Russia's MegaFon signs US$600m equipment order with Huawei

MegaFon, Russia's second-largest wireless operator, has agreed to buy at least US$600 million of equipment from Huawei Technologies at a time when ties between Russian and Chinese firms are strengthening.

Alexander Bashmakov, MegaFon's chief strategy officer, said it chose China's largest maker of network products for a seven-year contract to speed mobile networks in several Russian territories. The deal, including software and maintenance, was worth "dozens of billion roubles", he said.

Russian companies have boosted ties with China after the United States and the European Union imposed sanctions on the country to punish it for annexing the Crimean peninsula from Ukraine. Gazprom, Russia's biggest company, signed a US$400 billion deal last month to ship gas to China.

"Huawei is one of the technological leaders in 4G equipment," Bashmakov said. "They are leading in the number of signed contracts with operators. The Russian market is very competitive in equipment prices, unlike the US where supplies of Chinese equipment are limited."

MegaFon chose Huawei based on financial and technological factors rather than politics, Bashmakov said.

MegaFon, controlled by Russia's richest man, Alisher Usmanov, and partly owned by Sweden's TeliaSonera, will use a credit line from China Development Bank to fund the deal.