INTERVIEW: Russia's Svyazinvest Units May Merge Mobile Assets

MOSCOW, Feb 2 (Prime-Tass) -- Executive directors of VolgaTelecom and Sibirtelecom, controlled by Russia's national telecom holding Svyazinvest, may consider merging their mobile assets this year, Valery Yashin, CEO of Svyazinvest, said in an interview with Prime-Tass this week.

VolgaTelecom and Sibirtelecom also plan to consider buying mobile operators in regions of the Volga and Siberia federal districts where the companies do not have network coverage, Yashin added.

Yashin said that the total mobile subscriber base of companies incorporated by Svyazinvest is expected to grow to 9.2 million people by the end of this year from 7.7 million as of the end of 2005 and 4.74 million as of the end of 2004.

Besides VolgaTelecom and Sibirtelecom, Svyazinvest's two other subsidiaries Dalsvyaz, also known as Far East Telecom, and Uralsvyazinform have subsidiaries that provide mobile services in Russia.

The fixed-line subscriber base of companies in which Svyazinvest has stakes is expected to increase to 33.8 million users by the end of 2006 from 33 million users as of the end of 2005, Yashin said.

The share of digital lines is expected to increase to 59% by the end of this year from 55.6% as of late 2005, he said.

Yashin said that tariffs for local fixed-line services provided by Svyazinvest's companies are expected to increase on average by 13%-15% this year.

"I think we will observe a trend of mobile services replacing fixed-line services (in Russia)," Yashin said. "This trend would lead to the migration of long-distance traffic from regional fixed-line companies to mobile operators. In addition, competition among regional fixed-line operators for generated long-distance traffic will increase," Yashin said.

The aggregated net profit of companies incorporated into Svyazinvest is expected to decrease to 14.2 billion rubles this year from 21.3 billion rubles in 2005, according to preliminary figures, Yashin said.

The companies' aggregate revenue in 2006 is expected to increase 3% on the year in 2006 to 216.4 billion rubles, while sales profit is expected to fall 15.6% on the year to 43.7 billion rubles, Yashin said without providing an explanation for the expected decrease in profit.

The aggregate revenue of Svyazinvest companies amounted to 185.5 billion rubles in 2004, while net profit stood at 17.5 billion rubles and sales profit was at 44.9 billion rubles, as calculated under Russian Accounting Standards (RAS).

"I think that in general the company showed good results, and some financial figures (net profit, sales profit) even exceeded our targets," Yashin said, commenting on the company

Posted to the site on 2nd February 2006