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. Last Updated: 07/27/2016

Vimpelcom Buys Up Orensot for $14M

No. 2 cellular operator Vimpelcom announced Monday that it had bought a 78 percent stake in an Orenburg provider for $14 million, marking its entry into the Urals cellular super-region.

"The purchase of a controlling stake in Orensot is part of our strategy of building a unified national GSM network," said Alexei Mishchenko, Vimpelcom's vice president responsible for regional expansion. "We are covering blank spots on the map."

Mishchenko said that Vimpelcom is negotiating with the Orenburg regional administration to buy a further 21 percent of Orensot.

Vimpelcom does not hold a license for the entire Urals super-region, however.

Orensot is Vimpelcom's second regional acquisition. Vimpelcom bought Novosibirsk operator Sotovaya Kompaniya earlier this year. Vimpelcom is known for starting up regional branches rather than buying smaller operators.

Vimpelcom-R, Vimpelcom's regional subsidiary, bought the shares in Orensot from a group of investment companies -- Melon, Detstvo, Yermak, Orenburg Financial Co. and Austria's ABC Konti.

Orensot has a 66 percent share of the local market, Vimpelcom said. The company operates GSM and DAMPS networks and has some 66,000 subscribers in the Orenburg region, more than 46,000 of them in the GSM standard.

The region has a population of 2.2 million and cellular penetration of only 4.5 percent, Vimpelcom said.

Vimpelcom plans to fully integrate Orensot into its regional network by the end of the year and install 19 more base stations, Mishchenko said.

Vimpelcom had 3.32 million subscribers at the end of June, 460,000 of those outside Moscow, according to the J'son & Partners consulting company.

The company lags behind No. 1 cellular operator Mobile TeleSystems in regional expansion. MTS had 4.37 million subscribers at the end of June, 2 million of those in the regions, according to J'son & Partners.

Vimpelcom holds licenses for Moscow and the central, North Caucasus, Volga and Siberia super-regions, which closely resemble the country's seven federal districts.

The company plans to roll out networks in all of the 50 regions for which it already has licenses by the end of December.