Daily analyst comments

On December 21 Interfax reported that the BoD of Vimpelcom and Golden Telecom have approved the merger of their companies. Vimpelcom is to buy Golden Telecom's shares at USD 105 per share, which is USD 4.24 bn for the entire company, while the current price of the Nasdaq-traded operator's stock is USD 100 per share.

The rumors that Vimpelcom might acquire its "relative", the Alfa Group owns large stakes in both companies, were mentioned several times in our past dailies on - July 9, 2007 and February 27, 2007. We are now able to see the picture more clearly, as the transaction is to be completed soon.

We believe that the merger with Golden Telecom is likely to make Vimpelcom the company with the highest consolidated revenue, while MTS should lose its position as Russia's No-1 Operator. Nevertheless, we do not expect any serious negative effects on MTS, which specializes in mobile communications. It is worthy to note that diversified holdings do not always produce a synergy effect for their shareholders. In Vimpelcom's case, it is not quite clear yet whether the merger is to have a harmoniously symbiotic effect, or whether seperate operations would be more profitable for shareholders. The other negative factor which is to affect Vimpelcom is to be the reduction of consolidated margins. Golden Telecom's OIBDA margin in 9M 2007 stood at 25% compared to 52% of Vimpelcom.

Table. Vimpelcom, MTS and Golden Telecom: Key financials

	Vimpelcom	Golden Telecom	Consolidated (Vimpelcom + GT)	MTS
9M 2007 Revenue	5,161,152	903,799	6,064,951	5,926,015
OIBDA, 9M 2007	2,678,333	222,968	2,901,301	3,096,531
OIBDA margin, 9M 2007	52%	25%	48%	52%

Source: Companies data, FINAM estimates

We do not see any serious threat to MTS, and keep our fair value for company's common stock at USD 18.22 per share. We reiterate our BUY recommendation.