Telecom Operators Warn of Service Disruptions Due to Equipment Shortages

The RSPP Commission on Communications and IT, which includes representatives from MTS, MegaFon, VimpelCom, ER-Telecom, GS Group, and Russian Railways (RZD), believes that under the current economic conditions, telecom operators’ equipment reserves will last for about six months, and service disruptions could begin as early as July or August. This was reported by Kommersant.

According to the commission, the cost of telecom equipment has already increased by 40% due to the withdrawal of Western vendors and the weakening of the ruble, and prices could rise by another 80%. The commission forecasts that the capital expenditures of the largest telecom operators will grow from 390 billion rubles in 2021 to 450 billion rubles in 2022, even if investment programs are reduced.

Within six months, the industry could also lose up to 30% of its highly qualified specialists, and the overall worsening financial situation may lead to a 15–20% reduction in staff by the end of 2022.

Proposed Support Measures

Industry representatives have proposed the following support measures:

• Impose a moratorium on contributions to the Universal Service Fund for 2022;
• Reduce the fee for radio frequency spectrum by 50%;
• Eliminate property tax rates and exempt industry employees’ income from taxes.

However, the Ministry of Digital Development does not see any reasons for network disruptions. “The government is providing entire packages of support measures to businesses. It’s important to understand that business performance depends not only on government preferences but also on the decisions of the companies themselves,” the ministry added.

According to MForum Analytics, the RSPP commission’s forecast is more of a negative scenario, but network problems are possible and, most likely, inevitable. Disruptions may manifest as a decline in service quality. To maintain network operability, operators may partially dismantle already deployed equipment and use it for repairs or to expand networks where it is most needed.

The Huawei Factor

“What about Huawei? In the current situation, a logical strategic move would be to swap out Western vendor equipment in several regions for stock, replace it with our Asian partners’ equipment, and slow down the pace of network expansion,” writes the Telegram channel “Telekommunalka.” “But there’s a problem. Huawei isn’t selling us anything. There are two main reasons for this: total confusion with the exchange rate and U.S. sanctions. The fact is, despite all of China’s power, Intel chips and other components covered by American patents are still restricted. Therefore, China cannot supply the hardware.”