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. Last Updated: 07/27/2016

Minister Keeps Cell Providers in Limbo

Fanning the fires in a fight over the radio frequencies used by Vimpelcom and Mobile TeleSystems to transmit cellular traffic, Communications Minister Leonid Reiman said Tuesday that the country’s telecoms oversight agency would continue to investigate whether rights to the frequencies were issued "correctly."

Vimpelcom and MTS were ordered by that agency, Gossvyaznadzor, to vacate 52 frequencies in a letter sent Sept. 5. The agency said the frequencies were to be returned to the Defense Ministry.

Reiman suspended the order last week, but no one knows whether the two Moscow cellular operators will be allowed to keep their frequencies, which were granted by Gossvyaznadzor earlier this year.

Later, a Reiman deputy, Eduard Ostrovsky, said the ministry had to free up frequencies in the 900 band, already crowded by MTS, Vimpelcom and air force communications divisions, for newly minted market player Sonic Duo, which received Moscow’s third GSM license in June, Reuters reported.

Speaking in the southern city of Voronezh, Reiman hinted the threat of frequency seizure still hung over the companies, saying it was "totally unclear how permission to use these frequencies was granted," Prime-Tass news agency reported.

"You can’t get frequencies over the counter," Mikhail Umarov, press secretary at Vimpelcom, said in a telephone interview. "They are allocated by Gossvyaznadzor. … Gossvyaznadzor, which gave us the frequencies, is suddenly asking, ‘Hey, did we do everything right?’ You have to agree this looks strange. Our position has not changed. All frequencies were received legally."

MTS, for its part, says the frequencies it was ordered to surrender could not even be used by another carrier for regular operations — they were granted on the condition that MTS, which is expanding its network in Moscow metro stations, use them only underground, said MTS spokeswoman Eva Prokofyeva, adding that only the military uses these frequencies above ground.

Reiman said cellular subscribers and investors in the companies — which are both listed on the New York Stock Exchange and have major European telecoms as strategic partners — would "under no circumstances" be affected "even if we assume, purely hypothetically, that it turns out some of the frequency channels were incorrectly granted, which I think won’t actually happen," in remarks reported by Interfax.

The seizure threat has already affected investors. The price of the two companies’ stock has yo-yoed since the news came out.

"To say it won’t affect investors is a strange statement to say the least," Umarov said. "You can look for yourself and see what is happening on the New York Stock Exchange."