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Analytical review
In recent years the investors have shown great interest in telecommunication companies. Today telecommunication is expected to rally on the good outlook for growth.
In the wake of the overall high activity of the stock market in the 90’s telecommunication shares reached their historical highs. Though the investors overestimated the market value of the telecommunication companies during the peak of their highest possible value, the capitalization growth of telecommunication companies followed the expansion of the telecommunication sector in general.
In 2001-2002 during the recession of western economies telecommunication companies being the spotlight of the investors were among the leaders to sell their shares that led to the sector value twice lowered. However nowadays with the improving financial condition of world telecommunication companies the foreign investors interest in favor of telecommunication shares rose again. The chart shows the flat trend to rising capitalization and soon the overall estimate of world telecoms is likely to top the earlier-established highs. Due to the ongoing rise in this sector it is important to say that telecommunications have traditionally been among Russian favorites with the foreign investors.
The economic recovery in Russia with dramatic income growth of telecommunication companies forecasts the capitalization of the Russian telecommunication to outstrip the earlier growth. In 2002 the growth of the Russian telecommunication range of services exceeded 20% converted in dollars. It was, on average, more than 50% in 2003 and for some stocks, such as Uralsvyazinform, Volgatelecom, MGTS more than 100%. The sector gained appeal for both Russian and foreign investors on the above spectacular results, especially compared with those of its counterparts abroad.
Despite the uncertainty surrounding Svyazinvest privatization deal, the market has seen the surge in the Russian telecommunication companies especially in local ones over the past two years. The market players were glad to learn of the first stage of the telecommunication reform lying in the merger of dozens of regional operators into 7 large and powerful enough companies. Over the last 2 years their value was three times as much to reach $4,5bn.
The second stage is expected to be the privatization deal of “Svyazinvest holding” causing a new upswing of the value of local operators. This event is highly expected by the investors including major Russian and foreign banks, industrial groups, telecommunication companies, etc. |
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