MTS ties up with Vodafone

The world's leading mobile telecoms company Vodafone is coming to the Russian market through a partnership with Russia's biggest mobile operator MTS.

Vodafone declared MTS its partner network and gave exclusive access to its products and services. In return says Vodafone CEO, Vittorio Colao, the European operator gets access to over 90 million customers in Russia and the CIS, making for two key reasons behind the tie up.

“There are two reasons – First, exposure to a very important part of the world with a huge number of customers, a very good company, and it was a very good way for us to get an exposure. Second – we now can speak with suppliers, with technology providers, and developers on behalf of almost 100 million more customers; and that is extremely valuable.”

For its part according to MTS CEO Mikhail Shamolin, MTS benefits from Vodafone's expertise in building 3G networks and plans to reduce costs, buying mobile handsets through Vodafone suppliers.

“This is especially important given the current crisis conditions in the current situation. When everyone wants to optimise whatever expense I wouldn't be surprised if we talk about 5 percent.”

The market wonders how far the two companies may go along the partnership path – since Vodafone once considered buying into MTS.  Philip Townsend, Head of Research at Metropol IFC says the market change since then could lead to a fresh a renewal of interest.

“Vodafone had the opportunity to buy over 30 percent stake in MTS from Deutsche Telecom some years ago they turned it down because emerging markets were too risky what changed from that is that Western european market for cellular has completely matured.”

Vodafone's revenue growth in Western Europe is declining, driving the company to emerging markets.  But observers still don't fully understand the company's strategy.  Vodafone went into India paying 840 dollars per subscriber – and paid even more in Ghana.  Although MTS is much cheaper – less than 200 dollars per customer – analysts no one is selling just now.

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