Russia - hoping to expand into Asian markets

Russian Telcos Look to Asia for Growth

After a decade of rapid advances in the former Soviet Union, Russia's mobile operators are placing big bets in India, Vietnam, and elsewhere

The Russians must know a thing or two about mobile telephony. After all, few countries in the world have seen such a dramatic explosion in mobile-phone usage: The number of Russian subscribers has risen to 170 million today, up from just 1.35 million in 2000. That phenomenal growth has been good news for Russia's leading telecom companies, now among the largest and financially strongest in the world. But there's one obvious downside. Now that so many in Russia have mobile phones, where do the nation's telcos go for growth?

The answer, it turns out, is Asia. In recent months, Russia's leading mobile operators have made their first forays outside the former Soviet Union. They're pinning their hopes on the fledgling telecom markets of southern and southeastern Asia, where Russian companies have recently announced plans to invest billions of dollars.

So far the most ambitious plans are those of Sistema (AFKS.RTS), a Russian conglomerate that owns Mobile TeleSystems (MBT), known as MTS, Russia's largest mobile-phone operator. Sistema has recently been causing a stir in India, becoming the latest international heavyweight to join the Indian telecom race. "Of course, India was always the top priority because of its market size, population, economic growth, and other factors, including a very good [historic] relationship between the Soviet Union and India," says Anton Abugov, a vice-president at Sistema and member of the MTS board of directors.