Rostelekom Goes Abroad

The board of directors of Rostelekom approved an outline for the company's strategic development through 2012 at a meeting on Monday. An important aspect of the company's development will be its entrance onto foreign markets. It will begin building trunk lines in the CIS, India and China between this year and 2010, and branch out into the Middle East after that. A Rostelekom source said that merger and acquisition, exchanges and partnering are all possible means of expansion.

Rostelekom, 38-39 percent of which is owned by KIT Finance and UK Leader, was founded in 1993 by decree of the State Committee for the Management of State Property (Goskomimushchestvo) from 20 companies that provided long distance service in Russia. In 1994, Rostelekom became part of Svyazinvest, which owns 51 percent of it. The company's receipts in 2007 totaled 64.6 billion rubles by international accounting standards. Its EBITDA was 11.1 billion rubles and its capitalization 8.63 billion rubles.

Among the projects being considered by the company are trunk lines between Aktau and Baku, Baku and Turkmenbashi, Georgia and Turkey and Georgia and Ukraine and the Two Valleys project in China. In addition, it is looking at the possibility of purchases of Aztelekom (Azerbaijan; Aztelekom and Baku Telephone Connection are to be united and privatized), Beltelekom (Belarus; due to be privatized this year with up to 49 percent foreign investment), Uzbektelekom (Uzbekistan; the state intends to sell 49 percent of it for $45-50 million), Kazakhtelekom and Kaztranskom (Kazakhstan; 49 percent of Kazakhtelekom belongs to Kazakh investors) and Ukrtelekom and Farlep (Ukraine). The combines price tag for the entire group would be about $4 billion.