OREANDA-NEWS. October 15, 2009. The restructuring of Svyazinvest is an unprecedented process for Russia as the holding’s companies across the country are to be folded into a single integrated operating and competitive company which is capable of providing the entire range of telecom and datacom services all across the Russian Federation. This news was announced by the director general of Svyazinvest Evgeny Yurchenko, speaking at an exhibition by the International Telecommunication Union (ITU) Telecom World 2009 held in Geneva on October 6.

Svayznivest participates in the proceedings of this major and well attended event by presenting a Russian display booth under the aegis of the Ministry of Telecommunications and IT of the Russian Federation which includes  the stands of Russia’s leading companies in the telecommunications sector.

Evgeny Yurchenko noted that the challenge of reorganizing Svyazinvest will be resolved by folding seven regional telecom companies into Rostelecom, the holding’s largest subsidiary.  Such a merger, according to the director general of Svyazinvest, “will make it possible to unlock the financial synergies from the merger, sharpen management’s flexibility, boost market capitalization and share liquidity while lowering the cost of debt financing of the merged company”.  A single company will allow us to retain our leadership positions in the fixed-line and broadband Internet segments and strengthen our positions in the mobile telephony segment”, he pointed out.

 Mr. Yurchenko went on to say that the merger process could take roughly a year and a half to two years to complete.  He pointed out that the holding’s merger “could give us the opportunity to gain a foothold on markets located outside the Russian Federation”.

“The merger will definitely help us boost the market capitalization and share liquidity of the consolidated company.  Even now we are seeing that investors’ expectations of positive effects of the reform process are pushing up the valuations of RTO shares.  For example, the shares of Far East Telecom and CenterTelecom have more than tripled over the last year and a half”, Evgeny Yurchenko pointed out.

Yurchenko named the rollout of Svyazinvest’s mobile assets as a top priority for Svyazinvest.  He noted that at present “the Group’s mobile assets are disparate, we don’t have enough coverage and are unable to provide service on the federal level.  We face the challenge of rapidly expanding our cellular assets and then consolidating them and entering the market in a new capacity.  Our task is to conquer positions equal to those of the cellular communication market leaders”, the head of Svyazinvest said.  In addition, Mr. Yurchenko noted that it is still too soon to speak of a specific scenario for the development of Svyazinvest’s cellular business, but that it would be made public before long.

The holding’s director general also noted that the holding faces the challenge of maintaining its positions in the fixed-line and Internet segments.  “We have some ambitious plans on the broadband Internet market.  By the end of 2009 Svyazinvest intends to considerably increase the number of its broadband Internet subscribers”, Mr. Yurchenko said.

According to Yurchenko, Svyazinvest also plans to ramp up its positions in the corporate segment.  “We’ve set ourselves the goal of providing the  whole range of services for key clients on the federal level, including state agencies and ministries and special users, and also to enter the market with bundled telecom solutions for small And medium-sized businesses, including such traditional services as a full array of advanced infocommunication services”, the head of Svyazinvest emphasized.

He also made a point of stressing that Svyazinvest has no intention to stay away from the high-revenue Moscow market.

Evgeny Yurchenko expressed confidence that “the challenge of turning Svyazinvest into a unified and integrated competitive operating company will be met”.