Vimpelcom has launched an offer to buy Golden Telecom (GT) shares for US$95-100 per one security. Regarding the given price band the transaction is to come to US$3.8 -US$4 billion., the Russian news agencies inform.

CNews source aware of the situation confirms the given information. ’The given transaction has been initiated by Vimpelcom management and approved by the largest shareholders of both companies’, - the source says. – On November 29th Vimpelcom offer is to be considered by GT independent estimate committee. If a positive opinion is made, then GT Board of Directors will announce the final decision’.

The rumors regarding the merger of the second large mobile operator in Russia with the second alternate operator regarding its capitalization have been circulating in the market for several months. Consequently, GT shares have surged in prices. On November 27th GT one share cost US$102, which exceeds the price band claimed by Vimpelcom. ’Because of the given market situation GT Estimate Committee might acknowledge the offer made non-market, - CNews conversable says. – But Vimpelcom does not intend to raise the price, so the transaction might not be concluded’. Vimpelcom refused to give any comments. Vimpelcom and GT joint shareholders, the telecommunications holding Altimo (owns 44% and 26.6% in the given operators, relatively) and the Norwegian Telenor (owns 29.9% and 18.3% in the given operators, relatively), did not given any comments, too.

However, both stock and sectoral analysts are sure, the largest merger in the history of the telecommunication sector is likely to be completed. ’GT is evident to have risen in price because of the rumors regarding its merger with Vimpelcom’, - Vladislav Kochetkov, Finam analyst, believes. – Three months ago GT shares traded on the stock exchange below US$70. No fundamental incentives for the company’s price to rise were observed. The company’s actual price is about US$90 per share. So Vimpelcom offer seems rather appropriate. The attempts to receive a higher price regarding the market capitalization are likely to be made, but if the transaction is not concluded then GT capitalization will fall again. The given factor should be taken into account when deciding upon the company’s sale’.

’Neither Vimplecom, nor GT management were seeking to conclude the transaction so far. For example, the joint projects to converge the mobile and fixed-line communication were not a great success, - Yuri Bryukvin, the analytical agency Rustelecom Director General, says. – That is why the transaction is likely to be promoted not by the management, but by the joint shareholders, Altimo in particular. If the given holding manages to agree with the other joint shareholder Telenor, then the transaction will be concluded’. However, according to a source close to GT, when the question is of the merger of two large public companies, then a great many factors might emerge to hamper the transaction despite the shareholders’ support.

Vimpelcom Group includes cellular companies operating in Russia, Kazakhstan, Ukraine, Uzbekistan and Tajikistan, and recently acquired companies in Georgia and Armenia. The Company operates under the ’Beeline’ brand. The VimpelCom Group’s license portfolio covers approximately 240 million people. Geographically it covers 78 regions of Russia with 136.5 million people, representing 94% of Russia’s population as well as the entire territories of Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia and Armenia. The company’s net income and revenue for Q3 2006 was US$268,4mln and US$1,358mln respectively.

Golden Telecom, Inc., is a leading facilities-based provider of integrated telecommunications and Internet services in major population centers throughout Russia and other countries of the CIS. The Company offers voice, data and Internet services to corporations, operators and individuals using its metropolitan overlay networks. The company’s revenues increased 44% in the first quarter of 2007 compared to the first quarter of 2006 and reached US$255,7mln.

Altimo was established in 2005 from Alfa Telecom, which itself was established in 2004 to hold the telecoms investments of the Alfa Group Consortium. Those assets are in Russia, the CIS and other markets. The companies in which Altimo invested have a footprint which covers a total population of 334 million people and have over 150 million subscribers. Growth levels in the Russian telecommunications market are impressive, increasing by over 50% in recent years.