OREANDA-NEWS. May 15, 2012. Mobile TeleSystems OJSC (“MTS” — NYSE: MBT), the leading telecommunications provider in Russia and the CIS, announces that it has signed a memorandum of understanding with VimpelCom OJSC (trademark "Beeline"), MegaFon OJSC and Rostelecom OJSC to jointly lay and operate an underwater fiber-optic cable joining the Russian Far East with Sakhalin Island. The project, dubbed ‘Sakhalin-Magadan-Kamchatka’, will kick-off in late 2012. According to preliminary estimates, the total cost of the project will amount to RUB 2.4 billion and will be split evenly between four operators on a parity basis. The volume of investments will be specified at the end of 2012 after completion of the feasibility study.

The new line will connect the town of Okha on Sakhalin Island with the mainland towns of Magadan and Petropavlovsk-Kamchatsky. Capacity of the underwater cable will amount to 8 Tbs (80*100 Gbs) with the total length of lines around two thousand kilometers. The group expects to complete construction in two years’ time.

Andrei Dubovskov, MTS President and CEO, highlighted, "The growth of fixed and mobile traffic in the Far East dictates the need for active development of infrastructure in the region. Working jointly with government and other players in the market to develop major telecom infrastructure projects has proven to be efficient in the case of providing communication services for the highway "Amur" and the joint build out of fiber-optic networks by “Big 3” across Russia. The shared construction of a submarine cable between critical markets linking Sakhalin and the Far East allows telecom operators to create critical infrastructure efficiently in areas difficult to access and featuring harsh climactic conditions."

Alexander Provotorov, President of Rostelecom OJSC, commented, "Joining forces will allow participating companies to significantly reduce construction time of the underwater cable, decrease capital and operational expenses, which are substantial given the location and environmental conditions. With this approach we will be able to start providing communication services in the shortest possible time to a greater number of Russia’s Far East inhabitants.”

Ivan Tavrin, CEO of MegaFon OJSC, added, "We have set forth an objective of tackling the shortage of modern communications services for households, corporates, and public sector in the Far East. We expect the underwater cable to foster penetration of a wide array of telecom services in the region."

Anton Kudryashov, Ceneral Director of VimpelCom OJSC, commented, "Underwater fiber-optic cable ‘Sakhalin-Magadan-Kamchatka’ is another striking example of timely and relevant forms of infrastructure partnerships. This format of cooperation is beneficial for all participants and allows us to effectively address the availability of communications services to the residents of the sparsely populated remote regions of the country. Within a framework of such partnerships, operators are able to more effectively manage their investments and the pace of network construction, as well as improve the quality of services rendered to the customers."