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. Last Updated: 07/27/2016

Summa to Put $1Bln into WiMax Growth

Summa TelecomSergei Koshkin
Closely-held telecommunications firm Summa Telecom said Wednesday that it would invest $1 billion out of the personal funds of its primary shareholder to create broadband wireless Internet networks across the country.

The company plans to extend wireless Internet, or WiMax, coverage to 330 cities by 2010, CEO Sergei Koshkin told journalists Wednesday. Summa Telecom also intends to invest $600 million into building a GSM network, Koshkin said.

Company spokesman Igor Ryabov said Wednesday that the company has what it takes to build WiMax networks capable of providing services such as telephony and Internet Protocol Television, as well as Internet access.

"Funds for the construction of the networks ... will be provided by our main shareholder, Ziyavudin Magomedov," Ryabov said. "The money will be drawn from his oil and metal interests."

The St. Petersburg-based company was founded in 2005 by Summa Capital, the investment vehicle of Magomedov, whose principal businesses include oil transportation logistics and metals.

In November, Summa Telecom became the only company in the country to receive a nationwide WiMax license.

Industry watchers were surprised when the relatively small firm was awarded the license, a decision that fueled speculation that a well-connected individual gained the permits simply for the purpose of selling them on.

Koshkin dismissed the rumors Wednesday, blaming it on telecom monopolists "who wanted to maintain dominance over the telecom market."

Ryabov also dismissed media reports that Gazprom Media was in talks to acquire Summa Telecom.

"This is rubbish," Ryabov said. "The first ever approach by Gazprom Media took place Tuesday."

"They called us yesterday and suggested we should try to get acquainted with each other further," he said. "We, of course, refused even to meet them and there can be no talks about selling."

Gazprom Media was unavailable for comment Wednesday.

Industry analysts said it was difficult to speculate on the company's operations, as little is known about it.

"This is a company whose operations are wrapped in a mystery," Aton Capital analyst Anna Kurbatova said. "Its operations are quite limited, but it does provide services for powerful state-controlled organizations such as Gazprom, Rosneft, Transneft and the Emergency Situations Ministry."

Alex Kazbegi, a senior telecom analyst for Renaissance Capital, said the size of the announced investment was comparatively modest for building countrywide WiMax networks, however.

ING Bank analyst Igor Semenov said it was worth adopting a wait-and-see attitude in assessing Summa Telecom's projects.

"We knew very little about MTS in the 1990s but that did not prevent them from building a strong company," he said.