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Providers of traditional fixed-line telephone services and mobile operators that have obtained fixed-linelicenses may compete more effectively with us. The fixed-line market has historically been dominated bySvyazinvest in Russia, Kazakhtelecom in Kazakhstan, Ukrtelecom in Ukraine, Uzbektelecom in Uzbekistanand Tajiktelecom in Tajikistan, all former state monopoly telecommunications services providers. These companiesand other established competitors, such as Rostelecom, have some competitive advantages over our fixed-lineoperations, including:kkkksignificant resources and greater market presence and network coverage;brand name recognition, customer loyalty and goodwill;control over domestic transmission lines and over access to these lines by other participants; andclose ties to national and local regulatory authorities who may be reluctant to adopt policies thatwould result in increased competition for Svyazinvest, Uzbektelecom, Kazakhtelecom or Ukrtelecomand other historically state-owned companies.On December 29, 2008, the Ministry of Communications and Mass Media adopted an order establishing therequirements for Mobile Virtual Network Operators, or MVNOs. MVNOs are companies that provide mobilecommunications services but do not own the radio frequencies and, often, network infrastructure required to do so.According to the order, MVNOs in Russia must be licensed, and their use of frequencies and infrastructure andrendering of services will be done pursuant to agreements entered into between MVNOs and existing frequencyholders. Competition from MVNOs may reduce our subscriber market share and revenues and could have a materialadverse effect on our business, financial condition and results of operations.Our failure to keep pace with technological changes and evolving industry standards could harm ourcompetitive position and, in turn, materially adversely affect our business.The telecommunications industry is characterized by rapidly changing technology and evolving industrystandards. We experience new customer demand for more sophisticated telecommunications and Internet servicesin Russia, Ukraine and the CIS as well as for other new technologies such as Internet Protocol, or IP, telephony andWorldwide Interoperability for Microwave Access, or WiMax. Accordingly, our future success will depend, in part,on the adoption of a favorable policy and regulation of standards utilizing these technologies. Our success will alsodepend on our ability to adapt to the changing technological landscape. However, the rapid technological advancesin the telecommunications industry make it difficult to predict the extent of future competition. It is possible that thetechnologies we utilize today will become obsolete or subject to competition from new technologies in the future forwhich we may be unable to obtain the appropriate license.We may not be able to meet all of these challenges in a timely and cost-effective manner. In addition, we maynot be able to acquire licenses, which we may deem necessary to compete or we may not be able to acquire suchlicenses on reasonable terms and we may not be able to develop a strategy compatible with this or any other newtechnology.On April 20, 2007, the Federal Communications Agency announced the results of three tenders for awarding3G licenses and our company was awarded a license for the provision of IMT-2000/UMTS 3G mobileradiotelephony communications services for the entire territory of the Russian Federation. The 3G license wasgranted subject to certain capital commitments. The major conditions are that VimpelCom will have to build acertain number of base stations that support 3G standards and will have to start services provision by certain dates ineach subject of the Russian Federation, and also will have to build a certain number of base stations by the end of thethird, fourth and fifth years from the date of granting the license. Part of the frequency spectra related to the3G license are currently used by other commercial and governmental entities and our 3G network development willrequire those entities to vacate those frequency spectra. Additionally, 3G network development requires significantfinancial investments and there can be no assurance that our company will be able to develop a 3G network oncommercially reasonable terms; that we will not experience delays in developing our 3G network or that we will beable to meet all of the license terms and conditions. If we experience substantial problems with our 3G services, or ifwe fail to introduce new services on a timely basis relative to our competitors, it may impair the success of our3G services, delay or decrease revenues and profits and therefore may hinder recovery of our significant capitalinvestments in 3G services as well as our growth.33