UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of February 2006
Commission File Number 1-14522
Open Joint Stock Company “Vimpel-Communications”
(Translation of registrant’s name into English)
10 Ulitsa 8-Marta, Building 14, Moscow, Russian Federation 127083
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): .
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): .
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| OPEN JOINT STOCK COMPANY “VIMPEL-COMMUNICATIONS” | ||||||||
| (Registrant) | ||||||||
| Date: February 14, 2006 | By: |
| ||||||
| Name: |
Alexander V. Izosimov | |||||||
| Title: |
Chief Executive Officer and General Director | |||||||
 VimpelCom
acquisition of Kyivstar Creating value for all shareholders February 2006 |
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VimpelCom and Kyivstar today Market cap—US$9.1 billion Enterprise value—US$11.4 billion
45.4 million subscribers (as at 31 December 2005) Kyivstar VimpelCom (economic ownership) Telenor Alfa Group Public VimpelCom URS Other assets 29.9% 24.5% 45.6% Telenor Alfa Group Kyivstar 56.5% 43.5% Private company No.1 mobile operator in Ukraine 13.9 million subscribers (as at 31 December 2005) Source: Datastream, UBS Research, ACM Consulting |
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Background to the proposal VimpelCom Board approved a CIS strategy in 2004 - management has argued the strategic importance of entering Ukraine ever since VimpelCom public shareholders strongly supported the acquisition of URS, the No. 4 Ukrainian operator 89% of the public shareholders who voted approved the URS acquisition acquisition completed November 10, 2005 for US$231m On 26 January 2006, Telenor publicly announced that it was filing three separate law suits in the Moscow Arbitration Court challenging the URS acquisition Before making significant infrastructure and marketing investments in URS (in excess of US$500m), VimpelCom wants to propose a full merger of VimpelCom and Kyivstar A merger offers ALL shareholders an opportunity to create more value than on a standalone basis |
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The proposal Acquire 100% of Kyivstar equity for US$5 billion, plus debt Payable in VimpelCom common registered shares approx. 35% ownership dilution¹ Subject to: completion of due diligence UBS fairness opinion all required corporate and regulatory approvals VimpelCom post transaction (economic ownership) 1 Note: 1 Assuming no pre-emption rights or rights to tender shares, if applicable. by minority shareholders Telenor Alfa Group Public VimpelCom Kyivstar URS Other assets 31.1% 29.8% 39.1% |
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Why Kyivstar Ukraine is a highly strategic growth market for VimpelCom and a cornerstone for any CIS expansion strategy Combining Kyivstar and VimpelCom creates the leading telecoms operator in Ukraine - and a dominant player in the CIS Eliminates significant duplication capex and marketing expenses and achieves a number of operational efficiencies Earnings accretive to VimpelCom’s public shareholders from 2007 Potential solution to dispute between VimpelCom’s (and Kyivstar’s) strategic shareholders 1 2 3 4 5 |
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Ukraine: strategically important 47 million population GDP growth forecast 8.7% p.a. 2006–2010 Strong economic and cultural links with Russia and strengthening ties with the EU A key expansion market for VimpelCom, with Russia already at 87% penetration 30.4 23.4 7.2 8.4 10.6 13.8 16.1 19.5 64% 50% 15% 18% 22% 29% 34% 41% 0 5 10 15 20 25 30 35 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 0 10 20 30 40 50 60 70 Ukraine wireless market Source: EIU, EMC, The Mobile World Note: PPP adjusted nominal GDP growth |
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Source: ACM Consulting, as at 31 December 2005 Note: 1 VimpelCom pro-forma for Unitel, Buztel and Tacom acquisitions 2 MTS includes unconsolidated Belarus subscribers, but excludes 470k subscribers related to disputed acquisition of Bitel (Kyrgyzstan) Russia 43.1 44.2 Ukraine 14.2 13.3 Other CIS 2.4 2.8 Total subscribers 59.7 60.3 Becoming the leading CIS operator Subscribers (m) VimpelCom + Kyivstar MTS Total CIS 16.6 16.1 |
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Strong financial position VimpelCom today + Kyivstar = VimpelCom pro forma (US$m) 2004 9M05 2004 9M05 2004 9M05 Revenues 2,147 2,301 641 774 2,787 3,074 OIBDA 1,027 1,152 377 428 1,403 1,580 OIBDA margin (%) 47.8 50.1 58.8 55.3 50.3 51.4 Net earnings 350 463 219 213 570 677 Capex (943) (776) (424) (380) (1,367) (1,156) Operating FCF 83 376 (47) 48 37 424 Net debt 1,275 1,263 255 315 1,530 1,578 No synergies or cost savings assumed Refer to VimpelCom press releases of April 14, 2005 and November 17, 2005 posted on VimpelCom's website www.vimpelcom.com for a reconciliation of OIBDA and OIBDA margin to their most directly comparable US GAAP financial measures for 2004 and 9M05, respectively Operating FCF equals OIBDA less capex VimpelCom net debt calculated as the sum of ruble denominated bonds payable (2004: $108m; 9M05: $105m), bank loans (2004:$1,355m; 9M05: $1,764), capital lease obligations (2004: $8m; 9M05: $5m) and equipment financing obligations (2004: $110m; 9M05: $63m) less cash and cash equivalents (2004: $306m; 9M05: $675m) Source: VimpelCom and Kyivstar company reports Note: 1 2 3 4 |
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Attractive synergies Corporate services Product development Network capex Roaming Network maintenance Advertising Corporate overheads + |
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Summary A compelling, value enhancing deal for VimpelCom shareholders VimpelCom becomes the leading operator in the CIS Potential path to resolution of dispute between our two strategic shareholders |
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Disclaimer This presentation contains "forward-looking statements", as the phrase is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate, in part, to the consummation of an acquisition of Kyivstar and the potential benefits that may result from any such acquisition, as well as the effect of such transaction on VimpelCom’s operating and financial performance and VimpelCom’s planned expenditures on its subsidiary in Ukraine. There can be no assurance that the proposed acquisition will be consummated and, if consummated, that the expected benefits from the acquisition will be realized. In addition, the forward-looking statements contained in this press release, including the intended benefits to VimpelCom and its shareholders from the transactions described herein, are based on management's best assessment of each of the Company's and Kyivstar’s strategic and financial position and of future market conditions and trends. These discussions involve risks and uncertainties. The actual outcome may differ materially from these statements as a result of developments from competition, governmental regulations of the wireless telecommunications industry, general political uncertainties in Russia and Ukraine and general economic developments in Russia and Ukraine, and other factors, including our ability to successfully integrate Kyivstar into the VimpelCom Group and the extent and timing of our ability to realize synergies from the transaction. Certain factors that could cause actual results to differ materially from those discussed in any forward-looking statements include the risks described in the Company's Annual Report on Form 20-F for the year ended December 31, 2004 and other public filings made by the Company with the United States Securities and Exchange Commission, which risk factors are incorporated herein by reference. VimpelCom disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this presentation, or to make corrections to reflect future events or developments UBS Investment Bank is the global investment banking and securities business group of UBS AG |