VIVACELL UNVEILS PLANS FOR LTE ROLL-OUT IN 2010
BYLINE: Michael Lacquiere

World Markets Research Centre
Global Insight
November 3, 2009

The global push towards LTE appears to reaching the CIS as MTS’
Armenian unit pledges to deploy the technology.

Armenia’s leading mobile operator, Mobile TeleSystems (MTS)-owned
K-Telecom, has indicated that it plans to launch 4G mobile broadband
services based on LTE technology, according to a company statement
cited by ARKA. While it has not revealed any specifics, K-Telecom,
which operates under the "VivaCell" brand, has explained its decision
by pointing to forecasts that suggest mobile broadband access growth
will continue in 2010. At present, it has indicated that around 600,000
of its 2.045 million customers are subscribers to data products,
utilising GPRS, EDGE or UMTS technology, including around 400,000
3G subscribers.

IHS Global Insight Perspective

Significance: While it has not revealed any specifics, K-Telecom has
explained its decision by pointing to forecasts suggesting that mobile
broadband access growth will continue in 2010.

Implications: Having just announced nationwide 3G coverage and with
strong 3G subscriber uptake, the progression to LTE-based services
is understandable.

Outlook: K-Telecom will be one of the pioneers of LTE in the CIS,
a region that has traditionally lagged behind neighbouring European
markets in terms of telecoms sector development, but is now maturing.

Outlook and Implications

Progressive Move from Armenia’s Dominant Mobile Operator: K-Telecom,
like its rival Armentel (owned by MTS’ Russian rival, VimpelCom),
received its 3G licence in October 2007 and launched 3G services in
April 2009, some six months after Armentel. Just last week, K-Telecom
announced that it had achieved nationwide 3G coverage (see Armenia:
30 October 2009: ). Within this context and on the strength of
its 3G subscriber uptake, the progression to LTE-based services is
understandable, particularly as the operator should be able to use
existing 2G and 3G spectrum. K-Telecom had a market share of around 78%
at the end of 2008, so is well-positioned to make a strong assault
on the 4G market. It will face increased competition, with France
Telecom’s Orange Armenia due to launch commercial operations before
the end of the year in the 3G and 2G segment. While Orange Armenia
is planning to enter as a low-cost operator, K-Telecom’s 4G services
will be aimed at a smaller niche of higher-end subscribers.

Global Push Towards LTE Reaches CIS: Global momentum has been growing
in recent months for LTE network commitments from operators, with
the Global Mobile Suppliers Association (GSA) reporting 42 such
commitments globally as of late-October 2008. The GSA anticipates
that 15 such networks will be launched by the end of 2010, with a
further 33 expected to be in service by the end of 2012, and IHS
Global Insight anticipates that the first such launches may occur
in Scandinavia. K-Telecom has given little detail of its planned
deployments and it is unclear whether it expects its 4G services to be
commercially launched by the end of 2010. Nevertheless, the operator
appears to be one of the pioneers of the technology in the CIS,
a region that has traditionally lagged behind neighbouring European
markets in terms of telecoms sector development. Mobile penetration
levels across the region are now approaching and exceeding triple-digit
levels, and 3G roll-outs are gradually being undertaken.

Operators prowling for high-growth opportunities now appear to be
looking elsewhere, such as South-East Asia and Africa, as the CIS
region evolves from an area of growth potential to a maturing market.

MTS-VimpelCom Battle Continues: The only other hint that LTE roll-outs
might be imminent in the CIS have come from VimpelCom-owned KaR-Tel
in Kazakhstan, which late last month indicated that it had received
regulatory permission to deploy 4G test zones (see Kazakhstan:
27 October 2009: ). The fact that just days later an MTS unit had
announced its own 4G plans is indicative of the ongoing rivalry
between VimpelCom and MTS as they battle for supremacy in the CIS.