Rostelecom Announces Lower Prices for Long-Distance Calls

Rostelecom, the country's dominant long-distance telephone company, announced plans Wednesday to reduce charges for long-distance calls in an effort to expand its client base and stay ahead of the competition.

The rate cuts, effective Feb. 1, could be as much as 30 percent for daytime intercity calls, although actual rates would vary from region to region, said Anton Godovikov, the company's commercial director for long-distance services.

Godovikov said both regular clients and occasional users of Rostelecom services would benefit from the reduced calling rates.

"The reduction in the rate was made possible because of structural changes in the cost of international calls," Rostelecom chief executive Konstantin Solodukhin said in a statement.

As part of the price cuts, Rostelecom's Moscow subsidiary said a differential price would be introduced, in which regular clients in Moscow would get as much as a 50 percent rebate when making long-distance calls from Moscow to the regions.

Rostelecom has to reduce its rates to compete with a myriad of formidable long-distance players that have appeared in the market since it lost its monopoly status, analysts said.

"Rostelecom now has pretty strong competitors like MTT, Golden Telecom, Transtelecom and Synterra, some of which are also considering price reductions on long-distance calls," said Anna Kurbatova, an analyst at Aton Capital.

A decision last year by the government to abolish interconnection fees between local and long-distance operators might have helped bring about the price reductions, Kurbatova said.

Igor Semyonov, a telecom analyst with ING Bank, said Rostelecom and other long-distance operators would need to reduce rates anyway because of the onslaught from popular software like Skype, which enables users to make free calls.