The Russian Telecommunications Development Corporation

ISBN 0-538-88686-2

Case Teaching Package
A case teaching package is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.

Length
This case is 14 pages in length and its case teaching package is 6 pages.

Abstract

US West International's (USWI's) visionary President Dick Callahan has entrusted a difficult task to Bob Gras, chief financial officer for USWI, Greg Sadler, USWI controller, and Steve Crosby, director of US West's international stock portfolio. The three must find a way to finance USWI's entrance into the Russian market without committing large sums of US West's capital.

USWI has already begun the work by creating a subsidiary, the Russian Telecommunications Development Corporation (RTDC), to act as a holding company for all of USWI's current and future Russian operations. Callahan's original intention was for USWI to seed RTDC by giving it USWI's current Russian operations, then attract a variety of outside investors to support RTDC's activities. The initial RTDC corporate structure, however, was fairly complex. It also depended on the involvement of institutional investors and commercial entities that were likely to have conflicting interests. Gras, Sadler, and Crosby needed to simplify the corporate structure and make involvement in RTDC equally attractive to a variety of potential investors.

Fit Within a Course/Linkages to Textbooks or Journal Articles

This case is intended for advanced undergraduate finance students or MBA and executive-education students. It may be used in courses devoted to corporate finance, strategy, and/or international business.

The case lends itself to in-class discussion. For this reason, the teaching plan favored here consists of discussion questions for the class and suggestions for how students may respond.

Study Questions

1. What was the value of USWI's current Russian operations?
2. How should the deal structure be simplified?
3. How would it be possible for the various partners to realize value?
4. How does USWI allay the fears expressed by institutional investors that Time-Warner will cherry pick the best international cable deals and leave the poorer deals for RTDC?