Leap Wireless International Operating Company Metrosvyaz Launches AffordableWireless Phone Service in its First Russian Market
- Wireless Carrier Metrosvyaz's Joint Ventures Expect to Provide Service
in Eight Russian Regions in 1999 -
SAN DIEGO, April 19 /PRNewswire/ -- Wireless communications carrier Leap Wireless International, Inc. (Nasdaq: LWIN) today announced that a joint venture formed by Metrosvyaz has launched state-of-the-art Wireless Local Loop (WLL) telephone service in its first Russian market. Metrosvyaz, a wireless carrier and an operating company partially owned by Leap, forms joint ventures with local telephone operators in Russia to bring high-quality, affordable wireless communications to some of the millions of people who have been waiting for phone lines. The launch, which is expected to add up to 10,000 new phone lines initially in the area around St. Petersburg, is the first of at least eight regions in which Metrosvyaz joint ventures plan to provide service in 1999. The next operations scheduled to launch are in Tartarstan, Saratov and Krasnodar. Metrosvyaz joint ventures will target Russian families who want basic phone service as well as the business community.
"We believe the demand for phone lines in Russia remains strong, and improving infrastructure -- including telecommunications, transportation and power -- is the cornerstone to building a healthy, stable economy," said Tom Bernard, executive vice president of Leap and a director of Metrosvyaz. "Through Metrosvyaz, Leap is dedicated to adding much-needed phone lines more quickly and cost-effectively than expanding Russia's wireline network."
In Russia, teledensity -- the number of phone lines per 100 inhabitants -- is only 19%, compared to 64% in the United States. The Russian government has set an aggressive goal of adding 30 million telephone lines over the next 10 years. To help meet this demand, Metrosvyaz offers a total wireless telecommunications solution to local telephone operators with Code Division Multiple Access (CDMA) licenses. The Metrosvyaz solution encompasses every aspect of the business from network planning, financing, installation and operation to business functions such as customer care and billing. In a typical joint venture Metrosvyaz and the government news agency ITAR-TASS hold 50% ownership, while 50% is held by the local telephone operator.
"For local operators, the ability to offer new phone lines requires access to capital and the right technology," said Anthony N. Georgiou, chairman of Metrosvyaz. "Metrosvyaz joint ventures give progressive local operators a highly effective means of extending their telephone networks with digital wireless technology."
Metrosvyaz is forming or in negotiations to form joint ventures in 26 regions in Russia. Metrosvyaz plans to raise and invest $500 million in the joint ventures in the next two years, of which $175 million has been committed. Leap is providing $72.5 million in working capital. QUALCOMM Incorporated is the equipment supplier for the first eight regions. Metrosvyaz is in discussions with other vendors and strategic investors to obtain equipment and financing commitments for future rollouts.
Metrosvyaz's service currently is priced in rubles, but indexed to U.S. dollars with each monthly bill. Metrosvyaz keeps costs low by using advanced CDMA WLL technology, where a wireless link is used to replace traditional copper line to connect apartment buildings, homes or businesses to the central switching office.
About Metrosvyaz
Metrosvyaz, an operating company and a wireless carrier, is dedicated to bringing high-quality, affordable wireless communications to millions of Russians who have been waiting for phone lines with its state-of-the-art Wireless Local Loop phone service. Metrosvyaz partners with local telephone operators to add much-needed telephone lines more quickly and cost-effectively than expanding Russia's wireline network. Metrosvyaz was formed in 1996 in close cooperation with Russian telephone holding company Svyazinvest to make a significant contribution to Russian telecommunications infrastructure under the initiative of the People's Telephone Programme. The shareholders in Metrosvyaz are Teletal, a company affiliated with the official Russian news agency ITAR-TASS, Leap and Tiller International Limited, a privately held company with offices in Moscow and London with diversified operations including telecommunications, data communications and financial services. Through a holding company, Leap indirectly owns 35% of Metrosvyaz.
About Leap Wireless International, Inc.
Leap Wireless International, Inc., headquartered in San Diego, California, is a wireless communications carrier that deploys, owns and operates wireless networks in domestic and international markets with strong growth potential. In conjunction with its strategic partners, Leap has launched all-digital wireless service in the United States, Mexico, Chile and Russia, and plans to offer service in Australia through its operating companies. Leap is dedicated to bringing the benefits of reliable, cost-effective and high-quality voice and data services to domestic and emerging markets. For more information, please visit www.leapwireless.com.
This news release contains certain "forward-looking statements," including statements regarding the future scope of the operations of Metrosvyaz and it joint venture companies. Forward-looking statements, which are based upon certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "plan," "anticipate," "estimate," "project" or similar expressions. The ability of the Company to predict actual results and other future events is inherently uncertain. Important factors which may cause actual results to differ materially from the forward-looking statements contained herein or in other public statements by the Company are described in the section entitled "Risk Factors" in the Company's 1998 10-K, and other documents on file with the Securities and Exchange Commission. Those factors most likely to cause actual results to differ include but are not limited to: currency exchange, economic and political risks associated with Russia, uncertainties regarding Leap's or Metrosvyaz's ability to access the capital markets, failure of the St. Petersburg network to perform according to expectations, and the uncertainties relating to costs and profitability of development stage companies.
SOURCE Leap Wireless International, Inc.
CO: Leap Wireless International, Inc.; Metrosvyaz
ST: California, Russia
IN: TLS
SU: PDT
04/19/99 08:30 EDT prnewswire.com
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