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Russia Prepares for 3G Licence Awards

November 20, 2003 - source: BWCS

The Russian government has indicated that it will hold its first auction of 3G licences in early 2004. No further details of the number or format of the licences have been made available. The Russian market is currently dominated by GSM (900 and 1800) technology although the rival standard CDMA (450) has been deployed by Delta Telecom in five north western regions and St Petersburg. However the GSM-based standard W-CDMA looks set to become the only 3G technology option as the Russian government has effectively precluded the operation of next-generation CDMA2000 services by allocating the spectrum bands required to digital television broadcasters.

Like other Eastern European countries Russia has taken note of the difficulties experienced by mobile operators in Western Europe who have been saddled with huge licence fee payments. The Russian cellular operators will be hoping that the government will use this knowledge to set realistic minimum licence fee levels and 3G rollout deadlines. Several major European telcos including T-Mobile (MTS), TeliaSonera (MegaFon) and Telenor (VimpelCom) own stakes in the leading Russian mobile operators.

There were around 25 million cellular subscribers in Russia by mid 2003 and this figure is expected to have grown to around 30 million by the year end. The market is dominated by three national operators, MTS, VimpelCom and MegaFon, which control 36%, 29% and 19% of the market respectively. Although overall cellular penetration remains low by western European standards at less than 18% in city regions such as Moscow and St Petersburg penetration rates are considerably higher at around 50%.

 


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