Osnova sounds LTE battle-cry; is MoD-backed start-up now armed with a 4G licence?

6 Mar 2012

According to unconfirmed local press reports, controversial Russian start-up Osnova Telekom was quietly granted Russia’s second Long Term Evolution (LTE) licence earlier this year, just days before Mobile TeleSystems (MTS) was awarded a much-publicised LTE concession covering Moscow. If the reports prove to be true, it means that three companies have now been formally issued with LTE licences: WiMAX-turned-LTE provider Scartel (Yota), mobile giant MTS and Ministry of Defence-backed Osnova. As previously reported by TeleGeography’s CommsUpdate, in December 2011 Osnova CEO Nicholas Tamodin expressed his intention to actively pursue LTE-suitable frequencies in the 790MHz-862MHz spectrum band, with a view to launching a commercial 4G network. According to Kommersant, under the terms of its licence Osnova is obliged to launch full-blown services no later than 26 January 2014; the news site goes on to suggest that the telco has selected Infra-Engineering – a vendor with close ties to Rostelecom – to roll out its LTE network.

The mysterious circumstances surrounding Osnova’s possible allocation of LTE-ready spectrum are nothing new. According to TeleGeography’s GlobalComms Database, in 4Q10 Russian press reports leaked the story that the State Commission for Radio Frequencies (SRFC) was poised to grant a job-lot of LTE-suitable frequencies in the 2.3GHz-2.4GHz band to Osnova, forcing the so-called ‘Big Three’ cellcos (MTS, MegaFon and Vimpelcom) to lobby prime minister Vladimir Putin to protest against what they saw as the non-competitive distribution of LTE frequencies. A co-signed letter sent to Putin warned that if the start-up company did decide to build a 4G network it would take much longer than if an established cellco were to do so. They estimated that creating a 4G federal communications network from scratch could cost as much as USD7 billion, and take up to seven years, severely undermining future investment opportunities. Communications Minister Igor Shchegolev promptly entered the fray, questioning why a public resource was being distributed behind closed doors.

Osnova is partly owned (25.1%) by Voentelecom, which is itself controlled by the Ministry of Defence. Further, the remainder of Osnova is owned by Vitaly Yusufov, the son of a former energy minister and influential Kremlin insider Igor Yusufov, leading to widespread accusations of nepotism.

Russia, Voentelecom (incl. Osnova Telecom)