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. Last Updated: 07/27/2016

Publisher Teams Up With Web Plus

The local Internet boom gathered pace Tuesday as Independent Media announced a Time Warner-AOL-style deal to match its content with a St. Petersburg Internet Service Provider and Sistema holding, a leading Moscow ISP player, saying it would move into content.

In an effort to boost traffic on its portal and lure the uninitiated to the web with a simple interface, Independent Media has struck a deal with Web Plus to offer net access and exclusive services to subscribers, said Derk Sauer, CEO and founder of Independent Media, which publishes The Moscow Times and 16 other print media.

"This is the first time a Russian publishing company has teamed up with a telecom," Sauer said Tuesday at an equity conference organized by Renaissance Capital investment bank.

Announcing a strategy that looks likely to play out as a reverse of the eStart/Web Plus deal, Levan Vasadze, vice president of AFK Sistema, said the holding would consolidate its digital networks and develop a major portal in partnership with an as-yet unidentified U.S.-based content provider.

That will put it on something of a collision course with Independent Media's ambitious plans to capture the front door to the Russian net.

The Web Plus deal has "the same rationale, the same thinking" behind it as the merger deal earlier this year between U.S. media giant Time Warner and America Online Inc. f the world's largest ISP f which captured a huge subscriber base by offering cheap, simple Internet access, Sauer said.

The holding that owns Web Plus had plans to "roll out Internet access all over Russia," he added.

For now, since the nation lacks a unified national ISP, the AOL feat will likely prove difficult to emulate. Of 300 largely isolated providers scattered across the country, only 15 claim more than 15,000 subscribers, according to data cited by Sauer.

For the same price as regular web access, Web Plus subscribers f including the ISP's current 12,000 f will have eStart automatically installed as their home page and get access to exclusive financial management services, such as household expense management guides.

St. Petersburg's Web Plus has a sign-up fee of $6, and monthly subscriptions start at $8 a month.

"EStart will become the default homepage of all the users of the ISP," Sauer said.

"In an emerging market, it's very important to be the default page of new users. People have not yet figured out how to set up their own home page. If you want to go to another site, you need Latin letters," he said. EStart's Cyrillic home page would spare new users from navigating the Latin-alphabet keyboard, he added.

EStart, a joint venture between Independent Media and the Dutch VNU publishing conglomerate, was launched last month.

Sauer said in his speech at the conference that 250,000 pages on the site were being viewed daily.

Meanwhile, AFK Sistema f which controls Moscow City Telephone Network, or MGTS, several ISPs, competitive local exchange carrier Comstar, Mobile TeleSystems cellular operator and other telecoms through Sistema Telekom f is planning to capitalize on its large telecoms base to attack the portal market from the other end, said Sistema vice president Vasadze.

Four of the holding's operators, including MGTS and Comstar, will consolidate their digital networks into a single company, which will aim for a public offering on international markets within two years, the same time frame for a float of MGTS stock, he said. Mobile TeleSystems is set to float 18 percent on the New York Stock Exchange June 30.

Sistema had decided to try to leverage its telecoms capacities so that it could provide more Internet services to end users, Vasadze said.

"We have formed an incubator, we have tried to align our telecoms concessions and resources into one knot."

He did not elaborate on the company's Internet incubator, but said the company was "in the process of yielding interest" from a major U.S. content player for a new portal project "backed by our ISPs."

Sistema claims a 40 percent share of the ISP market in Moscow. Company officials have said in news reports they want to expand their regional presence.

Sauer cited Western market research showing new users were far more dependent than experienced users on multipurpose portals, which provide search engines, e-mail and content.

Metromedia International Inc. said Tuesday it agreed to purchase Marconi Communications Ltd.'s 50 percent stake in Comstar, a Russian operator of a fiber-optic network, for $60 million, The Associated Press reported.

Comstar, a 50-50 joint venture between Britain's Marconi and Moscow City Telephone Network, has a 1,210-kilometer optical fiber network in Moscow that supports data and telephone services.

Metromedia, New York, owns stakes in communications joint ventures in Eastern Europe, Russia and other emerging markets. The company, which had $264.8 million in revenue last year, expects to complete the Comstar deal in the fall.