Capital carrier “Gars Telecom” specializing in business-centers telephony announced ambitious development plan. Investing about 12 MUSD in networks, marketing and competitors’ acquisition, company plans to increase capital market share from 5 up to 20 per cent and prepare to hold an IPO. Market players and analysts concern that “Gars” plans are very optimistic. Such investments can help to save the market share but to hold an IPO carrier should tumble over itself and to earn 10 times more than at the moment.

Gars Telecom Board of Directors accepted company development strategy for further three years. “We developed investment program within the bounds of which the whole returns and shareholders resources will be directed in network development, acquisitions and region expansion”, — tells Michael Sergeev, “Gars Telecom” Corporate Communications Director. According to him the total amount of investments during further 2 years will be about 12 BUSD.
Up to 2010 carrier plans to occupy up to 20 per cent in the capital business centers telecommunication market and to begin working in cities with million population rising company capitalization up to 60 MUSD to prepare base to hold an IPO in 2010-2011 or to engage strategic investors.

Experts refused to believe in “Gars Telecom” plans realization. According to “Comstar-OTC ” the total amount of A, B and C class business centers is not more than 2000. Nowadays company has about 5 per cent of Moscow business centers telecommunication market. Big-size market players such as “Comstar-OTC” and “Golden Telecom” aggregate share is about 70 per cent. “Arctell” and “WestCall” are made difficult to determine their share. “To realize such ambitious plans of 20 per cent commercial real estate market ‘Gars Telecom’ should acquire more than a half of little and middle-size carriers. And lots of them are not ready to leave its business, — considers Michael Reshetov, ‘WestCall’ CEO. — Such plans realization will demand significant financial investments”.

Analysts have the same opinion. “Such investments will help ‘Gars Telecom’ to save market share but not to influence on forces aligning”, — tells Evgeny Solomatin, “Cominfo Consulting” analyst. In his opinion, at the same time strategy developed by carrier is feasible and in fact repeats Golden Telecom and “ComStar” business models. “But there are a great amount of such companies as ‘Gars Telecom’ and competition between them is harder. To compete successfully, unique services, developments and technologies are needed. ‘Gars’ has such advantages that give a chance to draw closer to leaders”, — adds Mr. Solomatin. But it is not impossible that “Gars Telecom” can be acquired and IPO is just abstract prospective for several years.

“Gars Telecom” rivals do not believe completely that it will be possible to hold an IPO. “To hold an IPO successfully it is necessary to have 100 MUSD annual revenue that is ten times more than it has”, — comments Vladimir Kovalev, “WestCall” PR and Marketing Director. “Gars Telecom” last year annual revenue was 250 MR and company capitalization was evaluated in 20 MUSD. “New rules for long-distance telecommunication services rendering influenced greatly on revenue distribution, — explained Pavel Gorenkov, ‘Gars Telecom’ CEO. — According to our analysts, about 20 per cent of possible telephony services revenue moved to long-distance telecommunication carriers”. As a result, company revenue share in fixed and mobile telephony dropped to 27 per cent in the total revenue amount from 46.4 per cent in 2005 and from 52.8 per cent in 2004. On Internet access company yielded 32.3 per cent and on telecom-consulting and outsourcing about 40.7 per cent or 101 MR.