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. Last Updated: 07/27/2016

MTS Clients Suffer Roaming Blackout

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Mobile TeleSystems cellular clients who traveled outside Russia over the weekend found themselves cut off from their network for three days because its connection with its European partner T-Mobil went on the fritz, MTS vice president for technology Yury Gromakov said Tuesday.

Almost simultaneously, some new switching software caused glitches in the Moscow network, Gromakov said at a news conference at MTS headquarters Tuesday evening. The software, designed by German high-tech firm Siemens to boost network capacity, was sent back to a lab in Finland.

Patches of MTS’s European roaming network were blacked out for three days from Saturday evening until Monday night, Gromakov said. He did not list all countries where roaming was affected. Of about 10,000 clients roaming on the company’s 160 partner networks, up to 80 percent suffered no service problems, he said. Of the affected roamers, most were located in Germany, Turkey and Lithuania, he said.

It was the second time MTS subscribers lost touch with the network in two weeks. The company explained an Aug. 3 blackout as an "accident" in its fiber optic network that forced engineers to shut down the network, then bring it back online gradually to prevent its switches from overloading as subscribers frantically redialed.

Gromakov said the company had yet to calculate its losses from the crashes. He said some subscribers had already lodged claims against the company, but did not say whether anyone had filed a lawsuit. He said the damages incurred to subscribers were mostly "moral."

But moral damages to roamers in Europe may prove more costly to the company than damages to subscribers who sit in Moscow. The roamers are more likely to be wealthy clients who produce high revenues per subscriber, many of whom signed up with MTS namely because the GSM operator let them roam as they transacted business, shopped or vacationed abroad.

The news may also cast a pall on the company’s first meeting with its shareholders on Thursday, when it is to announce second quarter results, expected to be strong. The network troubles do not appear to have weighed too heavily on the company’s stock, which was first listed on the New York Stock Exchange on June 30.

Gromakov said the signaling system that connects the MTS network with T-Mobil, a subsidiary of MTS strategic investor Deutsche Telekom, broke down Saturday evening, sporadically disconnecting some MTS clients roaming in Europe.

A T-Mobil spokesman could not confirm the signaling system had gone out, but promised to investigate.

"I have no hints on this but if the Russian experts say this, it could be true," the spokesman said. "They are closer to the roaming department than I am."

A few analysts skeptically received MTS’s explanations of the blackouts and hinted that the company’s rapidly growing subscriber base had outgrown the network. But Gromakov hotly denied accusations that the network was overloaded.

He said MTS has four switches in Moscow that can handle up to a million clients.

"It is impossible from outside MTS to say what actually happened," said Michael Alexeyev, senior consultant at J’Son and Partners telecoms consultancy. "I can say clearly there is no capacity constraint whatsoever. If it were due to capacity constraints, [cross-town rival operator] Vimpelcom would have experienced much more severe outages. In terms of frequency, they have substantially less than MTS. In terms of switching capacity, MTS is truly on the safe side."

Vimpelcom has also suffered a blackout recently as has a Japanese operator, Alexeyev said.