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11 Feb, 2008 23:23

Russian telcoms look abroad for growth

Russia's telecommunication market grew in value by 25% in 2007 to more than $US 60 billion. However, analysts say high levels of penetration are limiting corporate growth, and that's why more companies are looking at opportunities for expansion overseas.

“The telecom world itself is at a high standard within Russia. How much more can you do? If the market is saturated you look for more opportunities. These are partially within the country. But with the market saturated, you need to take share from someone else. If you do so, you’ll end up in a price war, which is not necessarily adding to growth. So going for a geographical expansion makes a lot of sense,” explained Karl Deutsch Vice President of A.T. Kearney International. 

The first Russian company to make the step has been AFK Sistema which has announced plans to invest up to $US 7 billion into the Indian telecoms sector.

Analysts say emerging markets are the right direction to expand to now. The potential is huge not only due to economic development – they see new technologies, such as wi-fi and wi-max, developing. And coming from Russia’s phenomenal market expansion of recent years, Russian companies have the strategies to ride the boom.

With Russian companies now looking beyond market expansion at home, for their rise into the realms of the world’s biggest telecommunications players, emerging markets offer millions if not billions of new potential customers.  Their challenge in entering these markets is not just to replicate their success at home, but to establish themselves as leaders in quality service provision.