Russia’s five-prong approach to 4G networks

Russia’s four largest mobile operators have partnered with wireless broadband company Yota to roll out a nationwide 4G network by 2014.

Taking a collaborative strategy similar to that being adopted in Sweden, Russian operators VimpelCom, MegaFon, Mobile TeleSystems (MTS) and Rostelecom will partner with Yota, which will serve as the operators’ 4G network provider. Yota, working with the telcos, will be responsible for providing an LTE-based technology to 180 cities for up to 70 million people in the country using its spectrum allocation.

“We firmly believe in the separation of network owners and service provision and believe that this groundbreaking agreement will drive innovation and benefit Russian consumers,” said Dennis Sverdlov, CEO at Yota. “Even more importantly, we believe that Yota can help all operators across the world to take advantage of the massive opportunity that 4G brings.” Once the network is rolled out, all operators will be given the option to acquire a 20% stake in the broadband company at market prices. Yota was set up three years ago as an internet start-up company and is presently 75% owned by private fund group Teleconet Capital Limited Partnership and 25% state-owned by the government’s Russian Technologies State Corporation. Considering Yota’s part-state funding, Prime Minister Vladimir Putin witnessed the deal signing at the company’s Moscow office.

“This announcement suggests that Russian mobile operator choice is limited. Unlike in the US, this deal suggests that MTS and others may not be willing, or are unable to roll out their own LTE networks in the short term,” said Angel Dobardziev, analyst at Ovum. “This deal however, is very significant for both the Russian market and the broader telecoms industry. This is another step towards ever broader and deeper network sharing among operators that is increasingly gaining traction.”

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