Vimpelcom, MTS embark on USD2 billion LTE collaboration

27 Sep 2011

Mobile TeleSystems (MTS) and Vimpelcom, two of Russia’s self-styled ‘Big Three’ mobile operators have confirmed plans to collaborate on a joint infrastructure rollout to support their respective Long Term Evolution (LTE) networks. Business daily Kommersant reports that the two companies have inked a Memorandum of Understanding (MoU) which will see them invest a total of USD2 billion in the shared infrastructure by the end of 2012. The first phase of investment will see the pair roll out 34 fibre-optic lines, spanning 4,500km, for LTE backhaul purposes. Vimpelcom spokeswoman Anna Aybasheva commented: ‘The benefits [of the agreement] are obvious. The network will be built faster, costs will be reduced, and the range and quality of services will be improved’.

This latest development casts further doubt over the ever-increasing fragility of the March 2011 pact between the ‘Big Three’ mobile operators (the other party being MegaFon), national operator Rostelecom and WiMAX operator Scartel (Yota). The telcos united to facilitate the rollout of a single national LTE network by 2014, with Scartel duly becoming the consortium’s 4G network provider of choice. In July 2010 Scartel received regulatory approval from telecoms regulator Roskomnadzor to abandon WiMAX for LTE, re-using its existing spectrum. As part of the deal the four Russian telecoms operators would each be given an option to take a 20% stake in Yota in 2014, at market prices. Telconet Capital Fund, which currently owns 74.9% of Scartel will be required to sell all of its shares, whilst co-owner Russian Technologies will reduce its 25.1% stake to 20%. As reported by TeleGeography’s CommsUpdate last month, Scartel slapped a USD1 billion price-tag on its 4G network, which is integral to the functionality of the partnership, causing ructions between the operators. Whilst Rostelecom subsequently reaffirmed its commitment to working with Yota, it now seems clear that MTS and Vimpelcom no longer consider the consortium to be their best LTE option. Kommersant reports that, in the wake of the Vimpelcom/MTS tie-up, MegaFon and Rostelecom have now stated their willingness to form alliances with other operators.

Russia, Beeline (Russia), Mobile TeleSystems (MTS)