The Russian mobile operator Tele2 dropped its lawsuit against the Russian subsidiary of the Finnish telecom equipment manufacturer Nokia Nokia Solutions and Networks (NSN). The Moscow Arbitration Court accepted the refusal and terminated the proceedings on March 14, a Vedomosti correspondent reports from the courtroom.
The representative of Tele2 refused to explain to Vedomosti what the refusal of the lawsuit against NSN is connected with and on what conditions the parties settled the dispute.
In May 2022, Tele2 filed a lawsuit against the Russian subsidiary of the Finnish Nokia demanding to recover 478 million rubles. The lawsuit was related to the refusal of NSN to fulfill the contract for the supply of equipment, Interfax wrote with reference to the operator’s press service. At the same time, Nokia began to violate the terms of the contract even before the introduction of anti-Russian sanctions, the TV company specified.
Tele2 sought to arrest the defendant’s accounts in the amount of 8 million euros and $2,613 as interim measures, but the court rejected this request, follows from the file of arbitration cases. But already in November 2022, the plaintiff filed a motion to postpone the court session “due to the possibility of concluding a settlement agreement.”
In April 2022, Nokia announced its withdrawal from the Russian market. She stopped deliveries of telecom equipment to the country, stopped new business and transferred research activities outside of Russia. In 2021, Russia accounted for less than 2% of Nokia’s net sales. The Corporation has estimated the provision for termination of operations in the Russian Federation at approximately EUR 100 million.
Nokia has allocated technical support to a separate Russian legal entity in order to ensure the operation of previously installed equipment in the Russian Federation after the eighth EU sanctions package that has entered into force, Vedomosti wrote on January 30. The package prohibited Russian companies from installing equipment, setting up networks and introducing software (SW), repair and maintenance.
In June 2019, Tele2 and Nokia signed a five-year contract for the installation of 35,000 base stations for 2G, 3G, 4G networks in 41 regions of the Russian Federation. The project was supposed to allow the operator to modernize the network due to the active growth of traffic and prepare the infrastructure for the introduction of 5G, the Russian company said in a press release.
Taking into account the circumstances of the dispute, as well as judicial practice, most likely, the parties have been negotiating for a long time about the possibility and conditions for resolving the dispute out of court, Yuri Fedyukin, managing partner at Enterprise Legal Solutions, draws attention.
The reason for the dismissal of the case could be an agreement between the plaintiff and the defendant, agrees Irina Androsenko, chief legal adviser of the dispute resolution practice at the law firm EBR. In her opinion, the terms of the agreement between Tele2 and Nokia are unlikely to be seen in the form of a settlement agreement approved by a court ruling. This is due to the fact that the subject matter of the agreement between the parties to the dispute is confidential, and the plaintiff at the court session stated only that the claim was abandoned, which was eventually accepted. Since Tele2 has disputes with other vendors, it is unprofitable to publish the terms of its agreement with Nokia, the lawyer emphasizes.
Most likely, the lawsuit dealt with hundreds of base stations under a previously concluded contract and Nokia agreed to supply them to Tele2, suggested Denis Kuskov, CEO of Telecom Daily. It is possible that it was about base stations under the agreement of 2019, the analyst admits.
Nokia has recently been negotiating with the EU authorities on permission to issue export licenses for the supply of certain models of telecom equipment to Russian operators, including Tele2, under contracts concluded before the SVO, and in the end the permission was received, Vedomosti’s source in government agencies said. This is a kind of “demobilization chord”, made in order to fulfill all their obligations to Russian television companies and “close the key” Nokia office in Russia, he explained. According to the interlocutor, the equipment can be delivered to Russia before the end of spring.
According to Telecom Daily, Tele2 was one of the last to build a network, and in 2021 the operator was the leader in terms of the rate of commissioning of base stations. Considering that the quality of networks is at the level, then until 2025, when domestic telecom equipment should appear, current stocks will be enough, says Kuskov.
The obligations of the Russian subsidiary of Nokia, both in terms of supplying equipment and repaying the debt, can be transferred de jure to an organization not affiliated with the Finnish company, for which the sanctions risks are much lower, Fedyukin admitted.
Last year, Nokia and Ericsson received export licenses that could allow them to keep the legal work of licensing already installed equipment and software, but without direct business – without selling and supplying new equipment and software, says Alexander Sivolobov, deputy head of the NTI Competence Center on the basis of Skoltech on wireless communication technologies and the Internet of things. This could keep the networks up and running. In his opinion, the consequences of the prosecution of the Finnish vendor may adversely affect its ability to maintain a presence in Russia, albeit minimal, but valuable for operators in the form of support for license renewal.