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03
Dec

Growth Continues in November 2003

Russian cellular market demonstrates steady growth with 1.6 mln new subscribers added to the counter in November 2003. MTS remains market leader in Russia and CIS while Vimpelcom continues to lead in Moscow region.

Top 10 Cellular Operators

# Company November 30, 2003 October 31, 2003
1 MTS 15,763,000 15,050,000
Moscow
4,709,052 4,605,000
Ukraine (UMC)
2,800,000 2,700,000
Belarus
405,000 360,000
2 Vimpelcom 10,498,000 9,915,000
Moscow
5,420,000 5,270,000
3 MegaFon 5,817,225 5,600,296
Moscow
803,554 767,502
Tajikistan
10,000 9,500
4 SMARTS Group 1,080,000 1,027,000
5 Uralsvyazinform 1,066,400 1,007,500
6 Sibirtelecom 439,900 424,300
7 N.Novgorod Cellular 334,444 317,029
8 Dal Telecom International 175,632 165,382
9 Ekaterinburg Cellular Communications 172,774 169,669
10 New Telephone Company 136,534 130,180

Russian Cellular Market Breakdown

Russian Net Additions, November 2003

Russian Mobile Subscribers

Mobile Subscribers Nov. 30, 2003 Oct. 31, 2003
Russia 33,520,000 31,920,000
  Penetration 23.1% 22.0%
Moscow 10,987,606 10,697,502
  Penetration 64.7% 63.0%
St.Petersburg 3,338,643 3,233,948
  Penetration 52.7% 51.0%

Recent events:

  • On November 1st MCC launched IMT-MC-450 network in Moscow under SkyLink brand.
  • MTS and Vimpelcom announced 9M 2003 financial results.

Moscow Market

First month of MCC's IMT-MC-450 network operations did not changed much in net additions breakdown. GSM operators continue to dominate the market in the capital of Russia.

Moscow market demonstrates signs of mid-term saturation. We expect that in 6-9 month the pace of growth in Moscow region will noticeably slow down.

Moscow Market Breakdown

Moscow Net Additions, Nov 2003

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05
Nov

Two New Millionaires on the Market

Despite some traditional Pre-Christmas slowdown in sales, more than 1.6 mln of new subscribers joined mobile networks in October, 2003. Penetration of mobile services in Russia is 22%.

Uralsvyazinform and SMARTS reached 1 mln subscribers while MTS has stepped over 15 mln threshold. Ukrainian an Belorussian operations added almost 200 thsd of new subs for the company. Top five operators significantly outperform other players.

Top 10 Cellular Operators

# Company October 31, 2003 September 30, 2003
1 MTS 15,050,000 14,270,000
Moscow
4,605,000 4,490,000
Ukraine (UMC)
2,700,000 2,550,282
Belarus
360,000 310,000
2 Vimpelcom 9,915,000 9,250,000
Moscow
5,270,000 5,065,000
3 MegaFon 5,600,296 5,342,625
Moscow
767,502 755,910
Tajikistan
9,500 9,000
4 SMARTS Group 1,027,000 970,000
5 Uralsvyazinform 1,007,500 947,600
6 Sibirtelecom 424,300 405,000
7 N.Novgorod Cellular 317,029 295,738
8 Ekaterinburg Cellular Communications 169,669 165,234
9 Dal Telecom International 165,382 150,711
10 New Telephone Company 130,180 116,7881

Russian Cellular Market Breakdown

Russian Net Additions, October 2003

Russian Mobile Subscribers

Mobile Subscribers Oct. 31, 2003 Sep. 30, 2003
Russia 31,920,000 30,280,000
  Penetration 22.0% 20.9%
Moscow 10,697,502 10,326,000
  Penetration 63.0% 60.8%
St.Petersburg 3,233,948 3,123,000
  Penetration 51.0% 49.2%

Recent events:

  • Penetration in St.Petersburg is over 50%.
  • On November 1st MCC launched its IMT-MC-450 network in Moscow.
  • On November 4th Vimpelcom has announced that the company has more than 10 mln subscribers

Moscow Market

Moscow Market Breakdown

Moscow Net Additions, Oct 2003

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06
Oct

Regional Mobile Growth In Full Swing

Russian mobile market grew by record 1.8 mln users in September 2003 fueled mainly by strong growth in regions. Moscow and St.Petersburg together added about 600 thousand of new subscribers while regional networks attracted the remainder bringing penetration of mobile services to 20.9%.

If the trend persists, there will be over 35 mln of cellular users in Russia by year-end 2003.

Top 10 Cellular Operators

Company September 30, 2003 August 31, 2003
Total Moscow Total Moscow
MTS* 14,270,000 4,490,000 13,280,000 4,390,000
Vimpelcom 9,250,000 5,025,000 8,530,000 4,835,000
MegaFon** 5,342,625 755,910 4,942,745 593,643
SMARTS Group 970,000   915,000  
Uralsvyazinform 947,600   869,800  
Siberia Telecom 405,000   352,744  
N.Novgorod Cellular 295,738   279,087  
Ekaterinburg Cellular Communications 165,234   161,490  
Dal Telecom International 150,711   134,453  
New Telephone Company 116,7881   107,387  

* including UMC of Ukraine (2.55 mln), MTS Belarus subscribers (310,000) and recently acquired Tomsk Cellular Communications (195,000)
** including 9,000 in TT-Mobile (Tajikistan)

Russian Cellular Market Breakdown

Penetration in Moscow and St.Petersburg is significantly higher compared to the rest of the country so it comes as no surprise that the cellular growth finally spilled over to regions.

Russian Mobile Subscribers

Mobile Subscribers Sep. 30, 2003 Aug. 31, 2003
Russia 30,280,000 28,480,000
  Penetration 20.9% 19.6%
Moscow 10,326,000 9,870,000
  Penetration 60.8% 58.1%
St.Petersburg 3,123,000 2,971,000
  Penetration 49.2% 47.2%

Vimpelcom has won the September race for new users in St.Pete for the first time since launching its network in the region. The company earned 34% of net additions followed by MTS (29%) and MegaFon (25%).

Moscow Market

Vimpelcom's Moscow client base grew over 5 mln with 190 thsd of new users added in September. The company leads in Moscow followed by MTS (4.49 mln) and MegaFon (0.756 mln).

MegaFon managed to attract a significant portion of net additions for the second month in a row. The company outperformed MTS thanks to its popular O'Lite tariff plan. MTS explains the slowdown in net additions by a high churn rate on its contract tariff plans resulted from swithching of its contract users to the company's pre-paid tariffs started two month ago.

Moscow Net Additions, August 2003

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03
Sep

Vimpelcom Leads in Moscow, MTS Expands in Russia

Russian mobile networks enlisted 1.6 mln new subscribers in August, which represents a slight decline from July numbers (1.75 mln) reflecting traditionally weak sales in the last summer month.

Top 10 Cellular Operators

Company August 31, 2003 July 31, 2003
Total Moscow Total Moscow
MTS* 13,280,000 4,390,000 12,270,000 4,290,000
Vimpelcom 8,530,000 4,835,000 7,960,000 4,650,000
MegaFon** 4,942,745 593,643 4,653,450 513,257
SMARTS Group 915,000   860,000  
Uralsvyazinform 869,800   789,329  
Siberia Telecom 352,744   324,443  
N.Novgorod Cellular 279,087   268,142  
Tomsk Cellular Communications 183,904   169,926  
Ekaterinburg Cellular Communications 161,490   155,600  
Tatincom 118,606   120,239  

* including UMC of Ukraine (2.4 mln) and MTS Belarus subscribers (250,000)
** including 8,500 in TT-Mobile (Tajikistan)

MTS finally completed SibChallenge deal (135,000 subscribers) and also acquired Primtelefon (91,000 subs) - a strategic asset for MTS providing access to Far Eastern territories. We have included both companies into MTS subscriber base displayed in the table above. With these transactions closed, only a few attractive independent cellular operators left in the country.

Russian Mobile Subscribers

Mobile Subscribers Aug. 31, 2003 July 1, 2003
Russia 28,480,000 26,880,000
  Penetration 19.6% 18.5%
Moscow 9,870,000 9,505,000
  Penetration 58.1% 55.9%
St.Petersburg 2,971,000 2,841,000
  Penetration 47.2% 45.1%

Russian Cellular Market Breakdown

Moscow Market

Megafon demonstrated strong growth in subscriptions for the second month in a row thanks to the new (and heavily promoted) O'Lite pre-paid tariff plan. Vimpelcom was again a winner in Moscow while MTS slowed down the pace. Nevertheless, we believe that MTS will be able to restore its share in net additions soon.

Moscow Net Additions, August 2003
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07
Aug

Cellular Subscriptions Soar in July

July added 1.75 mln to the counter of cellular subscribers in Russia which is a record monthly growth to date. As of July 31, 2003 Russian operators served 26.88 mln users. Regional networks continue to outperform Moscow increasing the growth pace.

Top 10 Cellular Operators

Company July 31, 2003 June 30, 2003
Total Moscow Total Moscow
MTS* 12,270,000 4,290,000 11,490,000 4,135,000
Vimpelcom 7,960,000 4,650,000 7,455,000 4,435,000
MegaFon** 4,653,450 513,257 4,255,000 440,300
SMARTS Group 860,000   807,700  
Uralsvyazinform 789,329   739,060  
Siberia Telecom 324,443   298,331  
N.Novgorod Cellular 268,142   248,025  
Tomsk Cellular Communications 169,926   158,400  
Ekaterinburg Cellular Communications 155,600   143,500  
SibChallenge 135,000   128,000  

*including UMC of Ukraine (2.2 mln) and Belarus subscribers (210,000)
** including 8,100 in TT-Mobile (Tajikistan)

MTS, the prominent market leader, is approaching 10 mln milestone in Russia. The company also controls Ukrainian Mobile Communications with 2.2 mln users and has a JV in Belarus that enlisted 210,000 users by the end of July.

On August 6 Vimpelcom announced that it has reached 8 mln subscribers. Recently launched network in St.Petersburg attracted 23% of new subscribers in July which is a good result for the new market entrant. Vimpelcom now has more than 80,000 subs in St.Pete and the region.

MegaFon, third-largest Russian operator, also did a good progress in July attracting 23% of all new users in the country. It is likely that the company may break through 5 mln in August.

Please note that we did not consolidate SibChallenge subscriber base into MTS numbers despite the recently announced acquisition. We plan to start the consolidation as soon as the deal is officially closed.

Russian Cellular Market Breakdown, July 2003

Shares in Net Additions, July 2003

Moscow Market

In Moscow the miost significant news of the months is MegaFon's leap from 8% to 16% in net additions. Vimpelcom retains its leading position with MTS following the race.

MCC, the market outsider, is about to launch its IMT-MC network in 450 MHz under SkyLink brand.

Moscow Market Breakdown, July 2003

Moscow Net Additions in July 2003

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04
Jul

Regions Accelerate

With 1.6 mln new users subscribed to mobile services, June became one of the most successfull months for Russian mobile operators. The healthy growth was mainly fueled by booming regional markets.

Total number of cellular subscribers reached 25 mln milestone while Moscow market grew over 9 mln subscribers. We expect that by the year-end 2003 Russian cellular market will expand to 32 mln users.

Top 10 Cellular Operators

Company June 30, 2003 May 31, 2003
Total Moscow Total Moscow
MTS* 11,490,000 4,135,000 10,815,000 3,945,000
Vimpelcom 7,455,000 4,435,000 6,951,000 4,235,000
MegaFon** 4,255,000 440,300 4,009,393 407,936
SMARTS Group 807,700   758,400  
Uralsvyazinform 726,000   659,500  
Siberia Telecom 298,331   234,619  
N.Novgorod Cellular 248,025   233,100  
Tomsk Cellular Communications 158,400   145,799  
Ekaterinburg Cellular Communications 143,500   129,800  
SibChallenge 128,000   120,000  

*including UMC of Ukraine (2 mln) and Belarus subscribers (170,000)
** including 7,200 in TT-Mobile (Tajikistan)

Although MTS remains a strong leader in regions, Vimpelcom's regional expansion becomes more and more aggressive - the company managed to outnumber MTS in net additions on many regional markets. St.Petersburg is the most developed market outside Moscow with mobile services penetration about to hit 40%.

St.Petersburg Market, June 2003

Net Additions in Regions, Including St.Petersburg

Vimpelcom has more than 50,000 users in St.Petersburg - the number that the company reached in 2.5 months of operations in the city. The company also enlisted its subscriber #7,000,000 in June.

Russian Cellular Market Breakdown, June 2003

NOTE: The chart above includes only Russian subscribers, all CIS networks are excluded from the calculation.

Moscow Market

Total market size in the Moscow license area has reached 9 mln users bringing cellular penetration in the region to 53%. According to the preliminary results of 2002 nation-wide census, population of Moscow and region is 17 mln. Since the final results of the census are not available, we shall use the preliminary data from now on.

In June Vimpelcom became a leader in Moscow net additions regaining the position lost to MTS in December 2002.

Moscow Net Additions in June 2003