NEW YORK-Russia’s largest cellular carrier, Vimpel-Communications, plans to go public with an international offering that will make it the first Russian company listed on the New York Stock Exchange.
Through an underwriting syndicate led by Donaldson, Lufkin & Jenrette Securities Corp., New York, Vimpel-Com has registered to sell 5.24 million American Depository Shares, of which 3.8 million will be offered in the United States and Canada and the rest will be offered abroad.
The sale price is estimated between $15.75 and $18.75 per ADS. Each ADS will represent three-quarters of a share of common stock.
FGI Wireless Ltd., an Illinois corporation, is offering 1.77 million of the 5.24 million ADS that are part of the planned sale. Vimpel-Com’s board of directors includes two FGI directors, Augie K. Fabella II and Michael Buinyckyi. FGI will keep proceeds from the sale of its shares.
Upon completion of the IPO, Dmitri Zimin, Vimpel-Com’s president and chief executive officer, will have effective control of 58.8 percent of the votes eligible to be cast by shareholders. Part of the proceeds of the initial public offering will be used to repay a loan of $18 million from the Moscow Bank for Reconstruction and Development. Vimpel-Com used the bank loan money last month to buy an 88 percent interest in KBI, a company indirectly controlled by Zimin that holds the only license to provide personal communications services in Moscow and its environs.
The PCS license permits operation of a network using the DCS-1800 standard. The PCS system will permit subscribers to roam in countries where Global System for Mobile communications or DCS-1800 systems are in operation. Vimpel-Com plans to use $7 million of its IPO to help finance KBI’s PCS operations. The remaining proceeds will be used for working capital and general corporate purposes, including line capacity purchase and fiber optic transmission network expansion.
In June 1994, Vimpel-Com began commercial operation of the only 800 MHz Digital Advanced Mobile Phone System cellular service in the Moscow License Area. The D-AMPS network employs Time Division Multiple Access technology.
The company, which markets its services under the Bee Line brand name, had 45,000 subscribers as of Sept. 30. D-AMPS customers, using handsets supplied by L.M. Ericsson, can roam on other AMPS networks in 34 Russian regions and in six neighboring countries that are part of the former Soviet Union. Using GSM handsets with temporary telephone numbers, Bee Line customers can access about 35 GSM networks in Europe, Asia, the Middle East and Africa.
The company reported net income for the first six months of 1996 totaled $18.8 million, more than double the net income for the same period in 1995.
According to documents filed with the Securities and Exchange Commission, Vimpel-Com’s average monthly usage per subscriber was 480 minutes last year, compared to 145 minutes of usage for an average American cellular company subscriber.
Similarly, average revenue per subscriber during the same period was $374, compared to an average of $52 in the United States.
Vimpel-Com, which also holds AMPS licenses in six other regions of Russia, sees a business opportunity for wireless as an alternative to wireline service. At year-end 1995, 9.7 million people were on a waiting list for telephone line installation.