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Rostelecom taking strides towards mobile and LTE

The Russian fixed-line operator Rostelecom is implementing a “strategic change of direction” which will incorporate a strong shift towards mobile.

The state-owned company is reportedly aiming to “aggressively expand its share in the 3G market” via the creation of a new mobile management division. It also plans to use its 450MHz spectrum to build a 4G/LTE network.

Rostelecom is currently the fifth-placed operator in Russia according to GSMA Intelligence, with 13.82 million subscribers. This puts it significantly behind the fourth-placed Tele2’s 23.34 million. The market is led by MTS (71.82 million), followed by MegaFon (62.72 million) and VimpelCom (56.25 million).

The operator is well-placed to begin a mobile offering, having built and tested 3G networks across 22 regions of Russia in conjunction with major international vendors Huawei and Ericsson. It also provides HSPA+ services in St Petersburg to supplement its offering.

Fitch Ratings recently noted that Rostelecom would “face the biggest hurdles” as the major Russian operators begin deploying LTE networks. It is speculated that Rostelecom could merge with Tele2, but even under these circumstances competing with the other three operators would require heavy capital expenditure.

Rostelecom currently provides wireless internet using 450MHz frequency licences. It is reportedly investigating whether these can be used for an LTE rollout, presumably using CDMA450. This would be subject to regulatory approval. There have thus far been few instances of LTE being deployed in the 450MHz band, although other large markets such as Brazil have expressed an openness to the frequency.

 

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