Alexander Malis, 31, vice president of Corbina Telecom, has been with the company since it began operating in 1995. The company prefers to finance its development using its own funds (foreign direct investment was attracted only in the very beginning). Russian alternative operators have had mixed fortunes because it is not easy to compete with the large state monopolist companies on the fixed-line and long-distance markets. Nevertheless, Malis remains optimistic and is ready to work even in these difficult conditions. "Whatever the difficulties, we will keep working in these markets for our clients," he says.

The Russia Journal: How did the company begin?

Alexander Malis: A group of Western investors decided to set up a company to sell communications services in Russia in the mid-1990s. As their model, they took companies working successfully in the West, medium-sized companies offering clients a full range of services from mobile telecommunications to fixed-line service and Internet access. I was invited to work for the company by one of the company’s founders, Michael Leibov, who lived in the United States and was looking for someone to take care of operations in Russia.

At first, Corbina Telecom specialized in intercity and international telephone connections, but we systematically expanded the range of our services. Our main objective was to help organize any telecommunications project, no matter how complex. A lot of changes have taken place since then, but we retain this universal aspect. That is what attracts corporate clients.

TRJ: Do you have previous experience in the telecommunications sector?

A.M.: No, and I can now say that it was a good thing. We did not develop the company according to the rules. Our main goal was to provide high quality service and we wanted to do this so well that our clients would be happy to pay us. We immediately put into place a policy different than that of the large nationwide operators and the state-owned companies.

Our staff knows that clients come to us in order to rid themselves of all hassles with communications. We help them in this respect. Corbina Telecom is a medium-sized operator but it is similar to the large operators. We demonstrate to our clients that each of them is valuable to us and we are attentive to their demands. We do not always take on people with specialized education in telecommunications and experience in telecommunications companies. Even some of our senior engineers do not have a telecommunications background and previously worked in other sectors.

We think that a good engineer can work with any kind of equipment, whereas specialists often have narrow views. We take on professionals from related sectors and they prove far more effective in sorting out problems and sometimes come up with more innovative and cheaper solutions.

TRJ: That is an unusual approach. Is it really that effective?

A.M.: Yes, and our results from last year prove it. We had sales of just under $60 million, which represents a 100 percent increase on 2002. We are developing new cable networks and in 2003 alone we laid more than 500 kilometers of fiber-optic cable. Our policies mean we can attract clients at little cost. We hardly advertise at all, relying instead on satisfied clients to spread the word.

We now have 55,000 mobile clients and we have a 20 percent share of the market, represented by clients who frequently use their mobile phone. We do not yet offer data transfer through mobile network services, as it is not demanded by top customers. GPRS services in the federal operator networks are popular with private users. The average data transfer speed using these networks is between 10-20 kilobytes per second, which is insufficient for serious businesses with large volumes of data. We have 13,000 fixed-line clients (20,000 numbers) and more than 1,000 dedicated Internet lines with a capacity of ten megabytes per second [according to IKS Consulting, this represents around 2.4 percent of the fixed-line market for alternative operators]. The company is constantly evolving.

Over the last nine years, we have gone through everything that is in standard business textbooks and have had all classic problems. We have reorganized on several occasions and all because the company has developed rapidly (we have doubled our sales several years in a row). We have been living in an environment of constant transition, so we have had to do business in such a way as not to put a brake on the company at any point in its development. Our development is not restricted to Moscow. We made serious investments in Moscow Oblast last year so that enterprises in the region would have access to the same kind of quality services available in the capital, and for reasonable money. We have only been investing our own profits — around $15-20 million a year — in these projects.

TRJ: What are the main focus areas for your business?

A.M.: Our business is divided into fixed-line and mobile communications. Our mobile business focuses on voice traffic. Our fixed-line services include telephone services, Internet (xDSL technology, eMGW radio channels, and optic communications lines), IP-telephony (voice traffic through Internet channels), fixed-line wireless access (when three to ten telephones in an organization enter the city network through a radio channel). Our business is divided roughly 50/50 between fixed-line and mobile communications. Last year, these two components of our business grew at roughly the same rate. In this way, we are following standard world trends.

TRJ: Last year, you bought DAMPS network equipment from VimpelCom and are now developing this business on your own. Has it been successful thus far?

A.M.: It is developing successfully, though certain external problems exist. Good DAMPS network coverage in Moscow and Moscow Oblast is essential for our clients who talk a lot on their phones. We paid VimpelCom around $20 million for this equipment, and it has given us an excellent niche product for our clients who talk frequently on their mobile phones.

True, the wave of VimpelCom inspections has hit us too. In particular, [telecoms watchdog] Gossvyaznadzor acted on a user’s request to inspect Investelektrosvyaz recently, which is part of the Corbina Telecom Group. During the inspection, the accusation was made that the services the company provides do not correspond to the license it has for providing local and inside-zone services in Moscow and the Moscow Oblast. We had to protect our interests in arbitrage court. It is evident that these kinds of audits have been ordered by someone. In a normal business environment, companies compete on the market and customers ultimately get the final say, but Russia is a specific case and competitive advantages here can include close contacts with state regulatory bodies, which can perform checks and close down companies as they see fit. It gives the impression that we are simply a nuisance for the state, although when officials talk of doubling the GDP, it is companies like Corbina Telecom that are driving forces in the economy. But, unfortunately, I have to say that we have not yet seen anything good from the state.

TRJ: Who are your main clients and what is your target audience?

A.M.: The companies we work with are mostly businesses that have developed out of the new economy. They are dynamic, fast-growing companies that are trying to build transparent businesses. They share our spirit, and this helps to establish a rapport in order to correctly estimate their needs and provide them with quality telecommunications services. Our prices are very reasonable, as we realize that it is better to earn smaller amounts from a large number of clients.

TRJ: What is the company’s view on introducing the 3G standard?

A.M.: Corbina Telecom will definitely introduce this standard, but this will not happen overnight. We know that the future lies in mobile telecommunications, but our mobile component is a niche product at the moment. We predict that by 2007-2010, the balance will change and data services will be the dominant product, while fixed-line voice services will become a niche product.

This will happen all over the world and in Russia as well. By that time, mobile communications will account for 80-90 percent of our business. In three to four years time, we plan to completely change our equipment and introduce new communications standards. The only thing that concerns us is the issue of licenses. It is no secret that the regulators plan to issue a limited number of licenses all at once for the entire country. In that case, we would probably work with one of the large nationwide operators. We will work out this question over the next year or two.

TRJ: Administrative reform is still going on here and there are still problems in the telecommunications industry — the ban on importing new equipment and difficulties in increasing number capacity. How will this affect the sector this year?

A.M.: The laws the government is to consider do not match our interests. The telecommunications business in Russia is going from good to worse. Initially, we could provide our services without licenses, then they came up with simple licenses, then they made them more complicated, and then divided them into different types. Now the number of licenses will double.

To give a simple example, our company now has six licenses, but just to continue doing what we are doing now without making any changes would require us to get 15-20 licenses. Who needs so many licenses? Any application for a license can be turned down without explanation. Then any universal operator would find itself unable to provide a full range of services to its clients. Everything is only making our work more difficult. This is being done so that operators who do not have connections with the state do not get a chance to stay on the market. We place a lot of hope in the new Transport and Communications Minister and hope that he might be able to change this situation.

TRJ: You are a medium-sized company. Does this ensure any advantages over big companies?

A.M.: We have both the time and opportunity to take a personal approach with respect to each client. Large companies are apt to simply follow a standard model. They are quicker, of course, but they either do not take on a lot of interesting individual projects or they ask for a lot of money for services. We have an optimal staff of engineers, electricians and technicians and they can create and install systems of any complexity.

We still know how to take a personal approach. We are not a large company, but we are large enough to develop a wide range of products rapidly, simultaneously, and within the set deadlines.

TRJ: What will be your main development focus in 2004? Will you concentrate on Moscow or the regions?

A.M.: I would like to see the company pursue even development in all areas. Of course, it would be good to focus more on the regions, but it is more advantageous for the company to take a gradual approach. We cannot risk putting all our stakes on just one area. Development in the regions is not just about the regions around Moscow. We are interested in large cities such as St. Petersburg, Yaroslavl, Perm, Yekaterinburg, Samara, among others.

TRJ: What is your forecast for the telecommunications market in 2004?

A.M.: The market will grow — no slowdown is in sight. The market is really going through a period of explosive development now. Mobile telecommunications will dominate, although the penetration rate in Moscow is already high now (around 80 percent), and growth will slow. We think the high-speed Internet access market will be this year’s real hit. The Internet will take some of the market share from telephony, due to the fact that almost everything that can be done through telephony can also be done through the Internet.

Corbina Telecom was one of Russia’s first universal telecommunications operators, founded in 1995. It does business in 20 of the country’s regions. Its main businesses are mobile telecommunications, intercity and international telephone connections, Internet access provision and fixed-line telecommunications.

Corbina’s clients are mostly corporate customers, including large Russian and international companies (Formosa, Electro-cable Plant, Agrokhim, Kostromatrubinvest, Millenium Oil, Guta-Bank, Fundament Bank, Universalny Kredit, National Development Bank, Urals Bank, and the Russian offices of Renault, Avtoframos and Musa-Motors.

The TDMA-800 network on which the company’s Corbina Mobile Access service is based was developed jointly by Corbina Telecom and VimpelCom and is the leader in Moscow and the Moscow Oblast for quality of service. TDMA (IS-136) is one of the most widespread digital standards used today.