Does the purchase of the Aport search engine by Golden Telecom, the Russian affiliate of American group Global Telesystems (GTS), mark the end of the phase of massive acquisitions by foreign (or partly foreign) investors that the Russian Internet has been experiencing since the beginning of this year?

Monday's announcement of the $25 million purchase of Agama – of which Aport is a part – has certainly been presented in such a light by several observers. And, indeed, Aport was the last major search engine that had so far eluded the interests of large Western investors "shopping" the Russian Internet, although admittedly it belonged to Israeli firm Digital Holdings, which owned Agama.

But other experts said that it was perhaps a little too dramatic and premature to declare the period of large purchases over; a little bit like Francis Fukuyama announcing, after the fall of communism, that the end of history had finally come.

True enough, Golden Telecom's move is highly significant and does add an important player to the club of the five or so prominent Russian portals that have Western financial backing, alongside Rambler and Yandex. It also makes Golden Telecom itself, which acquired entertainment site Omen.ru and Web catalog Atrus.ru alongside Aport, a major player in the Russian Internet.

Not that the purchase came as a total surprise: "It has been common knowledge for some time now that Golden Telecom was negotiating with people at Aport," said Vladimir Konovalov, vice president of Internet holding NetBridge.

Darrell Lauterbach, vice president for business development with Golden Telecom, said that the Aport purchase was part of a strategic plan, devised in October 1999, to increase the group's position on the Russian Internet market.

Apparently, this deal was not only well thought out. According to Alexander Andreev, an Internet analyst with investment bank Brunswick Warburg, it was also unique in that Golden Telecom, contrary to other major investors such as ru.net or NetBridge, is not just an Internet company, but primarily a telecoms company with off-line activities.

"Golden Telecom has an underlying business, which generates a steady cash-flow and means it has a lot to invest in its Internet activities," Andreev said. Lauterbach said Golden Telecom hasn't yet allocated a specific sum of money to Aport and the other Sites it has just bought. "But we have $150 million on our sheet, and we'll invest what we feel we need to invest," he added.

So, with Aport off the market, some, like Konovalov, say it will be harder for those interested in the Russian Internet to find new opportunities. "It will be harder for newcomers to break in," he said, adding it was "hard to disagree" with the idea that the era of massive acquisitions had come to an end. According to him, there will now be a degree of consolidation and restructuring in the Russian Internet, but very few newcomers.

However, not all observers agree with this point of view. Some think, on the contrary, that more newcomers are bound to appear. "It is too early yet for the Internet industry to consolidate," said American businesswoman and Russian Internet specialist Esther Dyson, who sits on the board of Rambler and IBS, among other Russian companies. "There will probably be a couple of other attempts to build portals, and there will be other foreign entrances," she said.

Some were even more positive: "You cannot say that the era of acquisitions is a thing of the past," said Andreev. "One reason is that there are several kinds of players that have hardly entered the market in Russia, even though they have long done so in Europe and in America, and they should therefore be expected here at one point. They include cellular phone companies and media companies."

Another reason why acquisitions are not over is that some of the investors that have purchased Websites recently may find themselves short of cash soon, especially among those that don't have an underlying business that generates money, Andreev said.

"The current owners of newly acquired Sites or portals don't all have enough money to follow up on their initial investments. There is going to be a lot of reshuffling and mergers, and that should begin very soon. Some of the Sites that were bought even recently may soon be purchased a second time by another investor."

Lauterbach concurred: "Some made purely financial purchases and will soon want to sell their Sites or look for a strategic investor. The end of deals is certainly not in sight."

(E-mail dot.ru at erich@russiajournal.com)

HIGH-TECH TICKER

UKRAINE: The Ukrainian government commission for information technology and communications has decided to draw up a program for the development of the Internet in Ukraine. According to Alexander Baranov, the State Communications Committee first deputy chairman, there are currently 200,000-250,000 active Internet users in Ukraine, and there could be up to 350,000 by the end of this year. There were 100,000-120,000 regular users at the beginning of 1999.

EHOUSE: The Russian Internet holding announced a turnover of $5.7 million for the first half of 2000. Ehouse, which was set up last spring, includes such online stores as dostavka.ru, megashop.ru, Wstore.ru, Bolero.ru, Aromat.ru and Kenga.ru.

RAMBLER: Some 63 percent of the Russian Internet audience knew of Rambler at the end of the first half of 2000, as opposed to 54 percent at the end of the first quarter of that same year, the Rusian Internet company said, quoting research done by polling institute Comcon-2. More than 90 percent of those who know Rambler actually use it.

EUROPE STEEL.COM: British company Europe Steel.com, which owns an Internet portal for metals trading in Eastern Europe, is in the process of acquiring Russian Internet company Rusmet. Rusmet, which was set up in 1997, created the first independent Internet metals exchange portal in Russia. Eurosteel intends to eventually buy 100 percent of Rusmet shares but, at the moment, the deal only involves a 50 percent purchase.

ACTIS: Internet solution company Actis Systems is going to upgrade mosnalog.ru, the Website of the Russian Tax Ministry's Moscow department, said Actis' president, Pavel Cherkashin.

SOVINTEL: Russian telephone company Sovintel announced it is poised to sign an agreement with German telephone company Deutsche Telekom AG. By this agreement, both companies would offer their clients cheap dedicated digital lines between Russia and Germany.