PRESS
RELEASE
ИНФОРМАЦИОННЕОЕ
MegaFon and Synterra:
Business Model of Integrated Company
November 29, 2010. Today, MegaFon, the first all-Russian mobile operator, and Synterra, national-wide
telecom operator, will make their official presentation of the business model for the companies
integration.
MegaFon’s acquisition of Synterra, the major fixed-line operator, that is ranked as the 3rd largest in terms of its
backbone network size in Russia, became a natural stage of the company’s evolution that reflects the trend of
the global telecommunications market.
As the convergent communication services that are offered by universal providers become more and more
advanced, any clear differentiation between fixed and mobile services is seen by the customers as less and less
relevant. Universality or any telecom service capability is becoming the key condition for telecom operators growth
in the early XXI century.
At the same time, the exponential growth of mobile DATA-traffic driven by active 3G expansion made mobile
operators interested in integration with fixed-line companies, and first of all with long-distance backbone
operators. Being the owners of powerful network infrastructure they turned out to be capable of satisfying the
growing demand in data transmission, and also creating foundation for multi-service and convergent services.
“While working on the business model, we have identified our long-term goals not just for integration process, but
we have also defined the future for the entire integrated company: in 2 years we must become a Universal
Telecommunications Operator. Acquisition of Synterra Group is the first and strategically essential step towards
this major goal. Our integration will give us an opportunity to create a universal operator for providing a wide
range of telecommunication services to any kind of customers. Today we are not discussing mergers and
acquisitions. Today we are discussing integration because changes are needed both for Synterra and for
MegaFon as well,” said Konstantin Solodukhin, General Director of Synterra and Deputy CEO of MegaFon
for Long-Distance Communications, to comment on the goals of integration.
New priorities of the operator have been implemented in the customer-oriented business model that has no
separation of mobile and fixed business. This integrated model is focused on comprehensive
telecommunication services offering to four customer segments. Further to retail customers (B2C) sector that was
the basis of the previous MegaFon’s business model, as well as corporate customers sector (B2B) that has been
significantly enhanced due to Synterra’s competences, the Integrated Company now has identified as
independent the sectors of government customers (B2G) and operators (B2O). The logic of transition to
customer-oriented business model provides for identification of the operator’s strategic goals per customer
segments.
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This approach is clearly reflected in the integrated services portfolio. Integration of Synterra and MegaFon is
unique in the sense that the companies used to operate in the markets that practically do not overlap. Therefore,
the portfolio of the Integrated Company services shall inherit the entire spectrum of MegaFon’s and Synterra’s
offers. Besides, combination of resources will allow developing new services of high demand in the market, such
as videoconferencing, IPTV, VoD, CDN, international traffic transit, multi-level inter-operator services, etc., which
will create additional benefits for the operator’s cooperation with customers of various segments.
All services of the Integrated Company shall be based on single backbone network that is over 100,000 km
long as well as on extensive satellite infrastructure. Development of Data Centers network will also become
the key area for the operator to combine capabilities and competences of MegaFon and Synterra. The operator
is planning to build a federal network of Data Centers that would vary in size from 250 to 7,000 sq.m.
The commercial unit in the Integrated Company – marketing and sales of fixed and mobile communications –
shall be structurally organized on the basis of customer segments. Function of sales to federal corporate
customers shall be transferred to the level of MegaFon’s Headquarters. Project management function related to
all federal customers (B2B, B2G, B2O), which will support both MegaFon and Synterra, shall be transferred to
Synterra, which is a specialist in such projects implementation.
The regional integration plan includes stage-by-stage combination of MegaFon’s branches network and
Synterra’s subsidiaries. The first stage provides for implementation of the new business model on the basis of
MegaFon’s North-West Branch and PeterStar CJSC. Combinations of regional units in the Urals, Siberia and later
on in the South are in the pipeline. MegaFon’s business strategy at the stage of universal operator establishment
shall include individual approach to formation of services package in each specific region to be based on analysis
of its own local resources and competition environment.
The structure of new business model for the Integrated Company shall also include a single function of network
and infrastructure management, as well as single functions of strategic, HR, legal and financial management.
In the course of business model development over 20 synergies have been identified in the area of incremental
revenue from B2C, B2B, B2O segments, which will appear as a result of cross-sales, opex and capex spending.
Net effect from integration of MegaFon and Synterra till 2015 (synergies less debt) shall be 4.53 BRUR.
Information
OJSC MegaFon is the all-Russian universal communications operator running its business in all segments of the
telecommunications market. MegaFon was established in May 2002. MegaFon became the first and the only operator with a network
covering all regions of Russia. The Company and its subsidiaries have all the required licenses and operate in all the Russian
regions and the Republic of Abkhazia, South Ossetia and Tajikistan. MegaFon was the first in Russia to launch 3G for commercial
operations and is currently Top 1 in the segment of mobile Internet, and Top 2 as to the number of active subscribers in Russia.
Having acquired Synterra Group of Companies, one of the leading Russian backbone operators, in June 2010, MegaFon entered the
market of fixed-line communication for government and corporate customers as well as fixed Broadband market. The combined
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infrastructure of MegaFon and Synterra is present in all the Russian regions, forming the basis for GSM 900/1800, 3G, VSAT,
IP/MPLS, NLD/ILD networks, data and call centers connected to all players of telecommunication market.
In 2009, MegaFon became the General Partner of the XXII Winter Olympic Games and XI Paralympic Games in 2014 in Sochi.
As of September 30, 2010, the principal shareholders of MegaFon are companies of AF Telecom Holding group, the TeliaSonera
group and Altimo telecommunications holding.
For additional information
Tatiana Ivanova, Press Secretary of MegaFon OJSC
Phone: +7 495 980 1970; +7 926 442 5246,
pr@megafon.ru
www.megafon.ru
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