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IFC APPROVES ITS FIRST INVESTMENT IN RUSSIA'S TELECOMMUNICATIONS SECTOR

WASHINGTON, D.C., Dec. 15 -- The International Finance Corporation (IFC) has made an equity investment of US$7.5 million in the Russian Telecommunications Development Corporation (RTDC), which will invest in modernizing the country's telecommunications infrastructure. This is IFC's first investment in the telecommunications sector in Russia, where the enormous demand for services, with 11 million people on the waiting list for telephone lines, has prompted the Government to open this sector to foreign investors. Over the next three years RTDC's affiliates expect to increase the number of cellular telephone users from 8,200 to 34,000 in St. Petersburg and Moscow, and help increase the capacity of three international gateway switches owned by Rostelecom from 3,000 to about 8,300 circuits. RTDC and its affiliates will also invest in building cellular networks in Volgograd, Krasnodar, Rostov on Don, Nizhny Novgorod, Perm, Ufa, Vladivostok, Blagoveshchensk, and Khabarovsk. Cellular networks have the advantage of l
eapfrogging infrastructure bottlenecks where conventional networks are inadequate or have not been established. "The expansion and modernization of telecommunications networks will boost the development of private enterprise in Russia, as well as the trade and service sectors, which are seriously hampered by poor communications," said Everett J. Santos, Director of IFC's Infrastructure Department. "Improved access to reliable telecommunications is essential to the economic transformation under way in Russia." RTDC was set up in December 1993 by US West International to attract foreign investment in Russia's telecommunications sector. US West International has a 71 percent shareholding in RTDC and is active in other European countries. IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in emerging economies.