ER Telecom's Aggressive Strategy May Require Mobile HedgeMay 2012 | Company News Alert
In late April 2012, leading Russian cable operator ER-Telecom secured six-year, RUB6.5bn of financing from Sberbank. The financing is needed to fund ER-Telecom's aggressive strategy as it aims to triple revenues during 2011-2015 and reach 20% market share in the Russian broadband and cable TV markets by 2014. BMI considers ER-Telecom's aggressive expansion plans to have strategic value as it targets regions beyond the leading urban centres of Moscow and St Petersburg, which have greater medium-term growth potential as a result of lower penetration rates. However, there are significant medium-term risks, including direct competition with state-backed incumbent Rostelecom in a number of regional markets, and the threat of mobile broadband, against which we believe ER-Telecom may require a hedge.
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