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Challenger in rapidly growing Russia

October 26, 2004

Russia is one of the fastest growing telecom markets in the world. The challenger in the tight race for first place is the country's second largest mobile operator VimpelCom, who is relying on Ericsson to keep pace.
Last year, the Russian market increased by 18 million new subscribers and by June 2004 there were almost 50 million mobile subscribers in the country, equating to a penetration rate of just over 34 percent.

VimpelCom's large GSM investments follow the rapid development of the Russian market. Ericsson supplies VimpelCom in six of the seven regions (together more than 18 million square kilometers) that it operates. Deliveries include GSM, GPRS, WAP and MMS solutions, and preparations are under way for the launch of EDGE.

 

Sergej Avdeev, CTO at VimpelCom, says because the operator has such a huge rollout, it is very important to have a reliable partner like Ericsson. "Right now, the market is growing with 3 million new subscribers a month," Avdeev says. "Every year we are practically doubling the number of subscribers, and this growth is still continuing." "Sometimes we need to accelerate our rollout and build quickly", Andeev adds. "Ericsson is currently our main network supplier and we continue to choose Ericsson because of its reliable, future-proof equipment and skilled local staff, who are able to provide the necessary support."

 

The close relationship was confirmed this year when the total value of the contracts signed reached USD 210 million. Under these contracts, Ericsson will deliver infrastructure and telecom services for the company's latest GSM expansion.

 

Zoran Lukovic, Ericsson's key account manager for VimpelCom, says Ericsson has tried to avoid being just a supplier, and instead become a real partner. Integral to this goal is a good understanding of the demands of the customer and its customers, and delivery of the best solutions to make VimpelCom's business profitable.

 

"Market demands are changing all the time and we have to be close to VimpelCom and its customers to provide the best solutions," Lukovic says.

 

Since 2000, the Russian market has been consolidated into three main players. Mobile TeleSystems, with about 36 percent market share, is the market leader, followed by VimpelCom (33 percent) and MegaFon (18 percent).

The VimpelCom group's license portfolio covers about 94 percent of Russia's population of 136 million people, including the city of Moscow, the Moscow region and the city of St Petersburg. VimpelCom is now a dual-band operator covering practically all of Russia.

 

Avdeev says the future looks bright for VimpelCom. The company is aiming for increased market share and is now enhancing its network and building out both capacity and coverage.

 

It is also important to introduce new technologies as they become available. "We are considering 3G. It has yet to be decided when the licenses will be issued, but sooner or later this will happen, and we want to be there to compete for a 3G license," Avdeev says.