By Supantha Mukherjee and Alexander Marrow
STOCKHOLM/MOSCOW (Reuters) – When telecommunications equipment makers Nokia and Ericsson leave Russia later this year, their departure could steadily cripple the country’s mobile networks over the long term, triggering a deterioration in communications for Russians everyday.
Five senior telecom executives and other industry sources said Russian cell phone users are likely to experience slower downloads and uploads, more missed calls, calls that don’t connect, and longer outages as carriers lose the ability to upgrade. or patch their software and fight for dwindling parts inventory.
Ericsson and Nokia, which together account for a large share of the telecommunications equipment market and nearly 50% in terms of base stations in Russia, make everything from telecommunications antennas to hardware that connects the optical fiber that carries digital signals.
They also provide fundamental software that allows different parts of the network to work together.
“We are working towards the end of the year and that’s when all the waivers (from the sanctions) will expire,” Ericsson chief financial officer Carl Mellander told Reuters. Ericsson has received sanctions exemptions 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.”
The Russian economy has so far weathered sanctions and export controls put in place by governments after Moscow sent tens of thousands of troops to Ukraine, but the impending withdrawal of Nokia and Ericsson could have a more profound impact on daily life snore, ultimately making something as simple as a phone call difficult.
Russia’s digital ministry told TASS news agency that Russia has no shortage of telecommunications equipment, while the withdrawal of Nokia and Ericsson will have no impact on the quality of communications.
Maksut Shadaev, minister of communications and mass media, said earlier this week that four telecom operators were signing contracts to spend more than 100 billion rubles ($1.45 billion) on Russian-made equipment.
“This will allow us to organize modern production of telecom equipment in Russia,” he said, without naming operators or manufacturers.
Major Russian telecom operator MTS declined to comment on the story. Megafon, Veon’s Beeline and Tele 2, the other companies that make up Russia’s big four telecommunications companies, did not respond to requests for comment.
Government programs to promote Russian equipment have helped telecom operators become less dependent on Nokia and Ericsson in recent years, and Russian manufacturers have increased their market share this year to 25.2% from 11.6% in 2021.
But industry sources predict that the severing of ties with foreign companies will delay Russian communications by a generation as the rest of the world moves forward with the rollout of 5G technologies.
“If, presumably, this situation continues for years, Russian cellular networks in terms of coverage could return to the state of the late 1990s, when their coverage was limited to big cities and the richest suburbs,” said Leonid Konik, who runs the IT publication ComNews in Moscow.
Rural areas will start to collapse first as operators remove equipment to strengthen urban networks, telecom experts have said, while a lack of software updates can lead to network outages or expose them to cyberattacks.
Chinese telecom equipment maker Huawei, the largest supplier to Russia last year with more than a third of the market, will continue to provide software updates and maintenance work, but has stopped selling new equipment in Russia, according to sources close to the issue.
END OF SOFTWARE UPDATES
The biggest obstacle for mobile operators to keep their networks running will be a lack of software updates — Nokia and Ericsson have said they will stop software updates within the next year — and patches, the sources said.
The software unifies a range of equipment that make up a telecommunications network, converts analog and digital signals; monitor and optimize network traffic; and protects the infrastructure from cyber attacks.
While mobile carriers may stockpile hardware parts for future use, they rely on a regular program of software updates and licensed patches to maintain the integrity of a network.
“Unquestionably, software patches are critical to ensuring networks remain operational, secure and reliable,” said Paolo Pescatore, an analyst at PP Foresight.
Russian telecom operators stockpiled foreign-made parts in February and March before the sanctions, two industry sources said, but inventories will drop after Nokia and Ericsson pulled the plug on Dec. 31.
Consolidation among Russian operators at the behest of the government could also allow them to share equipment and resources to make networks last longer, industry sources added.
Huawei, which stopped selling new equipment to 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; Editing by Kenneth Li, Chris Sanders and Louise Heavens)