Nokia will give the joint venture with Rostelecom the rights to some types of its equipment to recognize these developments as domestic. For the domestic status, the manufacturer can count on preferences. Market participants do not remember other examples of the transfer of Western technologies to Russian companies.
Nokia will transfer the intellectual property rights and source codes of some of its Telecom equipment to the Russian company RTK Setevye Tehnologii, a joint venture with Rostelecom. This is stated in the materials of the company RTK Setevye Tehnologii (a copy is at RBK, their authenticity was confirmed by the interlocutor of RBK, close to Rostelecom, and the head of the Russian company — manufacturer of telecommunications equipment).
In 2018 during St. Petersburg international economic forum the parties announced the creation of the joint venture, in which the Russian state operator received 51%. The sphere of activity of the joint venture is the development of software and equipment for communication networks. As part of the deal, Nokia should invest up to 10 billion rubles during 2019-2022. The money will be used to finance the development of RTK Setevye Tehnologii own products, as well as participation in the capital of Russian technology companies.
The materials do not specify for which equipment the intellectual property rights will be transferred to the Russian company. The document states that its production will be localized in Russia in the future.
The representative of the press service of Rostelecom and the General Director of RTK Setevye Tehnologii Maxim Papin declined to comment. Nokia representative did not respond to RBK’s request.
What gives the transfer of intellectual property rights?
“The company to which the intellectual property rights for any development are transferred becomes the full owner of this technology: all rights to patents, know-how, and source codes are transferred to it. In this case, this can be done to increase the value of the assets of the Russian company, as well as compliance with domestic legislation in the field of import substitution, since after the transfer of such rights, the technology, in fact, will become Russian,” explained Kirill Mityagin, partner of Nevsky IP Law.
According to the materials of the company, RTK Setevye Tehnologii in the future intend to achieve for its products the status of “telecommunications equipment of Russian origin”, which assigns the profile Commission at the Ministry of industry and trade.
Items on this list may receive preferential treatment in public procurement — the government for several years expressed the need to encourage the procurement of domestic equipment. In particular, Russian President Vladimir Putin at the end of February 2019 instructed Prime Minister Dmitry Medvedev to develop a set of measures aimed at stimulating the acquisition of Russian equipment through the mechanism of related loans.
General Director of the Association of developers and manufacturers of electronics Ivan Pokrovsky in a conversation with RBK could not remember cases when foreign manufacturers of equipment would have previously transferred the rights to their development to Russian partners. “Although there were examples when companies such as Siemens and Alcatel localized the Assembly of their equipment in Russia,” he added.
In his opinion, by obtaining intellectual property rights Rostelecom will be able to supply Nokia equipment as Russian. “Nokia, in turn, will consolidate its position in the market, fixing the status of its technologies,” says Pokrovsky. Earlier, the Alliance of TELMI (unites the Russian T8 Elteks and Micran) estimated the volume of the Russian market of telecommunication equipment 150 billion rubles per year, of which 92 to 94% are foreign manufacturers.
To obtain the status of “equipment of Russian origin”, RTK Setevye Tehnologii will need to demonstrate not only legal control over the joint venture by Rostelecom, but also the opportunity to develop the technologies obtained from Nokia in Russia, adds Pokrovsky.
“Nokia is not the first time trying to get the status of “domestic” for its equipment, a few years ago for this purpose was made a joint venture with NPF Mikran — the company Center besprovodnih tehnologii. However, the company did not transfer any intellectual property rights to it, and the localization of Nokia equipment production at that time was to transfer two minor Assembly operations of finished equipment to Russia,” recalls Svetlana Appalonova, a member of the Coordinating Council for the innovative development of the radio-electronic industry of the Ministry of industry and trade. This joint venture was created to develop LTE (4G) base stations, but was closed in 2014, and did not receive the status of “domestic” for its products, despite the repeated submission of relevant applications to the Commission under the Ministry of industry and trade.
Appalonova doubts that this time the technology will be transferred to Russia: “There is not a single working legislative act in Russia that would limit the purchase of foreign equipment, Nokia simply does not make sense to do it.” According to her, the idea of creating a joint venture with a Telecom operator is “unsuccessful”, as it does not have the necessary competencies to develop Telecom equipment.
“Besides, other Telecom operators will not be interested in purchasing equipment from this vendor, since they will sell it more expensive than Rostelecom. It seems to me that this joint venture is only necessary for Rostelecom to reduce its risks and formally meet the requirements for import substitution,” she says.
Who will benefit from the transfer of rights?
RTK Setevye Tehnologii plans to offer its equipment to Rostelecom at a price 4-5% lower than the market, according to the company’s materials. As a result, the company intends to sell equipment to Rostelecom in 2019 for €67.6 million, and by 2022 — for €397 million. Revenue of RTK Setevye Tehnologii as a whole by the end of 2019 should amount to €97.6 million, and by 2022 — €581 million, While capital costs for the development of RTK Setevye Tehnologii in 2018-2022 are estimated at more than €500 million. This will allow building a vendor capable of working in the telecommunications market, as well as to supply products to large enterprises, “solving the problem of minimizing sanctions risks”.
The company plans not only to work with Nokia technologies but also to develop its own. “We set ourselves the task on the horizon of three to five years to achieve autonomy in some technological products,” — said in the materials of RTK Setevye Tehnologii. To develop its solutions, the company, in particular, intends to engage in attracting and accelerating Russian startups, to form its own R&D team and to test promising technologies.
“Foreign manufacturers, such as Huawei, sell almost any product. Telecom operators are used to this approach, in which you can buy the entire range of necessary equipment from one company and not break your head. It will be good if RTK Setevye Tehnologii thanks to cooperation with other Russian manufacturers and startups will be able to build a vendor with a wide range of equipment that covers all the needs of operators”, — said the General Director of the company RDP.RU Sergey Nikulin.