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. Last Updated: 07/27/2016

Rostelecom Increases Intercity Calls by 20%

Trying to build a cushion to repay staggering foreign debts, national telecom provider Rostelecom on Monday pushed up rates on intercity calls by 20 percent in Moscow.

Including a 15 percent hike last February, intercity rates have been increased 35 percent since the summer of 1998 when the exchange rate stood at 6 rubles per dollar. Inflation over that same period has amounted to roughly 150 percent.

"Rates are still lower in dollar terms," says Vera Polyakova, head of the international calls department with Rostelecom.

Rates on international calls were raised 70.8 percent this summer, making them 2.44 times less expensive in dollar terms in comparison to the pre-crisis days last year.

Rostelecom is trying to balance on the rope between the need to read just tariffs and not kill the market with a sharp tariff increase, analysts said.

"An increase in tariffs does not mean the company will have more money," said Konstantin Chernyshov, head of research at NIKoil brokerage. "You also have to collect it."

Financial reports for the first half of 1999 for the Svyazinvest holding, which manages the state's 38 percent stake in Rostelecom, showed that the increase in revenues was exactly the same as the growth in bad debts.

Rostelecom has already restructured some of its foreign debts and is now in talks to restructure a $100 million payment that comes due next February, said Tom Adshead, a telecommunications analyst with investment bank Troika Dialog.

Rostelecom had $450 million worth of outstanding loans as of January this year, $200 million of which mature next year.

"They have to rebuild their margins," Adshead said. "There is no point in giving money away."

Rostelecom will not be able to break even under international accounting standards this year, Adshead added.


Call Costs

Rates on intercity calls, including connection fee and VAT*

Zone Rubles per min.

up to 100 km 2.48

101-600 km 5.11

601-1200 km 6.64

1201-3000 km 7.47

3000-5000 km 8.78

5000-7000 km 10.19

Source: company data