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Russian WiMAX Network - GlobeTel

GlobeTel Announces $600 Million WiMAX Network Installation in Russia

Other Topics: WiMAX National Network - Motorola, Chief Financial Officer - Trango, WiMAX Power Amplifier - Sirenza, Motorola Canopy Wireless Broadband

GlobeTel Wireless
January 3, 2006

Wireless users in the Russian Federation will have access to a $600 million WiMAX network, as a result of a binding agreement between GlobeTel Communications Corp., and LLC Internafta of Moscow, Russia.

GlobeTel’s wireless subsidiary will install wireless communications networks in 30 cities throughout Russia that will provide VoIP and related broadband technologies. Internafta will pay GlobeTel four construction payments totaling $600 million to install a variety of proprietary networks in 30 of Russia’s largest cities, beginning with Moscow and St. Petersburg. The networks will establish high speed wireless service throughout the chosen cities with the ability to provide voice over IP. When complete, GlobeTel will manage the network and will retain a continued 50 percent ownership in the network’s operation. Installment will roll out in three stages of 10 cities each over the next 27 months.
The agreement is the product of over six months of key meetings with Russian government officials, senior members of the Russian Parliament, and various branches of the Russian telecom and technology establishment. In October, GlobeTel CEO Timothy Huff, GlobeTel Wireless President Uli Altvater and Sanswire President Bob Jones demonstrated a working version of the HotZone 4010 equipment that will support the new network. The demonstration showcased the equipment’s capability and usability when it established Internet and DECt phone connectivity inside the Russian Parliament building, thereby helping launch negotiations with a group of Russian investors that resulted in the finalized agreement.

GlobeTel Wireless President Altvater described the venture as a “very large undertaking that will utilize the skills of more than 1,000 people in Russia, Europe, and the United States,” while Maxim Chernizov, one of the founding principals of Internafta, expressed optimism about the positive impact the network will have on the Russian Federation.

"Completely apart from the obvious economic rewards associated with an investment in this exciting new communications technology, we are most proud of the social, educational, and community benefits that we are able to facilitate as part of the dramatic quality-of-life attributes which are rapidly emerging throughout the Russian Federation," Chernizov said. "This initial step with GlobeTel -- along with other very significant technology breakthroughs to follow -- will prove to be significant for all of us in the relatively near-term."

Russia is increasingly garnering attention as one of the fastest growing segments of the technology market. A Dec. 13 Research and Markets report found that, while more mature markets such as North America enjoy the most telecommunications revenue globally, the growth rate in those markets is stagnant, relying on the introduction of new services for growth. Although the European and Middle Eastern/African markets enjoy a higher growth rate, the underdeveloped markets including Russia, Latin America, and the Caribbean are posting faster growth scenarios than any other markets. The report suggests that the combination of a rapidly expanding middle class and increased privatization of key industries has resulted in a higher, and delayed, demand for telecommunications -- specifically wireless -- services. (See Russian Telecommunication Market is Now One of the Fastest Growing after the Industry Overcame Bankruptcies and Scandals.)

Other industry members have taken notice of the Russian Federation’s telecom growth. In July, Russian company Comstar deployed BroadSoft’s hosted VoIP application software to its business customers and in June, Alvarion Ltd. announced plans to extend its BreezeMAX products to include the WCS (2.3 GHz) and BRS (2.5-2.7 GHz) frequency bands for North America, noting that these frequencies are relevant in other key regions such as Russia. (See Comstar Deploys Russia's First Hosted VoIP Service and Alvarion Announces WiMax Products for North America.)

GlobeTel’s CEO Huff described the opportunity to implement the network.

"It is beyond exciting to be able to bring this level of connectivity to Russia," Huff said. "Russia will, quickly and at a relatively modest cost, have a wireless infrastructure that will rival any in the industrialized world. This presents an amazing opportunity for us, for Russia, and for our Russian partners.”

“The Russian Internet market is severely limited by a lack of infrastructure and by the high cost to individual users of obtaining high speed Internet access, even in those relatively rare cases where it is available,” Huff continued.

The $600 million agreement supplements GlobeTel’s recent growth strategy. On Dec. 7, the company signed a Letter of Intent to provide wireless services in up to 20 cities in Mexico and on Dec. 22, it signed a marketing agreement with Travelex Currency Services, Inc. to expand Travelex’s money transfer service to thousands of retail merchants throughout the United States. (See GlobeTel Announces Letter of Intent with Marcatel S.A. de C.V. and GlobeTel Announces Marketing Agreement with Travelex.)

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