Filed
by Altimo Holdings & Investments Ltd.
This
communication is filed pursuant to Rule 425 under the Securities Act of 1933, as
amended.
Subject
Company: Open Joint Stock Company “Vimpel-Communications”
Commission
File No.: 1-14522
Mikhail
Fridman: “I Don't Believe That Government Management Can Be
Efficient”
Ekonomicheskie
Izvestiia, No. 221, December 7, 2009
Alfa
Group owner Mikhail Fridman recently visited Ukraine to participate in an Alfa
Bank management conference.
The
program of the visit did not include any official meetings. However, “i” [Ekonomicheskie Izvestiia]
learned that Mr. Fridman met informally with several major Ukrainian businessmen
to discuss the telecommunications, financial and trade markets. Mikhail Fridman
told us about the results of his “Ukrainian meetings.”
-
Mikhail Maratovich, what was the reason for your visit to Ukraine?
—
The management of Alfa Bank (Ukraine) invited me to a management
conference. This was not connected with any serious
decisions. I was able to thank my colleagues for their work, to
discuss with them the status of the banking sector and our plans for the coming
year. I assured my Ukrainian colleagues that the shareholders support
the bank and are willing to capitalize it. I am always happy to
accept an invitation to visit Ukraine because I was born in Lvov.
-
How much money might such support amount to?
—
The bank's shareholders are willing to consider a potential increase in capital.
We have already commenced a formal process that we are planning to complete
within the next several months. The amount of the increase is being
discussed; it will depend on the needs of the bank and on management's business
development plans. It could be US $100 to 200 million. We will
increase it as much as necessary.
-
Do you expect any further problems in the economy? Why increase the
capital?
—
Yes, problems are possible: everyone here is currently and will in
the future be affected by the crisis. But you know, they say that after a
crisis, the survivors always win out and have a real chance to increase their
market share.
-
At whose expense? Are you going to loan up the customers of other major
banks?
—
Why loan them up? In Ukraine, the banking system itself is
half-ruined. Today, I passed by a bank that recently had provisional
administration and observed a very picturesque queue and crowd… In my view,
further development of the crisis will just encourage customers to look for more
reliable banks, and we would like to be one of those banks. In this market,
whoever has capital and resources will be in an advantageous
situation.
-
These are foreigners as well as new Ukrainian state-owned banks, and Russian
state-owned banks are also present in this country…
—
I don't believe that government management can be efficient, no matter what the
country. As for foreigners, they now have their own problems to deal
with: Ukraine is not their priority. That is why we have our
competitive advantage, and we will benefit from it.
-
Are you going to choose a single line of business?
—
No, the crisis has demonstrated that niche players don't do so well. We maintain
our concept of a universal bank that will focus on the domestic deposit market
and will at the same time monitor risks very carefully.
-
Do you have any plans to use the bank to gain ownership of assets by enforcing
pledges?
—
We are, in fact, not big fans of property ownership. There are some businessmen
who try to lay their hands on anything. When I worked at an automatic switching
center in Lvov for a year after I graduated from school, I had a very funny
manager named Petro who was always busily taking various things home from
work. And when I asked him why he wanted yet another Plexiglas sheet,
he used to answer “let it be” (laughs). I believe, however, that
property is a real headache. For example, in Ukraine, we acquired the
Donetsk Electrometallurgical Plant. What can I say — I wish someone would offer
to repay the underlying loan: we would be happy to give that asset to
him.
-
What investment projects are you currently considering in Ukraine?
—
We are an investment group, but all our investments are divided into strategic
areas (banks, telecommunications, oil) and opportunistic deals (anything
else). Opportunistic deals are managed by A1 (formerly Alpha
Eco).
But
with respect to strategic investments, we have a specialized company for each
specific area of business. For example, VimpelCom is currently
working on a merger with Kyivstar. TNK ВР
decided to materially increase its investments in Ukraine: in a
relatively short time, the Lisichansk Refinery will be reconstructed and the gas
station network will be expanded several times through the purchase of networks
from other operators (such as UTN-Vostok). However, such decisions are not
related to the crisis – this is systematic development of the
group.
In
the area of telecommunications, we might buy several minor fixed-line
operators. In the retail sector, our company Х5 is
negotiating the purchase of assets from several local players, but for the time
being their assets are somewhat overpriced, so we are not in any hurry.
Moreover, Х5 has
sufficient development opportunities in Russia, with its higher per capita
income and lower retail market coverage.
As
for various opportunistic possibilities, we currently don't see anything with
the potential for a high return. If А1 finds
any opportunities, we will consider them.
-
So you don't tip your managers off on which way to go?
—
You know, our asset management system is not entirely typical for Russia or
Ukraine. A lot of people think that every group has one brilliant
manager who sits the center of the decision-making process on all issues,
including what color the fences at the premises will be. As for me, I
prefer to think about more pleasant things and to leave investment-related
issues to the managers. Each Alfa Group company has its own
development philosophy, its own ways of achieving its objectives, etc., based on
which they each independently look for ways to earn money, and the shareholders
get involved only when large amounts of money are being discussed, or such
matters as strategy, approval of a major transaction, etc. Such transactions
include the consolidation of the assets of VimpelCom and Kyivstar, or a similar
transaction to be entered into between ourselves and TeliaSonera with respect to
Turkcell and MegaFon.
I take an active role in projects like those. Otherwise, people
manage quite well without me.
-
Speaking of telecommunications, next year you and TeliaSonera will be able to
gain control over Turkcell, which will require approximately US$ 2
billion. Are you going to invest such a large amount?
—
The current situation with respect to Turkсell is
as follows: the company is controlled by Cukurova, a Turkish company, de jure but not de facto, as their interest
was pledged under a loan on which they have defaulted. Moreover, that
asset has been re-sold to TeliaSonera. The situation is complicated and knotty,
but we believe that we will gain legal control once we have joined up with the
Swedish company. Then, pursuant to local joint stock company laws, we
will have to make a mandatory tender offer to all minority shareholders for
their shares. That is when we would require the amount of money to which you
referred. But there is no guarantee that the minority shareholders
will be willing to sell shares of a company that controls 65% of the
market. It's a unique situation, because in every other major
telecommunications services market, all the players have more or less equal
shares.
-
How will the strengthening of Alfa's position in Turkсell
affect the Ukrainian market?
—
We plan to merge MegaFon with Turkсell;
the latter company is represented in Europe and in the C.I.S. through Fintur
Holdings. In Ukraine, it will still be represented by Astelit [operating under
the Life. brand — author], a company which can already be called a full-fledged
competitor of MTS and Kyivstar. For the moment, we will be paying more attention
to the process of merging BeeLine and Kyivstar in Ukraine: once we consolidate
the subscriber base, we will have frequencies and licenses that may be sold to
new players. We are going to consolidate purchasing, centralize all
financial operations of Kyivstar through VimpelСom
Ltd., our Dutch subsidiary, etc.
-
Will you keep Igor Lytovchenko as the manager of Kyivstar?
—
I don't see any reason for him to be dismissed. It is, of course, up
to the management of the holding company, VimpelСom
Ltd., but I personally don't have anything against him.
-
It is known that you met with certain oligarchs while in Kyiv. Did
you discuss issues relating to the use of the Odessa-Brody
pipeline?
-
Indeed, we are interested in this. However, we try to stay out of politically
charged projects. For example, at one time we were interested in
Ukrneft and discussed a potential purchase of shares, but realized, from the
heated discussion, that such form of cooperation would be of no interest to us.
Ukrneft produces 2 to 3 million tons of oil. From the point of view
of TNK-ВР,
which produces approximately 70 million tons, such amounts are insignificant. We
could easily buy such a company in Russia, and it would be a matter of price
only.
The
situation with the Odessa-Brody pipeline involves politics and the global
interests of all branches of government. Remember that in medieval
Russia, the lance of St. George the Dragon-Slayer was directed first to the East
and then to the West, depending on the situation. This pipeline plays
a similar role in Ukraine.
And
this pipeline is only one of many routes for a private company to transport oil
to Europe. If it proves to be an efficient route for TNK-ВР as a
Russian oil producer, then we will use it. If not, we will find an alternative
route.
Mikhail
Maratovich Fridman was born on April 21, 1964, in Lvov. In 1986, Mr. Fridman
graduated from the Moscow Institute for Steel and Alloys. He is the
founder of Alfa Group, a major Russian private financial and industrial
consortium. He is also the Chairman of the Board of TNK-BP and a member of the
Board of ABH Holdings Corp. (a holding company and a member of the Alfa Bank
group), a member of the Board of VimpelCom and a member of the Supervisory Board
of X5 Retail Group N.V. He is a member of the Management Board of the
Russian Union of Industrialists and Entrepreneurs and the Management Board of
the U.S. International Advisory Board on Foreign Relations. With a fortune of
US$ 6.3 billion, in March 2009, Mr. Fridman ranked 71st on
Forbes' World Billionnaires List.
By:
Alexander DUBINSKY
___________________________________________________________________________
This
communication is for informational purposes only and does not constitute an
offer to purchase, sell, or exchange or the solicitation of an offer to sell,
purchase, or exchange any securities of OJSC VimpelCom or
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will only be made pursuant to an offer to purchase and related materials that
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SHAREHOLDERS TO READ THESE MATERIALS REGARDING THE POTENTIAL OFFER CAREFULLY
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INCLUDING THE TERMS AND CONDITIONS OF THE OFFER.
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VimpelCom shareholders will be able to obtain a free copy of such materials
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statement regarding forward-looking statements
This
announcement contains “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are
statements that are not historical facts, including statements concerning the
anticipated timing of filings and approvals relating to the proposed
transactions; the expected timing of the completion of the proposed
transactions; the expected benefits and costs of the proposed transactions;
management plans relating to the proposed transactions; the ability to complete
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