Chechnya's PM ‘threatens to shut down MegaFon’

14 Mar 2006

Chechnya’s Prime Minister Ramzan Kadyrov has reportedly said that if MegaFon, Russia’s third biggest cellco, does not improve its service quality and lower its tariffs within two weeks, the regional government may force it to cease operations in Chechnya and replace it with another mobile operator. Kadyrov’s statement, quoted in business daily Vedomosti yesterday, did not elaborate on how MegaFon would be forced out or the intended method of replacing it. MegaFon is currently the only GSM provider in Chechnya, and charges users on average RUB4.5 per minute to make calls – between 30% and 40% higher than in other regions – according to Yuri Grechko, spokesman of MegaFon’s subsidiary Mobicom-Kavkaz, who added that the company’s costs are ‘80%-100% higher compared with adjacent regions,’ due to a lack of infrastructure and a greater need to ensure the security of its base stations. Grechko said that MegaFon launched operations in the disputed region in March 2003 and currently operates 136 base stations, with plans to roll out an additional 60 this year. It has an estimated 300,000 subscibers in the region. Russia’s second largest mobile operator VimpelCom holds a licence to operate in Chechnya, but is awaiting approval from local authorities to launch services. Market leader Mobile TeleSystems (MTS) does not hold a Chechnyan concession.

Russia, MegaFon