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. Last Updated: 07/27/2016

MCT to Spend $65M on GSM Equipment

The MCT Corp. cellular company has signed a $65 million frame agreement with China's Huawei Tech Investment Co. to supply equipment for 15 regional networks set to switch to the GSM standard.

The networks currently operate on the AMPS standard.

MCT owns stakes in a total of 27 networks, which operate under the brand Indigo. Three of the networks are NMT-450 operators -- among them Moscow Cellular Communnications and St. Petersburg's Delta Telecom -- while nine are GSM operators. All but one of the 15 AMPS operators have GSM licenses.

Vladivostok operator AKOS will receive the license in the near future, MCT said last week. The networks are expected to switch to GSM by the end of the third quarter, said Garth Self, MCT's president and CEO in Russia.

MCT has set aside $475 million for capital expenditures over the next four years in the regions, Self said.

"We believe the prospects are very good for our AMPS companies launching GSM networks," he said. "It is an advantage to build a new network in a market where you already have experience and a trained staff."

Indigo has 583,000 individual subscribers and holds licenses for regions with a total population of 102 million people, MCT said in a press release. "Indigo is a national operator," Self said.

Analysts, however, are skeptical about MCT Corp. breaking into the big three national operators -- Mobile TeleSystems, Vimpelcom and Megafon.

MCT's operations in the regions are not viable long-term businesses, and MCT does not have full control over its ventures, said Andrei Braginsky, an analyst at Renaissance Capital.

"However, MCT businesses could become acquisition targets for a larger domestic player, such as MTS, Vimpelcom or Megafon or a potential newcomer to the market," he said.