Industry Analysis Case Study

Telecom Industry in Russia: Besieged with "Oligarchic" Battles

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Abstract:
The Russian telecom industry, one of the fastest growing and profitable sectors, had faced negligence under the Soviet Government, resulting in under-investment. Having recognised the importance of developing telecommunications for a modern economy, the post-Soviet Government made reforms that helped the industry to grow. However, there are certain impediments such as limited foreign investment, and excessive rules and regulations that hinders the industry's development. One of several controlling factors is the dispute between the oligarch, Mikhail Fridman and the Communication Minister, Leonid Reiman over a 25% stake in the country's third largest telecom company, MegaFon. The legal battle that started in 2003 between the two, has witnessed charges and counter charges, accusing each other for resorting to murky tactics. It has cast shadow on the future of the industry drawing parallel with the Russian oil industry and the fate of Mikhail Khodorkovsky, the Russian oil oligarch.

Pedagogical Objectives:

• To analyse the environmental factors in Russian telecom industry
• To discuss the reasons for Russian telecom industry not being able to attract enough FDI and also assess the accompanying political risk in operating in the Russian telecom industry
• To discuss how the dispute between Leonid Reiman and Mikhail Fridman will affect the telecommunication companies and the future of the telecom industry in Russia
• To analyse whether this controlling battle would result in Alfa Group (Mikhail Fridman) meeting Yukos' fate
• To debate ways and means to make Russian telecom industry on par with the global telecom industry standards.

Keywords : Russian telecommunication, Government and Business Environment Case Study,Oligarchs, MegaFon, Alfa Group, Telecom policy, Political risk, Business risk, Risk management, Business and politics, Yokos