Rostelecom Is Considering Stakes in 30 Telecoms Firms

Rostelecom, the country's biggest long-distance carrier, is considering buying stakes in 30 telecoms operators in Russia, including Sky Link, as well as assets in the former Soviet Union, chief executive Konstantin Solodukhin said at a news conference Wednesday.

Solodukhin said he expected Rostelecom's revenue to be 70 billion rubles ($1.9 billion) this year. The company has not announced its 2008 full-year results, but 2007 revenue was $2.7 billion.

Of the 30 companies under consideration, Rostelecom is conducting due diligence on four of the companies, he said, without indicating whether Sky Link, controlled by billionaire Vladimir Yevtushenkov's Sistema holding, was among them.

Rostelecom, 51 percent controlled by the state, is also ready to buy telecoms assets in Ukraine, Moldova, Kyrgyzstan and Azerbaijan if they are privatized this year, he said, while it is also interested in China, India and the Middle East.

The company has not cut its budget of 8.5 billion to 9 billion rubles ($240 million to $255 million) for 2009, he said, and it has developed an anti-crisis plan in the event that profit falls by more than 10 percent. Under the plan, designed in part to mitigate the effects of the ruble devaluation, Rostelecom would lower prices on the most popular types of calls. The company also plans to raise rates for its foreign partners.

"We are getting our revenue in rubles from our clients, while we have to pay our foreign partners in dollars, since they provide services to our customers calling abroad," Solodukhin said. "So we decided to raise tariffs for our foreign partners on an individual basis."

Rostelecom services about 40 percent of Russian businesses, but demand is falling for some of the company's offerings.

"Banks are dropping toll-free, 800-services and hiring people for their own call centers," he said.

"The creation of virtual private networks is not as popular anymore either."

Revenue from individuals has remained strong, however.

"The more trouble Russians have, the more they want to share their problems with their friends and relatives," Solodukhin said. "So the amount of their calls hasn't fallen because of the crisis."

So far, the company has not experienced any payment delays, and its outstanding debt is so small that it would be "confusing to even name it," he said.