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. Last Updated: 07/27/2016

Volga Mobile Firm Receives Go-Ahead

The Communications Ministry has apparently taken steps to reinstate a suspended mobile license in the Volga River Valley to Samara-based mobile operator SMARTS, the company said Wednesday.

SMARTS secured approval last week from the local Glavgossvyaznadzor, the license-issuing body that falls under control of the Communications Ministry, to start commercial operations on the GSM-1800 standard, SMARTS general director Gennady Kiryushin said in a telephone interview.

He added that formal word had not yet been received from the ministry saying the license was theirs to use, but the latest decision was sufficient for now to operate normally on a dual-band network.

The ministry suspended the company's license last October, citing SMARTS's failure to meet a deadline for rolling out its network.

Kiryushin said they have since met the license requirements.

Ministry spokesman Sergei Grigorenko declined to comment, but he confirmed that the license had been suspended because SMARTS failed to meet its obligations.

Following the suspension, speculation abounded in the media and among telecoms analysts about the ministry's possibly dubious ulterior motives driven partly by government favoritism toward St. Petersburg operator Telecominvest. Communications Minister Leonid Reiman and first lady Lyudmila Putin both worked for PTS, the St. Petersburg telephone company that founded Telecominvest.

The action coincided with the granting of a third GSM license for the Volga macro-region to MCC-Saratov, a small provider that is 98 percent owned by Telecominvest.

The suspension "left us with the impression that the ministry's agenda goes beyond simply enforcing the existing regulations, which are far from clear-cut," United Financial Group wrote in its morning comment Wednesday.

"The suspension gives an indication to companies that they have to obey license requirements, especially if Telecominvest wants to come in," said Andrei Bogdanov, telecoms analyst at Alfa Bank.

Telecominvest says it sees no connection between SMARTS's problems and its own expansion in that region through its MegaFon, a brand name for its GSM networks in the Volga, Caucasus, Siberia and Far East regions launched last year. A GSM 900/1800 network will be launched this summer in Samara, Saratov and Mordovia, said Andrei Klimov, Telecominvest spokesman.

"If we see a promising market with inactive players — we enter it," Klimov said. "Now others get active — why not before?"

Apart from the Volga region, where Vimpelcom also holds a license, Moscow is the only region to have received three GSM licenses, though leading operators Vimpelcom and Mobile TeleSystems have both been trying to wiggle their way into the St. Petersburg market through a possible third license.

The ministry has been accused by industry watchers of trying to protect Telecominvest's North-West GSM, the leading operator in St. Petersburg.

SMARTS's Kiryushin said that after the suspension negotiations with potential investors froze. In the last few days, however, talks restarted with two interested companies.

Last year SMARTS held talks with four companies, Kiryushin said, but he would only name one of them — Sistema Telecom, parent company of national No. 1 mobile operator MTS.

Through its daughter companies with GSM-900 licenses, SMARTS operates in most cities in the Volga River Valley.