Altimo is one of Russia’s most prominent and biggest telecom investments companies. Can you tell us about the company’s business history?
Altimo was established 2 years ago, in 2005. The company`s assets then were worth USD 7 billion. We have been growing very rapidly since that time. Our company’s asset now amounts to USD 21 billion, it`s a three times increase compared to 2005. We have been successful in the past two years. We have acquired many new assets which in turn contribute to our success significantly.
Altimo is an experienced investment company. We only invest in assets that are in the process of developing. We help the industry to grow rapidly. However, we are not involved in the day-to-day business operation because we are simply not the experts.
I would like to emphasize that Altimo understands how to improve the business value of a company. Our role is strictly limited to giving insights and suggestions to the management.
What is Altimo’s key of success?
The cellular telephone business is growing rapidly. We all know this fact. Telecom is one of the most prospective industries in the world. We are always interested in entering emerging market countries, such as Russia, Ukraine, Turkey and of course Indonesia. These are the emerging market countries because they have been growing very rapidly in the past few years.
A key of success to enter such market is how to choose the best company and undertaking the most accurate policy to develop it. For example, Russian VimpleCom, we only own 44% of the company’s shares.
We have helped this company to strengthen its management. We helped them to find new assets in other countries. When we acquired VimpleCom, their asset was only USD 1.4 billion. Today it`s worth USD 25 billion. This is a huge increase and it is demonstrative to our success in investment. This is what we are planning to do in Indonesia.
What is the connection of Altimo with Alfa-Group? Does Alfa-Group contribute to Altimo’s success?
Alfa-Group is one of Altimo’s majority shareholders. However, we are very independent. They do not dictate or control the management. We work as an independent subsidiary of Alfa-Group. Alfa-Group owns about 75% of Altimo’s shares and the rest is owned by individuals.
Altimo recently acquired Sotelco’s shares, a Cambodian telecom company. Is this Altimo’s initial step to enter the Asian region?
If we mean acquisition, yes it`s our first step. Sotelco is the company with full-pack licenses including GSM, broadband and WiMax. However we have entered this region earlier by launching our representation offices in Hanoi and Jakarta in Autumn 2006. Southeast Asia is an extremely attractive investment market in comparison with European markets which are already mature. If we take France and England, the penetration level of cellular phone has reached 100%. This means that everybody in the region has already used cellular phone. While in Indonesia, the penetration level has only reached 30%. So there is still a great potential of the market to develop. This is what we’re looking for. We will come and help Indonesian cellular industry to grow faster.
What is the difference of investment in Indonesia and in Cambodia?
Cambodian market is small in comparison to your country, only around 20-25 million people. But this market is at initial stage of its development, that’s why we are also there. But from the point of potential it can not be even compared to Indonesian market. So it’s clear that our investments will be essentially higher than in Cambodia.
How would Altimo invest in Indonesia?
We are considering a few options. We are still negotiating with several parties which piqued our interests. We have not yet identified the projects that we are going to work on in Indonesia. We will make a decision soon. Some of the options that we are going to consider are to invest in existing companies or to establish a new telecom company. We will have to select the right partner and project. This usually takes time.
How does Altimo view the Indonesian market?
It is similar on how we view Russia, especially from the business and political environment. We like Indonesian bureaucracy because it reminds us about our home country (smiling). I hope it would be easy to work/invest in Indonesia.
How much would Altimo’s potential investment value in Indonesia be?
We plan to invest more than USD 2 billion. Certainly we will focus on mobile telecommunications.
Can you tell in details of the new big project?
We cannot reveal anything as the negotiation process is underway. If we sign any agreement, we will definitely make an announcement. We are now on a discussion with a potential partner here. It takes time for us to learn about Indonesian market, as what any party should do when entering a new market.
So there is a possibility that Altimo will not be investing in existing companies, but to establish new projects?
Yes, there is such a possibility. There are a lot of investment options in Indonesia. We are still considering the many business opportunities; whether to invest in existing companies or to establish a new one. We haven’t come up with any decision just yet.
How long do you think it would take to learn about the Indonesian market?
I think next year (2008), we will make some decisions.
If Altimo is to invest in an existing company, what would be Altimo’s investment strategy?
We share our experience how to grow with our new investee companies. For example in Turkish leading GSM operator Turkcell we helped to drive several changes in the company, such as recruiting new very professional CEO. We also found several new projects for Turkcell in other countries. The business value of the company is now increasing rapidly. The company is developing greatly as well. However, bear in mind that we never dictate what they should or should not do.
We only looked for the right projects and the right CEO for them. We made the decision because we understand how to increase a company’s business value. For example, the company could only book a USD 1 billion profit, and we know how to increase it to USD 3 billion.
How many players are there in Turkey’s cellular business?
There are three major players in Turkey, similar to the condition in Indonesia. Turkcell controls about 65% of the market share.
Which one is more attractive to Altimo, to invest in an existing company or to establish a new one?
That would depend on the business logics. We will consider all options using business logics. How much the investment will benefit us is hard to say. We will consider everything and select one project that is most suitable to work on in Indonesia. This is not easy as it involves a huge investment value. We are not talking about a IDR 2000 investment value, we are talking USD 2 billion.
If we talk about Indonesian telecom companies, such as Indosat, Telkomsel, and XL. Which one is the most attractive to Altimo?
That is hard to say. Did you hear that any one of the three companies is on sale? I haven’t heard anything about that.
But Altimo has been heavily rumored to be interested in acquiring Indosat?
It’s not wise to comment speculations, right? We will only make a purchase if any party is interested in selling. However, for now there is no such option unfortunately.
What do you think about GSM and CDMA cellular business?
GSM is a lot more prospective to be developed. It is easier to build the network and is easier to reap benefits from. GSM’s market share is a log bigger than CDMA. We are also considering investing in 3G service.
For now, we don’t think we would enter the CDMA market. We intend to develop cellular markets in various countries. That is one of the reasons why we wanted to enter Southeast Asia region, including to Indonesia and Vietnam. We see that Southeast Asia market is very attractive.
Indonesia imposes limitation towards foreign ownership in the telecom sector. What do you think about this?
That is true but this does not concern us. In all our companies we are minority shareholders because we are financial investors and industrial players like Vodafone or Telenor. We don’t aim to intervene the management through our shares ownership. In several countries, we only have about 13-15% of shares. Therefore, the limitation does not become an obstacle for us.
Can you mention the name of your local partner?
We cannot disclose anything because the negotiation process is still underway and no decision has been made yet. We cannot announce to the public on our local partner as we are still negotiating.
How do you see Indonesian market compared to other Asian countries?
Well, actually we have designed Altimo index which measures the potential of various telecom markets in the world. In this ranking list the 1st market was Bangladesh, then followed China, India, and Indonesia was on the 4th place. But it’s clear that Indonesia here has more perspective because for example China has closed its cellular market for foreigners, in India competition is extremely high so Indonesia is right choice.
Southeast Asia has already one big player in the industry, Temasek. What would be you comment to this fact?
They (Temasek) are very successful. Temasek is one of the most dominant players in the Asia region, like Altimo in the CIS countries. Actually in the near future, the telecom industry will be consolidated. I guess there will only be 20 big telecom companies in the world. We intend to become like Vodafone who has gained international reputation.
What is the significance of Russian President Vladimir Putin’s meeting with President SBY to the development of Altimo’s business?
We were not in the meeting. However, from what we read in the papers today (last Friday), SBY and Putin discussed about the telecom sector. In the Indonesia-Russia Business Forum, President Putin also said that he supported Russian telecom companies to invest in the telecom sector in Indonesia. That bodes us well.
Are you sure that Altimo is going to be successful in Indonesia?
I am very optimistic. We have never encountered failure so far.
How long is your target until Altimo starts reaping benefits in Indonesia?
We are a long-term investor. So far, we are in investigation phase here. It’s not our philosophy to come and then flee out of the country once we reap benefits. We expect to have a long-term project in Indonesia.
Source : www.altimo.org