Russia s Alfa plans to invest up to $2b in RI

Andi Haswidi, The Jakarta Post - 2006-12-21 12:03:41

Jakarta, December 21, 2006 (The Jakarta Post) - One of Russia's largest privately owned holding companies, the Alfa Group, announced Wednesday that it planned to invest up to US$2 billion in Indonesia's mobile telecommunications industry through its subsidiary, Altimo.

"The Asian mobile market is developing very rapidly and Indonesia is the leader here with its large population, making it the most prospective market. So, we have decided to enter this market," Altimo vice president Kirill Babaev told reporters Wednesday in Jakarta.

The plan was conceived after company chiefs met with President Susilo Bambang Yudhoyono in Moscow earlier this month, when they expressed their interest in helping develop Indonesia's mobile telecommunications industry.

"We are targeting some kind of stake in one of the larger mobile operators here. Certainly, some time will pass before we start our actual project, but we are ready to invest up to $2 billion in the country's telecoms industry," Babaev said.

"It's not settled yet, but we will do what is best for us. We don't have a deadline. So we are basically looking for a good opportunity," he explained, adding that the plan would be realized next year.

Altimo is a strategic investment company that focuses on telecommunications, and which owns stakes in major cellular operators in Eastern Europe and Turkey with a total subscriber base of 130 million globally, far higher than the world's largest mobile operator, Orange, which has 80 million subscribers.

"We just celebrated our first anniversary earlier this December. Our investment portfolio now stands at about $14 billion, representing significant growth from when we Babaev said.

"We have significant stakes in two of Russia's largest mobile operators, and a 40 percent stake in the largest operator in Ukraine. In addition, we have a minority stake in Turkcell, which also owns mobile assets in Ukraine, Georgia, Moldova, Kazakhstan and Azerbaijan," he explained.

Kirill said that as an investment company, Altimo possessed the know-how to clinch investment deals in emerging markets like Russia, Turkey and Indonesia. "These markets are very similar," he explained.

Echoing Kirill's comments, Andrei Zemnitsky, also a company vice president, said, "We really believe that we have the know-how to manage businesses in'emerging markets, to add value, to serve consumers in emerging markets where people have limited incomes. But this doesn't mean they should be deprived of having mobile telephones."

Zemnitsky said Russia had 100 percent mobile penetration, meaning that every person in Russia had a mobile telephone.

"We see that a lot remains to be done in Indonesia in order to increase mobile penetration. The telecoms market is overly concentrated, there is not enough competition in that sense, and that severely limits the development of the sector," he explained.

Zemnitsky said his company had been observing Indonesia's mobile industry for some time before finally deciding to enter the market.

It established an operations office in Jakarta on Dec. 19, and appointed Soeharto as the company's chief representative here.

"We aim to improve Indonesia's mobile telecoms industry. What we have here is high communications costs due to the poor competitive climate. This was the foremost factor in encouraging us to enter the market," Soeharto said, promising that the arrival of the Russians would benefit .