MegaFon and Huawei strike $600 million equipment deal

10 June 2014 | Kavit Majithia


Russian telecoms operator MegaFon has acquired equipment and maintenance services from Chinese vendor Huawei in a multi-million dollar deal.

The seven year agreement will see MegaFon spend approximately $600 million on Huawei equipment and services, and the deal will cover the construction and modernisation of network services, as well as software and maintenance.

Huawei and MegaFon already have an existing relationship. The Chinese vendor was integral in the roll-out of 3G in Russia and also supported the operator’s initiatives in developing the “Eurasia” high-speed network.

There has been an increasing trend across the world of Chinese groups forging stronger ties with Russian companies, as a response to sanctions against Russia for its involvement in Ukraine.

Huawei’s president for Russia Wan Biao said the Russian region was “one of the most promising”, and MegaFon added that the bulk agreement was struck to reduce the total operating expenses for equipment and software.

“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,” said Ivan Tavrin, CEO at MegaFon. “It is highly important for us that Huawei cannot only provide the best supply conditions, but also guarantee stable long-term co-operation.”

Huawei has been blocked from doing business in the US, but still operates as one of the largest equipment vendors in the world, and just last week, picked up the bulk of LTE contracts for Chinese operators.