Russian mobile heavyweights turn their gaze towards Central Asia

16 Dec 2004

Two of Russia’s largest mobile operators, MTS and Vimpelcom, have begun to look at investment opportunities in Central Asia, as rapid expansion in their domestic markets begins to slow. Alfa Group, which holds a 25.3% + 2 shares stake in Vimpelcom, has announced plans to buy Uzbekistan GSM operator Buztel through its investment arm Alfa-Telecom, while MTS is in talks over a USD55 million bid for Turkmenistan’s sole mobile operator, Barash Communications Technologies Inc (BCTI). Although a spokesman for MTS would neither confirm nor deny rumours of the deal, the company has admitted it is looking both at the CIS countries and Central Asia as part of its future expansion plans.

Earlier this year MTS purchased a 74% holding in Uzbek cellco Uzdunrobita, extending its footprint from its current presence in 71 Russian regions, Belarus and Ukraine, while in August Vimpelcom bought up Kazakh mobile operator Kar-Tel. While growth in Russia is slowing as they reach maturity, the underdeveloped Central Asian markets offer significant growth potential. Some industry watchers suggest that Kazakhstan could experience a four-fold expansion in cellular penetration rates in the next few years to around 60%, while Uzbekistan and Turkmenistan could see mobile take-up boosting penetration from around 2% to 20%.