Russian cell phone calls, internet deteriorates after Nokia and Ericsson leave

  • Russian telecom users expected slower data, more abandoned calls, longer outages – sources
  • This content was produced in Russia, where the law restricts coverage of Russian military operations in Ukraine

STOCKHOLM/MOSCOW, December 21 (Reuters) – When telecom equipment makers Nokia (NOKIA.HE) and Ericsson (ERICb.ST) leave Russia at the end of the year, their departure could long-term paralyze the country’s mobile networks, worsening communications for ordinary people triggers Russians.

Five senior telecom executives and other industry sources said Russian cellphone users are likely to experience slower downloads and uploads, more dropped calls, calls that won’t connect and longer outages as operators lose the ability to update or patch software and around Parts inventories are fighting dwindling reserves.

Ericsson and Nokia, which together account for a large share of the telecommunications equipment market and nearly 50% of the base stations in Russia, make everything from the telecommunications antennas to the hardware that connects optical fibers that carry digital signals.

They also provide vital software that allows different parts of the network to work together.

“We are working towards the end of the year and then all exemptions (from sanctions) will expire,” Carl Mellander, Ericsson’s chief financial officer, told Reuters. Ericsson received exemptions from sanctions from the Swedish authorities.

Nokia CEO Pekka Lundmark echoed this sentiment in an interview: “Our exit will be complete. We will not deliver anything to Russia.”

Russia’s economy has so far weathered sanctions and export controls imposed by governments after Moscow sent tens of thousands of troops to Ukraine, but the imminent withdrawal of Nokia and Ericsson could have a more profound impact on Russia’s daily life and eventually make things easier than phone call, difficult

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Russia’s Digital Ministry did not respond to requests for comment, but this week Communications and Mass Media Minister Maksut Shadaev said four telecom operators signed deals to spend more than 100 billion rubles ($1.45 billion) on Russian-made equipment .

“It will allow us to organize modern production of telecommunications equipment in Russia,” he said, without naming operators or manufacturers.

Russia’s leading telecom operator MTS (MTSS.MM) declined to comment on the story. Megafon, Veon’s Beeline (VON.AS) and Tele 2, the other companies that make up Russia’s Big Four telecoms, did not respond to requests for comment.

Government programs to boost Russian equipment have helped telecom operators become less dependent on Nokia and Ericsson in recent years, and Russian manufacturers have increased their market share to 25.2% this year from 11.6% in 2021. But the severing of ties with foreign firms is industry sources expect Russian communications to be set back a generation while the rest of the world pushes the deployment of 5G technologies.

“If this situation is expected to continue for years, in terms of coverage, Russian cellular networks could return to where they were in the late 1990s, when their coverage was limited to major cities and the wealthiest suburbs,” said Leonid Konik, who heads the IT publication at ComNews Moscow.

Rural areas will collapse first as operators remove equipment to bolster urban networks, the telecoms experts said, while a lack of software updates can cause network outages or expose them to cyberattacks.

Chinese telecoms equipment maker Huawei, which was the largest supplier in Russia last year with more than a third of the market share, will continue to offer software updates and maintenance, but has stopped selling new devices in Russia, according to sources familiar with the matter.

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The biggest hurdle for mobile operators to keep their networks up and running will be the lack of software upgrades – Nokia and Ericsson said they would stop software updates by next year – and patches, the sources said.

Software unites a set of devices that form a telecommunications network, converts analog and digital signals; monitors and optimizes network traffic; and protects the infrastructure from cyber attacks.

While mobile operators can hoard pieces of hardware for future use, they rely on a regular schedule of licensed software updates and patches to maintain a network’s integrity.

“Software patching is undoubtedly of paramount importance in ensuring networks remain operational, secure and reliable,” said Paolo Pescatore, analyst at PP Foresight.

Russian telecom operators stockpiled foreign-made parts in February and March ahead of sanctions, two industry sources said, but stocks will fall after Nokia and Ericsson pulled the plug on December 31.

Consolidation between Russian operators at the behest of the government could also allow them to share equipment and resources to extend the life of networks, industry sources added.

Huawei [RIC:RIC:HWT.UL], which stopped selling new devices in Russia when the United States began sanctioning Russia, has also stopped selling its smartphones in the country, according to three sources familiar with the matter. Huawei has not publicly disclosed its status in Russia and declined to comment.

Reporting by Supantha Mukherjee in Stockholm and Alexander Marrow in Moscow; Edited by Kenneth Li and Chris Sanders

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