Russia technology

An employee shows handsets to customers in a mobile phone store in Moscow in December. Russian mobile carriers are gearing up for about $13 billion in spending to boost data speeds, creating the next major battleground for network suppliers.

Bloomberg News/Andrey Rudakov

MOSCOW — Russian mobile carriers are gearing up for about $13 billion in spending to boost data speeds, creating the next major battleground for network suppliers.

Russia is, by land mass, the largest country in the world, making it potentially tremendously lucrative for makers of equipment such as base stations and antennas. It has trailed the United States and Europe in wireless infrastructure, leaving consumers unable to enjoy video streaming and quick browsing.

Sweden’s Ericsson AB, the No. 1 maker of wireless networks, and Finland’s Nokia Siemens Networks won some of the early contracts. They will face challenges from competitors such as China’s Huawei Technologies Co. for the rest of the deals.

“The geographic scope, population size, economic demand and growth all indicate the size of the contracts coming out of Russia could be outstanding, and everyone will want a piece of it,” said Daryl Schoolar, a wireless infrastructure analyst at researcher Ovum.

While smaller in value than the U.S. and some European countries, wireless markets in faster-growing economies such as Russia and India are crucial for network-gear providers because of their future potential. Economic expansion in Russia exceeds most of rest of Europe — at 3.4 percent last year and 4.3 percent in 2011 — and winners of contracts for this network-upgrade cycle are likely to be considered for projects in years ahead.

Russian carriers are facing pressure to catch up after economic growth raised consumer expectations and the standard of living.

“I definitely need faster Internet on mobile,” said Andrei Muchnik, who browses the Web every day on his commute to central Moscow from the suburbs.

“When I am typing a message in Gmail or using Facebook, connection often gets lost and I have to do it again,” said the 35-year-old office worker. “Sometimes I have to restart the phone to be able to use Instagram. I don’t even try downloading video.”

His frustration may end soon as OAO Mobile TeleSystems, OAO MegaFon, VimpelCom Ltd. and OAO Rostelecom have started developing so-called fourth-generation networks to comply with the terms of licenses they were awarded a year ago. The carriers committed to spend $12.9 billion on faster networks by 2019.

Equipment makers could get as much as half of that, according to LTE Union, a Russian industry group. The rest will go toward expenses such as construction work.

Three Ericsson engineers this month were working on the roof of an office building near the Kremlin, adding 4G antennas and a transmitter to a VimpelCom base station. That upgrade should allow a tripling in data speeds for users with smartphones or tablets supporting 4G.

The work was part of a contract announced in May, among the first 4G network deals in Russia. VimpelCom, controlled by billionaire Mikhail Fridman, picked Stockholm-based Ericsson to develop its 4G network in Moscow and Nokia Siemens for four other regions. China’s Huawei and ZTE Corp., both based in Shenzen, China, were picked for one region each. No deal values were announced.

“It’s important for us to win these 4G deals because it sets the footprint for years to come,” said Robert Puskaric, head of northern Europe and central Asia for Ericsson.

This month, Nokia Siemens won an order valued at $200 million or more for a 4G system in Moscow and central Russia from MTS, the country’s largest mobile-phone company. MTS selected Ericsson to develop LTE in southern Russia, the Volga region, Siberia and the Urals, and hasn’t yet awarded contracts for northwestern and far-eastern Russia.

“Russia is a big, modern country and a promising market to work in,” said Kristina Tikhonova, head of Nokia Siemens’s eastern operations. “Our ambition is to become the No. 1 preferred vendor for Russian operators.”

Data traffic in Russia has tripled in the past year and may increase 10-fold by the end of 2015, said Irina Agarkova, a spokeswoman for MTS in Moscow. “We have to be technically prepared for this,” she said.

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