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. Last Updated: 07/27/2016

Sonera Awarded GSM Licence

The local unit of Finnish telecoms firm Sonera was awarded the third GSM-standard mobile phone operating license to be issued for Moscow city and region Friday, the Communications Ministry said.

It said in a statement that Sonera planned to invest $300 million in a 10-year program for the mobile phone network and a mobile phone factory and had also agreed to invest $25 million in build housing for the military.

But a ministry spokesman said Sonera was not required under the terms of the license, given without a tender, to build the network and that the pledge to build the housing was not binding.

The spokesman said the company would have to pay for the license although he gave no sum.

The statement said Sonera's local unit, Sonik Duo, expected to launch a service for at least 60 percent of Moscow region by June 1, 2001, when there would be at least 15,000 subscribers.

The subscriber base would rise in a second stage ending in 2003 to about 160,000 and in a third stage to about 780,000 by 2010, when 95 percent of Moscow's territory would be covered.

Sonera will compete with two local firms that have identical GSM 900/1800 standard licenses covering Moscow. The companies, Vimpelcom and Mobile TeleSystems, or MTS, both operate in several regions and each has more than 500,000 subscribers, almost all in Moscow.

Vimpelcom has said there is not enough room for a third GSM license in the market.

Competition on the cellular market has been fierce in recent years, with Moscow's three main providers, Vimpelcom, MTS and Moscow Cellular Communications, which does not have a GSM license, battling it out for subscribers by piling on services and cutting prices again and again.

In October, Vimpelcom went so far as to slash the price of its basic cell phone package - handset included - to an unprecedented $49.

Sonera has an existing license in St. Petersburg. At a conference in the Latvian capital Riga, Sonera Finland president and CEO Aulis Salin said that no more Russian permits would be applied for.

The ministry said Sonera would work with a local strategic partner, Tsentralny Telegraf, a unit of the Svyazinvest national telecoms holding company, which controls almost every regional fixed line telecommunications firm in Russia.

Ministry spokesman Sergei Grigorenko said a local firm would have to own the license, but he was unable to say if Sonik Duo, registered in Russia, met those terms.