A handful of mobile and telecom operators in Russia signed a memorandum last week, in the presence of Prime Minister Vladimir Putin, to establish a joint venture for developing an LTE network. The companies involved are VimpelCom, MTS, and MegaFon, the leading Russian mobile operators; Rostelecom, Russia’s national telecom operator; and Scartel, operator of the first Russian mobile WiMAX network under the brand Yota.
Under the non-binding memorandum, the companies intend to pool their resources in a single infrastructure company based on Scartel, which will build an LTE network for all of the participating operators.
According to Igor Shchegolev, Minister of Communications and Mass Media, each company will receive a 20% stake in the joint venture.
Denis Sverdlov, head of Scartel, told journalists that his company will borrow $2 billion in bank loans to build the LTE network by 2014. According to him, the four other operators in the joint venture will not participate in this financing, but after funds have been amassed in 2014, they will have the option to purchase a proportionate share of Scartel.
Deploying an LTE network requires bands of at least 20 MHz in each direction for maximum speed. Scartel already has a set of frequencies in the 2.5-2.7 GHz band in 180 Russian cities. Combined with the low-band frequencies (800-900 MHz) that are more readily available, they could be used to create a quality LTE network.
“While telecom operators around the world are increasingly sharing network resources to cut costs, the Scartel (Yota) deal is the first example of such cooperation in Russia,” notes Reuters.
In speaking with Reuters, independent mobile analyst Eldar Murtazin said, “This deal was imposed on the telecom firms.It represents a big victory for Yota. They demonstrated that they are backed by the state.”
A technically simpler and bureaucratically quicker approach
“This initiative doesn’t mean that the project of converting the frequencies currently used by the Defense ministry and other state bodies has been abandoned,” said to EWDN Sergey Maltseff, a mobile broadband expert. In January, the Ministry of Communications and Mass Media requested that a consortium composed of MTS, MegaFon, VimpelCom and Rostelecom investigate, both technically and economically, the conversion possibilities for these frequencies. The investigations were expected to be completed by July 2011, but the creation of the consortium has been delayed and the deadline is unlikely to be met.
“Using Scartel’s frequencies is a technically simpler and bureaucratically quicker way to deploy LTE. A first network could thus appear years before the one based on converted military bands. Still, the authorities’ greenlight will be required for Yota to switch from WiMAX to LTE, since frequencies in Russia are not allocated on a technology-neutral basis,” adds Maltseff.
