Good day everyone and welcome to this conference call to discuss VimpelCom's Second (sic) [Third] Quarter 2007 Earnings Results. Today's call is being recorded. At this time, I'd like to turn the call over to Mr. Peter Schmidt. Please go ahead sir.

Good morning, and welcome to VimpelCom's conference call to discuss the company's third quarter and nine months 2007 financial and operating results. Before getting started, I would like to remind everyone that except for historical information, statements made on this conference call may constitute forward-looking statements that involve certain risks and uncertainties. These statements relate, in part, to one, the company's strategy and development plans in Russia and the CIS; two, market growth and the competitive environment in Russia and the CIS; three, 3G developments and four, projections relating to the company's cash position, dividend payments, and capital expenditures. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including the risks detailed in one, the company's press release announcing third quarter and nine months 2007 financial and operating results; two, the company's earnings presentation entitled Presentation of 3Q 2007 Financial and Operating Results, three, the company's annual report on Form 20-F for the year ended December 31, 2006 and four, other public filings made by the company with the United States Securities and Exchange Commission, each of which are posted on the company's website at www.vimpelcom.com. In addition, the company's third quarter and nine months 2007 financial and operating results press release and Form 20-F are posted on the SEC's website at www.SEC.gov. VimpelCom disclaims any obligation to update development of these risk factors or to announce publicly any revision to any of these forward-looking statements made on this conference call or to make corrections to reflect future events or development. If you have not received a copy of the third quarter and nine month 2007 financial and operating results press release, please contact FD at 212-850-5600 and it will be forwarded to you. In addition, the press release and the earnings presentation, each of which includes a reconciliation of non-GAAP financial measures presented on this conference call can be downloaded from the VimpelCom website. At this time, I'd like to turn the call over to Alexander Izosimov, Chief Executive Officer of Vimpel-Communications. Alexander?

Thank you. Thank you and hello everyone. Thank you for joining our conference call today, and let me introduce the team participating on this call. Here with me are Elena Shmatova, our Chief Financial Officer; Nikolai Pryanishnikov, our Executive Vice President who is in charge of operations in Russia; Kent McNeley, our Chief Marketing Officer, and Alexander Boreyko, our Director for International and Investor Relations. Today's presentation will start with a general overview of our performance in the third quarter of 2007. After that, we will review each of the markets where we operate in more detail. Now let me ask Elena to present our consolidated financial results.

Thank you, Alexander. Discussing our third quarter results I would like to highlight a few key numbers. First, we are very pleased with revenue and OIBDA growth, both over 40% year-on-year. It is particularly important to note such level of growth in the third quarter, because now we can see a proper comparison not affected by changes in disconnect regime in Russia and the corresponding tariff for dollar. Second, our third quarter OIBDA margin was strong at 51.9%. It was slightly less, however, than what we saw a year ago or in the previous quarter. But if excluded $17 million of additional accruals connected with stock option as a result of high stock price volatility, our OIBDA margin would be approximately 0.9 percentage point high. This accrual was reflected in Russia, and that's impacted the Russian OIBDA margin as well. Third, it is important to mention our very strong growth in net income, more than 70% year-on-year, which was to some extent helped by ruble appreciation against U.S dollars and a slowdown in depreciation expense. Based on these operational results, we continue to see substantial improvement in our cash generation. Consequently, our free cash flow over the last 12 months is more than $1 billion. Two factors contributed to this: strong operating cash flow and relatively modest capital investment during the first nine months of this year. Although our annual CapEx profile is traditionally skewed towards the fourth quarter, we believe that at year-end our free cash flow will not differ much from what we see now. This strong cash generation gives us good ground for further development and dividends. Our balance sheet continues to be strong with net debt decreasing, since the beginning of the year by 20%. The last 12 months OIBDA interest ratio of more than 17% shows our ability to reliable service debt and looking at our debt to OIBDA ratio, one can see that we are able to more than double our debt if needed for our development purposes. Let me now turn the call back to Alexander to discuss in more detail, developments in our key markets.

Thank you, Elena. Let's start with Russia. Overall, the Russian telecom market continues to be very strong, and the competition remains fairly benign over the past several quarters. Against this backdrop, we believe our third quarter results are very good. We have posted 9% quarter-on-quarter growth of ARPU driven predominantly by continuing growth in usage. Our active subscriber base keeps increasing and in the third quarter it grew by 4%. Growth in ARPU and active subscribers led to a strong 13% sequential and 35% year-over-year increase in our revenues in Russia. Our OIBDA margin remains strong at 52.7%. As already mentioned, it would be approximately 1 percentage point higher if we exclude the non-cash effect of high volatility, and by the way, very high growth in our stock price in the third quarter. Our CapEx in Russia as a percentage of revenue continued to decline in the third quarter and is now firmly within the target corridor of 15% to 20%. We are on track with our 3G implementation schedule, and as we said before, 3G is not going to have any significant effect on this year's numbers. As usual, we will provide the 2008 CapEx guidance through the next year, until our budget is approved by the Board of Directors. Before reflecting on our developments outside Russia, I would like to draw your attention to the fact that the contribution to our business from the countries of the CIS continues to grow. In the third quarter, 29% of our year-on-year revenue increased and 31% of our OIBDA growth came from the CIS. In terms of subscriber growth, 63% of new additions came from the CIS countries. The third quarter aggregated OIBDA margin in the CIS was 47%, a significant improvement from approximately 40% recorded a year ago. I would…

Thank you. [Operator Instructions]. We'll take our first question from Sergei Arsenyev with Goldman Sachs.

Good afternoon. I'd like to ask you about your acquisition strategy. And especially given a very intense press speculation about your interest in Golden Telecom and the potential for a deal with Golden Telecom, and I appreciate that's... you can't talk about this specific transaction especially if you are in the process of it. But I'm just wondering whether you can make a generic comment on how you would rationalize acquiring a business which trades as significant premium to your own multiple and that will result in a... also pretty considerable short term and medium term earnings dilution for you.

Actually you're absolutely right. We are not commenting on the rumors because it will be very difficult to run the business otherwise. In terms of logical thinking of acquisitions which we do, they have to fit our strategy and our strategy has been clearly communicated. It includes three major growth platforms. So platform number one, that's a consolidation of the market in Russia, and to that extent, acquisition target in various mobile sectors in Russia would be of interest to us. Number two, that would be continuing to expand geographically both in the CIS and the outside of CIS. So, any country inside the CIS is of our... is of interest.

What?

Outside of the CIS we said that everything what you... south and East of Moscow with Uzbekistan [ph], then, we will go with, plus the strategy where we target major markets. And unless we can establish a presence over kind in the major markets probably wouldn't go into smaller one. Hence, the discussion would be now and which would be in line with that. The third element, third type of strategy we said that we will be exploring opportunities to enter adjacent businesses, and adjacent businesses would be either of a new nature, let's say mobile TV which doesn't exist or actually territory which well established but where we believe would have a competitive edge or we have assets which could be leveraged effectively in that area. That would include wholesale in the long distance, for example, of the capacity attacking the broadband territory both wirelessly and wireset. Executing that strategy, if we see an opportunity which allows us to either accelerate or to do it more efficiently our assets swiping game so to speak then we will pursue it. To that end, as soon as you start looking at the businesses which operate in the different domain, in a different environment to say that everything should be either at the same multiple as we are or they should be operating in the same margins, would dramatically limit the opportunity for us to enter into the new areas. So each case would be very carefully analyzed, and each case would be judged on the merit of strategic fit and delivering value to the shareholders.

And what would be the timeframe for delivering the value to the shareholder from an acquisition in the circumstances that you have described?

If we are looking at earnings dilutive acquisition from that perspective I think that in our industry normally we would be looking two years, we're about to that.

Okay. Great. Thank you very much.

Your next question comes from Alex Kuznetsov with Bear Stearns.

Good afternoon. I would like to ask you a couple of questions. First of all, your MOU expanded to 171 minutes in Russia last quarter. And it's my understanding that its price is close to the European level. What sort of upside for MOU expansion do you expect? And secondly, could you provide us with some further information on your expansion in Vietnam please? Maybe you can give us some key strategic goals you expect to achieve by expanding in Vietnam. Thank you.

Let me start with the minutes of use. We believe that there is potential for growth of minutes of use in Russia. If you compare us, our numbers with European, it's important to note that most European operator calculates mobile-to-mobile minutes as one minute, and we calculate as two minutes, which is... puts us into a bit different comparison. And it's clear that if you talk... if you take our minutes of use per active subscriber, which is right now 200 minutes, it's only 6 minutes per day, which is not too much and it's clear that with the continuous economical growth in Russia, with the subscriber base becoming more mature with our continuous traffic stimulation program, there is clear potential, and we would like to explore it and to use this potential going forward.

And as far as Vietnam and our strategic aspirations, there is concern. We prefer actually not to talk much about it and that's why we didn't include anything into our press release and into our presentation. I have mentioned it answering previous question on as an illustration to the strategic direction. The reason why we are doing that, as we mentioned before, we would be the first company ever to establish a joint venture, and actually direct strategic presence in telecom industry in some major fashion. And that became possible only after accession of Vietnam to WTO and that happened early this spring. Hence all the legislation and regulatory framework is not robust yet. So we are now in a fairly intensive and lengthy process of negotiating the structure and joint venture with the government. And our partner there will be Minister for Public Security. So the idea is to establish a joint venture, which would be a fourth GSM operator in the country. Federal base, when we look at the penetration level in Vietnam, which is currently operating around 30%, because there are also not requirements for ID in person when they are getting the numbers. So there are multiple schemes, same story as in Russia, and a lot of schemes are used actually to as a payment terms rather than real SIM cards. So that all gives us a hope that penetration game is far from really being played out, and it leaves ample room for the fourth player, market size of 85 million people suggest that. And our initial assessment was targeting 10 million subscribers, and that's where the number of 1 billion actually has been indicated in the press, and our early statements came from. Our normal level of investment is about $100 per sub, so if you take these 7 million subscribers and you are left with a $1 billion investment. Our strength has always been that we investors would grow and with initial investment of $1 billion allows us to create sufficient network with adequate coverage, but if we see that, we are competing successfully, which I wouldn't rule out, then we will of course readjust our plan, but initially we think a number of lines.

And do have any guidance in terms of ARPU?

Of course not because we haven't started an operation there. We haven't got the license balances [indiscernible]. So of course we don't guide on anything.

Thank you very much.

Our next question comes from Vladimir Postolovsky. Please go ahead with... I am sorry with UBS.

Good afternoon. A question and I am just wondering about the way you see competitive dynamics developing in Russia. Could you tell me first of all, how much revenues you derived URS acquisition? And if I am right kind of making my estimates, it looks like kind of a long term of growing faster than MTS, at least in upward terms is no longer there. I mean, any comment on that. Do you believe that the low bases actually that disappeared, or MTS management has gotten stronger, or was it just a temporary phenomenon or basically you have been very impressive over the year gaining market share away from them. Is it still possible going forward or you think the competitive dynamics have changed? Thanks.

From URS operations we got $8 million additional revenues and that's half of the quarter because acquisition was in the middle of that third quarter. As compared to competitive situation, we believe it's in general mature the cadre of old players. So, old players right now are more concentrated on revenue growth and we see clearly that interesting steps of old players. But we are trying to work harder and I... we're going to see this continuous revenue growth in Russia. We believe we are delivering that and that will be focused going forward.

All right, thanks. And can you comment... the other question on the Ukraine. How much of revenues... how much of total roaming revenues in Q3 and do you believe that this exaggerates seasonality a little bit of this stage while subscriber base still low?

I will just start that in our consolidated revenues, revenues from roaming were representing 6% of total revenues. And in Russia it was slightly high, it was approximately 8% of Russian revenues. Ukraine, we'll just check.

Curious about Ukraine in particular because obviously quarter-on-quarter ARPU dynamic was really impressive but just wondering how?

Vladimir so we usually don't give this exact number how much of roaming revenue was sitting in each of the market, in each of the countries. And you can contact our office actually. We will... probably can give you some trend in general. But I would confirm that your feeling is absolutely right and that's what we're trying to say now in press release that the volatility of the top line in Ukraine would be much more pronounced because of two reasons. Its roaming effect of people coming in to know but also a lot of Russians... because still there is no requirement for ID while acquiring SIM cards, a lot of Russian visitors coming and buying, well non-Russian as well... coming and buying SIM cards, and they use it only for the short season. And in terms of overall trends, what we can assign for the roaming in the sense would be about probably 14% of third quarter revenues.

Thank you. Our next question comes from Alex Kazbegi with Renaissance Capital. Please go ahead.

Yes, good evening. On Russia, I was just wondering I mean you had one of the slowest growth in terms of subscriber numbers in this quarter. But yes, your sales and marketing actually grew quite considerably and adds into the margin. So, if you could maybe discuss the reasons for that, and what should we expect specifically in Q4 and possibly going forward? And the other question probably is going to be on Kazakhstan. You mentioned about the competitive situation but I just wanted to also know, how do you view the current sort of economic health of the country, potential slowdown of the economy in specifically probably next year and some pressure probably for 10-K [ph] to depreciate the north, what sort of impact that could have on your numbers? Thank you.

Alex, thank you. First of all, our gross effective base was not that slow. Actually we grew from 40 million active subscribers in the second quarter to 41.8. There is URS acquisition there included but of course even without that it was more than 1 million growth of active users and if we think that all were --

Yes but organically it was one of the slowest in the last three quarters.

But it's on a --

Sorry it's... doesn't matter, let's get to the... to your answer.

Yes, first of all just to confirm if you look to dynamic of active base, it's not there. It's not the slowest. You can see it clearly on our chart, and if you see that tails of gross subs of that quarter. That was not small either. Actually our gross traditions were more than 5 million during that... during the quarter. But of course, we can see that in general, in Russian market we see there some indicators of situation as you can see that most of the market, most of the regions are in situation today. And of course the recent growth but it means the... in rural areas and that's not... that's pronounced. Most important going forward will be of course MOU and ARPU growth, that would be the main driver for further revenue growth in Russia.

Alex, I just wanted... I just checked our presentation and you can do the same on checking the numbers, increased last year between quarter three and quarter two in Russia that stocks was 800,000 and organic increase this year is 900,000. So we're probably on the same page for practical reasons.

Right, okay.

And on Kazakhstan in terms of economy, we really don't interpret this into our calculation to be honest. Right, so we don't think macroeconomic factors. And the reason being that we wouldn't do anything different as in management because we have... we experienced still a very, very strong growth, which currently outpaces our ability almost to develop the network. And therefore we will continue to put investments in Kazakhstan and develop sales further. Also it seems to me that ability of ARPU which was fairly remarkable when you have such a growth in subscriber base, we never experienced anything like that in Russia at that stage of development in the market. So having virtually flat ARPU indicates the resilience so far of our subscriber base. And yes of course the food inflation on the turmoil, particularly hitting Kazakhstan, and the currency there and so on, might have some effect, but we believe that we are very low in the food chain, if you wish to experience in any substantial potential fashion.

Okay, thank you.

Your next question comes from Azan Zaki [ph] with Merrill Lynch.

Yes, hi good afternoon. I have two questions, one on the dealer commissions in Russia. There was a big jump in Q3 versus Q2 even on a per gross add basis. Is there any thing happening here? And then the second is on what percentage of your revenue comes from non-voice services? Thanks.

First on the dealer commissions, the increase was not that high. It was a $2 difference between two quarters, and that was driven by their revenue growth, because our dealer commissions are bet as a percentage of revenues. And of course with that revenue and ARPU growth we have a slight increase.

And in terms of percentage of revenue that comes from non- voice, it was 13.6% in the last quarter, which is essentially consistent with both the previous quarter and a year ago.

Great. Thank you.

Next is William Kirby with Nevsky Capital. Please go ahead.

Yes thank you. I have two questions. Firstly your tax rate in Q3 was lower than we have seen in earlier quarters or earlier years. What's your guidance for that in the future? And secondly, what level of advertising inflation are you seeing in Russia? And are you likely to make any changes to your advertising volumes or the amount you advertise in the future?

So let me start with effective tax rate. Yes, in the third quarter effective tax rate was around 26% and in the second quarter it was around 27%. So the effect comes from the fact that the contribution of CIS countries in flexible income is becoming higher and the effective tax rate there is slightly lower. Going forward, we assume that the tax rate will be kind of in the range between 24% and maybe 29% because you see the volatility slightly increases as we adopt this FIN 48 standard because we have to make certain accruals and evaluation on potential tax exposures. And this may change quarter-on-quarter. So, in general, we think that it will be well in the range which I indicated.

And with regard to advertising inflation with the changes in the advertising law and the restrictions now on the amount of advertising that you can have per hour and per day in the networks, our expectation is that from a total market standpoint that TV will increase by 60% and potentially even a little bit more. And overall that the market will be in the 30% to 40% range when you look at the mix including out of home, and print, and radio etcetera. And in terms of our specific strategy, we are really not disclosing the specifics of what we do, but of course as different inflation rates are in different media vehicles we'll re-evaluate what's the most efficient way to deliver our messages to consumers.

All right, okay. Thank you and so what will be the effect on your SG&A line? I mean do you see that growing significantly in the future or will you be able to control that?

We have consistently said that from a marketing standpoint we would plan to spend between 4% and 5% in total marketing, and we would maintain that guidance.

Okay, thank you.

Your next question comes from Alex Wright with UBS. Please go ahead.

Hi, yes good afternoon. Two questions please. One, on Ukrainian SG&A, which has been very stable now for quarters despite the strong growth in revenue and subscribers. Could you tell us how you've achieved that impressive trend and to what extent you think that is sustainable phase? And the second question is on the Kazakh business. You've highlighted your desire to focus more on the share of revenue and high quality of the subscriber base going forward. Could you give any examples of how you intend to implement that strategy in the short term specifically? Thank you.

On Ukrainian SG&A, indeed it was lot of focus state by the management team in the country actually, the management team at the group level, we achieved that. So three factors that initial scale been achieved and we've been saying that we're now positioned well to continue to grow without putting additional people on the ground and incurring additional expenses on maintenance of the network and so on. So we benefited from sort of upfront investment if you wish. Also at this, we restrict budget control exercise in the country because when you're in red zone and price war raging around you of course... you have this like messaging [ph] towards the base. And thirdly, which was probably somewhat seasonal or political seasonality space if you could invest [ph]. It was very heavy advertising around election campaign and we just decided not to waste lot of money because it will be very difficult to get share of line. People there show, it was difficult, third quarter was particularly low in advertising price.

In terms of Kazakhstan and addressing a high quality subscriber number one, the practices that we've been using to both partner with dealers and to acquire to our own offices we think it's been effective in delivering that for us. Some practices that have been done not only in Kazakhstan but in other markets, where SIM cards are given away for free or virtually for free, we will avoid those as we do in Russia which has helped the network or the subscriber base strong. And then as we have noted in the press release and in presentation, we are focused on building the MOU of our customers, trying to build the habit of higher usage and then over time based on all of our testing and experience specifically to expand in ARPU.

Thanks. Can I just follow up from the Ukraine in terms of the outlook, I mean do you feel that you're growing to the extent now that the SG&A should start to grow again? Or do you think there is still more scale gains that you make in the coming quarters?

Well I mean clearly that current level of SG&A in comparison to revenue is way too high. And of course it will continue to decline. So even if we see increase in SG&A, it will be much lower than the top-line growth.

Sure, okay, thanks.

Next is Andrey Bogdanov with Troika.

Good evening. I have a few questions. One was Russia, can you give some generic guideline as far as the sort of usage versus ARPU performance is concerned? I noticed that you have a slab [indiscernible] during the third quarter which generated a very good result. So do you think that such impressive performance of MOU will continue with sort of flattish or sort of... or relatively stable pricing per minute which in other words which result in ARPU going forward? Second question with regards to Ukraine, am I right to assume that your cooperation with Golden Telecom can actually help you in getting the market share in Ukraine? As far as I understand the Opera Telecom started 3G business in early November in six major towns and outside of them, sort of feel to be Opera Telecom new customers will be effectively using your service in GSM outside of those CIS. If that's right assumption, what impact do you see on your business from that cooperation? Thank you

On Russian MOU, in our view development, I will say that in the second and third quarter we had the special summer promotion, which was driving traditional minutes of use at low price on that traffic. This promotion we finished on the first of September and in the fourth quarter, they are slight... it's... the churn time will be slightly less. Minutes of use have increased tariffs, if we take this particular promotion. If we talk about overall seasonal trends of course I should say that in general MOU in the next second and third quarter summer months are higher and in the first and the fourth quarters are lower. And just overall impression on Russian market that we don't need further tariff reduction to keep growing MOU and revenue. That's why we will try to be as consolidate as possible in our pricing and not to allow prices to go down.

And before I answer the question on Ukraine, I would like to correct myself on my previous answer that I might have sound a bit too optimistic on the fourth quarter because what my answer related to the next year, the fact that we see the ratio going down. As fourth quarter usually, more intensive in terms of communication and that was spent on advertising and promotion, and top of it the top line will be affected by roaming not being there. And seasonal use is not being there. That ratio of G&A growing slower and significantly slower than the top line might not hold for the fourth quarter. So, I would like to qualify my answer that for the next year projection. As far as our relationship with Opera telecom, this is just a test and we are trying to understand whether we can reach anything in the audience effect there. But so far we are not purchasing in whatever check [ph] for effect of that operations into our operational projection.

Thank you. Our next question comes from Anastasia Obukhova with Deutsche Bank.

Good evening. Congratulations, and good results. The question is about the roaming revenues. Can you please split them between your own one and the guest ones and the second question can you please provide the percentage of validity services into ARPU? Thank you.

In our roaming revenues 30% came from guests and 70% from our subscribers who are traveling. And as percentage of validity, there is always percent that it was motioned 13.6% of service revenues came from validity services.

Thank you.

Except in Russia we just noted in Kazakhstan it's very similar percentage.

Thank you.

Thank you. Our next question comes from Nadezhda Golubeva with Aton.

Good afternoon. My first question is about your cost the inflation of adjacent media inflation in Russia, do you believe there are certain areas for cost cutting which could mitigate the input margin? And overall do you believe your current margin level is more or less in favorable next year? Secondly, could you possibly update me on the promotions in fourth quarter already made and probably planned? And do you see there is a risk of some of pricing pressure in fourth quarter and also possibly what's your feeling on 2008 whether there is a risk of inevitable price competition? And third question if I may do you believe for we can see self exploration of usage growth in Russia next year as newly joined subscribers talk more or do you think the growth rate I mean the growth rates are ticking down? Thank you.

Okay. Let me start from costs. Of course it will be some costs which will have some negative effect and of course it will have media inflation, we've have salary growth in Russia and some other lines. But saying that we are trying to be as efficient as possible. As an example, we launched OpEx efficiency program in VimpelCom where we looked to all items and we looked for new savings. And it actually was very successful investigation. We identified number of projects which right now are delivering significant savings this year and then bringing even more results next year. This way, it will be of course not easy for the development of the business but we will try to do our best then to be as efficient as possible. For the promotions, I can say that during the fourth quarter, we are not making any serious price promotion. Actually we already launched our New Year campaign which is an interesting gift for children and their parents. And that's goods and yield products but without reduction in interest. And that would be our strategy for the next year as well, stable tariffs, not aggressive behavior in terms of tariffs but more differentiated marketing and innovative solutions.

And just to add one other thing that, so far in the fourth quarter we've launched a couple of other promotions that we think are important. One is promotion to fill our MMS revenue and try and drive penetration in MMS. And another one is with discounts on long distance, we've changed our tariff structure for long distance both air city and international long distance.

Thank you. Our next question comes from Will Milner with Arete Research.

Thanks. Just sort of links back to a couple of the questions already asked on inflation but I mean, you got inflation running I think about 11% in Russia and obviously the sort of advertising inflation is running a lot higher than that. Against that backdrop it sort of seems that ruble pricing in Russia, it fell 13% in this quarter year-over-year. And I just wonder you mentioned that you hope you can stabilize pricing going forward, but is there a reason why pricing year-over-year is falling? I mean obviously that the CPP price rise is an annualized now. But it does seem that the prices are falling quite sharply against inflation that's going up quite fast in Russia. I wonder if you can comment on that.

Yes. We expect to finish the year at roughly to same APPM that we started the year. We have had an impact in pricing that we have talked about last quarter's call and this quarter which is specifically driven towards generating higher usage, generating ARPU for our existing customers to try and help build a habit in Russia or improve the habit in Russia. But in general we expect the beginning and the end point for APPM to be very consistent through the beginning and the end of the year.

Yes, I guess I was more thinking looking out into 2008.

Overall I would just give a comment on inflation from I mean how you read it. I mean it's easy to... so the intention is keep prices flat and if we're managed to do that, it will be a great achievement. Because if you look at what's happening in the country, you'll also how political connotation here. There are moves to fix prices in the shops on basic foodstuff and so on. And don't forget it when you are looking, and I have always been saying that anyhow EBITDA margin over 50%, you're asking for somebody to come and settle your revenue, and if in the backdrop of inflation and kind of needs in the general population about inflation and pressure in the foodstuff we thought raising prices. And with our current level of margin it will be very, very hard and very risky political move. So, we are also feeling a bit constrained by this. If we see opportunity rises either from the regulatory standpoint that general tariffs being great or interconnecting rates then of course we will follow on that opportunity.

I guess can I have just one follow-up? Just I mean looking at the level of usage increase that you have seen I mean it looks as though you are carrying around 50% more minutes over the network in Russia than you were last year. I guess also looking at that I think you gave guidance of $1 billion of CapEx I mean Russia for this year. I am not sure it has changed or not. But that seems to only be right at the low end of your 15% to 20% range of CapEx to sales. I mean it does seem we feel as though CapEx will need to increase quite sharply in 2008 over the extra usage on the network is that a fair understanding of what's going to happen?

So if both CapEx overall in Russia so we are still talking about this target of 15% to 20%. And we will try to be within this corridor. In during this year of course the usage and growth of traffic and revenues was higher than we expected. That's why we can finish the year with slightly higher numbers than it was announced earlier. But the difference would be not so big.

But on the other hand it would be fair to say that you always have in our business compromised between the quality and capacity. And this year we will move towards the high capacity utilization at the expense of quality. So we will have to pay back that debt at a later stage. So you can say that it's a little bit of a delay in the investment. Part of it will be offset of course with our investment in 3G when we cut migrating traffic away from 2G into 3G. And to that end actually all economic equation about 3G is more beneficial in our case when compared to Western Incubators [ph] for example.

Yes and just to refresh my memory you haven't given any guidance so far in '08 on 3G CapEx, have you or any 3G CapEx spend, no?

Our budget needs to be approved by the Board and on after that we will be in a position to give guidance.

Okay great.

We'll go next to Bill North [ph] with Marvin & Palmer Associates. Please go ahead.

Yes the immediate release that I read this morning didn't show the consolidated depreciation charge or the pre-tax income, could you just give that over phone and to the thousands of donors?

I'm sorry, consolidated depreciation?

Yes.

Actually it's in the attachment B to our press release the P&L statements and there is line depreciation and amortization. It's consolidated numbers so for the third quarter it was $285.5 million and amortization $55.6 million.

And then how about the pre-tax income?

Income before income tax third quarter was $648.6 million.

$648.6 million and then minority interest in any net income?

Minority interest was 19.5 and income taxes spent $171.1 million. And so our net income before was effect of changes in accounting principles is $458 million.

Okay. Thank you very much.

Thank you. Next, we'll go to Richard Vashellion [ph] with UBS.

Good afternoon everyone. Just a quick question, couple of weeks ago, there was full press coverage citing VimpelCom borrowing up to $3.5 billion for potential M&A. But I haven't seen company either confirming or declining this. Can you please comment? Thank you.

Well we usually don't comment on the rumors and that case wouldn't be an exception.

Okay. Thanks.

Next is Lutnilya [ph] Khan with Citigroup.

Yes hello. How much room do you think you have in your current trade rates in terms of potential debt increase?

Lookingon our research we saw quite strong, we think that we at least can double our debt levels. So, currently the level is approximately $2.7 billion and so we can go even above that level and still be within quite good shape in terms of ratios.

You mean credit ratings?

I am sorry.

You mean credit ratings.

Credit ratings, yes.

So, you can double even potentially more than double your debt level, and you are confident that you will be able to keep your credit ratings. Okay and in terms of your informal or formal debt policy, are you... do you think there might be changes to that? I mean given that you are running very highly testing in this operation and free cash flow is rising.

Sorry, we couldn't hear you clearly, could you please repeat your question?

Yes, I would like... if you could discuss your informal target, leverage target policy, given that operations are highly cash sensitive and free cash flow is rising. Do you think you might change it?

Well actually we are always saying that solid level of comfort would be on the level of debt rate... debt around two. So currently of course we are way below that level. So that's why I'm saying that we have kind of a lot of room for additional debt. In general, we are seeing that... feel debt towards around two weeks quite good projects.

And if there are interests in acquisition targets would you be looking to finance this primarily with debt given your debt capacity or it might be combination that you could see or some alternative range --

That'sa question which is very specific to a situation, and also it would be probably limited not from the fact... sorry, I look at strange would be not from balance sheet capacity and therefore how much cash we can take on top of equity or something like that but rather market capacity. Because you can see that our balance sheet capacity is quite large, and to borrow that in one goal and on top of it to place equity would be rather difficult. So, I mean it is very difficult to answer this question specifically. It will depend on the situation in a given marketing condition.

Okay. And I missed some part of the call, did you discuss the CapEx plans for '08?

No, we haven't given any guidance yet. We are just saying that we will be targeting our corridor, long term corridor between 15% and 20% to revenue and more specific number in Russia and more specific number for the group and broken down to each country will give out, it's been approved by our Board, later this year and we thought we will let market know early next year.

Thank you. We have another question from Alex Kuznetsov with Bear Stearns.

Hello again, I have a follow-up question. First of all I tried to estimate size of the third CapEx operative [ph] based on your reported data and the data suggest that mobile telecom services had approximately 600,000 subscribers at the end of September. Could you comment whether the estimate is correct please? And my second question is, regarding the new license that's allocated in Russia, as we know, one company called Summa Telecom accumulated quite a sizeable license portfolio and Tele2, one of your aggressive competitors has mentioned as well in terms of license coverage, could you tell us whether you expect to differ that is coming from all those two new operators? Thank you.

Let me start with this second question. We really believe that from the other operations like Tele2 in particular or other players, there's some threats on the market especially on price because they always compete on price. Although, we believe that this threat and risk is limited because it's... first of all it takes time to deal with them across the countries, they are different, you need to deal not only base stations but transport networks. So, it takes time, takes capital, and it's probably too late to achieve just good results to have a good business model in order to have huge investment and huge returns. That's why there is a risk, there is a threat but we believe it's limited. And that's for a number of subscribers. If you clarify with the question it'll be helpful. We've just missed it a bit.

Okay. So based on your market share and number of subscribers I estimated there the number of market subscribers and having subtracted number of your subscribers and number of subscribers of your major competitors, you came to an estimated subscriber base of mobile telecommunication services of about 600,000. But of course there might be some rounding so, maybe you can comment on your estimates, how successful is your tough competitor in Kazakhstan, and what is their likely strategy in the future?

Alex, sorry which market are you talking about?

Kazakhstan.

Kazakhstan... they don't release that number so we have some estimates but frankly it's not substantial and we're really not prepared to comment on it.

Thank you very much.

In terms of strategy, if you talk about strategy in Kazakhstan how we're dealing with different competitors, as we said that we are beginning... we have learned a lesson, a hard lesson in Russia when all the competitors have been pulled down into very hard fight for subscribers, which were actually not very productive, because the fight wasn't productive, and subscribers were not productive. And therefore everybody later on had to go to clean up those as gradually shift away from that type of approach to the market towards more thoughtful, and trying to recruit subscribers, which would bring value overall. And actually we believe it's time in Kazakhstan start implementing this. Don't get me wrong. It will be next year, certainly will be a year of growth in subscriber base and quite a significant one. But sorry before we are talking about anything goes, now we will be more selectively going forward and we will try to discern actually at the entry point whom we take, whom we don't take, and investments that's where we're changing our approach. This threat it created certainly will continue of course gaining market share and probably will take away both from us and from our primary competitor K-Cell. So our objective would be absolutely not disproportionately higher, and actually make the competitors to lose more than us, but that's more or less we take it as a given and we are not going to engage in heavy price retaliation trying to defend that range of productive part of our subscriber base, which is more likely to migrate to a new competitor.

Thank you. We'll take our final question from Nadezhda Golubeva with Aton.

Yes sorry, I wanted to come back to my third question, which was not answered. The third question was about usage growth. I asked whether it seemed that we can see acceleration on the usage growth, as the newly joined subscribers start talking more or do you think that the growth rates are picking at the moment? And also if possible could you please update us on the 3G, because we have felt about problems with Spectrum in North Core. Do you think this could affect your plans on the launch of 3G? Thanks.

Your information is absolutely correct. Moscow has the more difficult situation in a country and that relates to the defense systems, which are difficult to coin this word. Because in Russia actually we have frequencies on the secondary nature, so to speak, and everywhere we are going through a lengthy and elaborate process of creating a co-existence snap of military devices and our operations. In Moscow 3G, it will be difficult for all of the operators. We created a joint team and we are trying together with the military structures, and the regulator, and among ourselves to find a solution. How long will it take, we don't currently know. We are expecting answers from them that again unfortunately shed more light. Will it affect our plan in Moscow? Yes, but the rest of the country will proceed according to plan, and we will start rolling out the network early next year. And in terms of usage, we will expect some increase ongoing... increase in usage as we said before that we see on average that 10% for the same subscriber, 10% or their advance will increase in usage. And on a natural marketing accumulated basis, not price stimulated basis, and we probably don't see any reasons why it should disappear now. So we'll see some gradual increase. The $100 million question, or a $1 billion question I'm not sure about the price tag, where it's going to stop and here I wouldn't dare to speculate because we've struggled to find a relevant benchmark, and say where it should stop at the American level or the Russia level or at German level, and therefore the management has positioned us, we have to be capable of accommodating all the growth, which comes our way within a given year within our budget and have that stability. And that's what we are trying to implement.

[Indiscernible] want to clarify that you're talking about same things. So I understand that the usage growth likely... when I specifically asked about the growth rate, so now, or we see acceleration of the user growth. Do you think that we can see total acceleration in the growth rate, so you're seeing that the growth will proceed at same place where we sit now? Thank you.

Youshould be careful taking one quarter in particularly with the high seasonality and which is loaded with promotional accumulated traffic to take as a guidance going forward. Clearly that problem was exceptional because we put quite a bit of effort to stimulate usage on a try and buy basis where we provide people with services of certain tariffs and opportunities, just try our services at the lower entry cost and then hoping that when we come out of it that will... they will stay with us. They will, they won't right and therefore in Russia... both in Russia and in Kazakhstan the surge of MOUs in the third quarter shouldn't be taking as that will continue. Of course it will subside and that's the intention of ours essentially to come out those promotions and as a matter of fact we have already terminated most of them.

And gentlemen it appears we do have further questions, next we will go Olga Bystrova with Credit Suisse.

Well hi, good evening. I sort of, I think I got disconnected, so I was pushed back to the line. But if my questions were answered, I would appreciate if you would comment again. The first one is if you look at your investment priorities currently, you mentioned a few over IG, and let's say it's a expansion, in Russia expansion outside of Russia and maybe adjacent businesses. How would you rank them in terms of priorities and probability of those happenings? And what I'm interested in is let's say you have... you are looking at Asian clusters. You might be potentially looking at the Ukraine, or you might not if you can comment on that a little detail and also speculations on Golden as well ongoing. How would you rank those? And my second question is it could have been answered over IG, but if you look at the seasonality in the fourth quarter this year in Russia now and then last year, let's say do you see a very similar seasonality patterns or maybe slightly better or slightly worse, etcetera? Thank you very much.

As far as our priority is going I can only give you priorities in terms of what we would like to have and in terms of what will happen and now unfortunately in our part of the world, it is not very predictable. And a lot of things depend on the sort of situations and the targets coming off. In principle, I would believe that the most productive in terms of returns and therefore would be highest on their priority and it would be acquisition inside Russia, easiest to execute, lowest risk and probably highest return from that perspective. Then comes at CIS countries, again from the ease of use execution. However, all of these we have very limited long term impact and therefore as a most desirable of course would be entering into new countries where we will create long term growth perspective. So that I would put probably at the top. As far as adjacent businesses are concerned, that would be number three on our priority list, and the reason to go into that would be to bring those SKUs capabilities and scale in house in order to succeed the endorsement per se. In terms of what's going to happen and when going to happen, that would be pure speculation on my side and I don't want to engage to that.

On this quarter actually, I can say that on the one hand of course is less traffic seasonally because there is no or this summer that is season traffic and less roaming. But on other hands those trends which you see on Russian markets when people can afford using mobile phones, I think continues. And overall I think that's overall positive impression on the market and of course we feel in the fourth quarter that's why to announce full trends would be appropriate, soon when we announce the fourth quarter results.

Okay, maybe a clarification question. Let's say your financial capacity is also limited right, in ways cost resource. And this for example you have an opportunity for an investment project which is maybe of priority let's sat at the end of your priority list, would you still do it? Or would you continue to look for higher priority or high impact opportunities now while you still have the capacity to do so, let's say?

This is as you say, we cross that abridgement again there and so far all of our... let me put in this way. We haven't come across that situation yet. And all of our pipeline which we are working on can't be accommodated with our balance sheet.

Okay, great thank you very much. And sorry but clarification on the second question, when I was asking as if you look at the first quarter this year and fourth quarter last year, do you see very similar seasonalities or dissimilar seasonalities slightly better or slightly worse? I was comparing fourth quarter last year with fourth quarter this year.

Olga but there... it's not seen yet, so it's a... we are just in November. Yes, so it's difficult to comment on full quarter.

But I think that's between very similar and dissimilar we can say probably similar,

More similar.

Okay, great. Thank you very much.

Next we go to Alex Kazbegi with Renaissance Capital.

Yes, hi again. I just want to ask on the... I mean we discussed quite a lot on the 3G and I understand you cannot give us the numbers. But just in terms of the benchmarks and related to CapEx as well given that you plan to start spending already in the beginning of the year. When do you expect actually if you give us the guidance on the next year CapEx as the first one? Secondly I just noticed that you had recorded about $26 million of ForEx gain and you have about $2.7 billion in debt and if I by no means want to compare you and MTS but they seem to have a very similar amount in debt and they had about three times larger ForEx gain. So I was just wondering what is your composition of your debt and why was it so low if I may. And the last one also I looked at the depreciation and it fell actually in Kazakhstan and Armenia and just a clarification there. I mean was it something you wrote off in terms of the equipment that's just one off or it's going to continue actually some more write-offs coming through in the coming quarters? Thank you

CapEx, our intention is to let you know first, right after the holidays probably in January and not so good before Christmas but...

So we are not waiting for the next... okay.

But in principle I can already say now that it wouldn't be far-off or everything we have been saying before. We can give you an indication of 350 to 400, few license requirements in Russia for 3G so that will be probably...

I am sorry I couldn't hear you very well which number did you mention 350 right?

350 to 400 that will be group profile.

Okay wonderful.

And talking about ForEx gain, which we will have less than MTS I do not know what the reason for MTS of course but for us I can say that practically more than 95% of our debt is in U.S. dollars, but we are hedging all our exchange risk at least to the extent we can get that hedging arrangements in Russia. And you know that's normally it cannot be longer than one year. So, we are hedging all sorts of, I would say debt and to this extent do not see that fluctuations to a larger extent.

Yes that could be the reason, okay.

Thelast question... what was... another question?

I just mentioned I noticed that depreciation fell in because of that quarter-on-quarter, in no meaning... not meaningful numbers maybe but just to know whether this is something which is going to happen also in the future or this was just one off, sort of write-off of the equipment there?

Actually it was connected with the kind of discontinuation of depreciation of old billing system because we replaced them with the new billing systems. And so what was shown in the second quarter was related to that depreciation of old stuff.

So, it's not going to be happening again in the future.

No, hopefully not.

Yes. Okay.

Itwill not pertain to billing once more.

Thank you. Our final question comes from Vladimir Postolovsky with UBS.

Hello again. I just wanted to ask again a little bit about Kazakhstan. I am looking at the dynamics in pricing or its appropriate second or third quarter I know when pricing is on depression. And then looking at two different numbers, they seem to be regaining a little bit market share or quite a bit market share of subscribers, the third interim came in. So my question to you is how tough is it getting? Now you are saying that you would like to stabilize the market in exactly the way it happened in Russia about a year ago. But I think that requires cooperation from other players and then Russia may be a little bit likely that MTS new management was in a position to review that strategy at the time. Do you think you will be able to achieve the same cooperation with the players in Kazakhstan? And if you could just talk a little bit competitive dynamics at the moment because looking at the numbers it looks quite tough.

Well it's... let's say that it still... it's going to be correcting, in terms of customers compared to what we've experienced in most of the Russian regions where we have really strong players competing on four, five player basis. Here we still believe is a fairly comfortable environment. And in terms of pricing, really pricing competition, yes, Tele2, they have shown good gains in subscribers. We don't fully see in the retail data, so that's probably... might be related to something they did with the recovery of their subscriber base related to the legislation changes and regulation changes during last year. However, what we do see that their ARPU went down and their actually revenue growth was slower than ours. And that reflects, that actually be giving away SIM card business, no surprise to anybody, because we saw it in Ukraine, we saw it in Russia, doesn't bring you much in terms of revenue. And that's why we are not engaging in it, and that's why we believe it's not that productivity. One can say that look guys your ARPUs are slapped but revenues were up, price per minute is down, so you wouldn't have a price competition. And our intention was not to come into the low prices again like we did in Russia, but actually to stimulate usage as we set which was half that of Russia. And to that extent, we drove on weekends and at night conversation at the lower prices. And we're already out of it. So we are coming back in terms of price. We don't see very aggressive price moves from K-Cell. Yes the third of the rate is at discount and yes they will take some market share. But on the other hand, if we look at situation not against... comparing us…

Thanks very much.

Ladies and gentlemen...

All right.

That does conclude our question-and-answer session. I would like to turn the call over to our management team for any closing or additional remarks.

Well, what's left for me is just to say thank you for your attention and your patience for being with us. And if you have more questions, please do not hesitate to contact us and we will be happy to give you all necessary clarifications and explanations. And with this, have a nice day and good bye.

This does conclude today's conference. We appreciate your participation. You may now disconnect.