Russia’s telecom reform could leave 27 regions without local operators

A licensing overhaul being prepared by Russia’s Ministry of Digital Development could leave 27 of the country’s regions without a single local telecom operator. Industry associations made the estimate at a roundtable on September 3, Forbes reported, citing RBC.

The plan would replace the current 17 license types with three. A basic license would not cover internet access or telephony, and it would require 5 million rubles in charter capital. A universal license would let an operator work in one to six regions and sell both services, with a threshold of 30 million rubles. A general license covers the federal level and demands 100 million rubles. Today there is no capital requirement at all — a Russian limited liability company needs just 10,000 rubles.

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Those thresholds are what the industry calls the main barrier. Only 21% of companies would meet the capital requirements, according to Alexei Leontyev, director of the Association of Telecom Operators (ASTO). In 27 regions local operators could disappear entirely. In another 12 regions the market could shrink by 30–49%, and in 22 more by 31–50%. Leontyev said nobody can judge the full fallout yet. Even the companies that clear the new bar, he added, would freeze investment for years to cover the cost.

Thousands of small firms could leave the telecom market altogether. That warning came from Nikolai Mikhailov, who heads the telecom committee at ARPP Otechestvenny Soft, a Russian software developers association. Igor Dorofeev, president of Russia’s data centre industry association, gave a similar assessment. He expects the companies serving ordinary household subscribers to fade away, leaving no one to roll out new services.

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The ministry insists nothing has been settled. It says it is still collecting feedback from stakeholders and has made no decision on how operators will work. The changes are meant to leave only reliable companies on the market — ones able to invest in network upgrades.

Russian media first reported the plans in the spring. On April 2, Izvestia cited two sources on talks about tighter licensing rules, and RBC followed a day later with a report on a full overhaul of the sector. Amendments could be introduced after the State Duma elections in September, RBC said. The capital thresholds floated then were different — 5 million, 100 million and 1 billion rubles for the basic, universal and general licenses.

A basic license, according to RBC, would not require a connection to SORM, the system that gives Russian security services access to user messages and data. In late April, Kommersant cited a presentation by the Rostelesest association claiming one in three providers could leave the market. Only 7% would meet the new terms, by that estimate. Industry players warned at the time that the reform would push home internet prices up.

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