Telenor Xpress 4 - 2000

MOBILE VIP TREATMENT

Mobile phones were luxury items that only the wealthy could afford when they were first introduced to Russia in 1991. VimpelCom (Beeline brand) is changing that – fast.

Driving into Moscow from Sheremetyevo II, the international airport, you can’t miss the billboards for Bee line: A full service provider of mobile services. Voice, SMS and mobile Internet or WAP. All offered at affordable prices.

Only about 12 per cent of all Muscovites have mobile phones today. In a few years most expect the market to have grown to include 30 to 40 per cent of the population, or approximately 6 million people. It is fortunate then that the Bee line name and its blue-yellow insignia have become one of the most recognised brand names in Russian telecommunications, driving changes in consumer demand.

BUSINESS RADAR
VimpelCom was founded shortly after the fall of the Soviet Union by Dr. Dimtri Zimin, who is still CEO of the company. Zimin, who has a background in military radar technology at the Radio Technical Institute in Moscow, wanted a piece of the cake, but didn’t really know what to produce or how to market it.

“Our question was: what can we produce that people would buy?” Zimin says. He admits that at the time, he did not fully understand the mass market. After trying to market radar detectors, the company went into satellite communications. Around that time Augie K. Fabela Sr. came to Russia. He had a small factory in the USA producing equipment for the analogue cellular standard, AMPS (Advanced Mobile Phone Service).

“He wanted to sell his equipment, but we wanted to produce it in Russia. We started up together as a telecommunications operator, knowing nothing about the business and without the licenses,” says Zimin.

Zimin used his influence and persistence to get the first licenses. “The authorities didn’t want us, but we were given licenses, mostly to silence us, I suspect. They didn’t expect us to survive.” Such predictions were proven wrong. In November 1996, VimpelCom became the first Russian company to list on the New York Stock Exchange. And between ’95 and ’97, before the crisis in the Russian economy, VimpelCom was one of the most profitable Russian companies.

ENTER TELENOR
Telenor signed a contract with VimpelCom on May 28 1999, making it one of Telenor’s largest single investments abroad. Since then, the team from Telenor has strengthened the company’s commitment to the customer. “We are changing the whole organisation from within. This is business development based on co-operation between Telenor and VimpelCom,” says Dr. Zimin.

Jo Lunder, who joined VimpelCom from Telenor Mobile in September 1999, has been operative in the company’s current restructuring. He was recently appointed President and chief operating officer of the company. Jo Lunder was also awarded the “businessman of the year” prize in the Russian telecommunications sector for 2000.

“Since I was appointed we have focused on two areas. First, we have changed the organisation to handle product development in a better way, transforming VimpleCom from a company that operates a strict production line to one that provides products and services developed for the benefit of the consumer. Second, we have started to implement our mass market strategy and revolutionised how consumers view wireless communications,” he says.

“The change process fuelled our subscriber growth, because we have brought mobile communications within reach of students, families and a rising middle class of Russians,” says Jo Lunder. The strategy has already yielded positive results. As of November 28, 2000, VimpelCom had approximately 699,500 subscribers in the Moscow license area. This represents a nearly 100 per cent increase in the total number of subscribers in only eleven months.

STRIVE FOR EVOLUTION
When asked how a company could introduce new technologies to a market that has a mobile penetration of around ten per cent, Zimin answered: “We put it this way – we must help the market mature. We will implement new technology, not dwell on technologies that are already obsolete. We are talking about two parallel processes. Sometimes the market will drive technology forwards. Sometimes technology will drive the market. What we do know is that the age of telecommunications will change – and is already changing – the mentality of people around the globe.”



Text by: Torkel Bergstøl