Russian giants ink national LTE deal with Yota

4 Mar 2011

Four of Russia’s largest telecoms operators have agreed a deal that will see them unite to facilitate the rollout of a national Long Term Evolution (LTE) network by 2014. The so-called ‘Big Three’ mobile operators Vimpelcom, MegaFon and Mobile TeleSystems (MTS), as well as state-owned fixed line operator Rostelecom, have signed a deal with WiMAX operator Scartel which will see the firm become their 4G network provider of choice. In July 2010 Scartel – which launched in June 2009 under the Yota brand name – received regulatory approval from telecoms regulator Roskomnadzor to abandon WiMAX for LTE, re-using its existing spectrum. The regulator had previously insisted that the frequencies allocated to Yota for WiMAX use could not be used for other access types. In November 2010 Yota indicated that as soon as it started selling its LTE service, it would stop offering WiMAX, migrating all of its existing WiMAX customers to LTE within three years.

Under the terms of the deal, which was signed in the presence of Prime Minister Vladimir Putin and Minister of Telecoms and Mass Communications, Igor Shchyogolev, the firms will buy traffic from Yota and lease its LTE facilities. Putin commented: ‘A positive decision has been made, which will facilitate development, because the more affordable a service is, the more opportunities consumers will have. I very much hope that the idea will materialise’. Shchyogolev added: ‘Each [operator] will decrease its expenditure on building networks by several times, and thus will be able to invest more for their expansion, and, ultimately they will carry lower operation costs. They will be competing for not who will the first to build infrastructure, but who will offer a better service’.

As part of the deal, the four Russian telecoms operators will each be given an option to take a 20% stake in Yota in 2014, at market prices. Telconet Capital Fund, which currently owns 74.9% of Scartel will be required to sell all of its shares, whilst co-owner Russian Technologies will reduce its 25.1% stake to 20%.