depreciation currencies against EUR (62,867) 10% appreciation currencies against EUR 57,151

The movement on the post-tax effect is a result of a change in the fair value of derivative financial instruments not designated in a hedging relationship and monetary assets and liabilities denominated in currencies other than the functional currency of the entity. Although the derivatives have not been designated in a hedge relationship, they act as a commercial hedge and will offset the underlying transactions when they occur.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

F-284 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

28. Financial risk management (continued)

Credit risk (continued)

Trade accounts receivable consist of amounts due from subscribers for airtime usage and amounts due from dealers and subscribers for equipment sales. In certain circumstances, VimpelCom requires deposits as collateral for airtime usage. In addition, VimpelCom has introduced a prepaid service GSM network. Equipment sales are typically paid in advance of delivery, except for equipment sold to dealers on credit terms. VimpelCom’s credit risk arising from its trade accounts receivable from subscribers is mitigated due to the large number of its active subscribers (subscribers in the registered subscriber base who were a party to a revenue generating activity in the past three months and remain in the base at the end of the reported period), of which approximately 95% subscribed to a prepaid service as of 31 December 2011 (2010: 94%) and, accordingly, do not give rise to credit risk.

VimpelCom’s credit risk arising from its trade accounts receivable from dealers is mitigated due to the large number of dealers. Management periodically reviews the history of payments and credit worthiness of the dealers. The Company also has receivables from other local and international operators from interconnect and roaming services provided to their customers, as well as receivables from customers using fixed-line services, such as business services, wholesale services and services to residents. Receivables from other operators for roaming services are settled through clearing houses.

VimpelCom holds available cash in bank accounts as well as other financial assets with financial institutions in countries of its operations. To manage credit risk associated with such asset holdings, VimpelCom allocates its available cash to a variety of local banks and local affiliates of international banks within the limits set forth by its treasury policy. Management periodically reviews the credit worthiness of the banks with which it holds assets.

Trade receivables

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of the customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.

The requirement for an impairment is analysed at each reporting date on an individual basis for major clients. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actually incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 15. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

F-285 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

28. Financial risk management (continued)

Credit risk (continued)

Financial instruments and cash deposits

Credit risk from financial assets held with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits over US$ 50 million are reviewed and approved by the Company’s Supervisory Board. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure.

The Company’s maximum exposure to credit risk for the components of the statement of financial position at 31 December 2010 and 2009 is the carrying amounts as illustrated in Note 15, and for derivative financial instruments the carrying amounts as noted in Note 15.

Liquidity risk

The Company monitors its risk to a shortage of funds using a recurring liquidity planning tool. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, debentures, preference shares, financial and operating leases. The Company’s policy is that not more than 35% of borrowings should mature in a single year. 13% of the Company’s debt will mature in less than one year at 31 December 2011 (2010: 27%, as of 31 December 2009: 26%) based on the carrying value of bank loans, equipment financing and loans from others reflected in the financial statements. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments.

Less than More than 1 year 1-3 years 3-5 years 5 years At 31 December 2011 2012 2013-2014 2015-2016 >= 2017 Total Bank loans and bonds 1,508,902 3,291,914 3,758,029 3,334,523 11,893,368 Equipment financing 133,377 198,618 102,128 28,432 462,555 Loans from others 7,407 7,407 7,407 56,787 79,008 Derivatives over non- controlling interest – 297,000 – 330,000 627,000 Trade and other payables 1,317,507 – – – 1,317,507 Total 2,967,193 3,794,939 3,867,564 3,749,742 14,379,438

Less than More than 1 year 1-3years 3-5 years 5 years At 31 December 2010 2011 2012-2013 2014-2015 >= 2016 Total Bank loans and bonds 2,057,258 2,515,492 1,236,707 1,852,875 7,662,332 Equipment financing 94,970 114,896 65,918 41,049 316,833 Loans from others 327 – – – 327 Derivatives over non- controlling interest – 819,743 – – 819,743 Trade and other payables 967,233 – – – 967,233 Total 3,119,788 3,450,131 1,302,625 1,893,924 9,766,468

F-286 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

28. Financial risk management (continued)

Liquidity risk (continued)

Less than More than 1 year 1-3 years 3-5 years 5 years At 31 December 2009 2010 2011-2012 2013-2014 >= 2015 Total Bank loans and bonds 2,360,993 3,496,006 1,519,013 1,993,625 9,369,637 Equipment financing 128,851 158,618 56,271 23,944 367,684 Loans from others 4,070 332 – – 4,402 Derivatives over non- controlling interest – 872,543 200,783 – 1,073,326 Trade and other payables 760,951 – – – 760,951 Total 3,254,865 4,527,499 1,776,067 2,017,569 11,576,000

Capital management

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. Following to the acquisition of Wind Telecom by VimpelCom Ltd. the Company’s primary objective was shifted to ensure that it follows the corporate credit rating of VimpelCom Ltd. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2011, 2010 and 31 December 2009.

The Net indebtness to EBITDA ratio is an important measure to assess the capital structure in light of maintaining a strong credit rating. Net indebtness represents the nominal amount of interest- bearing debt and guarantees given less cash and cash equivalents and current and non-current bank deposits.

The required ratio is < 3.5 for some of the debt. The ratio is calculated based on consolidated financial statements of OJSC VimpelCom prepared under IFRS. In case this ratio is breached OJSC VimpelCom will have an Event of Default. No such events occurred for the years ended 31 December 2011, 2010 and 2009. The Company was in compliance with all other loan covenants.

29. Events after the reporting period

Significant change in financial liabilities

On 2 February 2012, OJSC VimpelCom signed a loan facility agreement with CISCO Systems Finance International. The loan was a ruble denominated export credit facility for a total amount of RUR 1.55 billion. The facility is to finance equipment provided to OJSC VimpelCom by CISCO on a reimbursement basis. The facility bears interest at a rate of 7.95% per annum. On 2 March 2012, OJSC VimpelCom drew down RUR1.55 billion (equivalent to US$ 52,921 at the exchange rate as of 2 March 2012).

F-287 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

29. Events after the reporting period (continued)

Significant change in financial liabilities (continued)

On 20 March 2012, OJSC VimpelCom issued Russian ruble-denominated bonds, in an aggregate principal amount of RUR 25 billion, equivalent to US$ 855,508 at the exchange rate of the Central Bank of Russia on the same date. The bonds have a ten-year maturity with a put option in 3 years and bear an annual interest rate of 8.85%. Interest will be paid semi-annually. On 26 March 2012, OJSC VimpelCom issued Russian ruble-denominated bonds, in an aggregate principal amount of RUR 10 billion, equivalent to US$ 340,092 at the exchange rate of the Central Bank of Russia on the same date. The bonds have a ten-year maturity with a put option in 3 years and bear an annual interest rate of 8.85%. Interest will be paid semi-annually. The proceeds of the offerings are used for OJSC VimpelCom’s general corporate purposes including refinancing of the existing debt. The proceeds of the offerings will be used for OJSC VimpelCom’s general corporate purposes including refinancing of the existing debt.

On 20 April 2012, OJSC VimpelCom repaid RUR 10 billion (equivalent to US$ 338,843 at the exchange rate as of 20 April 2012) owed to Sberbank pursuant to a one-year non-revolving loan facility, which was signed and drawn down in December 2011.

On 27 August 2012, OJSC VimpelCom partially repaid debt to Sberbank in the amount of RUR 5 billion (equivalent to US$ 157,184 at the exchange rate as of 27 August 2012) according to the payment schedule under RUR10 billion non-revolving loan facility signed on 28 August 2009.

On 27 September 2012, OJSC VimpelCom partially repaid debt to Sberbank in the amount of RUR 2.2 billion (equivalent to US$ 71,610 at the exchange rate as of 27 September 2012) according to the payment schedule under non-revolving loan facility signed on 14 February 2008 with availability limit US$ 750,000, which was fully drawn down in rubles.

On 9 October 2012, VimpelCom signed a Facility Agreement with HSBC Bank PLC and Nordea Bank AB (publ) for a Russian ruble denominated Swedish export credit facility supported by EKN in the total amount of US$ 199,716 to be drawn down in rubles. The facility is to finance equipment and services provided to VimpelCom by a Swedish supplier – Ericsson AB on a reimbursement basis. The facility bears interest at a rate of MosPRIME (Moscow indicative independent interbank offered rate) plus 1.00% p.a. On 23 October 2012 VimpelCom drew down RUR 6.151 billion (equivalent to US$ 199,015 at the exchange rate as of 23 October 2012).

Foreign exchange contracts

During August, September and November of 2012 OJSC VimpelCom entered into short-term forward and short-term zero-cost collar agreements with several banks for a total notional amount of $US 1,335,539 in order to protect cash outflows related to its short-term financial obligations denominated in US dollars from adverse foreign exchange fluctuations.

F-288 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

29. Events after the reporting period (continued)

Dividends proposed and paid

On 21 May 2012, the Annual General Meeting of Shareholders adopted the decision (i) to pay annual dividends to holders of common registered shares based on financial results for the year ended 31 December 2011 in the amount of 370.00 roubles (equivalent to 0.012 US dollars at the average exchange rate for May, 2012) per common share for the total amount of RUR 18,973.98 million (equivalent to US$ 618,811 at the average exchange rate for May 2012) for all common registered shares in the aggregate; and (ii) to pay annual dividends to holders of preferred registered shares of type "A" based on financial results for the year ended 31 December 2011 in the amount of 0.025 kopecks (equivalent to 0.00001 US dollars at the average exchange rate for May 2012) per preferred type "A" registered share for a total amount of RUR 1,606.65 (equivalent to 0.051 US dollars at the average exchange rate for May 2012) for all preferred type "A" registered shares in the aggregate.

On 19 December 2012 (i) the annual dividends were paid in the amount of RUR 18,973.98 million (equivalent to US$ 612,342 at the exchange rate as of 19 December 2012) for all common registered shares in the aggregate; and (ii) the annual dividends were paid in the amount of RUR 1,606.65 (equivalent to US$0.051 at the exchange rate as of 19 December 2012) for all preferred type "A" registered shares in the aggregate. In accordance with Russian tax legislation, VimpelCom withheld a tax from the dividend payment in the amount of RUR 948.70 million (equivalent to US$ 30,617 at the exchange rate as of 19 December 2012).

Loans to related parties

In the period from 1 January 2012 to 24 April 2012 OJSC VimpelCom granted additional loan tranches in the total amount of US$ 239,987 to VimpelCom Amsterdam Finance B.V. under the agreement dated 15 April 2011. On 12 May 2012 US$ 72,700 was repaid.

In the period from 1 January 2012 to 3 May 2012, OJSC VimpelCom granted additional loan tranches in the total amount of US$ 500,000 to VimpelCom Holdings B.V. under the agreement dated 22 August 2011. Interest rate for the first tranche made under this loan agreement was LIBOR + 0.25% per annum. From 1 January 2012 the interest rate was changed to 6.5% per annum.

In the period from 1 January 2012 to 25 April 2012, OJSC VimpelCom granted additional loan tranches in the total amount of US$ 30,000 to VimpelCom Ltd. under the agreement dated 10 December 2010. The interest rate was LIBOR + 0.25% per annum. From 1 January 2012 the interest rate was changed to 6.5% per annum. The loan matures on 13 December 2014.

In the period from 1 January 2012 to 30 September 2012 OJSC VimpelCom repaid part of the loan from Kyivstar in the total amount of US$ 27,935 under the agreement dated 23 November 2010.

On 27 December 2012 the Company granted a new tranche in amount of US$ 350,000 to VimpelCom Amsterdam B.V. under the agreement dated 16 March 2011. From 1 January 2012 the interest rate was changed to 6.5% per annum.

F-289 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

29. Events after the reporting period (continued)

Russian Anti-Monopoly Proceedings (Telenor East and Weather Investments II)

In April 2012 the Federal Anti-Monopoly Service of the Russian Federation ("FAS") filed a claim with the Moscow Arbitration Court against Telenor East Holding II AS (Norway) ("Telenor East"), Weather Investments II S.a.r.l. (Luxembourg) ("Weather Investments II") seeking to invalidate the following transactions: (1) Share purchase agreement dated 15 February 2012 between Telenor East AS and Weather Investments II, (2) Option Agreement dated 15 February 2012 between Telenor East and Weather Investments II and application of the consequences of invalidity of the above transactions ordered Telenor East to return to Weather Investments II the shares purchased under the share purchase agreement dated 15 February 2012, and ordered VimpelCom Ltd.,

Telenor East and Altimo Coöperatief U.A. (The Netherlands) to enter into a Shareholders Agreement which was terminated on 10 December 2011, subject to preliminary approval of FAS.

VimpelCom Ltd. together with OJSC VimpelCom, LLC Altimo, VimpleCom Holdings B.V. (The Netherlands), Altimo Cooperatief U.A. were joined as third parties in the lawsuit filed by the Federal Anti-Monopoly Service of the Russian Federation against Telenor East and Weather Investments II in the Moscow Arbitration Court.

On 24 April 2012, the Moscow Arbitration Court issued a Ruling Granting the Injunctive Relief pursuant to which VimpelCom Ltd. and VimpelCom Holdings B.V. were prohibited from voting at the general meetings of OJSC VimpelCom on matters to a change of the members of the management bodies, and passing resolutions on approval of major transactions and interested party transactions. The Ruling also prohibited Telenor and Weather Investments II from (i) changing the members of the management bodies of VimpelCom Ltd. and (ii) exercising the rights under the option agreement dated 15 February 2012. Telenor East filed an appeal against the Ruling on Granting the Injunctive Relief. On 24 September 2012 the Arbitration Court dismissed the appeal of Telenor East.

On 23 May 2012 the Moscow Arbitration Court issued a new Ruling on Granting Injunctive Relief in the FAS proceedings. The Ruling provided that VimpelCom Ltd, OJSC VimpelCom, VimpelCom Holdings B.V., and their management bodies (CEOs and directors) pending effectiveness of the judicial act entered on the merits of the dispute in this case were prohibited from giving effect to the resolutions of the Annual General Shareholders Meeting ("AGM") of OJSC VimpelCom held on 21 May 2012, including:

► prohibit payment to the shareholders of OJSC VimpelCom of the dividends based on the results of operations in 2011, and transfer of the cash intended for dividend distribution to the accounts of OJSC VimpelCom or other companies with foreign banks;

► prohibit the external auditors elected at the Annual General Shareholders Meeting of OJSC VimpelCom from exercising the powers conferred onto them;

► prohibit the board of directors of OJSC VimpelCom elected at the Annual General Shareholders Meeting of OJSC VimpelCom from exercising their powers pursuant to the charter of OJSC VimpelCom;

► prohibit other actions and steps designed to transfer the funds from the accounts of OJSC VimpelCom.

OJSC VimpelCom, Weather Investments II and Telenor East filed appeals against the court’s Ruling dated 23 May 2012. On 12 November 2012 the Arbitration Court dismissed the appeals of OJSC VimpelCom, Weather Investments II and Telenor East.

F-290 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

29. Events after the reporting period (continued)

Russian Anti-Monopoly Proceedings (Telenor East and Weather Investments II) (continued)

In the course of court hearings held on 27 November 2012, the Federal Anti-Monopoly Service of Russia filed a request to withdraw its claim and its motion for injunctive relief. On 30 November 2012 the court passed a decision to dismiss the case following the motion from the Federal Anti-Monopoly Service to withdraw its claim. The injunction has been fully lifted.

Sale of GTEL-Mobile

On 20 April 2012 VimpelCom signed an agreement to sell its entire indirect 49% stake in GTEL Mobile to GTEL Transmit and Infrastructure Service One Member Company Limited, or "GTEL Transmit", a related party of the our Vietnamese local partner, Global Telecommunications Corporation, or "GTEL", for cash consideration of US$ 45,000. The sale was completed on 23 April 2012. VimpelCom has no further obligations or liabilities to GTEL or GTEL Mobile and GTEL Mobile as a result of the completion of the sale.

Ukrainian Radio Systems

On 21 September 2012 VimpelCom signed an agreement to sell its entire indirect 100% stake in PJSC "Ukrainian Radio Systems" ("URS"), a subsidiary operated in Ukraine, to a related party Kyivstar for cash consideration of US$ 0.005. The sale was completed on 1 October 2012.

As of 30 September 2012 assets and liabilities of URS qualified as a disposal group under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

As of 30 September 2012 the major classes of assets and liabilities of URS were as follows:

30 September 2012 Assets of disposal group classified as held for sale Property and equipment 19,774 Intangible assets 2,764 Other current assets 26,107 Cash 11,209 Total assets of the disposal group 59,854 Liabilities of disposal group classified as held for sale Trade and other payables 28,759 Other current non-financial liabilities 6,280 Provisions, current 432 Current financial liabilities 357,655 Total liabilities of the disposal group 393,126 Total net assets of the disposal group (333,272)

F-291 Open Joint Stock Company "Vimpel-Communications" (a wholly-owned subsidiary of VimpelCom Ltd.)

Notes to the consolidated financial statements (continued)

(All amounts in thousands of US dollars unless otherwise stated)

29. Events after the reporting period (continued)

Sotelco

VimpelCom intends to dispose its entire indirect 90.0% stake in Sotelco Ltd. ("Sotelco"). As of 30 September 2012 assets and liabilities of Sotelco qualified as a disposal group under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Euroset

On 6 December 2012, VimpelCom acquired 0.1% of the shares of Euroset Holding N.V. ("Euroset"), one of the largest wireless equipment retailer in the Russian Federation, to increase its ownership interest to 50% of Euroset. The shares were issued by Euroset to OJSC VimpelCom subsidiary simultaneously with the acquisition of the other 50% of the shares of Euroset by Lefbord Investments Limited, a company owned by OJSC MegaFon and Garsdale Services Investment Limited. As part of the transaction our fully owned subsidiary Ararima Enterprises Limited ("Ararima") paid US$ 2,300 to Alpazo Limited, the previous 50.1% shareholder of Euroset, as compensation for dilution of its shareholding resulting from issuance of additional shares to Ararima. All previous call and put options in relation to Euroset shares have been terminated.

Transfer of VimpelCom (BVI) Ltd.

On 21 December 2012, Silkway Holding B.V., a wholly owned subsidiary of VimpelCom, signed an agreement to transfer its entire 100% stake in VimpelCom BVI Ltd., 98% owner of our operating subsidiary Tacom LLC in Tajikistan, to VimpelCom Holdings B.V., an immediate parent of VimpelCom. As at 21 December 2012, net assets of Tacom LLC were US$ 52,506.

Guarantee in favour of VimpelCom Amsterdam B.V.

20 December 2012 VimpelCom Amsterdam B.V., a subsidiary owned by VimpelCom Ltd., completed a term credit facility of US$ 500,000. The 8 years credit facility for VimpelCom Amsterdam B.V. is committed by China Development Bank Corporation to finance Huawei equipment. The loan bears interest at the rate of LIBOR plus 3.30% per annum. VimpelCom OJSC has guaranteed this term credit facility. No triggering events under the guarantee occurred. The Company believes that probability of these events is remote.

Dividends proposed and paid to noncontrolling interest

On 10 December 2012 the decision was adopted by the Company to pay interim dividends to noncontrolling interest in the amount of US$ 25,035. On 18 December 2012 the interim dividends were fully paid.

F-292 THE ISSUER VimpelCom Holdings B.V. Claude Debussylaan 88 1082 MD Amsterdam The Netherlands

THE GUARANTOR Open Joint Stock Company “Vimpel-Communications” 10 Ulitsa 8-Marta, Building 14 127083 Moscow Russian Federation

TRUSTEE BNY Mellon Corporate Trustee Services Limited One Canada Square London E14 5AL England

PRINCIPAL PAYING AGENT The Bank of New York Mellon One Canada Square London E14 5AL England

REGISTRAR, TRANSFER AGENT AND PAYING AGENT The Bank of New York Mellon (Luxembourg) S.A. Vertigo Building — Polaris 2-4 rue Eugine Ruppert 2453 Luxembourg

PAYING AGENT AND TRANSFER AGENT The Bank of New York Mellon, New York Branch 101 Barclay Street New York, NY 10286 United States

ADVISORS To the Guarantor as to Russian law: To the Issuer and the Guarantor as to English and U.S. law: Akin Gump Strauss Hauer & Feld LLP Akin Gump LLP Ducat Place II Eighth Floor 7 Ulitsa Gasheka Ten Bishops Square 123056 Moscow London E1 6EG Russian Federation England To the Lead Managers as to Russian law: To the Lead Managers as to English and U.S. law: Skadden, Arps, Slate, Meagher & Flom LLP Skadden, Arps, Slate, Meagher & Flom (UK) LLP Ducat Place III 40 Bank Street 6 Gasheka Street, 11th Floor Canary Wharf 125047 Moscow London E14 5DS Russian Federation England To the Guarantor as to Russian tax: To the Issuer as to Dutch law: PricewaterhouseCoopers Russia B.V. Loyens & Loeff N.V. White Square Office Center Fred. Roeskestraat 100 Butyrsky Val 10 1076 DE Amsterdam 125047 Moscow The Netherlands Russian Federation

AUDITORS TO THE ISSUER AND THE GUARANTOR Ernst & Young Accountants LLP Ernst & Young LLC Boompjes 258 Sadovnicheskaya Naberezhnaya 77 3011 XZ Rotterdam Building 1 The Netherlands 115035 Moscow Russian Federation

LISTING AGENT Arthur Cox Listing Services Limited Earlsfort Centre Earlsfort Terrace Dublin 2 Ireland Printed by RR Donnelley, 469558