Rostelecom Launches Local Mobile Service
The state-owned company offers rates ten times lower than its competitors.
Published: August 14, 2013 (Issue # 1773)
ST. PETERSBURG — Rostelecom, Russia’s largest telecommunications operator, has begun providing high-speed mobile telephone services in St. Petersburg. With the state as its principal owner, Rostelecom controls the fiber optic backbone that covers Russia from St. Petersburg in the west to Khabarovsk on the Pacific Ocean. Rostelecom has long been the leader in local and long distance telephony, broadband Internet access and IP-TV; it also provides mobile telephone services and pay TV in all of Russia’s regions. With the announcement on Aug. 1 of their new service, Rostelecom moved into yet another segment of the Russian telecoms business.
At a news conference on Aug. 6, Rostelecom announced that the service is already up and running. The network uses the HSPA+ standard, which is faster than 3G and is therefore often referred to as 3G+. In St. Petersburg, Rostelecom will provide its services using the technology of mobile network operator Delta Telecom, a subsidiary of Sky Link that is owned by Rostelecom.
Larisa Tkachuk, Senior Vice President and Commercial Director of Rostelecom, called the launch of their new mobile service in St. Petersburg another “historic moment,” referring back to Russia’s first mobile telephone call, made in St. Petersburg in 1991 by Anatoly Sobchak, the city’s governor at the time. Both Rostelecom and Russia’s big three mobile network operators — Megafon, MTS, and Beeline — began operations in the two years following that first mobile call. Today, the big three hold more than 25 percent each of the mobile market. Currently, Rostelecom controls only 6 percent of mobile communications and is looking to catch up.
Ever since then-president Dmitry Medvedev gave his famous “Go, Russia!” speech in 2009, in which he called for liberalization and a shift in focus from natural resources to a new information society, the government’s aim has been to privatize Rostelecom. A major milestone was reached in 2010 when Rostelecom acquired mobile operator Sky Link, giving Rostelecom access to much-needed mobile frequencies.
Later in 2009 the Russian government approved a plan to create a national leader in the telecommunications sector by transferring state-owned telecoms group Svyazinvest’s assets to Rostelecom. The reorganization is ongoing, due to complex ownership issues. Svyazinvest is Rostelecom’s main shareholder and owns 41.84 percent of ordinary shares. Rostelecom owns 25 percent plus one share in Svyazinvest. According to the government’s reorganization plan the ownership transfer will be complete by 2014.
With mobile users in big cities constituting phone operators’ largest source of income, it’s no surprise that Rostelecom is entering the 3G+ mobile market, or that they’re doing it in St. Petersburg. Rostelecom will be expanding into the Leningrad region in the beginning of 2014 and expects to launch mobile telephony services in Moscow by the end of this year. As a “carrier’s carrier,” all other telecoms operators pay Rostelecom to use its infrastructure.
The state-owned company offers rates ten times cheaper than those of its competitors for its new service. When asked about Rostelecom’s monopoly of the network, Tkachuk simply answered: “We are not afraid.” The Russian government has said it wishes to decrease its involvement in the telecom sector, but Rostelecom’s new service may indicate the contrary.