Teleset Networks

Investing in far-flung overseas ventures in emerging economies is an inherently risky proposition, although progress to date at Russian telecommunications play Teleset might stir interest from bolder investors willing to bear considerable risk.

Maiden figures from the fixed-line telecom network, whose core market is Kazan, capital city of the Republic of Tatarstan in the Russian Federation, beat forecasts at both the top and bottom line. For the year to December, a 30% rise in profits before tax was dialled up to US$4.4m (£2.2m) on sales lifted 43% to US$13.5m (£6.75m), representing a tenth year of profitable growth and an impressive margin performance.

Progress reflected expansion of the group’s network infrastructure and the aggressive promotion of new products and services in a buoyant market for fixed-line voice and data services in Kazan, one of Russia’s top ten cities by population and enjoying economic uplift on the back of boom times in the oil, aerospace and chemical sectors.

Here, the group offers a range of fixed-line services to residential and business customers including voice calls, broadband and dial-up internet access through an all-digital network covering the whole of the city.

A key recent deal was the US$17m (£8.5m) cash acquisition of TNPKO, Kazan’s fourth largest fixed-line telecom player, a transaction that extended network coverage into the remaining two districts of Kazan and created the city’s number one alternative fixed-line telecom operator. Teleset’s management insists the fixed-line market in Tatarstan (and elsewhere in Russia) continues to burgeon with usage directly tied to economic prosperity.

Longer term, this is a business with ambitions to become not only the Kazan’s number one telecom operator but also a thriving regional player in the Russian telecoms market. More recently, Teleset raised US$10m (£5m) through a placing at 21p with Templeton Strategic Emerging Markets Fund 2, an investment that should help with the group’s acquisitive pus