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Russian market leaders secure LTE licences as deals are negotiated

The three largest operators in Russia have been issued with licences for LTE spectrum by the country’s regulator. MegaFon, MTS and VimpelCom – along with broadband operator Rostelecom – won the licences at auction with currently undisclosed bids, beating out Summa Telecom, Tele2 Omsk, Tele2 Voronezh and TTK.

The licences cover 800MHz (791-862MHz) spectrum, which is suitable for LTE – accordingly, the operators are obliged to begin offering LTE services by June 1st 2013, and must invest at least RUB15 billion (US$457 million) in their LTE operations each year.

The 2013 deadline applies to six regional markets, with regular expansion targets planned over the next few years, culminating in nationwide coverage by 2019.

Interestingly, all four licence holders are partners in an LTE joint venture – the former WiMAX operator Yota - which aims to build a shared LTE network. However, this project has stalled after hitting various setbacks, prompting the partners to seek alternative avenues into LTE.

The Yota project could soon be assimilated into MegaFon’s operations, as the latter’s majority owner Alisher Usmanov is reportedly close to striking a deal with Yota parent Scartel that would see the two firms merge their assets.

MegaFon and Yota entered into a spectrum-sharing arrangement in February, allowing MegaFon to begin offering LTE services ahead of its rivals – using this advantage, it launched LTE networks in Moscow, Krasnodar and Novosibirsk and Sochi. It aims to be providing coverage in four more cities by the end of 2012.

MegaFon is not the only operator believed to be in talks with Yota – although it already holds a TD-LTE licence for Moscow, MTS is reportedly negotiating a deal with Yota allowing it to launch services on other frequency bands.

Meanwhile, Rostelecom is also launching LTE services in conjunction with Yota, via an MVNO. Yota itself is offering services in Moscow, Samara and Sochi.

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