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. Last Updated: 07/27/2016

VimpelCom Confident on 3G Mobile Phone Growth

DAVOS, Switzerland -- A significant segment of the Russian market is ready for third-generation, or 3G, mobile phones, though it could be years before access extends beyond major cities, the country's second-largest cell phone operator VimpelCom said.

"I am confident there is a significant segment of the Russian market which is absolutely right for 3G," VimpelCom CEO Alexander Izosimov said in an interview on the sidelines of the World Economic Forum in Davos on Thursday. "Is it the whole market? Absolutely not. Is it big enough? Yes."

Russia outlined the terms for 3G licenses in December, kickstarting an auction process that will last until next month. Companies will have to pay a fee of about $50,000, answer questions and convert frequencies for civil use.

Izosimov said the rules were "fairly balanced," but said VimpelCom would press for transparency as the process continues.

"That's where we are planting our pole -- trying to push the market to maximum transparency," Izosimov said. "The more transparency we get in this process, the more this process becomes a benchmark for what's happening."

Izosimov said VimpelCom could provide 3G services to spots in Moscow within months, though it could take over a year to cover the entire city and longer to move to provincial cities peppered across the nation.

"We don't subsidize handsets, so we have to pace ourselves with the pace of adoption of the new sets. That is likely to be in urban areas first and then trickle down into rural areas," Izosimov said.

He also said Russia was unlikely to suffer some of the turbulence that hit European operators in the initial phases, largely caused by handsets of insufficient quality, he said.

"All earlier rejection and skepticism of European users can be attributed to quality of handsets," he said. "Interesting toys, not a reliable service."

He said VimpelCom would focus on high-end customers and did not plan to subsidize 3G handsets.

"It is much better to cater for our upper-level customers, providing additional services and trying to generate incremental revenue."