Dear investors, This report will provide you with factual information on the importance of investing in the Telecommunications industry in Russia. Since 2006, the direct investments in Russia from external countries have increased a lot. It demonstrates that it is a strategic market in which the possibilities of development are significant. The total FDI in Russia represents 25% of the GDP. Thus, Russia stands first when compared to BRIC countries and Ukraine, regarding the number of foreign investments in the country per habitant. Currently, Russia is a strategic partner and if you want to be an active competitor on the market you may want to invest in Russia. A few points have to be highlighted regarding the main strengths of the market. Russia has a highly competitive mobile telephone industry, owing to a healthy competition between the country's main operators like MTS, VimpelCom and MegaFon. Huge amounts of money are being invested into the country's telecom sector, with operators looking to improve their services and networks.
[...] This means that for telecom, Russia did not want to invest in government use. Instead, it preferred to invest in the individual use of telecommunications as we shall see a little later. In other words, government usage is an axis to be developed in Russia. Moreover, we can underline that we are late on another point: the capacity for innovation. Although Russia is not the last on the latter point, it is unfortunately not well placed on innovation. Below, we realized a comparative chart to demonstrate you more easily the difference which we can have with the other countries: Source: The global information technology report 2008-2009 In spite of the fact that Russia is classified in the last ones, we cannot say that other BRICs countries are doing much better. [...]
[...] Time required to start a business The global Information technology report indicates us that it is faster to start a business in Russia than in China and India. It means that setting up a business in Russia can be done in no time at all, which shows that Russia benefits from a really good business friendly atmosphere. Number of procedures In Russia, we want to minimize the number of procedures but we also pay attention to the reduction of the risk of fraud, otherwise, businesses are trapped in the unregulated, informal economy, where they have less access to finance and hire fewer workers, and where workers lack the protection of labor law. [...]
[...] Environment component According to the Global Competitiveness Report 2008/2009 analysis and ranking, we know that Russia is a country in transition from stage of efficiency driven country to stage of innovation driven country development. Thus, based on the technology-gap theory, returns on investment are significantly higher in Russia than in other BRIC countries. Even if Russia's global rank for environment component is the third among the BRICs, Russia does have a competitive advantage regarding this aspect for our investment since it possesses good rankings in the sub-criteria that are really relevant for this investment, and especially regarding infrastructures which are essentials to build a long-run and profitable business. [...]
[...] Thanks to government support, the quality of Russia's educational system has been increasingly growing and, as the following graph suggests, the Russian educational system is ranked number 36, which places it number 1 amongst the BRICs: Through the major changes that Russia has been doing for the past years in its educational system, the country has succeeded in turning a weakness into strength. Indeed, Russia's quality of educational and research systems, combined with quite innovative firms which invest significantly in R&D (46th position) is now one of the country's main competitive advantage in ICT. [...]
[...] However, the Global Information Technology report (2008/2009) indicates that the number of mobile telephone subscribers per 100 inhabitants was in 2007 almost seven times higher in Russia (114,6) than it was in India (20). Investing in mobile telephony in Russia would bring important revenues through high margin due to high price and a potentially high consumption. Another factor is that mobiles can constitute a substitute product to residential phones which are still expensive in this country and require relatively higher outlays for the modernization and extension of the fixed line telephony infrastructure. [...]
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