After a big drop in subscribers during the second half of 1998, business is picking up again for paging companies in Russia, though competition remains heated as mobile telephone companies continue to slash their prices.

"We see the situation stabilizing and now we can make some plans for the future," said Leonid Kisvyantsev, commercial director of TasCom, one of the three largest providers in Moscow with more than 20,000 subscribers.

He said that during the six months after the August 1998 financial crisis, his company lost 30 percent of its subscribers, but he added that it has now almost totally recovered its pre-crisis positions.

However, industry experts say the fat profit margins seen before the crisis appear to be gone for good. According to data from major companies, fees have fallen by about 35 percent since last August.

Monthly fees for pager services in Moscow are currently around $25. Companies sell pagers at cost, and some companies also give one or two months' free subscription as an incentive for new customers. Prices are similar at all the leading companies.

"If today we take $5 off the price, tomorrow our competition will reduce it by $5 and 1 cent," said Kisvyantsev. "This is no good. The major task for companies today is not to kill the market."

Now companies attempt to compete with additional services, officials said. "We now consider a pager as a portable information terminal," said Alina Trofimova, a spokeswoman for MobileTelecom, the biggest Russian paging company.

Most companies have several information channels disseminating everything from traffic reports to ruble quotes, news headlines and other information.

TasCom said it plans to introduce a financial stream that will include customized equity and fixed-income quotes and send a signal when the prices of chosen securities break through a specific level.

Meanwhile, competition for paging companies has intensified. Major Russian mobile phone companies, in a struggle for the huge market of mobile telecommunications services, brought prices for mobiles so low that they are now comparable to prices for pagers.

"We used to say that pagers complement mobile phones but do not compete with them," said Tatyana Levit, spokesperson for TasCom. "Now, after mobile telecom companies set prices so low, they are more in competition with us."

But Trofimova of MobileTelecom said that about one-third of their clients have mobile phones and another third plan to buy one.

The cheapest mobile phone costs less then $200 (compared with $80 for the pager) and the base monthly fee is $20.

Things were different in the golden days of 1993 to 1997, when the paging business developed quickly in Russia. The pager was a new toy for New Russians and, for international corporations and was an alternative to mobile phones priced $5,000 per unit.

"Five years ago, a Motorola pager could be sold in Moscow for $380, and this price was much higher than the producer price," said Kisvyantsev, who started work in the paging business in 1993. "The monthly fee was more than $50." The fee rate remained nearly unchanged until just before the crisis, he said.

Companies thrived on very fast growth in demand. According to mobileTelecom estimates, there were 40,000 pager users in Moscow at the end of 1994 and about 220,000 just before the 1998 crisis.

The years 1997 and 1998 saw the business landscape in the sector change significantly. Vessolink, then the biggest company, and United Paging Service, with a wide regional network, merged in 1997 to form the new Vessolink-United Paging Service.

In February 1998, American-owned Radio Page and Russian Multi-Page announced the merger to create a new company, EnergoNet. The merger was never completed, and in 1999, the companies split. RadioPage, the fifth biggest paging company in Moscow, has some 15,000 subscribers.

In March 1998, the American founding partners of mobileTelecom sold their 50 percent stake to Metromedia International Telecommunication Inc., an Eastern Europe and CIS unit of American Metromedia International Group firm.

Now companies have to struggle to keep their share of the market. They are uncertain as to whether the current stability is sustainable.

"If another crisis hits Russia, one-fourth of the companies (or about 30) could bite the dust," said Dmitry Skovorodov, a sales director for Moscom, which Skovorodov said ranks among the "top 7" paging companies in Moscow. "Thus far, we see only shaky stabilization."

Kisvyantsev from TasCom estimated that companies with fewer than 5,000 subscribers would not be profitable in Moscow. "That is a break-even point for the company, considering the need to pay for broadcasting infrastructure, office rent, employee salaries and advertising expenditures," he said. Country-wide, only around 20 companies have any real prospects for survival.

Kisvyantsev also said that the cost of taking a new paging company to the market would now be around $3 million. He was unable to disclose revenues of TasCom, but agreed that the assessment of the annual revenue of $5 million based on the number of subscribers is close to the truth.

There are around 350,000 paging subscribers in Russia, and about half of them are situated in Moscow. The overall market for Moscow is estimated at $35 million per year, nearly the same volume as the rest of Russia, based on the $20 per month fee. But all major companies are privately held and do not disclose their financial results.