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Dear Louis, what are your feelings on Vimpel Communications (VIP)? Do you think it will rebound or should we cut it loose?

Vimpel Communications (VIP) is profiting from the newly-acquired Golden Telecom unit, which said that its net profit for 2007 rose 78%, to $152.6 million from $85.5 million a year earlier. Revenues rose 51% to $1.29 billion, as business and corporate services (Golden’s speciality) generated an additional $231 million, to total $718 million. The company also said that it had 509,000 contracts with business and corporate subscribers at the end of 2007 – twice as many as at the end of 2006. Revenue from consumer internet services also rose 58% to $77.1 million, in part due to acquiring broadband operator Corbina Telecom last May.   

There has been some recent volatility in the company’s share price due to the largest two shareholders of Vimpel not agreeing on the purchase of "Ukrainian Radio Systems" by VimpelCom. Altimo Group which owns approximately 44% of the voting shares of VimpelCom and Telenor which owns approximately 30% of the voting shares of VimpelCom have been in litigation and arbitration globally over a difference in VimpelCom's strategic expansion. Telenor believes that the purchase by VimpelCom of Ukrainian Radio Systems was overpriced and since its acquisition has detracted from the performance of VimpelCom. Alfa Group is countering that due to Telenor's lack of support of VimpelCom's expansion plans into the Ukraine it has set VimpleCom back a year.

 However, as with all of my Buy List stocks, as long as they remain in the top 10% in our proprietary quantitative model, they will remain on the Buy List.

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