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VimpelCom Ltd. (VIP)

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Vimpel-Communications (VIP)

Q4 2010 Earnings Call

March 29, 2011 10:30 AM ET

Executives

Alexandra Tramont – Vice President, Financial Dynamics

Alexander Izosimov – Chief Executive Officer

Henk van Dalen – Chief Financial Officer

Andrew Simmons – CFO, Ukrainian Business

Alexey Subbotin – Head, Investor Relations

Elena Shmatova – General Director, Head, Russian Operations

Dmitry Kromsky – Head, CIS Operations

Analysts

Cesar Tiron – Morgan Stanley

Will Milner – Arete Research

Alexei Gogolev – JP Morgan

Tory Keni – Beerenberg

Tatiana Boroditskaya – UBS

Dalibor Vavrushka – ING

Kirill Bakhtin – TKB Capital

Jean-Charles Lemardeley – JP Morgan

Zeltan Polthi – Credit Suisse

Nadia Golubeva – UniCredit

Olga Buzaknist – Union Bank

Rita Tsovyan – Renaissance Capital

Thomas Heave – Analyst

Presentation

Operator

Please standby. Good day, everyone. Welcome to the VimpelCom Ltd. Fourth Quarter and Fiscal Year End 2010 Earnings Conference Call. Today's program is being recorded.

At this time, for opening remarks, I’d like to turn things over to Ms. Alexandra Tramont. Please go ahead, ma'am.

Alexandra Tramont

Please welcome to VimpelCom Limited’s conference call to discuss the company's fourth quarter and full year 2010 financial and operating results.

Before getting started, I would like to remind everyone that except for historical information, statements made on this conference call may constitute forward-looking statements that involve certain risks and uncertainties. These statements relate in part to; one, the company’s expected margins, dividends and capital expenditures; two, synergies in Ukrainian; and three, the completion of the Wind Telecom transaction and the benefits thereof.

Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including the risks detailed in one, the company's press release announcing fourth quarter and full year 2010 financial and operating results and the earning presentation; two, the company's practice statement filed with the SEC on Form 6-K on February 15, 2011; three, the company's registration statement on Form F-4 filed with the SEC; four, OJSC VimpelCom's annual report filed on Form 20-F for the year ending December 31, 2009; and five, other public filings made by the company with the SEC, each of which are posted on the company's website at www.vimpelcom.com and on the SEC’s website at www.sec.gov.

VimpelCom disclaims any obligation to update developments relating to risk factors or to announce publicly any revisions to any of the forward-looking statements made on this conference call or to make corrections to reflect future events or developments. If you have not received a copy of the fourth quarter and full year 2010 financial and operating results press release, please call FD at 212-850-5600 and it will be forwarded to you.

In addition, the press release and the earnings presentation, each of which includes reconciliations of non-GAAP financial measures presented on this conference call, can be downloaded from the VimpelCom website.

At this time, I would like to turn the call over to Alexander Izosimov, Chief Executive Officer of VimpelCom.

Alexander Izosimov

Thank you. Hello, everyone. Thank you for joining our conference call today. Let me introduce first the people participating on this call. Here with me in Amsterdam are Henk van Dalen, our Chief Financial Officer; Andrew Simmons, CFO of our Ukrainian Business; and Alexey Subbotin, our Head of Investor Relations. Elena Shmatova, who runs our business in Russia and Dmitry Kromsky, Head of our CIS Operations have joined us from Moscow.

On this call, we will discuss our fourth quarter and full year operational and financial results. In the fourth quarter, we delivered solid financial results on the Group level. The numbers reflect a combination of factors, first, modest market economic recovery in the countries where we operate including Forex effect, second, growing demand for our services and third, the consolidation of Kyivstar.

The full year Group figures shows strong growth in all areas of performance, of course, there is a significant impact of the inclusion of Kyivstar from April 21st, by driving growth of our business also contribute to the solid picture. I’m particularly happy with the strong net cash from operating activities, which was up 4.5% to a level of $3.7 billion, enabling significant CapEx interim dividend payment and net debt reduction simultaneously.

In our key market Russia, we launched several marketing initiatives supported by accelerated investment in network rollout, pricing excellence and distribution efficiency. We are confident that we will achieve our goal of strengthening our competitive position in Russia while keeping our margin in the targeted level above 45%.

On March 17th, our shareholders approved the issue of shares enabling the combination with Wind Telecom. Once completed this will double the size of our business and position Wind Telecom in the top tier of international telecom companies.

We expect the deal to substantially expand our platform for growth and help to secure advantages of scope and scale in a very dynamic industry environment. I’m confident that we will be able to unlock value for all our stakeholders within the next 24 months.

Now, I’ll pass the floor to our CFO, Henk van Dalen, who will describe the Group’s financial performance. Henk, please?

Henk van Dalen

Thanks, Alexander. Let me remind you that we present the consolidated financial results with Kyivstar operations incorporated starting from April 21st when transactional (inaudible) completed. In the accompanying press release, you also find performance statements on consolidated level and for our Ukrainian business unit.

On the chart, you can see that despite of large adverse seasonal effects, our quarterly consolidated revenues remained flat sequentially from the third quarter to the fourth quarter in 2010, not less than US$2.8 billion. We invested in operations in Russia in order to accelerate our growth there and still consolidated all the amount to a healthy $1.3 billion with all the margin around targeted range for the Group.

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