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cellular operations. The acquisition was recorded under the purchase
method of accounting. The fair value of acquired identifiable net assets
of Tacom amounted to US$3,637, with the excess of the acquisition cost
over the fair market value of the identifiable net assets of US$8,697 being
recorded as goodwill and was assigned to the Tajikistan reporting unit.
On December 22, 2006 VimpelCom purchased an additional 20% share
in Tacom for $5,000, thus increasing its effective share to 80%. This
transaction was treated as a step acquisition with an additional $4,704
of goodwill being recorded at that date.
URS
On November 10, 2005, VimpelCom acquired 100% of URS, through
the acquisition of 100% of the issued and outstanding stock of each
of Crayola Properties Limited, Cradel Investments Limited, Wintop
Management Limited, Crisden Holdings Limited and Cellcroft Holdings
Limited, for a total cash purchase price of approximately US$231,200.
The costs related to the acquisition were US$7,737. The primary
reason for the acquisition was VimpelCom’s entry into the mobile
telephony market of Ukraine, the second largest mobile market in
CIS, where the Company did not have a license to conduct cellular
operations. The acquisition was recorded under the purchase method
of accounting. The fair value of acquired identifiable net assets of
URS amounted to US$156,938. The excess of the acquisition cost over
the fair market value of the identifiable net assets of URS amounted
to US$81,999, which was recorded as goodwill and was assigned to
the Ukraine reporting unit. The results of operations of URS were
included in the accompanying consolidated statement of income
from the date of acquisition.
STM
In July 2005, VimpelCom acquired 84.4% of STM, which holds GSM-
1800 and DAMPS licenses for the territory of Sakhalin, and 60% of
Limited Liability Company Joint Venture «Sakhalin Telecom Limited»
(«ST»), a fixed line alternative operator. VimpelCom purchased 84.4%
of the outstanding shares of STM for a total cash purchase price of
approximately US$51,162 and 60% of ST for a total cash purchase price
of approximately US$5,040. At the date of acquisition, ST owned 5.2%
of STM. In September 2005 this interest was purchased by VimpelCom
for the amount of US$3,191, which increased VimpelCom’s share in
STM to 89.6%. The primary reason for the acquisition was VimpelCom’s
entry to the mobile telephony market of Sakhalin, one of the regions
within the Far East super-region where the Company did not have a
super-region license to conduct cellular operations. The acquisition
was recorded under the purchase method of accounting. The fair value
of acquired identifiable net assets of STM amounted to US$33,631, with
the excess of the acquisition cost over the fair market value of the
identifiable net assets amounting to US$21,586, which was recorded
as goodwill and assigned to the Russian Federation reporting unit.
The results of operations of STM were included in the accompanying
consolidated statement of income from the date of acquisition.
In September 2005, VimpelCom sold its 60% share in ST to a third party
for US$4,968.
ВымпелКом / Годовой отчет 2007
Sale of Minority Interest in Limnotex
On February 21, 2005, VimpelCom Finance B.V. entered into a share
purchase agreement to sell a minority interest of 50.0% minus one share in
Limnotex to Crowell Investments Limited («Crowell»), a Cypriot company
beneficially owned and controlled by a beneficial owner and member of
the board of directors of ATF Bank, for a sale price of US$175,000. In the
second quarter of 2005, Crowell paid US$40,000 in two initial deposits
and in July 2005 Crowell paid the remaining US$135,000. Ownership of
50.0% minus one share in Limnotex passed to Crowell on August 22, 2005.
Net assets of Limnotex at the disposal date amounted to US$359,392,
including associated goodwill of US$154,242. The minority interest share
in Limnotex net assets at the date of disposal was of US$179,337. The sale
of a minority interest resulted in a loss of US$3,339.
In addition, VimpelCom entered into a shareholders agreement with
Crowell that, among other things, grants a call option to VimpelCom
to reacquire 25.0% minus one share of Limnotex at any time after the
closing of the sale and an additional call option to reacquire up to the
final remaining 25.0% share in case of a deadlock at a shareholders
meeting or a breach by Crowell of any representation, warranty or
covenant contained in the shareholders agreement or the share purchase
agreement, in each case at a price based upon a prescribed formula.
The following unaudited pro forma combined results of operations for
VimpelCom give effect to the Unitel, Buztel, ArmenTel and CSK business
combinations as if they had occurred at the beginning of 2006. The pro
forma combined results do not include Mobitel as it was non-operating
and would therefore not impact the results. These pro forma amounts are
provided for informational purposes only and do not purport to present the
results of operations of VimpelCom had the transactions assumed therein
occurred on or as of the date indicated, nor is it necessarily indicative of
the results of operations which may be achieved in the future.
Year ended December 31,
Unaudited 2007 2006
Pro forma total operating revenues $7,217,399 $4,688,528
Pro forma net income 1,457,128 787,501
Pro forma basic net income
per common share 28.67 15.47
Pro forma diluted net income
per common share 28.67 15.46
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