Global players in Russian telecoms look to longer term

The current financial crisis has prompted speculation about the future of consolidation in Russia's mobile telecommunications market, with several local operators recently acquiring retail outlets and internet companies.

Foreign investors in Russia's mobile telecommunications market have their sights set long-term. Norway's Telenor is a shareholder in Vimpelcom – operator of the Beeline brand. Now, according to Kjell Morten Johnsen, Head of Telenor Russia, it's looking beyond Russia, at other telecoms assets across the CIS – and beyond.

“We are happy that we have been able to put that together in one entity that is strong, that has the opportunity and ability to look beyond not only the Russian border, but also the CIS borders that were sort of seen as the limit in the past.”

The Big Three mobile operators, MTS, Beeline, and Megafon – with 34.4%, 25.4% and 23% of the market, respectively, in 2008 – all work on the federal level.

Additionally, the all have assets abroad – namely in CIS countries. Tele2 is the fourth largest mobile operator in Russia in terms of subscribers, and the largest among regional players – with 10.4 million customers.

Donna Cordner, President of Tele2 Russia says the Swedish-based holding has a growth strategy that utilises its regional status – currently covering 17 regions, and plans to develop 18 more GSM networks over the next two years.

“Always when you're expanding significantly…that's a big challenge. Making sure you're hiring people and you can expand as rapidly as you want. I think for 2009, that's one of our big challenges.”

Russia's telecom market has probably reached saturation in terms of customers. But there is still work to be done on developing the country's network – especially in the regions and with 3G services.