German firm makes call to Russia's telecoms

Issue Number: 
Polina Zvereva

As operators fight to compete on Russia's expanding telecoms market, German consulting company BINCom says the industry has reached the stage where those looking to thrive are in need of professional advice.

BINCom opened a Moscow office in March in a bid to help Russia's more than 100 telecoms operators, equipment suppliers and servicing companies to develop networks, select equipment and introduce new technologies as the industry enters its next stage of expansion.

"It will be difficult for [telecoms] companies to cope with all these problems on their own," Oleg Pavlov, head of BINCom's Moscow office said. "Of course, they can hire more staff, but this will boost expenses, or they can put additional workload on their present employees, but this may not be very effective.

"The business of equipment suppliers is to sell equipment, while the business of our company is to advise clients which equipment is most cost effective and how to build a telecoms network," he added.

In addition to technical consulting, BINCom plans to offer consultation in business planning and marketing. When the operation gets fully up and running, German and Russian specialists from a range of companies and institutions will be called in as advisers.

Meanwhile, Moscow analysts gave mixed views when asked how much demand they expect to see for BINCom's services.

Nadezhda Golubeva, telecoms analyst from ATON and Ari Krill of UFG both said it is difficult to predict demand for telecoms consulting services, but Golubeva added that marketing and finance consulting is particularly important given the poor quality of management common in Russian firms.

Igor Semyonov from Fleming UCB said that as long as the trend of building new networks continues, there should be demand for relevant consulting services. He, too, said there is most likely to be demand in marketing and finance. "I think we have enough domestic technical specialists," he said.

BINCom's Pavlov said negotiations with potential customers were held throughout April, and some of them are at the stage of contract signing. First orders are expected before this summer.

"We work hand-in-hand with our customers so that a customer's specialists can see what they will eventually get and can express their opinions on the project," he said. "Sometimes, formulating the task turns out to be the most difficult part of our work. More often than not, customers give unspecific and incomplete task requests, but as work goes on, their orders take clearer shape."

BINCom's Russian branch also plans to help Russian companies find foreign investors for their projects, evaluate the practicality and effectiveness of these projects and help Western companies to find suitable facilities if they wish to organize production in Russia.

According to Pavlov, BINCom will approach a wider range of problems in Russia than it deals with from its other offices in Berlin and Munich, as it will have to cope with both modern sophisticated telecoms networks in the cities and conventional phone lines in some of the more backward regions.

"We are well aware that Russia is miles away from the era of the virtual world, contrary to what is often shown in various colorful commercials," Pavlov said.

"Just ride several miles away from Moscow and you will see that people there need not Internet access but an ordinary telephone. We will approach these problems and will cooperate with regional communications operators, including getting individual houses and apartments connected to the existing trunk line."

Pavlov said that since setting up in Moscow, the company has been negotiating business with potential clients in the capital and throughout European Russia, and will be looking to expand into Russia's Asian regions in the future.

BINCom was established in Germany in 1993 by a group of specialists from Siemens, and it has since helped Siemens to design a confidential data transfer system for its mobile networks. BINCom has taken part in a number of telecoms projects in Europe and Asia, including optimization of Prague's GSM network, Latvia's general access network and GSM network projects in Hungary, Egypt and Taiwan.

In 1998, BINCom's sales exceeded DM 7 million, and although no official information has been published, industry insiders say that figure increased by some DM 3 million in 1999, making it possible for the company to expand its operations.