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MTS says Russian 3G will avoid the mistakes of the west

30 мая 2008

Russian mobile operator MTS launched its first commercial 3G services in St. Petersburg on Wednesday this week and stressed that Russia will benefit from its later adoption of the advanced mobile services than other markets in Europe.

MTS is not the first Russian operator to offer 3G: MegaFon launched services in St. Petersburg in October last year. But Sistema-owned MTS said it is the first to offer 3G on a pan-regional basis as it is rolling out services in St. Petersburg first, followed by Sochi, Yekaterinburg and Kazan in the first phase.

This year, MTS plans to offer services in at least 10 more cities, with up to 20 also cited as possible for 2008.
Then in 2009 up to 40 will be added, with more than 80 cities covered in 2010. By that time the population coverage will be around 40%. It's hoped that Moscow will be part of the network coverage by then: talks are currently going on with the Russian military over the use of spectrum for 3G services in the city, and MTS said it expects to see a resolution of this situation by autumn this year.

In 2009, the company also plans to roll out services in
Uzbekistan and Armenia, while the 3G business case is also under review for Belarus.

Vyacheslav Nikolaev, deputy CEO of MTS Russia, said at the launch event in
St. Petersburg that the company will spend around US$1.6 billion, or 38 billion roubles, on its 3G HSPA network, which offers maximum line speeds of 3.6 megabits per second and has so far been supplied by Ericsson.
Around 5% of the total sum has been invested so far, Nikolaev added, although he was unable to give any details on the number of base stations deployed. Revenue from 3G services is expected to reach around $2 billion in Russia by 2011.

Nikolaev stressed that MTS' strategy is to roll out 3G services according to customer demand, and he said up until now there has been little demand for 3G in

"2G was enough," he said.
"The main demand was for voice [as fixed networks are so poor in Russia]. But we're starting to see the requirement for 3G services now," such as mobile broadband and mobile email services.

Indeed, Ivan Zolochevskiy, director, North-West Macroregion, MTS Russia, said the company recorded a 3.5-times increase in GPRS traffic in 2007.
Nikolaev said he expects 3G services to boost ARPU by around $1.4 a month by 2011/12, from $10 from consumers now. Corporate ARPU is much higher at around $29.

Russia is extremely late with 3G compared with other markets in Europe, Nikolaev stressed that this is by no means a disadvantage, and said that he sees considerable benefit in launching services using more mature, tried-and-tested technology.

Europe, it was too early," he said.
"There were no terminals and few knew how to use the services. We believe we will be able to avoid the mistakes of the earlier launches."

"People in
Russia have a different attitude to mobile than the west due to poorer fixed networks," added Marcel Stoeckli, CTO, MTS Group.

Stoeckli said there are already a great many HSPA-enabled handsets on the market, so MTS will not be faced with the early handset-availability issues encountered by western operators. Plus, fixed broadband penetration is very low in
Russia and MTS expects to see good take-up for its mobile broadband dongles.

Nikolaev commented that Russian operators do not subsidise handsets or dongles, meaning that handsets will cost around $150-$200 and dongles around $100. He said this situation is unlikely to change, unless another operator "breaks the line" by introducing handset subsidies.

On the issue of backhaul, Stoeckli said different solutions will be adopted depending on the region.
In urban areas MTS will be able to take more advantage of fibre networks, but in rural regions it may have to look at different solutions, including satellite and wireless options.

He also said network sharing is "not an urgent need from day one", as the mobile operators in
Russia are concentrating on urban areas and see less need to share networks. But he said this issue may become more relevant in time for rural areas.

At the end of Q1 this year MTS had 59.9 million subscribers in
Russia, and 88.8 million in all six of its markets. It won its Russian 3G licence along with MegaFon and Vimpelcom in April 2007.

Источник: Total Telecom

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