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June 9, 2014 1:21 pm
MegaFon, the Russian telecoms operator, has acquired about $600m of equipment and maintenance services from China’s Huawei Technologies.
The seven-year contract between MegaFon and Huawei will “amount to dozens of billions of roubles”, according to the Russian company. It covers equipment for the construction and modernisation of networks, as well as software and maintenance.
Huawei is already one of the largest suppliers to MegaFon, having helped upgrade its 3G equipment and supported the “Eurasia” intercontinental high-speed network.
Wan Biao, president of Huawei’s Russia business, said the region was “one of the most promising” for the group. The deal comes as Russian companies are forging strong ties with China in the face of Western sanctions following Russia’s involvement in Ukraine.
MegaFon, the second-largest telecoms operator in Russia, said Huawei’s equipment was already widely used in its networks, and was acquired based on the total cost of the equipment and software.
The deal would “reduce significantly its operating expenses for network repair and maintenance”, said MegaFon, which is controlled by Russian billionaire Alisher Usmanov.
Ivan Tavrin, chief executive, said: “The seven-year contract is an unprecedented case for the Russian business environment, as similar agreements in the market are generally limited to three years.
“It is highly important for us that Huawei cannot only provide best supply conditions but also guarantee stable long-term co-operation.”
Huawei is one of the largest providers of networks in the world alongside Sweden’s Ericsson, and it supplies much of Europe and Asia with next generation telecoms equipment. It has, however, been blocked from doing business in parts of the US market following allegations of links to the Chinese state.
Alongside local rival ZTE, Huawei has also picked up the lion’s share of 4G contracts from Chinese operators being tendered to create the largest superfast mobile network in the world.
Separately, MegaFon said that its shares have been upgraded to the highest quotation list on the Moscow Exchange following recent listing reform. Inclusion into this list broadens the range of potential investors and improves the liquidity of the company’s shares, it said.
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