Russian operators agree to LTE network sharing, as Putin pushes deal

The Russian operator Yota has surprised the industry with an announcement that it plans to build a giant LTE network that will cover 180 cities by 2014.

In addition, the company, with the obvious support of Prime Minister Vladimir Putin, added that Russia's four top telecoms operators--MegaFon, MTS, Vimpelcom and long-distance provider Rostelecom--would then share the network on an MVNO basis. The agreement gives four operators an option to each purchase a 20 per cent shareholding in Yota in 2014. Yota is expected to borrow $2 billion in loans by 2014 to finance the network.

The involvement of Putin seems to come via the state-owned Russian Technologies which has a 25 per cent stake in Yota. Many observers believe that the PM personally oversees all major deals in Russia, and as reported by Reuters, he told the operators' CEOs, "It is very unusual to see heads of the leading telecom firms around one table."

According to the Moscow Times, Putin added: "I really hope that what has been thought of will be realised with the help of the employees of your companies, and with the assistance of state resources that we are ready to provide you with."

However, the meeting with Putin provoked Vladimir Yevtushenkov, the chairman of Sistema, the parent company of MTS, to question the deal. "There are more white spots in this agreement than one would wish," he said, according to Reuters.

The Russian Communications Minister, Igor Shchyogolev, said the agreement would provide greater competition in content and services without the need for the other four operators to build a new network, according to Reuters. The four operators lacked the spectrum to launch LTE, but will now could now use the Yota network, which will switch from using its frequency bands for WiMAX to LTE.

In the tangled web that is Russian business, the conglomerate Russian Technologies, lead by long-time Putin supporter Sergei Chemezov, has admitted its keenness to develop and supply LTE infrastructure and cut the country's reliance on buying network equipment from overseas vendors.

For more:
- see this Bloomberg article
- see this Reuters article
- see this Moscow Times article

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