Rostelecom Risks Losing Money From Management Revamp, Chief Says

OAO Rostelecom, Russia’s dominant fixed-line and long-distance phone operator, may lose money should the government decide to change its management team, Chief Executive Officer Alexander Provotorov said.

“If the main shareholder decides to change management, it’s their right,” Provotorov said in an interview today during the Mobile World Congress in Barcelona. “From a strategic point of view, it’s important to finish the initiatives we started. Otherwise, the company can lose money.”

A replacement of Moscow-based Rostelecom’s management is being discussed within the government, Interfax newswire reported today, citing Deputy Prime Minister Arkady Dvorkovich in comments that were confirmed by his spokeswoman. The Communications Ministry has previously criticized the state- owned carrier over inefficient spending and its expansion plans.

Rostelecom, which faces a decline in fixed-line revenue, is adding businesses such as mobile, broadband, pay television and so-called cloud services. The company has already started developing a mobile network in St. Petersburg and the Moscow region, seeking to challenge the country’s three top wireless carriers: OAO Mobile TeleSystems (MBT), OAO MegaFon and VimpelCom Ltd. (VIP)

“It’s important to continue and finalize the projects already started because there have investment cycles,” Provotorov said today.

To contact the reporters on this story: Amy Thomson in Barcelona at athomson6@bloomberg.net; Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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