The Moscow commercial real estate market increases 20-30 % yearly. And the customers’ demands to the services level including telecommunications increase in direct ratio. Nevertheless, not the all medium-sized operators are able to fit this level. Gars Telecom company is eager to invest 40 MUSD to buy such operators. How in the sharp competitive environment stay alive, moreover, to be successful, tells Pavel Gorenkov, Gars Telecom CEO.

What kinds of services are mostly popular among the clients on the Russian market? What is the specific of the rendering? How do the business-clients’ requirements change?

The market specific is that it is necessary to create unique solutions for the every customer because clients inappropriate universal services. But despite the every case unicity, corporate client is desperately conservative and do not always interested in the new services implementation.

In the large companies the telecom development strategy is aimed the personnel should be always in contact and have the access to the corporate resources. The other companies are the users of the traditional telephony and internet services but with the highest requirenments.

For a few companies we developed FMC class solutions and created Smart Mobile product (GSMGPRS convergence), “3G Office” (CDMAEvDO convergence), and “Videotelephony” that could replace expensive videoconferencing.

Security Departments of some famous clients block up the development of the modern unique products. In view of the different circumstances in the case of videophony there is physiological barrier in the service usage because people do not want to show the interlocutor the gestures and mimic. At the same time, traditional services rendering for the grandees does not mean that it is easy — there are the highest requirements to the services quality. And they rise permanently. SLA is the corporate service standard.

Do you really consider that the quality is more important than the price?

For the client’s business the high service quality is the killing application. Corporate client who has perceived demand in the “quality” services, does not accept “off-grade” ones. For the several years we have been thought what is necessary to invent to attract more clients. The problem became sharp when the growth rates decelerated. After the deep interviews with our clients we understood that the key is in the services level. We decided to change the work algorithms of the Service Department and Help Desk. Within the restructuring process the position of the Service Department Director was opened and the structure of the service managers was created. Help Desk has obtained the full powers. Now our HD operators have the manager functions and are able to make decisions. To raise the quality level in the last September we launched the “New quality standards” program aimed to monitor clients’ demands.

Upon our experience that serious problems are the number of unsettled little problems. Thus we changed the structure of the cooperation with the clients to the “keep in touch” mode. Our specialists regularly enquire about the current situation, learn the recommendations and wishes. Such a practice allows understanding the causes of the appearing problems: whether it is a fatal set of circumstances or the incompetence of the servicing personnel. But the most important thing is that attentive attitude to the clients’ problems helps to raise his loyalty.

The service quality is the question of the specialists’ qualification. Where do you find high-qualified managers and specialists?

Certainly, the human resources problem is set sharp before us. The ideal recipe of our team building does not exist. To employ the experienced personnel is a problem, and the experience in the retail telecom-companies is a disadvantage because such a specialist does not fit our corporate standard. Besides, ready specialist carries the other corporate culture. Nowadays, we understood that the own specialist training program makes sense. Moreover, the own specialist are more loyal.

But now telecom-market suffers of the chronic lack of human resources. Are you afraid that your specialist can be hunted by the companies with greater HR budgets?

Specialist attracted from outside easier to hunt. The loyalty of the own team is definitely higher. Moreover, we are among those companies that do not cut down expenses due to the low salaries.

Whom do you concern as the basic competitors?

On the Moscow business-centers market there are three main enterprises such as “Golden Telecom”, “ComStar-OTC” and our company. But our competitors, on the one hand, are in the restructuring process and, on the other, flirt with the mass market. This gives us an opportunity to fasten the development.

Previously you declared the plans of the regional expansion. What regions have you already entered?

Exactly, we planned to open representative offices in Kaliningrad, Novosibirsk and Rostov-on-Don. However, estimated the markets we decided to pause on the wide-scale regional expansion. So, our company core specialization — services rendering in the business-centers that is why we prefer to concentrate our powers in Moscow and Saint-Petersburg which have the 70 per cent of the Russian market.

The commercial real estate market in the other million-populated cities begins to develop. However, it is the tragically lack of the modern business-centers. In the Russian towns it is a lot of industrial objects that leased to enterprises but the modern business-centers, for instance, in Rostov-on-Don are very few. The value to enter the regional markets is not so high, for the 5 MUSD it is possible to merge rather successful company. But in the further development it will necessary to invest. Taking into consideration the prices on telecom it is 5-6 years investments. Our development strategy concerns on 3 years maximum. That is why we are waiting. The serious reason for us is to wait till the time when there are more modern business-centers will be built.

But till that time the market will have been split.

We are not afraid of it. It is no stranger to us. We have begun to work on the split market within the bounds of the strict competitive environment. And the capital corporate market is not full and its growth is 20-30% per year.

Please several words about how do the Company plan to develop in Moscow and Saint-Petersburg?

By the 2007 year results our business increased on 60%. We feel the powers to increase faster. And we plan not only to develop the network but to merge little-sized carriers. Currently we are choosing a financial partner who will help to buy and merge little-sized carriers. For the assets buying we plan to spend 40 MUSD.

For the previous 2 years we met and carried due diligence with 19 companies. It turned out that almost the all little-sized carriers have the off-the book financial scheme and stay alive owing to the local administrative resources. Such companies scarcely can be rental and its capitalization does not growth. It is normal when the head of such carrier is the friend of the business owner. And such a business is neither good nor bad. When we offer the owner our services he does not care that the department is profitless he just wants his friend be employed.

Carries from business-centers stay apart. A lot of developers prefer to control themselves telecommunications on the own objects and they are not ready to part with the “pocket” carriers. We got the successful experience when we outsource such companies and increased the “pocket” carrier capitalization.

How often companies use outsourcing? What does outsourcer face with?

We have been in telecom-outsourcing for years. We came following the large clients’ requirements who wanted to decrease the wastes on the telecom-services.

For examples, we carried out outsourcing for the large oil company. Twelve carriers provided the regional network. Three specialists provided the communication on behalf of the company with the carriers. The Client had the own Help Desk to solve the troubles with carriers. Handed over the communications on outsourcing the Company got the only Agreement, the one SLA, the number of the optic channels that logged in to the office data-center decreased. As the result, the budget on the telecommunications decreased on 23,6 %. Unfortunately, such an “ideal” cases a few in outsourcing practice. But the results are obvious, moreover for the Company who spends 40 MUSD and more per month.

Curiously, but IT Officers try to prevent the promotion of these services. In the case of outsourcing of the telecom-infrastructure they lose their positions. And the core reason against the outsourcing is that the own IT specialist is always on the place and for the external specialist is hard to reach. But the qualification of the outsourcing-company specialist is definitely higher. Engineers in the non-telecommunication companies usually do not try to develop. At the same time we are interested in the permanent staff qualification development.