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. Last Updated: 07/27/2016

Vimpelcom Reins In Regional Subsidiary

No. 2 cellular operator Vimpelcom is reining in its regional arm, Vimpelcom-R, making management of the separate company subordinate to Vimpelcom.

Vimpelcom's board of directors decided at a meeting last week that it could do a better job than Vimpelcom-R at expanding business in the regions. Alexei Mishchenko, formerly general director of Vimpelcom-R, has been reappointed deputy general director of Vimpelcom's regional business.

Valery Goldin, Vimpelcom vice president for international relations, said company research showed that Vimpelcom could do a better job attracting customers outside of Moscow.

"It would be better to use the synergies that exist in both companies to better coordinate the activities of both companies," he said. "Vimpelcom has a lot of achievements, and this experience will be more effectively used with the new structure of management that has been approved."

Vimpelcom is ahead of its main rival, Mobile TeleSystems, by number of clients in Moscow. The No. 2 operator has a total of 2.11 million subscribers in the capital, according to one estimate, while MTS has 2.06 million.

Yet Vimpelcom's performance has been less impressive in the regions. The company claimed just 110,000 subscribers outside Moscow at the end of 2001, while MTS says it has 700,000 regional subscribers.

Goldin said the change in management would not affect Vimpelcom's relations with its strategic investors, Alfa Eko and Telenor, each of which holds a 25 percent stake in the company.

Analysts said the management change was logical.

"When the market is going through such a dynamic development, it makes sense to concentrate all the management decisions in one place," said Andrei Bogdanov, an analyst at Alfa Bank, who added that Vimpelcom's management has proven itself in the Moscow market.

"I think the decision is aimed at translating the Moscow success into the regions," he said.