VimpelCom Board Fails to Approve Budget for 2007

MOSCOW, Dec 14 (Prime-Tass) -- The board of directors of Russia's second largest mobile operator VimpelCom failed to approve the company's annual budget for 2007 at its meeting Thursday, the company said.

The company will operate within the parameters of the proposed consolidated budget for 2007, VimpelCom said.

Under the company?s charter, eight of the nine directors must vote in favor of the proposed consolidated budget for it to be approved. However, the vote failed as a result of continued disagreement over spending by VimpelCom?s subsidiary, Ukrainian Radiosystems (URS), VimpelCom said.

Last year the board of directors also failed to approve the budget for 2006, and this year the company operated within the parameters of the proposed consolidated budget for 2006, VimpelCom said.

VimpelCom purchased URS for a total of U.S. $231.3 million on November 11, 2005. URS had less than 1% of the Ukrainian market at the time. Norwegian telecommunication company Telenor, a key shareholder of VimpelCom, opposed the purchase of URS, saying that the price was too high.

It is widely believed Telenor opposed the deal as the purchase may create a competitor to Kyivstar, another Ukrainian mobile operator. Telenor holds 56.5% in Kyivstar, while Russia's Alfa Group holds 43.5%.

VimpelCom provides telecommunications services in Russia, Kazakhstan, Tajikistan, Ukraine and Uzbekistan. Telenor holds 26.6% in VimpelCom, while Alfa Group indirectly owns 32.9%.

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Posted to the site on 14th December 2006