Millicom joins with Fyodorov to provide Moscow with cellular

Mobile Phone News, Jan 17, 1991

MILLICOM JOINTS WITH FYODOROV TO PROVIDE MOSCOW WITH CELLULAR

Millicom Inc., through its affiliate Millicom International, has entered into a letter of intent with the Soviet Ministry of Communications to provide cellular service to the city of Moscow in the Soviet Union.

The Millicom group, one of 2 cellular telephone system operators in Moscow, plans to provide cellular service to central Moscow by the end of 1991, extending service to the city's suburbs by 1992.

The project will be carried out by a group consisting of Millicom International Cellular S.A.R.L.; the Moscow Territorial Operational Center for Long Distance and International Circuits (MYOC); Voronezh Research-Production Association; the Moscow Local Telephone Network; Fyodorov's Eye Microsurgery Science and Technology Complex, based in Moscow, and U S West International Holdings Inc.

The cellular system will be a NMT 450 MHz system. The Millicom group's letter of intent also contemplates the development of GSM cellular and PCN systems.

Andrea Van Raalte, a Millicom spokeswoman, said the company had been working with the Soviets for 2 years helping devise a plan to alleviate the country's telecommunications problems.

...New System Will Benefit High-Volume Users

Dick Callahan, president of the U S West Diversified Group and executive vice president of U S West, said that "the Moscow cellular system will be used for mobile communications services and it will also be beneficial for high-volume communications users such as business and government entities that need access to national and international communications."

"This cellular system will provide additional capacity for emergency services, business communications services and areas where communications needs arise quickly," said Callahan.

The catalyst of Millicom's effort was a team led by Professor Fyodorov, from the Eye Microsurgery Science and Technology Complex. Raalte said that when dealing with the Soviet Union it is imperative to have a local partner who has political connections to help secure a license from the communications ministry.

Fyodorov is a well-respected entrepreneur in the Soviet Union--Raalte said "he is sort of a folk hero." Apparently, like their counterparts in the United States, Soviet entrepreneurs also see the value in cellular.

...Fyodorov Owns Hospitals and Farms in Russia

Fyodorov owns state-of-the-art westernized hospitals in Russia, and also has bought and operates several farms using Western equipment and management methods. He has been featured on the CBS News programs 60 minutes and his entrepreneurial approach to farming was the subject of a PBS documentary.

Fyodorov said that the cellular cooperative effort "affirms that our nations can work together successflly and will be the wave of the future for further Soviet-American cooperation to the benefit of both nations in terms of economic, political and social relations."

J. Shelby Bryan, chairman and CEO of Millicom Inc., said that "the Soviet government has been highly receptive to foreign investment in this [the cellular] area. We recognize that there are vast economic opportunities for Soviet and American enterprises who are willing to expend the effort and resources."

U S West was late entering the project, said Raalte, not joining the group until December. In October, U S West announced that it had entered into an agreement to form a joint venture to provide cellular service to the city of Leningrad in the Soviet Union (MPN, Oct. 25, 1990, p. 10), and also is involved in the Budapest, Hungary cellular system and also in Czechoslovakia.

...Part of Millicom's Job to Educate Russians About Cellular

Bryan said that "the Millicom group, as part of the operation, will transfer American management and telecommunications marketing techniques to the U.S.S.R." Millicom is sending a team to Moscow to educate the Soviets on how to run a cellular telephone system.

This is similar to the approach CommStruct International is taking with its Minsk project (MPN, Dec. 20, 1990 pp. 1-3). Raalte said, "Apparently the Soviet engineers are well qualified, many coming from the military, but not in cellular technology." Teaching the engineers cellular technology will not be a difficult task, Raalte added.

In addition to educating the Soviets, Millicom's role in the project will be to work with the equipment manufacturer to build the system. Presently, the group is taking bids from equipment manufacturers and then will take bids from phone manufacturers.

"Millicom plans [to] move forward quickly," said Raalte. Million Inc. through its affiliates, currently holds interests in cellular telephone licenses in Bolivia, Chile, Costa Rica, Guatemala, Hong Kong, Mauritius, Mexico, Pakistan, the Philippines, Sri Lanka and Sweden.