Tender bender

22 March 2010 By Jason Bush

All but one of 40 licences just awarded for 4G telephony in Russia have gone to Svyazinvest, the inefficient state telecoms dinosaur. Svyazinvest’s expansion is part of a deliberate policy that bodes ill for a sector that had been benefiting from the injection of competition.

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Russia's telecoms regulator Roskomnadzor announced the results of recent tenders for rights to use frequencies between 2.3 and 2.4 GHz in 40 of Russia's 75 regions earlier this month. Access to these frequencies is required by telecoms companies wishing to provide fourth generation (4G) technology, combining internet access with mobile telephony.

Rostelecom, part of Svyazinvest, was awarded licences to provide services in 38 regions. Another Svyazinvest unit, Sibirtelecom, won the licence for the Tomsk region in Siberia. Svyazinvest failed to obtain a licence in only one region, Chechnya, where the tender was won by local operator Vainakh Telecom.

According to the criteria published by the Russian government, the winner of each tender was chosen according to a scoring system. A maximum of 99 points was available, based on criteria that included the number of years the bidder has provided a range of telecoms services in the region. But 20 points were deducted for any bidder that already owned a licence to operate GSM services, and a further 20 points was deducted for a bidder with an existing mobile broadband service. Successful bidders are required to purchase only Russian equipment and begin investment within 18 months.

In January, Russia's telecoms minister Igor Shchegolov stated that Svyazinvest was in talks to acquire majority ownership of Megafon, one of Russia's three national mobile telecoms operators.

In May 2009, the government approved a reorganisation of Svyazinvest that will see the merger of its seven regional fixedline subsidiaries with longdistance operator Rostelecom. Svyazinvest anticipates an eventual IPO involving flotation of 25 percent of the merged company.

Svyazinvest was originally created in 1995 as a holding company for regional fixedline telecoms companies and Rostelecom. A 25 percent stake was privatised in 1997, but this is now being returned to state ownership as a result of an asset swap agreed between Svyazinvest and private telecoms holding Sistema last year.

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In January, Russia's telecoms minister Igor Shchegolov stated that Svyazinvest was in talks to acquire majority ownership of Megafon, one of Russia's three national mobile telecoms operators.

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