Over the last couple of years, Gemma and I have spoken on a number of occasions about the curious case of BiTel, which continues to lead the Kyrgyz mobile market, despite losing market share to later entrant MegaCom. Ownership wrangles around BiTel have been hitting the headlines at our Global Mobile Daily and Mobile Communications Europe services for nearly the past three years.
In Dec 2005 we reported that Russian operator Mobile TeleSystems (MTS) had announced the acquisition of a 51% stake in Bitel for US$150 million. Late the same month, we picked up the story of BiTEl HQ being seized by police and having its services cut off. This appeared to be due to a dispute over which organisation had been the legal owner of the 51% sold to MTS. A Russian company, Rezervspetmet was alleging that it owned the 51%. MTS had bought their stake in BiTel from a group known as Alliance Capital. My understanding is that Rezervspetmet eventually prevailed, forcing MTS to write off the investment. By the Spring of 2007 we were reporting that MTS was to be sued for around US$170 million in relation to the failed acquisition in Kyrgyzstan.
By May 2008 we were picking up stories suggesting that Altimo might have been behind the successful attempt to prevent MTS gaining control of BiTel. Altimo is a Russian telecoms investment company which owns significant stakes in both of MTS's major rivals in the mobile space in the Russian Federation and across the CIS. Altimo owns 44% of Vimpelcom and 25.1% of MegaFon. If these allegations don't add up to a sufficiently tangled tale for your taste, I invite you to compare the names and logos of Russia's MegaFon and Kyrgyzstan's MegaCom:
The choice of colours is pretty close. Coincidence? Apparently not. In March last year, we reported that MegaCom's management had descided not to reveal the identity of its backers. However, in the same edition of Mobile Communications Europe, it was noted that MegaFon had admitted that it was "supporting MegaCom in developing its network". "According to MegaCom's [then] General Director, Oleg Primak," ran the story, "whoever is backing MegaCom has already invested US$25 million (€19.1 million) in the development of the network".
By April 2008 the magazine of the American Chamber of Commerce in Kyrgzystan was running an interview with the new MegaCom General Director, a Mr Andrey Silich, a former MegaFon employee. I've heard a number of people refer to Megacom as a MegaFon company/subsidiary.
I can't verify whether that it is really the case, but all of the above is certainly evidence of a strong link. Whatever the true story, it's another case of the Kyrgyzstan market being a bit harder than average to track for us and other industry watchers. Back, then, to the matter of mysterious 'Nur Telecom' (or Nurtelecom?). Gemma pointed out to me that by May of this year, Global Mobile Daily was reporting that BiTel had "changed its name to Nurtelecom and plans to apply for a new license to operate services this year". If that's true, it certainly begs the question of why the BiTel website is still live now. Confused? Me too. When I was trying to figure all of this out yesterday, I asked for help via the Eurasia Com LinkedIn group. The only response? A group member saying he'd heard rumours of Virgin Mobile starting up in Kyrgyzstan. My initial response to that is extremely sceptical. That said, it does seem like this is one market full of surprises.
I hope to learn more by encouraging the country's various players to have a presence at our Eurasia Com conference in Istanbul in the Spring. We'll keep you posted on that.