Monthly Archives: February 2012

Rostelecom Completes NTK Takeover

Having a wired “last mile” to reach the country’s largest broadband market is part of Rostelecom’s strategy.

With Rostelecom planning to take full ownership of Moscow broadband operator National Telecommunications, the state-owned telecoms giant is poised to get a foothold in the capital’s crowded market for fixed-line Internet and paid television services.

Rostelecom’s board of directors was expected to approve at a Monday meeting the terms for buying 28.2 percent of National Telecommunications, or NTK, Vedomosti reported Monday. It will pay 13 billion rubles ($446 million) for that stake, the business daily said.

A 71.8 percent share of NTK was bought by Rostelecom in February 2011 from National Media Group,Surgutneftegazand Severstal majority shareholder Alexei Mordashov for 27.9 billion rubles, according to Vedomosti. The remaining stake is being bought from Gazprombank.

The acquisition of the Internet and paid-TV provider could help Rostelecom gain a good position in the capital’s retail telecoms market.

In the market for broadband Internet in Moscow, MTS has the biggest share, holding 25 percent, according to iKS-Consulting. Next is Akado with 19 percent, followed by VimpelCom with 18 percent and MegaFon with 9 percent. According to these figures, which are preliminary estimates for the end of 2011, Yota-brand operator Skartel and NTK each have 8 percent.

NTK, however, was the fastest-growing operator in Moscow last year, iKS-Consulting analyst Mikhail Bodyagin said.

In fact, it posted an eye-popping 90 percent increase in subscribers for its broadband Internet service in 2011 compared with the previous year, NTK general director Sergei Kalugin told Vedomosti.

The deal between NTK and Rostelecom “makes it possible to preserve NTK’s level of service quality, as well as [NTK's] high level of growth,” Bodyagin said.

He added that “the possible merger of NTK and Central Telegraph within Rostelecom could strengthen the position of the company in the Moscow market even further.” About 40 percent of Central Telegraph is owned by Svyazinvest, which holds roughly the same percentage of Rostelecom, according to Vedomosti’s company database.

In May, when Rostelecom’s board of directors approved a corporate development plan for 2011-15, Rostelecom president Alexander Provotorov said in a press release that “innovative projects and new services” would lead to ”the company’s transformation into a national service provider.”

http://www.themoscowtimes.com/business/article/rostelecom-completes-ntk-takeover/453755.html

News from the Moscow Times

California’s ‘Big TED’ offered live in Moscow

TED 2012

From Feb. 28 to Mar. 2, each of the 12 sessions of the legendary TED conference held annually in Long Beach, California, will be broadcast live in Moscow at MOD Design, a platform for contemporary design and innovation located in the center of town.

Among other features, the TED 2012 Full Spectrum event will include a four-day stage program featuring 18-minute talks, plus music, comedy, dance, short talks, video and other surprises.

“We’re in the midst of a dramatic reinvention of the ancient art of the spoken word,” the TED conference organizers say. “At TED2012 Full Spectrum we plan to celebrate this phenomenon and nudge it a further step forward. Full Spectrum is a term we’ve adapted to mean the rich use of multiple technologies, formats and approaches for the most powerful possible impact on an audience.”

According to GreenfieldProject, a Russian startup network which is organizing the broadcast, “Not only will the event provide participants with a forum for contact with the world’s brightest brains, it will be an opportunity for some useful networking and socializing.”

Due to the time difference between Moscow and California, the broadcast will take place during the night. It will start on Feb. 28 at 10:30 pm Moscow time and continue on Feb. 29, Mar. 1 and Mar. 2 at 8:00, 10:30 and 8:00 pm respectively. It will end at 6:45 am for the first three nights and at 12:45 am on March 3.

  • Attendance fee

Tickets are 300 rubles (approx. $10 US) – or more, as a voluntary contribution – which is well below the $7,500 paid by those who will attend the event physically, Greenfield indicated.

  • Location

MODDesign Center, Malyi Konyushkovsky pereulok 2. Nearest metro station: Barrikadnaya.

http://www.ewdn.com/2012/02/21/california%E2%80%99s-%E2%80%98big-ted%E2%80%99-offered-live-in-moscow/

News from East-West digital news

Transtelecom acquires regional Internet provider Electro-Com

TTK

Transtelecom, or TTK, has purchased 100% of the shares of Electro-Com, an Internet provider working under the Spark brand, Telecom Daily reported earlier this week. The deal will reinforce TTK’s positions in the broadband Internet access markets of Rostov-on-Don, Ryazan, Taganrog, Volgodonsk, and Kaluga. It will also introduce TTK to the Tula, Krasnodar, Bryansk and Obninsk markets.

“The deal is TTK’s largest transaction ever. The number of our Internet access customers has grown by 50%,” said Shukhrat Ibragimov, TTK’s Vice President for strategic development.

Electro-Com has remained an independent operator since its foundation in Moscow in 2003. The company provides broadband Internet services to individual and corporate customers. Electro-Com’s 920-kilometer FTTB network covers 700,000 households in the above-listed cities.

http://www.ewdn.com/2012/02/23/transtelecom-acquires-regional-internet-provider-electro-com/

News from East-West digital News

Russian banks attract half a million fans on social networks

Social networks

The popularity of banks on social networks – especially official corporate pages on Facebook or Vkontakte, and Twitter accounts – has increased more than 50-fold over the past year, says a report from Artenom Consulting.

“One third of the country’s 100 largest banks has either established an official presence on social networks or is using new communication channels such as ICQ or Skype,” the report reveals.

Although Facebook lags far behind Vkontakte and other major Russian social networks in terms of audience, banks are significantly more active on the US site.

The total number of subscribers of the largest banks’ official pages on social networking sites reached nearly half a million in late 2011, according to Artenom.

UniCredit Bank, the Russian subsidiary of an Italian bank, has the highest number of fans on Facebook and VKontakte. SKB-Bank, from Ekaterinburg, is number one on Twitter. OTP Bank Russia, a subsidiary of Hungary’s OTP, and AK Bars, a bank from Kazan, are those making the widest use of social networking tools.

None of the banks leading in social media in 2010 were able to maintain their positions in 2011, the report noted.

Insurance companies are also socializing online

Another report by Artenom, published last month, focuses on the use of social networks by insurance companies.

So far only eleven of Russia’s 100 largest insurance companies have official pages on social networks, or use ICQ or Skype. The insurance companies that are most active on  social networks are Renaissance Strakhovanie, Rosgosstrakh, ROSNO, and Severnaya Kazna.

As of early 2012, Russian insurance companies had 6 million fans on social networks.

Artenom’s analysts expect the presence of insurance companies on social networks to develop quickly in the near future, just as banks did last year.

http://www.ewdn.com/2012/02/27/russian-banks-attract-half-a-million-fans-on-social-networks/

News from East-West digital news

Skolkovo’s influence extending to post Soviet countries

Skolkovo

In a renewed round of innovation cooperation in the post-Soviet area, the Skolkovo Foundation, the Russian organization in charge of building a world-class technology hub near Moscow, is expected to start screening and funding technology start-ups from the neighboring CIS countries.

The CIS Economic Council will vest the Foundation next month with full powers to run a ten-year interstate collaboration program, the Armenian Mediamax news agency reported.

According to Skolkovo’s vice president Stanislav Naumov, residents of the Skolkovo tech hub will be granted zero taxation and enjoy 100% reimbursement of the customs duties they pay for imported equipment. Coupled with Skolkovo’s own screening and packaging methodologies, and eased migration legislation for innovators from CIS countries, this program will also reportedly provide commercialization strategies for innovative products emerging in CIS member states.

So far, out of more than 20 Skolkovo applications from the CIS countries, one application for the hub’s biomedical cluster is reported to have already been approved. The Foundation is considering opening a representative office in one of the CIS countries later this year, marking its third overseas office. The existing two are in the US and Israel.

At the moment, the Skolkovo Foundation supports an estimated 350 Russian innovation companies, with 220 of those coming from 30 different regions in Russia. Plans are to increase the number of residents to 500 companies this year, Mr. Naumov added.

http://www.ewdn.com/2012/02/28/skolkovos-influence-extended-to-post-soviet-countries/

News from East-West digital news

MTS and Rostelecom to share network infrastructure

Rostelecom + MTS

MTS, a major Russian mobile operator, and Rostelecom, the national telecom operator, have agreed to share part of their network infrastructure, including towers (antenna masts) and optical fiber cables, reportedRussian business daily Vedomosti.

Rostelecom has the largest network infrastructure in Russia, extending about 500,000 km, or 310,685 miles, covering even remote and underdeveloped territories in Siberia, the North, and the Far East. In exchange for access to them, MTS will make its sites and towers for base stations available to Rostelecom, which is developing mobile services.

The agreement may cut the capital expenditures of both parties by 10% every year, according to a source in the industry who spoke to  Vedomosti.

Russian mobile and telecom operators are tending to cooperate more and more to share their infrastructure, particularly to develop LTE networks at lower cost.

http://www.ewdn.com/2012/02/23/mts-and-rostelecom-to-share-network-infrastructure/

News from East-West digital news

Dreaming of an overseas vacation? Need new furniture? Check out phone retailer Svyaznoy

Svyaznoy

In a bid to diversify and assert itself on the fast growing Russian e-commerce market, major mobile retailer Svyaznoy is now catering to travelers and selling furniture and jewelry online.

Its most recent project, one the company positions as a ‘travel hypermarket’, Svyaznoy Travel, aims to incorporate both online and offline formats for all travel services, from booking air and train tickets to offering hotel reservation, tours and cruises, car and house rentals.

Visiting the Svyaznoy Travel portal – or any of the company’s nearly 3,000 physical outlets across Russia and Belarus – customers may now expect to find a set of customized travel services at prices that analysts feel are competitive enough for Svyaznoy to outstrip many conventional travel agencies

Earlier this month, the company launched sales of air tickets for a reported 500 international airlines. Train tickets will be available in March, Svyaznoy announced. Other services will reportedly follow, including apartment rentals, hotel reservations, car rentals, flower delivery, etc.

Svyaznoy CEO Denis Lyudkovsky hopes ticket sales will add about $33 million to his firm’s revenue by 2013.

Last year, online sales accounted for more than 25% of Russia’s $10 billion air ticket market.

A bold click-and-mortar initiative

In its hunt for new markets, Svyaznoy has taken a further step beyond its time-tested focus on mobile phones and household electronics. An online and offline concept, Enter.ru offers a broad range of goods including furniture, sports and children’s goods, and even toys and jewelry. Svyaznoy says, however, that Enter.ru will not sell cloths, groceries or medicines.

Customers may place online orders on Enter.ru – the site has already been operating for four months – contact a call center, or drop by an offline Enter.ru outlet.

Some analysts are not sanguine about the prospects of the new initiative, arguing that many people still find it easier and are more accustomed to buying furniture or jewelry at physical outlets.

Others counter, however, that a trailblazer like Enter.ru may carve out a decent market share given the strong pent-up demand for its assortment or products, as well as competing with major offline retailers in finer customization.

Svyaznoy already has a flourishing e-commerce site, Svyaznoy.ru, dedicated to its core mobile retail business. In 2011, the site’s turnover reached 3.51 billion rubles, or $120 million, compared to 1.5 billion rubles, approximately $50 million, in 2010. The site’s audience reached 54 million visits in 2011, with 687,000 orders averaging 5,000 rubles, or $170, Svyaznoy told East-West Digital News.

http://www.ewdn.com/2012/02/27/dreaming-of-an-overseas-vacation-need-new-furniture-check-out-phone-retailer-svyaznoy/

News from East-West digital News

Sales Soar on the Internet

Russia is poised to become the largest e-commerce market in Europe by 2019, if it maintains its current pace of growth. In September 2011, Russia overtook Germany as the European country with the most Internet users. There are now 50.8 million Russians online, and in a December 2011 poll half of Russian urbanites said that they used the Internet at least once a day.

http://rbth.ru/articles/2012/02/22/sales_soar_on_the_internet_14907.html

News from Russia – beyond the head lines

Online beats print in ad sales

Online beats print in ad sales

In 2011, advertisers in Russia spent 263.4 billion rubles ($8.8 billion) for promotions, up 21 percent over 2010 and 4 percent over 2008, according to a new report by the Association of Communications Agencies of Russia. For the first time, online advertising outperformed print ads, making it Russia’s second-largest media market after TV. Online advertising grew by 56 percent, while spending on print ads rose by only 6 percent.

Television remains the primary national media platform, taking in half of all ad spending. However, according to industry experts, the dominance of TV has actually advanced the growth of the online market. Andrei Chernyhov, CEO of AdWatch, said that TV ad capacities were sold out in the first months of 2011, prompting some key advertisers to increase online spending. This led to a 15 percent price increase at major online platforms and in some months, the demand for online placement exceeded the supply, he said. Lev Gleiser, head of Yandex media products development, said that concentration is increasing in the market and that major platforms increasingly control more ad spending on the Internet.

Ad sales also increased in volume due to continued growth in the number of Internet users in Russia and the amount of time these users spend online, said Alexei Katkov, commercial director of the Mail.ru Group. According to market research firm TNS, the monthly Russian online audience in December 2011 was 37.1 million users, up 5.4 percent over December 2010.

 

An increase in online advertising was particularly noticeable in certain sectors, the most important of which was major fast-moving consumer goods (FMCG) companies, according to Alexei Belyaev, head of ATSVI online research. Companies engaged in e-commerce and services have also become prominent advertisers, Chernyshov added. He and Katkov cited Tinkoff Credit Systems (TCS) as an example. Oleg Anisimov, TCS vice president for marketing, confirmed that the bank has significantly increased its online spending. “We have no offline offices, so we spend online more than any other media.” To promote its services among the less active audience and build the TCS brand, the bank uses outdoor advertising, Anisimov said.

This year, the market for Internet advertising will show on average “slight growth,” according to Katkov, but Chernyshov forecasts that online ad spending will grow by 35 to 40 percent. Ilya Perekopsky, deputy CEO of Russian social networking giant VKontakte expects an increase of 1.5 times, if no major crisis hits the market.

http://rbth.ru/articles/2012/02/23/online_beats_print_in_ad_sales_14918.html

News from Russia – beyond the head lines

Rostelecom Mulls $4Bln Mobile Investment

National operatorRostelecomcould invest $3 billion to $4 billion to develop mobile networks in the next four years as the state-run company seeks a bigger share of the wireless Internet market.

“Mobile data services are growing at a very serious rate, and we plan to focus our main efforts in this segment in particular,” chief executive Alexander Provotorov said in an interview. “Mobile voice services have stopped growing.”

Rostelecom, which took over regional fixed-line companies last year, aims to gain 22 percent of the mobile wide-band Internet market by 2015, according to its website. The operator has less than 2 percent of the market now, while the country’s three biggest mobile operators have 95 percent, according to Advanced Communications & Media. The market may more than double to 160 billion rubles ($5.4 billion) by 2015 from 75 billion rubles last year, Oksana Pankratova, a partner at the research company, said by phone.

Rostelecom plans to start developing LTE networks, for faster data transmission, in Russia’s largest cities without waiting for a federal licensing round, as isMegaFon, one of the three biggest mobile operators. Rostelecom agreed last year to work with Scartel, which operates under the Yota brand and has the necessary frequencies.

Talks are in progress with MegaFon and its larger competitorsMobile TeleSystemsand VimpelCom about collaborating on network development, Provotorov said.

“All the operators are keen to find ways to consolidate the huge expenses and are ready to share their infrastructure,” Provotorov said. “It costs about $3 billion to $4 billion to develop a nationwide mobile network, while the figure would be far higher for a fixed-line network like Rostelecom’s. The investment required would be unbelievable.”

Rostelecom, which reported revenue of 276 billion rubles in 2010, has already started building 3G infrastructure in 27 regions, including Moscow, Yekaterinburg and Irkutsk, he said.

The operator is still seeking regulatory approval to list in London, which may happen in the first half of this year after consolidated results for 2011 are ready, Provotorov said. A listing may still be shelved, he said.

“The listing for us is not a goal in itself, but a way to give investors access to our shares and to achieve maximum liquidity,” Provotorov said. A London listing may no longer be necessary if the merger of Russia’s two biggest bourses MICEX and RTS, and the creation of a central depositary boost liquidity at home, he said.

Rostelecom is now focusing on setting up web cameras at more than 91,000 polling stations for the March 4 presidential election. Prime MinisterVladimir Putinordered the move to fight fraud after nationwide protests against the results of the Dec. 4 parliamentary elections. So far 25,000 devices have been installed, according to the company’s website.

The state-run operator was awarded the 13 billion ruble contract as there was no time to hold a tender before the presidential vote. The project may cost as much as 30 billion rubles and Rostelecom may be responsible for the difference,UralSibFinancial Corp. said Jan. 16.

Part of the investment has already been planned into Rostelecom’s investment program for the next several years and would have been carried out regardless of the government contract, Provotorov said.

“It’s a great contract for the company,” Provotorov said. “I don’t know other telecoms contracts worth as much.”

Last week, Rostelecom’s Mobitel unit agreed to buy almost 3.9 percent of the Russian telecommunications operator’s stock for 19 billion rubles ($630 million) as the company carries out a buyback.

Mobitel signed a forward agreement to buy 63.9 million ordinary shares from Renaissance Securities for 10.7 billion rubles, according to a Rostelecom regulatory filing. The unit signed a similar agreement to buy 49.7 million shares for 8.3 billion rubles from VTB Capital.

The stakes represent 3.9 percent of the company’s ordinary shares at an average price of 167 rubles each, according to Bloomberg calculations.

Rostelecom’s board approved a buyback of no more than $500 million at an Oct. 31 meeting. The company is purchasing the stock for strategic acquisitions or a secondary sale, according to the operator’s website.

http://www.themoscowtimes.com/business/article/rostelecom-mulls-4bln-mobile-investment/453062.html
News from The Moscow Times