MOSCOW—Swedish company Tele2 launched a wireless communications project in the southern Russian city of Rostov-on-Don just weeks after the company announced the purchase of Russian assets of the Luxembourg-based Millicom International Cellular (MIC).
Tele2 and Rostov Cellular Communications carrier will provide wireless broadband access on the basis of BreezeACCESS equipment from the Israeli company Alvarion. The network will provide Internet access, Internet Protocol (IP) telephone communications and allow Tele2 to construct local networks. MIC is represented in the project by its 100-percent owned subsidiary Millicom New Technologies of Communications (Millicom-NTK).
Millicom-NTK said it planned to build out more base stations in Rostov-on-Don and the surrounding region and expand wireless broadband networks to other regions as well.
MIC in Russia owns controlling interests in 12 regional AMPS carriers, as well as 20 percent of the Moscow Cellular Communications (MCC) NMT carrier. As the D-AMPS standard is to quit Russia by 2010, the carriers were offered to switch to the GSM 1800 MHz technology. Eight carriers have already received the corresponding licenses.
Tele2 is to pay at least US$80 million for the Russian assets of MIC and an additional US$30 million if the remaining four carriers receive the GSM 1800 MHz licenses as well. Tele2 hopes that the Russian business will bring it 124,000 new clients.
“Millicom is a company that works on emerging markets, while Tele2 works on mature markets. The sale of Millicom’s Russian business to Tele2 is the acknowledgement that the Russian market has matured,” the Vedomosti newspaper quoted an anonymous Millicom official as saying.
But Russian wireless market experts predict it will be hard for Tele2 to compete with the “big troika” of Russian carriers—Mobile Telesystems (MTS), BeeLine and Telecominvest. “It is hard to become a pan-Russian carrier without a major presence in Moscow. Most likely Tele2 will have to agree with some of the existing market players on mutual business development,” said Anton Pogrebinsky from J’Son & Partners telecom consultancy.
He also played down the importance of the purchase as Tele2 and MIC are affiliated companies, and Millicom holds a 12.73-percent stake in the Swedish holding. Besides, the same person chairs both Tele2 and MIC.
“That is just a movement of assets from one company to another. Nothing of a major importance has happened,” Pogrebinsky said.
