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$150 million loan to spread mobile phones in Russian regions
MTS network set to expand from the North Caucasus to Russian Far East
A seven-year loan of $150 million from the European Bank for Reconstruction
and Development will help Russia’s leading mobile operator, Mobile TeleSystems
OJSC (MTS), expand its network to reach some of the most remote areas of this
vast country.
Russia’s booming mobile market is highly competitive, and falling prices have
brought these services within the reach of a growing number of people in urban
and rural areas, said Izzet Güney, Director of the EBRD’s Telecommunications,
Informatics and Media Team.
This loan will help MTS roll out in the Russian Far East, Siberia, the Volga
and Southern Federal districts, offering the local population and businesses
high quality telecommunications services, Mr Güney added.
Tatiana Evtushenkova, MTS Vice-President for Investment and Corporate
Development said: “With this loan, the EBRD is supporting the Company’s
efforts to develop telecoms infrastructure in the regions of Russia where
networks have not yet been established and where phones are still something of
a rarity. This substantial long-term facility highlights MTS’ investment
record and the EBRD’s commitment to Russia.”
MTS is licensed to operate in 87 out of 89 regions in Russia, but its
commercial services are currently only available in 71 of these regions, which
have a combined population of approximately 134 million. In addition, MTS
holds licenses through its subsidiaries and affiliates which allow it to
operate in Ukraine, Uzbekistan and Belarus.
There are approximately 65.6 million mobile phone users in Russia, providing a
mobile penetration of 45.2 percent. About a quarter of Russia’s mobile users
at present reside in the Moscow area, where market penetration is at present
92 percent.
The EBRD was an early shareholder in MTS and lent the company $45 million in
its start-up phase in 1995. That loan has been fully repaid and the EBRD no
longer holds equity in the company.
MTS, which had approximately 29.5 million subscribers as of November, is 51
percent owned by Sistema, Russia’s largest private sector consumer-services
company, and 25 percent owned by T-Mobile Worldwide. MTS shares are listed on
NYSE with a free-float of approximately 22.5 percent
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