A man talks on a mobile phone on the street in St. Petersburg, Russia.
Photo: Mikhail Razuvaev
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To Mobile Phone Companies: Go East
// Altimo Prepares Investment Rankings for Cellular Communications Markets
The Russian company Altimo has teamed up with several leading universities around the world to investigate the attractiveness to investment of cellular communications markets in different countries. According to the resulting index of development in the field of mobile communications, the definitive leaders in the rankings are the countries of Asia and the CIS. Altimo cautions against investment in Africa, a region that is currently attracting significant interest from investors.
Altimo, the telecommunications arm of the Russian company Alfa Group, yesterday released the world's first development index in the field of cellular communications in different countries (the Mobile Development Index, or MDI). According to the rankings, the most talkative nations are in South and Southeast Asia, as well as in the Commonwealth of Independent States (CIS) of the former Soviet Union. The report also notes that the countries of Western, Central, and Eastern Europe are offering increasingly few opportunities for investors, but the US and Canada are still considered good targets for investment. Altimo believes that this is due to a continued preference in North America for fixed-line telephones over mobile phones: for example, mobile phone networks have penetrated only 70% of the United States.
The group of experts that Altimo assembled to work on the MDI include faculty from the London Business School, Cambridge University, and the Russian School of Economics. The index takes into account factors such as the size of the market, the average EBITDA level of companies in the field, real and predicted levels of per-capita spending on mobile communications, the speed of cellular network expansion, outlays of capital by network operators, and per-capita GDP. The MDI was compiled for 52 countries and 11 regions of the world on the basis of this data, which was collected between 2002 and 2006.
According to Altimo, the ten countries with the highest levels of attractiveness to investment include seven countries in South and Southeast Asia (Bangladesh, China, India, Indonesia, The Philippines, Sri Lanka, and Pakistan) and three from the CIS (Russia in 5th place, Ukraine in 7th, and Uzbekistan in 9th). "Obviously, the most interesting countries from the point of view of cellular communications are Asian countries. For example, our company is already prepared to invest in three countries in that region – Vietnam, India, and Indonesia. The volume of investment may be up to $2 billion in each country," said Altimo vice president Kirill Babaev, the leader of the MDI project. According to Mr. Babaev, Central and Eastern Europe have lost much of their investment potential over the last two years as they have become increasingly saturated in terms of cellular network coverage. The countries of Africa occupy the bottom rungs of the Altimo MDI. "Right now a lot of people are talking about the prospects in that region, but the index says otherwise," said Mr. Babaev. "If the GDP of those countries is growing, then it is doing so very slowly, and outlays to build infrastructure will be very high," he added.
Experts in the field believe that the MDI generally reflects the current situation in the global market. The only point of some discussion has been the assertion of the attractiveness of the North American cellular communications market. "The data on the US surprised me," said PioGlobal Asset Management investment director Denis Matafonov. "It is possible that they got such results because of a large number of immigrants. Americans use mobile phones just as much as Europeans. So the attractiveness of the US to investment is on the same level as that of the countries of Western Europe – low, in other words." According to the experts, Russia remains a country of interest because of the potential for growth in the average monthly profit from a single subscriber, which is currently $8-10 in Russia. In Western Europe, by contrast, it is approximately $25.
Alexander Malakhov
All the Article in Russian as of Apr. 13, 2007
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