Optical fiber will be cut off at the border

Russian manufacturers of optical fiber and cables from it are asking the government to impose customs duties on imported products in the amount of 15%. Market participants explain that in 2022, when there was a shortage of materials, Chinese companies began to occupy the already shrinking market. But telecom operators oppose the initiative: they are ready to abandon cheap Chinese products only if tariffs for their services increase.

“b” got acquainted with the letter of the Deputy Head of the Ministry of Digital Development Andrey Zarenin dated March 13, sent to MegaFon, MTS, VimpelCom, ER-Telecom, Rosseti and profile associations. The official asks market participants to evaluate the proposals of Moscow Mayor Sergei Sobyanin to increase import customs duties on cable products in excess of those established under Russian WTO obligations (now the rate on fiber optic cables is 0%). This, according to the document, is about fiber-optic, telecommunications and power cables, etc. Also, Mr. Zarenin asks operators to assess the share of imported products on the market and report on the possibility of using Russian analogues of foreign products. The Ministry of Digital Transformation and the Moscow Mayor’s Office did not respond to Kommersant.

The volume of the Russian market of optical fiber as a raw material for cables at the end of 2021 amounted to 7.5 million km, or 4 billion rubles, says Andrey Nikolaev, CEO of Optovolokonnye Sistemy JSC (OVS JSC). The top manager adds that 30% of the market is accounted for by OVS itself, the rest is occupied by foreign manufacturers. He claims that by the end of 2022, the market has decreased to 6 million km (3 billion rubles), as operators have reduced spending on infrastructure development. OVS expects that by the end of 2023 the market will recover to 7.5 million km.

The initiative to introduce duties is due to the fact that manufacturers of cables, primarily fiber-optic cables, fear that their products will be forced out by Chinese ones, “the fact is that after the imposition of sanctions, the only Russian manufacturer of optical fiber faced a lack of preforms,” ​​explains the head of the NP “Association “Electric cable”” Maxim Tretyakov. They were purchased from a Japanese company, which in the spring of 2022 stopped deliveries to the Russian Federation.

“The search for alternatives took some time and led to a temporary cessation of the production of optical fiber by a Russian enterprise,” explains Mr. Tretyakov. , LLC “Altai-Cable”, LLC “Evrokabel-1”, JSC “Moskabel-Fujikura”, etc.— “b”) were forced to purchase fiber for their products in China and import it with the payment of a three percent import duty. According to the expert, Chinese manufacturers of final cable products took advantage of the situation by increasing supplies to the Russian Federation.

The Ministry of Industry and Trade told Kommersant that the capacities for the production of optical fiber in the Russian Federation “allow us to supply the types of material demanded on the market in the required volumes to meet most of the domestic demand.” Earlier, Russian manufacturers of smart cards (sim cards, bank and transport cards, etc.) found themselves in a similar situation. In 2022, Chinese manufacturers began to force them out of the Russian market, while at the same time raising prices for components necessary for the production of domestic smart cards (see Kommersant on February 21).

However, cable consumers oppose the imposition of duties. This is a premature step, which may have a negative impact on the work of operators, and subsequently on the development of the digital economy, MTS emphasizes. They assured that the company gives preference to Russian manufacturers when purchasing cables, “if there are relevant proposals.” “But a part of the Russian-made cable range is not available on the market or does not meet the requirements for ensuring the operation of networks and the provision of services,” MTS explained.

Rostelecom said that they support the proposal to increase the rates of import customs duties, but only “for those types of cable products that can be produced in the Russian Federation.” ER-Telecom and VimpelCom declined to comment, Rosseti and MegaFon did not respond to inquiries.

A Kommersant source in the cable market says that manufacturers are discussing with operators the idea of ​​raising duties from the end of 2022, “but the operators were categorically against it, since Chinese products are cheaper in the current situation, and it is more important for them to buy cable at a low price.” According to Kommersant’s interlocutor, operators are ready to support the increase in duties only if they can factor in the increase in prices for it in their tariffs.

Nikita Korolev