Russia's Rostelecom extends its presence at Asia's markets

Updated September 5, 2008

   Russia’s Rostelecom and Japan’s KDDI launch a new communication system, the Russia-Japan Cable Network, that will lay under the Sea of Japan along the Nakhodka-Naotcu route. According to the calculations of the analysts, the total volume of investments in the project reached $50 million. The construction will be conducted pari passu.

   The new system that consists of two parallel cable lines with the total length of 1 800 km links Russia and Japan by the direct high-speed route. According to KDDI’s (the second largest mobile operator in Japan) vice president Yasuhiko Ito, the system’s bandwidth is 640 Gb. Along with the redundancy, its peculiarity is less delay time of traffic transmission as compared to the devices through which the data between Europe and Asia has been transmitted.

   As Rostelecom’s chief executive Konstantin Solodukhin marked, the core service of the cable system is the sale of the capacitance to other operators and organization of the separate networks for the corporations between Japan and Europe and back. Moreover, Russia’s Rostelecom intends transmitting the traffic from Europe to Asia and doesn’t eliminate the opportunity of the cooperation with China and the CIS. Konstantin Solodukhin marked also that the system foresees the replacement of the faulty channel with the new one in case of emergency.

   On the background of the cable system launch, Rostelecom discussed the issue of its representative office opening in Asia. The company has already prepared the lease contracts for the international communication lines, and these contracts will be signed in the nearest future.

   "According to our calculations, the project is estimated at nearly $50 million. Rostelecom has already invested $25 million, and this sum is about 10% from the whole investment program of the Russian holding for 2008", as the analyst of Solid Invest Evgeniya Talalaeva says. "Due to this system, Rostelecom will increase the traffic and will develop the services of transmitting data from Europe to Asia, as well as will optimize the company’s business processes reducing the cost of phone calls due to the construction of its networks in the Asian countries".

   "Rostelecom gets the major part of the revenue in Russia. Despite the fact that the holding is taking much interest in the European and Asian markets, all its foreign projects have the image character now", as the analyst of Otkritie FC Kirill Tischenko says.

   It is better to remind that the construction of the cable system linking Japan and Russia was launched in 2006. The project is one of the strategic activity directions of Russia’s operator that already possesses high-speed paths to Europe, as well as points of presence in London, Stockholm, Helsinki, New York, Frankfurt and Hong Kong.