February 27, 1996 in Social Responsibility News

SAMSUNG Electronics Exports CDMA Hardware

. Will help Russia adopt the international standard for cellular phones.
. Puts Samsung in a position to participate in the Russian national telecommunications network modernization project.

(SEOUL) - The next-generation digital cellular phone system being adopted in Korea is now being exported. Samsung Electronics Co. (SEC) has signed an agreement to supply the code division multiple access (CDMA) system to Russia, putting the company in a strong competitive position in the world market. This is the first export of a CDMA system by any company in the world.

The US$ 2 million contract was signed in Moscow on February 27 with IV Telecom Co., an integrated telecommunications service company run by the Russian state of Ivanovo. IV Telecom is headquartered in the city of Ivanovo, which has a population of 600,000.

The agreement calls for the supply of two CDMA switching systems and base stations, along with supporting terminal equipment. The systems are the same models that Samsung is supplying to Korean cellular telephone service companies. This means that Samsung's CDMA hardware has been recognized for international quality, while the degree of success of Korea's digital telephone service will have an impact on the volume of future exports of this system.

The Russian government plans to choose CDMA as the national standard for cellular phone service. With Samsung being the first to export the system, there is a strong possibility that the Russians will opt for the Korean-made version of CDMA system.

Samsung Electronics officials also believe that they are now in a favorable position to take part in the 10-year Russian Telecommunications Modernization Plan. Critical factors in determining who gets chosen by the Russian government to take part in the US$ 55 billion project include whether a company makes telecommunications hardware locally and whether a company has experience in telecormmunications systems in their own country as well as in overseas markets.

Samsung has already formed a joint venture called DCN (Dagestan Cellular Network Co.) with Svyazinfon Co. of the Dagestan Republic that supplies analog cellular telephone service. With the latest export agreement, plans call for DCN to also provide digital cellular service. Furthermore, in 1995, Samsung formed a joint venture with the Russian company Crosna to produce telecommunications hardware in Moscow.

In this connection Samsung officials are now in contact with telecommunications service companies in the "Golden Ring Industrial Belt" (Yarcslav, Suzddal and Vladimir states), with a combined population of 10 million. The area is seen as having a strong potential demand for CDMA systems. Talks are also going on with companies in Pskov, which is in western Russia, as well as in Vladivostok and Sahalin, in the Russian Far East.

IV Telecom is involved in full range of services (standard, cellular, telegraph) and operates in the capacity as a provincial telecommunications ministry. The large company, which employs 7,000 persons, is currently preparing to offer Samsung's paging system and pager services in addition to moving into the digital service business.

If the Russian government makes CDMA the national standard for cellular phones (a decision to be made by the end this year), IV Telecom plans to purchase US$ 6 million in additional hardware to build a network serving 15 cities in Ivanovo State.

The current standards for Russia's digital cellular telecommunications are GSM and NMT 450, used in Europe. The government indicates it plans to add CDMA as a standard and is strongly considering the purchase of foreign-made hardware.

Samsung Electronics Company Ltd., a US$ 21 billion flagship company of Korean-based Samsung Group, is a world leader in the electronics sector, with operations in more than 60 countrires. The company develops, manufactures, and markets audio and video products, household electronics goods, computers & peripheral products, display products, telecommunication & information systems, software tools & semiconductors.

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