VivaCell Unveils Plans for LTE Roll-Out in 2010

Armenia's leading mobile operator, Mobile TeleSystems (MTS)-owned K-Telecom, has indicated that it plans to launch 4G mobile broadband services based on LTE technology, according to a company statement cited by ARKA. While it has not revealed any specifics, K-Telecom, which operates under the "VivaCell" brand, has explained its decision by pointing to forecasts that suggest mobile broadband access growth will continue in 2010. At present, it has indicated that around 600,000 of its 2.045 million customers are subscribers to data products, utilising GPRS, EDGE or UMTS technology, including around 400,000 3G subscribers.

Outlook and Implications

• Progressive Move from Armenia's Dominant Mobile Operator: K-Telecom, like its rival Armentel (owned by MTS' Russian rival, VimpelCom), received its 3G licence in October 2007 and launched 3G services in April 2009, some six months after Armentel. Just last week, K-Telecom announced that it had achieved nationwide 3G coverage (see Armenia: 30 October 2009: VivaCell Achieves Nationwide 3G Coverage in Armenia). Within this context and on the strength of its 3G subscriber uptake, the progression to LTE-based services is understandable, particularly as the operator should be able to use existing 2G and 3G spectrum. K-Telecom had a market share of around 78% at the end of 2008, so is well-positioned to make a strong assault on the 4G market. It will face increased competition, with France Telecom's Orange Armenia due to launch commercial operations before the end of the year in the 3G and 2G segment. While Orange Armenia is planning to enter as a low-cost operator, K-Telecom's 4G services will be aimed at a smaller niche of higher-end subscribers.

• Global Push Towards LTE Reaches CIS: Global momentum has been growing in recent months for LTE network commitments from operators, with the Global Mobile Suppliers Association (GSA) reporting 42 such commitments globally as of late-October 2008. The GSA anticipates that 15 such networks will be launched by the end of 2010, with a further 33 expected to be in service by the end of 2012, and IHS Global Insight anticipates that the first such launches may occur in Scandinavia. K-Telecom has given little detail of its planned deployments and it is unclear whether it expects its 4G services to be commercially launched by the end of 2010. Nevertheless, the operator appears to be one of the pioneers of the technology in the CIS, a region that has traditionally lagged behind neighbouring European markets in terms of telecoms sector development. Mobile penetration levels across the region are now approaching and exceeding triple-digit levels, and 3G roll-outs are gradually being undertaken. Operators prowling for high-growth opportunities now appear to be looking elsewhere, such as South-East Asia and Africa, as the CIS region evolves from an area of growth potential to a maturing market.

• MTS-VimpelCom Battle Continues: The only other hint that LTE roll-outs might be imminent in the CIS have come from VimpelCom-owned KaR-Tel in Kazakhstan, which late last month indicated that it had received regulatory permission to deploy 4G test zones (see Kazakhstan: 27 October 2009: VimpelCom's Kazakh Unit to Proceed with LTE Testing After Regulatory Nod). The fact that just days later an MTS unit had announced its own 4G plans is indicative of the ongoing rivalry between VimpelCom and MTS as they battle for supremacy in the CIS.