20 July 2018

Specialist opinion on Russia’s telecom industry

Specialist opinion on Russia’s telecom industry

Among the all the countries, Russia was one of the first country to introduce radio and television. Due to the large population in the country, Russia leads in the number of TV broadcast stations and repeaters.

In Russia, there are more than 1,000 companies licensed to offer communication services today, some of them includes Mobile TelsSystems i.e. MTS, VimpelCom i.e. BeeLine, MegaFon, SMARTS and Sibirtelecom etc.

As per the reports given by the Moscow News and Moskovskiye Novosti, in cooperation with Media Business Solutions, their official partner namely the Pepeliaev Group had hosted a Global Telecom Forum on November 30. In the forum, the experts gave their opinions on various factors of the Russian Telecom Industry such as government investment benefits in the development of telecommunications, foreign investor’s prospects on the Russian market, obstacles in Russian telecoms and their infrastructure sufficient to sustain a nationwide network.

As per the reports, YuryDombrovskythe president of Association of Regional Communications Operators gave his opinion on the above mentioned factors of the Russian Telecom Industry. According to him, there is an extremely low efficiency of state investments in telecoms and of state telecom companies in Russia and especially noticed in mobile communications, where the state company has powerful competitors. For example Rostelecom and its daughter companies own approximately 20 percent of the frequency spectrum of Russia, but they only serve about 7 percent of Russian users.

Large parts of the spectrum are simply lying idle and not being used. In Russian telecoms this low effectiveness is hidden, but clear only to experts. In the prospects of the foreign investment, he says that due to the entry of foreign investment, the majority of telecoms are publically listed and are also foreign operators, due to which there is purchase of regional companies and subsequent participation in national tenders for frequencies. He also says that the infrastructure and fiber-optic networks in Russia are not developed enough and Russia is one of very few countries in the world where a National Broadband Plan has not been created.

In the opinion of Natalya Ivashchenko, the head of the telecommunications group of Pepeliaev Group, as per the reports she says that the state investment is necessary for development of the telecommunications industry in Russia so that everyone should have the possibility to use modern communications services, such as Internet, etc. Since, Russia is a very big country, and today there are remote territories that still exits. In these areas, the population density is very low, and it is unprofitable for operators to build their networks because it requires large investment.

Financial support is required by the state policy in the development of innovation in Russia, and should note that such support can be shown not just through direct financing of innovative companies, but also through the creation of a favourable tax climate such as provision of tax relief, the introduction of special tax regimes. In the prospects of foreign investors she says that Russian legislation has provided Russian and foreign investors for the development of the telecommunications business. There are differences only for foreign investors in Russian commercial firms that have a strategic importance. But such companies in the telecoms industry are few, and practices show that companies with foreign capital are actively developing in Russia. She also adds that there are a lot of barriers, often created through problems in legislation, lack of clear-cut mechanisms for the realization of rights and the fulfilment of obligations. According to her, the allocation of radio frequency bands through tenders or auctions is not fixed in law. Hence, in practice, frequencies must be allocated among companies who do not always use them effectively. But if a transparent process for allocating frequencies is established, then more companies will have the opportunity to enter the market.

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