|
Articles & publications
24.06.2010
Alexander Provotorov: the future is in the networkVedomosti. Forum, Alexander Provotorov
Author: Alexander Provotorov, deputy general director of Svyazinvest.
Born in 1974 in Moscow. In 1996 he graduated from the legal department of the Moscow Lomonosov State University (MGU). In 2001-2003 he was head of the legal department of Gazprom-Media and member of the Board of Management. In 2003-2005 he was vice-president of the investment department of Sputnik Group. In 2005-2009 he was senior managing director of Marshal Capital funds, and general director of Marshal Capital. In 2009 he came to Svyazinvest.
Svyazinvest, holding company. Shareholders – Federal State Property Management Agency (75% - 1 share), Comstar-UTS (17.31% 1 share), MGTS Finance S.A. (7.69%). Financial indicators (2009, RAS): revenue – RUR 258.8 bln, net profit – RUR 28.5 bln.
The telecommunications industry never stands still. Nowadays, new trends have gained dominance on the market, which has caused operators to become universal providers, expanding the scale of their business in the broadband Internet segment and consolidation in this segment. Mobile operators are becoming universal providers, actively rolling out wireless broadband access on the basis of 3G. The broadband Internet segment is consolidating both as a result of the expansion of federal players into regional markets, and also because of the rapid business expansion of regional operators.
These trends are to a large extent associated with rising datacom volumes and a change in the quality of content in the service sector, which requires heavy traffic volumes. There has also been a change in the way services are used, with growing mass interest in gaining access to the information environment as well as higher demands for service quality. In order to keep up with the times and meet the rising needs of subscribers, telecommunications operators are launching new services and offering users bundled and converged solutions.
The time of extensive growth is essentially over in the telecommunications industry. We sidestepped this phase of growth and are now on the threshold of the consolidation phase when a number of brand new mechanisms are making their presence felt in the process of successful business development. And it will be possible to retain leadership only if there is a clear idea today about what models will enjoy demand and which priorities companies should try to advance in their business expansion strategies.
An analysis of the development strategies of leading players in the telecommunications market shows that their business models change in light of the market. In order to increase ARPU, large operators, which used to be incumbents and national giants (France Telecom, Deutsche Telekom, Telefonica), are moving into adjacent market segments by means of horizontal integration, by forming alliances with and taking over small players, developing partnerships with content providers and manufacturers of subscriber terminals, while enhancing the customer care system.
Thus, as we can see, the path to leadership at the stage of market consolidation lies in the innovative model of development. Thus, each company should consider its priorities when it comes to future business diversification, expanding its footprint on the market and forging possible alliances with other players.
Reorganization of Svyazinvest
The highlight of the year on the Russian telecommunications – the reorganization of the Svyazinvest Group of companies – was also dictated by the need to stay abreast of the latest trends in industry development. The reorganization of the group calls for setting up on the basis of Rostelecom and RTOs a national telecommunications operator which has federal coverage, ramified infrastructure, a large subscriber base and strong efficiency indicators. The formation of a merged operator on the basis of several operating companies, which independently conduct their business, is a unique case for the Russian telecommunications market.
As global practice has shown, about half of the cases involving mergers and acquisitions end unsuccessfully due to integration problems. For this reason, even before the merger process gets under way a program for the reorganization of the Svyazinvest Group of companies has been launched which includes all the main integration projects in the key functional areas of activity. At the same time, projects are to be implemented which aim to establish the conditions for Rostelecom’s sustainable market growth.
The strategy of the merged Rostelecom calls for stronger business efficiency and a concentration of resources in all key growth areas: - cellular telephony, value-added services, corporate client services, wholesale business, and optimization of traditional f business services. At the same time, the plan is to make systemic improvements in the area of infrastructure and IT systems and transform the management structure of companies.
An extremely important growth point for the new Rostelecom will be the corporate client segment. To achieve its goals in this segment, the company intends to take actions in a number of areas, which include creating federal scale products, organizing centralized service for large clients and launching new products and services on the market. Data centers are also part of this picture, as are IT services, including system integration and satellite television services.
Given the level of saturation it is nearly impossible to achieve much success on the traditional voice market. Therefore, the merged Rostelecom’s strategy calls for a focus on wireless datacom services. The Group’s mobile business is currently under consolidation as we are attempting to unify business processes, equipment, accounting and reporting systems, while a single brand is being worked out. An important stage in this process will be the integration of Sky Link’s business. As a result of this, the merged Rostelecom will have at its disposal the whole range of licenses for various frequencies. At a later time, the merged company’s business could be operationally integrated with that of the fixed-line sector, which will make it possible to offer subscribers the converged solutions which they need.
Experts are very upbeat about the growth outlook for the Russian IT services market. Services in the area of system integration and IT outsourcing are expected to become one of the core components of the new Rostelecom’s product proposals for corporate clients at various levels. Rostelecom’s partner for this project will be NVision, a leader on the Russian IT services market. The merged Rostelecom will position itself as a company with robust IT potential as underpinned by experience in carrying out such major national projects as “The Electronic Government”.
The new Rostelecom’s business expansion strategy on the datacenter market calls for ramping up the commercial capabilities of the company’s infrastructure. The company also intends to roll out a uniform distributed data center, including facilities which correspond to international quality standards.
Another key area of business for the merged company will be paid television. The new Rostelecom plans to become a leader in this segment. Resolving this challenge calls for within the group’s current business area and also entering the satellite television market. By using various technologies the company expects to roll out products which are diversified in terms of markets, including packages with various broadband Internet services.
The formation of a single brand using Rostelecom and RTOs as the consolidation hub will not result in increased concentration on the telecommunications market or create additional barriers for entering the market. Possible risks associated with reducing competition in various segments of the wholesale market may be ruled out under the current regulatory system. The reorganization, in and of itself, will not result in higher tariffs for subscribers.
Needless to say, the advent of the merged company will change the status quo in the Russian telecommunications industry. The main result of the merger of the new Rostelecom will be the possibility of a whole range of expansion opportunities opening up.
|
