Cable & Wireless Puts Investments on Hold

Russian telecommunications form a vast market with enormous potential, but Britain's Cable & Wireless will assess the outcome of current investment before injecting extra cash, Chairman Lord Young said Tuesday."What I would like us to do is to consolidate what we have got to see how it develops," Young told Reuters in an interview. "My impression is that the economy has now bottomed out and is beginning to come through again."He said Cable & Wireless, which made pre-tax profits of ?1.09 billion pounds ($1.64 billion) in the year to March 31, had already invested $100 or $110 million in Russia, most of it in a joint venture in St. Petersburg.Young declined to say when a break-even point would come in Russia but said: "I would be disappointed if in two years' time we were not smiling."The St. Petersburg venture, Peterstar, successfully organized telecommunications for last month's meeting of the European Bank for Reconstruction and Development, confounding those who said the city's telecommunications would buckle under the strain of frequent use by thousands of bankers.It is also due to look after telephone links for the forthcoming Goodwill Games, which will bring more than 2,500 athletes and thousands more spectators and organizers to Russia's second city for the most important athletics meeting this year.Poor telecommunications have dogged the path of potential investors in Russia and it can take dozens of attempts to complete an international or inter-regional call. Even local calls, a cheap and therefore unattractive prospect for foreign investors, are often inaudible. Wrong numbers are common and connections die mysteriously in the middle of a crackly conversation.Cable & Wireless is one of several Western companies looking to improve the situation and Young said there was big potential for investment in Russian communications."We are taking things step-by-step," he said. "We are in the unusual position of operating in 56 countries around the world and we are always in the business of comparing options to see where we get the best return for our shareholders."Russia must compete with China, which at the same time will have to compete with other countries."He said the Baltic region, including St. Petersburg, was the most promising area within the former Soviet Union. "We are very encouraged by what we have seen there."The British firm operated in Russia before the 1917 Bolshevik revolution, running cables into St. Petersburg and other districts. "We are renewing the business which ended in 1917," he said.Cable & Wireless is part of a consortium that won a contract late last year to modernise Latvia's telecommunications firm, Lattelekom.The group, which will invest $160 million over three years, aims to obtain a 49 percent stake in the Latvian firm over the period.The company is also helping to set up a mobile telephone network in the Belarus capital Minsk, although Young said there were no plans to get involved in Moscow's mobile phone market.