Keep It Simple: Buy Vimpel

Vimpel-Communications (VIP - Analyst Report) is the second largest cellular carrier in Russia. Robust subscriber growth and acquisitions continue to drive revenue and earnings momentum. Growth prospects in Eastern Europe for wireless services remain firm and support our forecast for strengthening financials.

We continue to be intrigued by VimpelCom’s success with increasing sales on a recurring basis and maintaining strong operating margin. Its recent acquisition of Golden Telecom is also expected to facilitate telecom expansion outside its core consumer cellular offering and provide significant growth momentum for the remainder of 2008. We reiterate our Buy rating based on financial metric estimates which we believe are attainable.

VimpelCom is trading at 15.3x our 2008 EPADS estimates. This is at a premium to its major competitor, Mobile TeleSystems (MBT - Analyst Report) and the S&P 500. We set a six-month price target of $36.50, which is based on 18x our 2008 EPADS estimate.

Anindya Barman contributed to this report.

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