Sonic Duo gets new owner after competitor shares frequencies

MOSCOW—Sonic Duo, which has the third GSM license in Moscow, received the first frequencies shared by its major competitor Mobile TeleSystems (MTS). The news was followed by a change of Sonic Duo’s major shareholder.
The carrier is to launch commercial operations in the third quarter of 2001.
When Sonic Duo last year received the third license in Moscow, where the GSM band is occupied by MTS and Vimpelcom (BeeLine), the Communications Ministry tried to strip the two major carriers of some spectrum, causing a scandal within the Russian telecom market.
Now MTS voluntarily ceded to the ministry 3.2 megahertz out of the total 14.6 megahertz of spectrum at its disposal in the GSM 900 MHz band, and one-third of the ceded spectrum has already been assigned to Sonic Duo. The remaining GSM 900 MHz spectrum and 19.4 megahertz in the 1800 MHz band are quite enough for MTS’ operation.
Wireless market experts recalled MTS statements that it was ready to cede “excessive frequencies” in exchange for certain backup from the ministry. MTS spokeswoman Eva Prokofyeva indirectly confirmed that. “Our company has always stood for a reasonable compromise and constructive cooperation with the ministry,” she said.
Experts believe the “constructive cooperation” concerns MTS development in St. Petersburg, where it bought the Telecom XXI carrier and became the second GSM operator. MTS will now compete in the second-biggest Russian city with North-Western GSM of Telecominvest holding, which was created with the help of Leonid Reiman, who is now the country’s communications minister.
Sonic Duo, evidently aware of such informal backup agreements, is in no hurry to thank the competitor for frequencies. “We cannot be grateful to MTS for sharing frequencies. The frequencies are owned by the state, and it assigns them to companies for a certain time and on certain terms,” spokeswoman Marina Belasheva said.
In the meantime, Sonic Duo received a new owner, which was the main de facto investor. Sonic Duo stock is split between Russian CT Mobile (65 percent) and Finnish Sonera (35 percent). The former was created by the Central Telegraph and LV-Finance investment company. Central Telegraph shareholders, who held a 51-percent stake in CT Mobile, decided to abandon the wireless market and keep only a 1-percent stake in the company. The rest went to LV-Finance, whose stake in CT-Mobile increased from 49 percent to 99 percent.
Wireless market experts believe Sonic Duo will only profit from the change, as new owners are likely to decide on joining the pan-Russian Megafon project of St. Petersburg-based Telecominvest holding.
Sonic Duo, backed by LV-Finance, is reportedly negotiating a US$40 million credit with the International Finance Corporation and the European Bank for Reconstruction and Development.