Rostelecom Sees Earnings Jump, But Sales Decline

Former long-distance monopoly Rostelecom saw its first-half earnings quadruple on the sale of its stake in a fixed-line provider, but sales declined as it struggled to maintain its market share.Rostelecom, which is controlled by state telecoms holding company Svyazinvest, said in a statement that net profit rose to 9.83 billion rubles ($349.9 million) from 2.55 billion rubles in the first half of last year.The company sold its 11 percent stake in fixed-line operator Golden Telecom to mobile carrier VimpelCom at the beginning of 2008 for around $465 million.Revenues, to International Financial Reporting Standards, declined 1.1 percent on the year to 31.4 billion rubles as core revenues from long-distance traffic transit fell 6.7 percent.Revenues from leasing trunk lines to other operators edged up 0.8 percent, while sales of new and value-added services such as Internet access soared 45 percent to 4.16 billion rubles, the company said.Operating expenses fell 5.7 percent to 27.16 billion rubles. Operating income before depreciation and amortization rose 14 percent to 7.85 billion rubles, and the OIBDA margin improved to 25 percent from 21.7 percent a year ago.Rostelecom lost its monopoly on long-distance phone calls in 2006 as part of the sector's liberalization. Since then, more than 30 operators have received licenses to provide domestic and international long-distance calls.

Prokhorov Plans Network for Snobs

Social high-end networking, in Denmark practised at e.g. beautifulpeople.dk, reaches a new dimension in Russia, as plans to launch "Snob" are soon to be reality.

If you don't like mingling with the rabble on Facebook or Odnoklassniki, billionaire Mikhail Prokhorov feels your pain.

Upwardly mobile Russians will soon be able to enjoy Snob, a social networking site of their own, which eventually will be accompanied by a co-branded magazine and television channel, thanks to a $150 million investment by Prokhorov and several business partners.

The invitation-only web site is aimed at "educated, successful, professional people leading a sophisticated way of life," Snob general director Andrei Shmarov said by telephone Wednesday.

"As a rule, these are generally not poor people," Shmarov said. "Wealth is not a criterion for membership, but it tends to be a quality of the target audience."

Initially, invitations will be extended to a group of 3,000 to 5,000 people, and afterward, the community will grow organically based on members' recommendations for new additions, Shmarov said.

The web site, expected to launch in June, is the first project from the ZhV media group, a new venture whose main shareholder is Onexim Group, Prokhorov's investment vehicle.

Prokhorov, sometimes referred to as the country's most eligible bachelor, is the fifth-richest Russian, with a fortune of $22.6 billion, according to Forbes Russia's rich list, published last week.

His reputation as the country's bad-boy oligarch was cemented in January 2007, when he was briefly detained by French police at the exclusive Alpine ski resort of Courchevel on suspicion of being involved with a high-end prostitution ring.

The Snob venture marks Prokhorov's first major foray into the media market.

"I think it would be very good if Russia became a world leader not just in energy, but in the creation of new intellectual products too, like new media," Prokhorov wrote on his blog Wednesday.

A spokesman for Onexim Group declined to comment about the project Wednesday, saying Prokhorov would answer reporters' questions himself at a presentation on Thursday.

The total amount being invested in the ZhV media group is $150 million, the bulk of which is coming from Prokhorov, Shmarov said.

Prokhorov's partners include the media veterans Vladimir Yakovlev, founder of Kommersant; Shmarov, who leads special projects for Expert magazine; and Yury Katsman, a former shareholder in the Sekret Firmy publishing house.

Shmarov said the first issue of Snob magazine would come out in July, to be followed later this year by Snob television, which will be broadcast only in the evenings on a pay-television channel.

The creators of Snob television have already filmed or selected 80 percent to 85 percent of their content, which will cater to people with good taste, Shmarov said.

"If we show a concert, it won't be the Spice Girls or t.A.T.u.," he said. "It will be the Louis Armstrong anniversary concert led by Ella Fitzgerald and Doc Severinson, which was an absolutely extraordinary concert, even though the footage is in black and white. Or the Rolling Stones in Belgrade."

Similarly, the Snob web site will avoid the shortcomings of Odnoklassniki, the Russian answer to Facebook, Shmarov said.

"I couldn't really care less about my classmates from 40 years ago," he said. "What I care about is people from my social circle."

Smugglers Lend iPhone Sales a Hand :-)

Apple has gained unlikely allies in its bid to boost iPhone sales: Russian smugglers.

The device isn't sold in Russia by California-based Apple, and it cannot be used legally on local networks. Still, about 250,000 people own them, more than in any other country except the United States and China, said Eldar Murtazin, chief analyst at Moscow-based Mobile Research Group.

That popularity has turned into a bonanza for traders who sell the phones in kiosks and over the Internet for $1,000 each, more than twice the U.S. price. Hackers say they charge as much as 2,500 rubles ($105) to "unlock" them so they work locally.

"It's an icon for Russians," said Timofei Kulikov, a lawyer and buyer of electronic products for X5 Retail Group, the country's largest supermarket chain. "If you see two businessmen at lunch in Moscow, they'll both have iPhones on the table."

The evolution from web-surfing touch-screen gadget to status symbol has been a boon for Peter Aloisson. The jeweler sold a diamond-studded iPhone encased in white gold to a Russian businessman in March for 120,000 euros ($188,000) and is working on a 500,000 euro version that may go to another Russian client.

"There is no doubt that Russia, when it comes to luxury items, is by far the best marketplace," Aloisson, 47, said from his studio in Vienna.

"More and more Russian customers visit us here in Austria," said Aloisson, who started customizing handsets 10 years ago.

Notable users include President-elect Dmitry Medvedev, billionaire Alexander Mamut and Boris Yeltsin, grandson of the former president, Kommersant reported. Medvedev's spokeswoman declined to comment.

Murtazin says about 20,000 iPhones arrive in Russia each month.

"They arrive in suitcases," Murtazin said. "Practically every flight from the U.S. brings new iPhones."

Apple, the world's biggest buyer of flash memory chips, has not said how many of the 4 million iPhones sold through Jan. 15 were unlocked to work on unauthorized networks. Analysts, including Gene Munster of Piper Jaffray, put the figure at 1 million. About 400,000 of those are in China, CNET News reported in February, citing market research firm In-Stat.

Apple, which sells its 8-gigabyte version for $399, gets an undisclosed cut of monthly wireless fees for the device, released in June, and has deals with carriers in the United States, Britain, Germany, France, Ireland and Austria. Users have hacked the handset to modify its software so it works on other carriers' networks, depriving Apple of fees.

The iPhone's popularity in Russia, home to 101 billionaires by Finans magazine's count, is an irritation for retailers, including Yevroset, the country's largest mobile-phone chain, whose sales are suffering because it cannot stock the product.

"The phones aren't certified on the territory of the Russian Federation," Yevroset co-owner and chairman Yevgeny Chichvarkin, 33, said in a telephone interview. "Import duties and value-added taxes aren't paid."

The prevalence of the iPhone underscores the country's attitude toward licensed goods, which the United States has made a sticking point in approving the country's 14-year quest to join the World Trade Organization. Hackers and sellers of pirated products openly advertise on the Internet.

"You can basically do whatever you like," said Ivan, 21, after he unlocked an iPhone in a basement office he shares with two friends in one of the capital's most expensive neighborhoods. "We're not liable for anything because officially it's not here," said Ivan, who declined to give his last name.