Rostelecom dominates 4G tender

15 Mar 2010

According to a report by Reuters, incumbent long-distance operator Rostelecom has been awarded 4G network concessions covering a third of the Russian population in a series of auctions which took place throughout February and March. Rostelecom, which is the long-distance arm of state-owned conglomerate Svyazinvest, won concessions to 38 of the 40 Russian regions covered by the tender, while fellow Svyazinvest subsidiary Sibirtelecom claimed a licence covering the Tomsk area and local operator Vainakh Telecom purchased frequencies covering Chechnya. The licences award each operator 30MHz of spectrum in the 2.3GHz-2.4GHz band for each constituent region. Under the conditions of the licences, the operators have 18 months to build and launch 4G networks using Russian-made equipment in their respective areas. Key markets such as Moscow and St Petersburg were not included in the tender as 3G services have only recently been launched by the big three cellcos, Mobile TeleSystems, Vimpelcom and MegaFon.

Svyazinvest is currently undergoing a full structural reorganisation, combining Rostelecom with its local divisions nationwide to create a single, unified network across which it plans to provide integrated fixed line, broadband and mobile services. Although its holdings in the fixed line sector are extensive, the group had only marginal influence in the country’s cellular market – with regional operations held through the likes of Sibirtelecom, Uralsvyazinform and SkyLink – and the company was rumoured to be considering a takeover of one of the big three to establish itself on a national scale. The company’s success in the 4G auctions, however, has made it the fourth largest mobile operator in Russia in terms of licensed area – beating Tele2, which has 35 regional concessions, into fifth place – and leaves the company well-positioned to become a major mobile provider by the time it completes its reorganisation and subsequently holds an initial public offering (IPO) in April 2011.