MTS to enter Eurasian transit market with Chinese fibre link

14 Mar 2013

Russian telecoms giant Mobile TeleSystems (MTS) plans to enter the Eurasian data traffic market in June 2013, following the completion of a 100Gbps capacity fibre-optic link between Blagoveschensk in the Amur Oblast, and the Chinese city of Heihe, which is located on the Russian border, on the south bank of the Amur River. Interfax reports that the fibre link, which will connect to China Unicom’s infrastructure, is expected to pave the way for MTS to initiate a direct exchange of traffic with China, and potentially establish a traffic exchange point in Hong Kong in the future. MTS has reportedly invested RUB70 million (USD2.3 million) in the Blagoveschensk-Heihe link.

Although the company has not stated how much it hopes to earn from the sale of transit capacity to other operators, a source familiar with the project told Interfax that the company’s additional revenues could reach RUB40 million per annum, meaning that the project will pay for itself within two years. Further, MTS plans to win a 20% share of the international transit traffic market in the medium-term. The telco has around 140,000km of backbone fibre in Russia, and claims a presence at traffic exchange points in Finland, Sweden, the Netherlands, Germany, the UK and the US. MTS currently uses two routes – north and south – for the transit of foreign traffic; the northern route runs from St Petersburg-Lappeenranta (Finland)-Helsinki, before using leased channels beyond Helsinki, although MTS also uses leased channels on the St Petersburg-Frankfurt route. Meanwhile on the southern route, MTS uses its own infrastructure on the Moscow-Nekhoteyevka-Ukraine border crossing section, before connecting to the infrastructure of MTS Ukraine and using leased channels between Kyiv and Frankfurt. Going forward, MTS plans to open a short route to Europe through Belarus in 2Q13, covering Moscow-Smolensk-Obukhovo before using the infrastructure of Beltelecom and its partners.

China, Russia, China Unicom, Mobile TeleSystems (MTS)