Joint telecoms venture enjoys rapid growth

HARRI J. SUOKKO General Manager of Voicecom

One sector of the Lithuanian economy with a large U.S. presence is telecommunications. UAB Voicecom, founded in March 2001, is a joint venture between Minnesota-based Nexcom and Lithuania's leading fixed-line operator, Lietuvos Telekomas (LT). For the last few years, Nexcom has been establishing a presence throughout Central and Eastern Europe and now boasts networks in 10 countries in the region. Combining the strengths of both parent companies, Voicecom specializes in long-distance calls using Internet protocol (IP) technology and has also harnessed the potential available in LT's established sales channels. Voicecom's greatest competitive advantage in the Lithuanian market is cost savings. In just eight months, and with a staff of 10, Voicecom has reached a two-digit market share in international calls, making the country Nexcom's second-largest operations base. General Manager Harri J. Suokko comments, "The main reason for our tremendous growth is that Lithuania used to be a closed market with expensive communications. With new technologies, we can reduce the expenses involved in long-distance communications and provide the best prices for individuals or companies between certain countries, especially those where IP technology is more advanced."

TAPIO PAARMA General Manager and President of Lietuvos Telekomas

According to Mr. Suokko, opportunities abound for the foreign investor in value-added services. He explains, "There are lots of business areas that have not yet been harvested here and value-added services are definitely missing. Only the first steps have been taken towards a value-added market in communication services. Voicecom is focusing on the global market now, but my forecast is that within two years the local value-added market will be bigger than the global market we are currently harvesting."
LT was privatized in 1998 and 60% of the company is now owned by Amber Teleholding, a consortium of Finnish Sonora and Swedish Telia. Since privatization, US$400 million has been invested in updating the company, further strengthening its prominent position. Today, LT is looking to expand throughout the Baltic region. LT's General Manager and President Tapio Paarma believes Lithuania's economic future is bright and that it is a safe spot to invest. He states, "I have a positive view of the future and there should be no hesitation about investing in Lithuania. The country is quite stable and there are a lot of connections with the U.S. There are hundreds of thousands of Lithuanians who have moved to the U.S. or have relatives living there."