09:38 13.03.2013

MTS to enter Eurasian transit traffic market in summer with fiber optic line to China

3 min read

Mobile TeleSystems (MTS), one of Russia's top three mobile phone service providers, plans to enter the Eurasian market for transit data traffic in June 2013 with the completion of a transit fiber optic line between the cities of Blagoveschensk and Heihe with China Unicom, the Russian company's press service told Interfax.

The project will enable MTS to set up a direct exchange of traffic with China, and in future reach a traffic exchange point in Hong Kong, the company expects.

MTS invested about 70 million rubles in the Blagoveschensk - Heihe link, which will initially have capacity of about 100 Gbps with unlimited potential for network expansion.

"We forecast that the amount of data transmitted by subscribers in our fixed networks will grow by seven to ten times in the next two years. We also expect penetration of smart phones in our network to increase to 60%, which with the launch of 4G networks will trigger avalanche-like growth in traffic. We are building infrastructure that will support effective exchange of data with the international segment of the global network in the long-term, as well as enable us to earn additional revenue from the sale of network resources to outside providers," MTS spokesperson Irina Agarkova said.

MTS did not say how much it hopes to earn from the sale of fiber optic transit capacity to other operators. A source familiar with the terms of the project said the company's additional revenues on this market could amount to 30 million-40 million rubles. Based on this estimate, the project will pay for itself in 2-2.5 years.

MTS plans to win about a 20% share of the international transit traffic market in the medium-term, a source familiar with the company's plans said.

MTS now has about 140,000 km of backbone fiber optic lines in Russia with capacity of up to 4,000 Gbps. MTS has a presence at traffic exchange points in Finland, Sweden, the Netherlands, Germany, the UK and the United States. MTS uses two routes - north and south - for transit of foreign traffic.

In order to carry data on the northern route, MTS uses its own network on the St. Petersburg - Lappeenranta - Helsinki, and leased channels from Helsinki. The company also uses leased channels on the St. Petersburg - Frankfurt route.

On the southern route, MTS uses its own infrastructure on the Moscow - Nekhoteyevka - Ukraine border crossing section, the infrastructure of MTS Ukraine and leased channels on the section from Kyiv to Frankfurt.

MTS also plans to open a short route to Europe through Belarus in the second quarter of 2013. The route will use MTS infrastructure on the section Moscow - Smolensk - Obukhovo - border crossing, and the infrastructure of Beltelecom and its partners.

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