OREANDA-NEWS. July 17, 2009. Telecommunications Ministry of Economic Development prepared a decree that would reclassify calls from Moscow city to the Moscow Region (Oblast) as local calls. The decree should come into effect July 2010, reported the press-centre of OTKRITIE FC.

View: The decision is aimed at allowing Center Telecom to enter the Moscow market, currently operated by MGTS. The impact on MGTS (which is controlled by Comstar) will be threefold, in our view. First, it might necessitate completion of the digitalization of its network, which could cost up to US200/line if the latest technology is used (adding as much as US 450m of accelerated capex). Second, MGTS is likely to pay a termination fee to Central Telecom, though it would not be able to charge clients for this. Third, there is a possibility of local loop unbundling (LLU) in Moscow, after which Central Telecom could start subscribing Moscow clients (away from MGTS).