Russian tower sharing joint venture under discussion

Two major Russian operators are considering forming a joint venture out of their respective tower businesses. MTS and VimpelCom have confirmed that they are holding preliminary talks, and have also indicated that other operators – including MegaFon and Tele2 – may be interested in participating.

Rosetelecom has also been floated as a potential partner by a major Russian business newspaper, which also suggests that the government-backed Russian Direct Investment Fund (RDIF) could become a major shareholder, buying up to 85% of the future company.

The same paper suggests that the remaining 15% would be held by the participating operators in return for providing 700 telecom towers – the JV would go on to increase this figure by 14,800 for around US$1 billion.

Although tower sharing provides operators with a convenient way of lowering their capital expenditure, analysts have suggested that the JV may not come to pass. Ivan Kim of VTB Capital noted that each of the operators involved already has a fairly extensive network, saying “we therefore think operators, especially those with relatively stronger networks in place, are likely to enter into such an agreement with caution."

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