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IEMR’s Mobile Operator Forecast on Russia provides over 50 operational and financial metrics for the Russian wireless market and is one of the best forecasts in the industry. We provide five-year forecasts at the operator level going out to 2014. We also provide quarterly historical and forecast data starting in 1Q2003 and ending in 3Q2011. Operators covered for Russia include: Mobile TeleSystems OJSC (MTS), Vimpel-Communications (VimpelCom), and MegaFon OJSC. Our Mobile Operator Forecasts are updated quarterly and are available for one-time delivery or through regular updates.

IEMR’s Global Mobile Operator Forecast covers 50 operational metrics of 200+ mobile operators in 50+ countries, making up 80% of the world’s population. Our forecasts are based on our proprietary, country-specific forecasting models. These models deploy multiple regression analysis and cross-impact matrices that estimate relationships between subscriber data, technology use and deployment data, overall economic and demographic changes expected in a particular country; and relate these to company operational and financial metrics.

Executive Summary

Strong subscriber growth continues in the Russian wireless market

+13.5% industry average subscriber growth in 3Q.2009

ARPU levels declined across operators in the latest quarter

-14.0% industry average ARPU growth in 3Q.2009

Minutes of Use per Subscriber are stabilizing

The industry average MOU/Sub growth of -3.0% in 3Q.2009

Negative EBITDA growth at MTS in the latest quarter

-4.5% industry average EBITDA growth in 3Q.2009

So what is IEMR’s Forecast?

Total wireless subscribers in Russia to reach 242 million in 2014

• Given the latest quarter numbers, we are forecasting that total mobile subscribers in Russia will increase from 195.9 million in 2009 to 242.3 million in 2014.

• Our model predicts that MTS's number of subscribers will increase from 66.6 million accounts in 2009 to 77.2 million accounts in 2014.

• We also expect that, by the end of 2014, VimpelCom will have 63.9 million subscribers while MegaFon will have 58.0 million subscribers.

VimpelCom's market share to increase slightly over the next five years

• Our model predicts that VimpelCom will see its subscriber market share increase from 25.5% in 2009 to 26.4% in 2014 while MTS's share declines from 34.0% in 2009 to 31.9% in 2014.

• We expect that MegaFon's market share will increase slightly from 23.2% in 2009 to 23.9% in 2014.

ARPU levels in Russia will be falling from 2010 to 2014

• We expect that MTS's ARPUs will be declining over the next five years. Our model forecasts that the industry average monthly ARPU will fall from RUB 277 in 2009 to RUB 269 in 2014.

• Our model forecasts that monthly ARPU levels at MTS, VimpelCom and MegaFon will be approximately RUB 248, RUB 312, and RUB 313 respectively in 2014.

MTS's EBITDA margin will be improving over the next several years

• We think that the Russian mobile operators will continue to enjoy high levels of profitability. We forecast that MTS's EBITDA margin (calculated as EBITDA/reported revenue) will increase from 45.5% in 2009 to 54.3% in 2014.

• We forecast that EBITDA margins at VimpelCom and MegaFon will be 48.0% and 45.3% respectively in 2014.

Companies Covered in this Country Mobile Operator Forecast

Mobile TeleSystems OJSC (MTS)

Vimpel-Communications (VimpelCom)

MegaFon OJSC

Annual Results & Forecasts for each of the above operators is covered in this report for: CY 2001-CY 2014. Quarterly Results & Forecasts are covered for: March 2003 – September 2011

PREPAID AND POSTPAID SUBSCRIBERS                         

SUBSCRIBER GROWTH (YoY)                   

SUBSCRIBERS BY OPERATOR                   

SUBSCRIBER GROWTH BY OPERATOR (YoY)                   

NET SUBSCRIBER ADDS BY OPERATOR

NET SUBSCRIBER ADDS GROWTH BY OPERATOR

MONTHLY CHURN BY OPERATOR *

POST-PAID SUBSCRIBERS BY OPERATOR *

POST-PAID SUBSCRIBER GROWTH BY OPERATOR (YoY) *

PREPAID/WHOLESALE SUBSCRIBERS BY OPERATOR

PREPAID/WHOLESALE SUBSCRIBER GROWTH BY OPERATOR

POST-PAID % OF TOTAL SUBSCRIBERS BY OPERATOR

PREPAID/WHOLESALE % OF TOTAL SUBSCRIBERS BY OPERATOR

POST-PAID NET ADDS BY OPERATOR *

POST-PAID ADDS GROWTH BY OPERATOR (YoY) *

PREPAID/WHOLESALE NET ADDS BY OPERATOR

PREPAID/WHOLESALE ADDS GROWTH BY OPERATOR

MONTHLY ARPU BY OPERATOR

MONTHLY ARPU GROWTH BY OPERATOR (YoY %)

DATA % OF SERVICE REVENUES BY OPERATOR

MONTHLY DATA ARPU BY OPERATOR

DATA ARPU GROWTH BY OPERATOR (YoY)

MONTHLY VOICE ARPU BY OPERATOR

VOICE ARPU GROWTH BY OPERATOR (YoY)

VOICE REVENUE PER MINUTE BY OPERATOR *

VOICE REVENUE PER MINUTE GROWTH BY OPERATOR (YoY) *

MOU PER SUBSCRIBER BY OPERATOR (MINUTES/MONTH) *

MOU/SUBSCRIBER GROWTH BY OPERATOR (YoY %) *

SHARE OF TOTAL SUBSCRIBERS BY OPERATOR

HHI INDEX BY SUBSCRIBER SHARE

SHARE OF NET ADDS BY OPERATOR

SHARE OF POST-PAID NET ADDS BY OPERATOR *

SHARE OF PREPAID/WHOLESALE NET ADDS BY OPERATOR

SHARE OF SERVICE REVENUE BY OPERATOR

HHI INDEX BY SERVICE REVENUE SHARE

YoY CHANGE IN REVENUE SHARE BY OPERATOR

REPORTED REVENUE BY OPERATOR (REPORTING CURRENCY)

SERVICE REVENUE BY OPERATOR (REPORTING CURRENCY)

EBITDA BY OPERATOR (REPORTING CURRENCY)

CAPEX BY OPERATOR (REPORTING CURRENCY) *

SERVICE REVENUE GROWTH BY OPERATOR (YoY)

EBITDA GROWTH BY OPERATOR (YoY)

EBITDA/REPORTED REVENUE BY OPERATOR

EBITDA/SERVICE REVENUE BY OPERATOR

EBITDA/INCREMENTAL SERVICE REVENUE BY OPERATOR

CAPEX/REPORTED REVENUE BY OPERATOR *

CAPEX/SERVICE REVENUE BY OPERATOR *

(EBITDA-CAPEX)/REPORTED REVENUE BY OPERATOR *

EBITDA MARGIN EXPANSION/CONTRACTION BY OPERATOR

REPORTED REVENUE BY OPERATOR (USD)

ARPU BY OPERATOR (USD)

DATA ARPU BY OPERATOR (USD)

VOICE REV/MINUTE BY OPERATOR (USD) *

SERVICE REVENUE BY OPERATOR (USD)

EBITDA BY OPERATOR (USD)

CAPEX BY OPERATOR (USD) *

* Not available for MegaFon OJSC