More Success for Rostelecom at Fourth and Final Regional 4G Licence Tender

Russian state-owned long-distance operator Rostelecom has won frequencies in the fourth regional tender for the provision of 4G services. Four tenders, held over the past month, have made available frequencies in the 2.3-2.4 GHz range in 40 regions across all seven of Russia’s Federal Districts. Rostelecom has won tenders in the following regions:

• First tender (Central and North-West Federal Districts): Arkhangelsk, Belgorod, Kaliningrad, Novgorod, Pskov, Tambov, Tula, and Tver regions, and in the Nenets Autonomous District.
• Second tender (Southern Federal District): Astrakhan and Stavropol regions, and the constituent republics of Adygeya, Dagestan, Ingushetia, Kabardino-Balkaria, Kalmykia, Karachayevo-Cherkessia, and North Ossetia-Alania.
• Third tender (Volga and Urals Federal Districts): Kurgan Region in the Urals Federal District, as well as in the Kirov, Penza, and Ulyanovsk regions, the constituent republics of Mari El, Bashkortostan, Mordovia, and Udmurtia, and the Chuvash Republic.
• Fourth tender (Siberian and Far East Federal Districts): Amur, Sakhalin, Altai, Kemerovo, Novosibirsk, and Omsk regions, as well as in the constituent republics of Altai, Khakasia, and Tuva, and in the Chukotka and Jewish autonomous districts.

Other frequencies were won by Vainah Telecom in Chechnya in the second tender, and SibirTelecom in the Tomsk region in the fourth tender.

Outlook and Implications

• Further Success for State Ahead of Reorganisation of Telecoms Assets: The successes enjoyed by Rostelecom provide a major boost to the state ahead of its planned restructuring of its presence in the domestic telecoms market. Rostelecom is 51% state-owned and has been identified as a key component of the imminent reorganisation of national fixed-line holding Svyazinvest. Currently the owner of seven regional fixed-line incumbents, Svyazinvest’s assets are to be reorganised under the umbrella of Rostelecom, with increased focus on their broadband offerings (see Russia: 19 February 2010: Svyazinvest Board Approves Plan to Merge Subsidiaries with Rostelecom). Plans are also in place to utilise the mobile assets of the Svyazinvest units, with the holding aiming to acquire an established mobile operator around which a unified mobile presence can be established. To this expanding portfolio can now be added 4G service provision as the group’s success in every Federal District of the country will help it to pioneer a technology for which global momentum has been enthusiastically growing (see World: 4 March 2010: GSA Report Confirms 59 Operators in 28 Countries Committed to Deploying LTE).

• No Unrest About Awarding of Licences by the State to the State: The precise criteria according to which the licences were awarded is unclear, but there does not appear to be any unrest among unsuccessful bidders about the fact that the state-owned operator has been so successful in being awarded so many valuable licences, even though the licences have been awarded by the state itself in the form of the Federal Service for Communications, IT and Mass Communication Oversight. Unsuccessful bidders for the various licences have included several of Svyazinvest’s own regional subsidiaries (Dalsvyaz, VolgaTelecom, Uralsvyazinform, CenterTelecom, North West Telecom and Southern Telecom), as well as leading Russian mobile operators Mobile TeleSystems (MTS), MegaFon, Tele2 Russia, and a number of minor regional players.

• LTE Test Zones Being Established: While Rostelecom appears to be in pole position for the eventual launch of 4G services, the technology remains very much at a nascent stage. The country’s leading operators have indicated that five test zones for LTE provision are to be set up across the country, although local media has reported that test zones will not be established in the principal economic hubs of the capital, Moscow, and St Petersburg. The test zones are reportedly to be established in regions including Kostroma, Sverdlovsk, Rostov, and Primorsky in the 700-MHz, 790-862 MHz, 900-1800 MHz, 2.3-2.4 GHz and 2.5-2.6 GHz ranges. The operators to participate in the testing will include the four largest mobile operators—MTS, VimpelCom, MegaFon and Tele2 Russia—as well as Svyazinvest. However, plans for the testing of LTE will be officially announced at a later date. The fact that plans are in place and that the country’s leading telcos are involved indicates that hopes are high for the service to be rolled out speedily among operators and regulatory bodies alike, which ultimately bodes well for consumers.