Branson's Virgin takes first step in Russia market

MOSCOW (Reuters) - Britain's Virgin Group made its Russian debut on Thursday, breaking into the country's expanding Internet business a few months after it unveiled big plans for Russia, including setting up an airline by 2010.

"I am delighted to announce Virgin's first business in Russia... Virgin Connect will demystify the complex tariff jungle and bureaucracy seen in the market over the last years," Virgin Group's billionaire founder Richard Branson said in a statement.

Virgin Connect plans to take 10 percent of Russia's broadband Internet market within five years, relying heavily on local players for help.

Only four months ago Branson, whose Virgin empire spans from an airline to music shops, said he was "studying" the Russian telecom, Internet and mobile phone market.

Russia's telecoms market, like the airline sector, is on Russia's list of "strategic industries" -- off limits to foreign control.

But working with a locally established partner, Swiss-based Trivon AG, Virgin said it had acquired all the licenses to launch the Internet venture in 32 Russian regions and Russia's 20 largest cities.

"Trivon believes in strong local knowledge... A highly experienced local team has been hired in Russia," the statement said.

Rostislav Gromov, general director of Russian satellite broadcasting operator Orion Express, last month became the head of Virgin's partner in the Internet venture.

Branson's plans for a Russian airline venture, which he announced in Moscow in January, led local analysts to question whether he was getting in above his head.

Russia's defense-sensitive aviation sector is guarded by a restrictive tax regime and major political hurdles.

As he did with his Internet business, Branson criticized existing Russian air carriers, saying Virgin could do better.

Virgin has not revealed how much it will invest in its Russian aviation venture, nor who will be its local partner, only saying it is in talks with several local carriers.

Local press reports have said Virgin is in talks to buy a stake in Sky Express, a low-cost commercial airline owned by businessman Boris Abramovich.

(Reporting by Simon Shuster; editing by Sue Thomas)