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Korea Telecom is the main investor of NTC.
Why are you investing in the Russian far east?
Korea Telecom is seeking the ways and means to
expand its business abroad because Korea Telecom
understands that the market in Korea is saturated.
So now Korea Telecom is seeking for overseas business
and trying to modernize its status.
What was the process for entering the local
market and to establish a partnership with NTC?
Local Russian companies established NTC in 1994.
They were seeking investors from foreign countries,
so naturally the first investor came from a foreign
country. That company was called Maverick and
they worked together for 3 years from 1995 until
1997 when NTC decided it wanted to end their co-operation,
so consequently they started to look for a new
investor. Korea Telecom then made a decision to
buy their shares at the end of 1997 we succeeded
in this and bought the New Telecom Company at
the beginning of 1998.
What was the initial investment made by Korea
Telecom and what are some of the most recent financial
figures of NTC?
By the end of the year we expect to generate revenues
of approximately $23 million. We expect our profit
to be over $3 million this year and our total
number of subscribers covering our GSM area to
be up to 60,000 users.
Over the past few years the national telecom
market grew 60% faster than the country's economy.
Have you witnessed the same growth rate in this
region and do you anticipate the same rate to
continue?
Yes, we have seen strong growth rates, especially
from the year 2000 up until now. I also believe
that for the next 2 or 3 years the growth rate
will continue to be very high.
The present growth rate in Vladivostok is over
9 % and I hope that by the end of this year it
will have reached 10 %. The average rate in this
area is now is 4 % and at the end of this year
I expect to see this figure increase to 5 %. Our
subscribers will have reached 60,000 and all of
our competitors combined will have just over 40,000
subscribers, so the total number of GSM subscribers
will be approximately 100,000 by the end of this
year.
You have about 60% of the market share. What
are the infrastructure challenges of such a big
region, to adopt the latest technology and maintain
a high subscription rate?
Our strategy is to expand our coverage. In some
areas we provide our mobile services but in other
areas the high-sensor providers cannot work, so
we use the autonomous provider for that area.
This region has quite tough terrain, so it is
not easy to put a cable just anywhere and start
a wireless floor, as it is very costly. So my
strategy is to expand our coverage and maybe by
next year we will cover over 90% of mobile operations
throughout the region. We also cover the three
major cities within Primorsky Krai: Vladivostok,
Nakhodka and Ussuriisk.
There are 800 thousand potential subscribers in
the Vladivostok area, 200 thousand in other areas,
so that translates to almost 1 million potential
subscribers. It is not easy to work in this region
- just to install our radio stations we need 2-3
transmission rings, but sometimes these transmission
rings do not exist, so we have to install what
we call a deter fiber-optical or deter microwave
ring instead. This is not an easy piece of equipment
to install, especially here.
As a mobile operator we face numerous infrastructure
problems. We cannot install all the rings, so
we have to wait for the transmission rings from
other operators, such as uphill or transition
operators. As a consequence, in some regions we
cannot provide adequate coverage due to this deter
transmission need.
You are looking to expand your services. So
what are the regions you will be looking at expanding
to, such as Yakutsk and Khabarovsk, and how are
you now using your position as a GSM leader in
Primorsky Krai to launch yourself into other regions?
Of course I plan to expand to other regions,
but in order to this we have to obtain the licenses
and frequencies first.
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Right now we do not
have them, so I cannot tell you how quickly we will
be able to expand. However, we are thinking about
different ways to expand our business to other Russian
regions. We want to make our company a model business
for foreign investors. I do not have any problems
with bringing money from foreign countries or from
foreign investors because our business is successful.
The problem that we currently face is getting the
right licenses.
The federal "Electrosvyaz" restructured
into several different regional operators. Has this
facilitated your process in establishing links and
relationships with regional operators?
I think we have good relationships with local companies
such as "Dalsvyaz". It is important for
a foreign operator to have good relationships with
local operators as it is the main factor for predicting
your success. So we have good relationships with
"Electrosvyaz" and we are able to provide
services together.
It is very important for foreign investors that
come here to be welcomed and supported by regional
administration, so how has your relationship been
with the regional administration?
I agree that this relationship is very important
also. I have not had any problems with the regional
administration or other authorities ever since I
have been here. Maybe this is due to the fact that
our company has major investors who are well known
in the telecommunications business. Small businessmen
or other business centers face problems with local
people or other competitors, but fortunately we
do not have any serious problems regarding this
factor.
As far as the competitive situation is concerned,
"Primtelefon" is of course trying to increase
its market share. What is your strategy in order
to stay on top?
We provide a high quality service and we have good
coverage, that is why we can compete with any operator.
I do not care about competitors because it is not
easy, especially in this region, to provide a high
quality service. If somebody can provide a better
service than ours, then naturally they can beat
us. However, I am sure that we provide the highest
quality service and the best coverage. It is not
good to always concentrate on how to compete - it
is better to think of how to survive together.
Investment for the national telecom system will
amount to almost 30 million dollars over the next
10 years. What do you expect to be Korea Telecom's
next investment plan for Russia?
In my personal opinion, in order to expand in the
Far Eastern region, Korea Telecom has to invest
over 100 million US dollars for several years to
come, in the first stage to provide services in
the Far Eastern region, and then in Eastern and
Western Siberia. Future plans are to cover this
entire region.
Telecom and mobile phone technologies are extremely
advanced in Korea. Do you believe that telecommunication
investments is one of the major partnerships that
can bring Asian countries and Russia together?
This region is our neighbor so our interest is strategic,
and we are investing into the local communities.
I have no interest in bringing money from Primorsky
Krai to Korea - even though we make profit here
I prefer to reinvest this money in order to develop
the regional telecom industry. Its all about trust,
the people here understand that we make $1 million
profit a year, but we will need more than $10 million
to install all of our equipment.
With your experience do you believe that you
are the man to lead the expansion of Korea Telecom
into other regions? Do you think that this is your
next challenge?
Yes indeed, it is my next challenge. I have been
here for three years already, so to further my career
it is not good to just remain here because Korea
Telecom has much bigger possibilities. We are a
small business in comparison to Korea Telecom. I
would love to work at our headquarters in Seoul.
But if I have a chance to expand our business into
other regions that would be a major target in my
life.
What is it that motivates you to do what you
do, to go somewhere like Russia where it is difficult
to do business?
I am not a shareholder - I don't even have 1 % of
shares in NTC - but to help establish a large company
is one of my business dreams. I do not want to be
original, but I like to be successful.
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