FOCUS: Russia to weather Ericsson, Nokia departure with existing equipment, other suppliers

By Yekaterina Yezhova

MOSCOW, Sep 5 (PRIME) -- Ericsson and Nokia may say farewell to Russia by the end of 2022, but experts see no serious problems for the market whose equipment will function for several years and that is of high interest for Asian telecom equipment suppliers.

“The formal retreat -- which is only formal -- of the equipment suppliers will not impact work of the Russian operators. We should understand that the telecom equipment installed on the networks of the Russian operators is one of the youngest in the world, this is why, even if nothing is done, the equipment will function for a few years without any problems,” news and research agency Content Review head Sergei Polovnikov told PRIME.

“But it won’t happen because the equipment suppliers have not really left the market, they will have only to change the office location. They will settle somewhere near because there are many countries bordering Russia that will be more than happy to act as an intermediary.”

Media reported on August 29 that Swedish telecom equipment producer Ericsson notified on August 22 its Russian subsidiary that it will shut it down by the end of 2022 and all the employees, including those in charge of technical support of the equipment used in the networks of the connection operators, will be fired.

Ericsson, whose share on the country’s market of telecom equipment accounts for about 20%, confirmed that it will wind down its local business in the coming months while promising financial and social support to its 565 employees.

“As to the technical support staff, these employees are Russian-speaking citizens. They will hardly agree to relocate, although we cannot rule it out fully. More likely, they will be hired by the connection operators and continue to provide technical assistance,” Polovnikov said.

News and research agency TelecomDaily head Denis Kuskov said that the operators depend on Ericsson equipment as much as on equipment by other makers.

Finnish telecom equipment producer Nokia, whose share on the country’s market is seen at about 40%, also said on August 29, as quoted by media, that the vast majority of its employees in Russia will be fired by the end of 2022 and that it had vacated all its offices. Nokia said it will retain formal presence in the country until legal closure is completed. The company employed 2,000 people in Russia.

Both Ericsson and Nokia suspended their activities in the country after the start of the special operation in Ukraine.

“At present, none of the big three companies delivers equipment to Russia,” Kuskov said meaning Ericsson, Nokia, and China’s Huawei.

Vladimir Zykov, head of projects at autonomous non-commercial organization Digital Platforms, said earlier that Huawei follows the West’s sanctions against Russia under the threat of tougher U.S. restrictions, which explains the problems with supplies of new devices to the country. Huawei started closing its official stores in early June and shut its online store Vmall in August.

“None of the companies in the world wants to be hit by secondary sanctions, but there are no fools either: the global market is on the eve of recession and nobody wants to lose the Russian market. Those who will be the fastest in making up and adjusting its strategy to work with the Russian market skirting the restrictions will win the market’s lion share. This is why Huawei is no different than Nokia or Ericsson in this context,” Polovnikov said.

Kuskov said that nobody can replace Ericsson or other players on the Russian market unless the country designed its national equipment in the next two to three years when there is a serious shortage in replacement of base stations when they start getting out of order.

“The equipment will run for a year or two. Then we will have to make decisions,” he told PRIME.

Banking software developer R-Style Softlab General Director Lev Frenkel said earlier that China’s ZTE and Huawei could take the place of the departed European companies, and the mobile operators would have to settle the matter of equipment shipments on a permanent basis.

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