 Exchange Offer to OJSC
VimpelCom Shareholders Platform for Value Creation in Global Emerging Markets Telecoms Filed by VimpelCom Ltd. Pursuant to Rule 425 under the Securities Act of 1933, as amended Subject Company: Open Joint Stock Company "Vimpel-Communications" Subject Company’s Commission File No.: 001-14522 |
 VimpelCom Ltd. 1 Transaction overview and key benefits (1) Market share (as of Dec ‘09) (source: AC&M) (2) FCF (Free Cash Flows) = Net income plus depreciation and amortisation minus capital expenditures (3) Return on Capital Employed Strong independent corporate and governance structure Strengthened strategic profile Long term benefits for OJSC VimpelCom shareholders Acquisition of a leading mobile operator in Ukraine Enhanced cash flow profile Committed dividend policy, proposing to distribute at least 50% of FCF (2) from Kyivstar and OJSC VimpelCom’s Russian operations Aiming to achieve superior ROCE (3) with strong operational improvements and efficiencies Near term benefits for OJSC VimpelCom shareholders A leading telecoms provider in Russia and CIS 24.5% (1) mobile subscriber market share in Russia Operations in nine countries Covers territory with total population of around 340 million OJSC VimpelCom The leading mobile operator in Ukraine with 39.9% (1) subscriber market share Strong FCF and balance sheet Strong brand and customer perception Extensive and high quality mobile network Innovative services and content Kyivstar “Platform for value creation in global emerging markets telecoms” VimpelCom Ltd. 1 2 3 4 5 6 |
 VimpelCom Ltd. 38.8% 35.4% 38.5% 43.9% 22.7% 20.7% Economic Voting 33.6% 29.9% 37.0% 44.0% 29.4% 26.1% Economic Voting Step 2 Key transaction steps Offer to exchange OJSC VimpelCom securities for VimpelCom Ltd. securities Step 1 Contribution of Kyivstar into VimpelCom Ltd. by Altimo and Telenor Step 2 Listing of VimpelCom Ltd. on NYSE and delisting of OJSC VimpelCom 3 3.4 to 1 effective equity split between OJSC VimpelCom and Kyivstar shareholders (1) Assumes 100% take up of exchange offer. (2) Includes Free Float and Treasury stock. Current OJSC VimpelCom shareholding Other Shareholders (2) Altimo Telenor Proposed VimpelCom Ltd. shareholding (1) Other Shareholders (2) Altimo Telenor |
 VimpelCom Ltd. 50.9 22.0 11.7 86.6 2.0 Russia Others VimpelCom Ltd. 3 Exposure to an asset of scale in Ukraine Source: Company reports, AC&M and Informa Telecoms & Media Note: Market share represents market share by subscribers (1) Kyivstar market share and subscriber data as of Dec ‘09 (2) Others include OJSC VimpelCom operations in Kazakhstan (6.1m subs), Uzbekistan (3.5m subs), Tajikistan (0.7m
subs), Armenia (0.5m subs), Georgia (0.4m subs), Cambodia (0.4m subs) (Bars represent
subscribers in millions (Dec ’09)) VimpelCom Ltd. subscriber build-up OJSC VimpelCom Kyivstar and OJSC VimpelCom Ukraine (2) Kyivstar: The leading mobile operator in Ukraine by subscribers Subs: 22.0m (1) Mkt. Share: 39.9% (1) |
 VimpelCom Ltd. 4 Exposure to cyclical and structural upside in Ukraine Among the largest telecoms markets in EE Source: AC&M (Russian, Ukraine), EIU (others) data as of December 31, 2009 209.2 11.7 65.5 55.3 45.2 28.1 13.5 Russia Turkey Ukraine Poland Romania Czech Republic Hungary Mobile subscribers (In millions) Source: Nominal GDP growth rates for period 2007–2009 sourced from NBU; Nominal GDP growth rates for period 2010–2013 sourced from EIU (derived using US$ forecasts and average forecasted FX rates from EIU). Economic recovery 15.8% 31.5% 32.5% 13.9% 8.1% (3.7%) 13.6% 2007 2008 2009 2010 2011 2012 2013 (% GDP growth in local currency) Improved market confidence Source: Bloomberg as of March 19, 2010 0 300 600 900 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 0 2,000 4,000 6,000 pts Ukrainian PFTS Index Ukraine 5YR USD CDS Spread S&P raised sovereign credit rating to ‘B-/C’ from ‘CCC+/C’ (foreign currency) and to ‘B/B’ from ‘B-/C” (local currency), with positive outlook on March 11, 2010 "The positive outlook reflects the potential for the new government to improve coordination with the presidential administration to achieve a more sustainable budgetary position and to continue to support the stability of the badly hit financial sector and the real economy.“ Standard & Poor's credit analyst, March 11, 2010 Improved Sovereign Rating Source: S&P bps |
 VimpelCom Ltd. 5 Market share (1) Key performance indicators (KPIs) 22.1% 39.9% 31.8% 6.2% Kyivstar MTS Life:) Others Kyivstar - a leading mobile operator in Ukraine 22.0 million subscribers (1) with UAH 41.5 ARPU (2) Competitive strengths The mobile market leader by subscribers A leading mobile operators by revenues and profitability Strong momentum supported by innovative services and mobile content - Mobile broadband on EDGE network - Music downloads through own portals Largest mobile network - Network covering territory inhabited by c. 95.1% of Ukraine’s population Strong brand and customer perception Strong retail distribution network - Widest geographic and population coverage of all mobile operators in Ukraine Source: Company reports, AC&M, TNS survey (1) Market share by subscribers; Market share and subscriber data as of Dec ‘09 (2) Average ARPU for 12 months ended Dec ‘09 Other KPI’s Best coverage satisfaction 54.0% Points of sale c.95,000 Customer satisfaction 87.0% Subscribers (1) 22.0m ARPU / month (2) UAH 41.5 Best quality satisfaction 55.0% |
 VimpelCom Ltd. 6 8,639 10,924 12,711 11,591 2006 2007 2008 2009 Kyivstar: Strong profitability and cash flow profile Kyivstar revenues (in UAHm) 26.5% 16.4% Key balance sheet information (Dec 31, 2009) (1) Operating Income before Depreciation, Amortisation and Impairment Loss. (2) Defined as Interest Bearing loans (current and non-current) plus trade and other
payables. (8.8%) 6,374 7,521 6,371 5,070 59% 58% 59% 55% 2006 2007 2008 2009 Kyivstar Adj. OIBDA (1) (in UAHm) (% margin) 25.7% 18.0% (15.3%) 2,201 5,069 4,145 5,633 25% 38% 44% 44% 2006 2007 2008 2009 Kyivstar Adj. OIBDA – Capex (in UAHm) (% margin) 35.9% 88.4% (10.0%) Total Debt (2) Cash Net Cash Net Cash / OIBDA UAH 620 m UAH 1,210 m UAH 590 m 0.1x |
 VimpelCom Ltd. Corporate action to be guided by the principle of maximising total shareholder returns Total shareholder returns to be maximised through three key pillars of corporate activity 7 Operating companies empowered to achieve operating efficiencies Business strategy of operating companies designed to maximise return on capital employed Commitment to maximise total shareholder return 50.0% of the annual free cash flows (1) from Kyivstar and OJSC VimpelCom’s Russian operations to be distributed as dividends Clearly established floor for shareholder remuneration via dividend policy Disciplined selection of potential expansion opportunities Expansion policy crafted to sustain attractive return on capital employed Operational efficiency Commitment to dividend Disciplined expansion (1) Net income plus depreciation and amortization minus capital expenditures 1 2 3 |
 VimpelCom Ltd. (1) United Nations Commission on International Trade Law Robust corporate law framework Incorporation in Bermuda will improve corporate governance and reduce Russia and Ukraine related risks Shareholders agreement governed by New York law designed to avoid deadlock situations Any shareholder disputes to be resolved by arbitration proceedings in London under UNCITRAL (1) arbitration rules Independent governance and strong minority rights Corporate governance structure will align the interests of all shareholders Balanced Board structure: – 3 unaffiliated Board members, 3 designated by Telenor and 3 designated by Altimo – Unaffiliated Board members will act as swing votes on Board decisions – No veto rights for Altimo or Telenor Chairman and CEO will be unaffiliated with Telenor or Altimo Strong minority shareholder protection mechanisms Requirement for approval of majority of independent shareholders for certain key decisions Independent governance and corporate structure 8 |
 VimpelCom Ltd. 9 Operating companies insulated from potentially competing shareholder objectives Strengthened strategic profile for next phase of value creation Operating companies focused on execution of business plans with overall strategic direction provided by VimpelCom Ltd. Enhanced scale to take advantage of selected value-accretive growth opportunities and operational efficiencies, both within and outside the current geographical footprint area Strategic flexibility to re-prioritise objectives in response to rapidly changing industry and
macroeconomic conditions |
 VimpelCom Ltd. Note: The above structure is simplified structure to represent functional
control mechanism at VimpelCom Ltd., please refer to page 23
of the prospectus for the detailed legal entity structure. 10 VimpelCom Ltd. corporate structure Supervisory board Chairman: J. Lunder Management board CEO: A. Izosimov VimpelCom Ltd. Board of Directors Board of Directors 100% 100% Lean HoldCo structure VimpelCom Ltd. has ultimate executive responsibility for the group's overall operations and strategy Management CEO: B. Nemsic CFO: E. Shmatova CMO: M. Furuseth Management CEO: I. Lytovchenko CFO: A. Simmons Clear decision-making responsibilities Governance structure designed for quick decision making process Unified management structure leads to operating efficiencies and improvements A clearly defined corporate structure VimpelCom Ltd. OpCo management fully empowered to execute the supervisory board-approved OpCo strategy 5 member OpCo Board appointed by VimpelCom Ltd.(3), Altimo(1) and Telenor(1) OJSC VimpelCom & Kyivstar |
 VimpelCom Ltd. 11 Main conditions precedent to closing Minimum acceptance level OJSC VimpelCom tendered shares (ADSs, common and preferred shares) representing more than 95% of the total outstanding OJSC VimpelCom shares — Required to comply with Russian corporate law requirements for subsequent compulsory squeeze-out of remaining OJSC VimpelCom minorities Termination of legal and regulatory proceedings Outstanding legal and regulatory proceedings involving Altimo and Telenor are terminated or withdrawn No orders, injunctions or legal actions preventing the completion of the transaction No legal, administrative, governmental or regulatory proceedings or actions commenced in Russia, Ukraine or the CIS against Telenor, Alfa or affiliates preventing transaction closing by June 30, 2010 Regulatory and other approvals Russia: Approval obtained from Commission on Strategic Investments — Approval pending by the anti-monopoly authority Other countries: Approval obtained from anti-monopoly authorities in Ukraine |
 VimpelCom Ltd. Exchange offer timetable (1) Assumes no extension of offer period, US offer closes on April 15, 2010 and Russian offer closes on April
20, 2010. (2) Squeeze-out procedure to start within 35 days of the expiration of the Russian offer. Key transaction milestones (2010) 12 Launch tender offer Tender offer period (1) Last day for tendering in the US offer VimpelCom Ltd. begins trading on NYSE Kyivstar contribution Delisting of OJSC VimpelCom from NYSE Initiate minority squeeze-out (2) April March February May 9 February 21 April 21 April End April / Early May Mid / Late May 15 April |
 VimpelCom Ltd. Important additional information In connection with the U.S. Offer by VimpelCom Ltd. to acquire all outstanding shares of
OJSC VimpelCom (including those represented by ADSs), VimpelCom Ltd. has
filed with the SEC a registration statement on Form F-4, which includes a prospectus and related U.S. Offer acceptance materials to register shares of VimpelCom Ltd. (including those represented
by DRs) to be issued in exchange for OJSC VimpelCom shares held by U.S. persons and OJSC VimpelCom ADSs held by all holders, wherever located. Holders of OJSC VimpelCom securities are urged to carefully read the registration statement (including the prospectus) and any other documents relating to the U.S. Offer filed with the SEC, as well as any amendments and supplements to those documents, because they contain important information. Free copies of the registration statement, including the prospectus and related U.S. Offer acceptance materials and other relevant documents filed with the SEC in respect of the U.S. Offer, can be obtained at the SEC’s website at
www.sec.gov. The prospectus and related U.S. Offer acceptance materials have been mailed to holders of OJSC VimpelCom securities eligible to participate in the U.S. Offer. Additional copies may be obtained for free from Innisfree M&A Incorporated, the information agent for the U.S. Offer, at the following telephone numbers: 1-877-800-5190 (for shareholders and ADS holders) and 1-212-750-5833 (for banks or
brokers). This presentation is not an offering document and does not
constitute an offer to sell or the solicitation of an offer to buy securities or a solicitation of any vote or approval, nor shall there be any sale or exchange of
securities in any jurisdiction in which such offer, solicitation or sale or
exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The solicitation of offers to exchange OJSC VimpelCom securities for VimpelCom Ltd. DRs in the United States will only be made pursuant to the prospectus and related U.S. Offer acceptance materials that are being mailed to U.S. holders of OJSC VimpelCom shares and all holders of OJSC VimpelCom ADSs, wherever located. An investor may only exchange OJSC VimpelCom shares for VimpelCom Ltd. DRs in the Russian Offer if such investor is a “qualified investor" under the applicable Russian rules and regulations.
This presentation is not for publication, release or distribution in or into or from any jurisdiction where it would otherwise be prohibited. This presentation does not constitute advertisement of securities, including securities
of foreign issuers, in the Russian Federation within the meaning of Federal
Law No. 39-FZ "On the Securities Market" dated April 22, 1996, as amended (the "Securities Law"), Federal Law No. 46-FZ "On the Protection of Rights and Lawful Interests of Investors on the Securities
Market" dated March 5, 1999, as amended, and Federal Law No. 38-FZ
"On Advertising" dated March 13, 2006, as amended, or a public offer to purchase, sell, exchange or transfer to or for the benefit of any person resident, incorporated, established or having their usual residence in the
Russian Federation, or to any person located within the territory of the Russian Federation, that does not fall under a legal definition of a "qualified investor" within the meaning of Article 51.2 of the Securities Law, or an invitation to or for the benefit of any such person, to make
offers to purchase, sell, exchange or transfer any such securities.
The securities of VimpelCom Ltd. have not been and will not be admitted for placement, public placement or public circulation in the Russian Federation within the meaning of Article 51.1 of the Securities Law. 13 |