Tele2 races ahead with fifth network launch

27 Aug 2003

Hot on the heels of its 16 July 2003 launch of a fourth Russian GSM network in the Kemerovo region of southwestern Siberia, pan-European telecoms services provider Tele2 [Nasdaq: TLTOA] has said it is ready to introduce a fifth GSM service to the city of Omsk, covering around two million people. The Swedish-based company’s aggressive expansion plan been met with a degree of scepticism from industry analysts, who fear the Russian market – which is 80%-controlled by three operators Vimpelcom, Mobile TeleSystems and Megafon – offers little potential for revenue growth. Nonetheless, Tele2’s chief executive Lars-Johan Jarnheimer is confident that his company’s Russian rollout plans offer ‘substantial growth potential’ and with mobile penetration standing at well below 20% in a country numbering over 143 million people his reasoning appears plausible. In July this year Mr Jarnheimer predicted that the Russian mobile sector would generate a sizeable portion of the company’s future turnover, adding that it planned to invest between USD50 million and USD80 million in 2003 to capture five or six networks and achieve the ‘critical mass’ from which to expand.