USM is a major investor in some of Russia's most successful telecoms businesses. The Group holds the majority stake in PJSC "MegaFon", a pan-Russian provider of digital opportunities.
MegaFon is a pan-Russian provider of digital opportunities, operating in all segments of the telecommunications markets in Russia with 75.9 million subscribers in the country and overall subscriber base of 77.6 million . The Company offers mobile and fixed-line services, mobile and broadband Internet, digital TV and OTT services, innovative digital products and services across Information and Communication Technologies (ICT), the Internet of Things, Big Data analytics and processing, cloud solutions, cyber security, financial services, digital advertising and marketing, e-commerce, and converged IT solutions in system integration. In 2019, for the third year in a row, MegaFon won Ookla's Speedtest Award for Russia's Fastest Mobile Network.
MegaFon has an extensive retail network which consists of around 4,000 stores, including owned-and-operated stores and third-party monobrand stores. In addition, following the merger of Euroset, the Company's wholly-owned subsidiary with around 1,725 retail outlets in Russia, with Svyaznoy, a national retail chain, MegaFon has access to the world's largest retail network in the technology sector by store count (around 4,500).
The Company has pioneered a range of services in Russia, including the launch of MMS and mobile TV, as well as free incoming calls. It was the first carrier in Russia that covered all regions of the country. MegaFon is also a well-established leader in mobile data services, as the first carrier in Russia to launch 3G and 4G/LTE. Currently, MegaFon offers LTE services across 83 Russian federal regions, covering 80% of the country's population. In 2014, MegaFon was the first to launch an LTE Advanced network, which at the time became the fastest commercial mobile network in the world. MegaFon's LTE-A services are currently available in 47 Russian regions allowing customer access to record mobile internet speeds of up to 450 Mbps.
MegaFon is the unrivalled leader in Russia by number of base stations, with 240,000 base stations covering all communication standards, including 100,000 base stations supporting LTE and LTE Advanced.
MegaFon continues deploying various advanced LTE technologies in preparation for 5G. By applying Massive MIMO on a single 20 MHz-wide cell typically capable of 150 Mbps with 2x2 MIMO, MegaFon was able to achieve 800 Mbps sector capacity without adding any additional spectrum. Equipped with Huawei's expertise, MegaFon was able to reach peak speeds of 35 Gbps in a 5G test in St. Petersburg in June 2017 using 2 GHz of bandwidth in the 70 GHz E-Band. In addition, MegaFon has successfully launched Gigabit LTE in Moscow using 60 MHz of spectrum (1800 MHz, 2600 MHz) and enhanced with 4x4 MIMO and 256 QAM.
MegaFon continues placing considerable effort into exploring and applying the very latest ideas. In 2019, together with Rostelecom and Nokia, MegaFon organised the first ever 5G international videocall in Russia between St. Petersburg and Helsinki and announced the opening of a digital 5G laboratory at St. Petersburg State University.
The Company has undertaken a number of significant deals to enhance the implementation of its digital strategy. In October 2019, MegaFon, Alibaba Group, Mail.Ru Group and the Russian Direct Investment Fund announced the completion of the joint venture transaction to integrate Russia's key consumer internet and e-commerce platforms and launch of a leading social commerce joint venture in Russia and the CIS.
MegaFon and Fort Ross Ventures (part of the Sberbank Group) signed a strategic partnership agreement for sharing technologies and innovations, and conducting a joint search for investment targets. MegaFon and the Finnish infrastructure operator Cinia Oy signed a memorandum of understanding to establish an international consortium for the construction of a new underwater high-speed fiber optic line from Helsinki to Tokyo. The new line will traverse the Arctic Ocean covering 10,000 km and is expected to provide the fastest signal transfer rates on the Europe-Asia route. This will enable MegaFon to assume a digital leadership role in developing network infrastructure for users in the Far East and areas bordering the Arctic region.
Together with USM, Gazprombank and Rostec, MegaFon launched a joint venture to develop digital products and services and implement projects in the digital economy. The new structure, MF Technologies, will allow the partners to efficiently develop cross-industry innovation projects including blockchain- and internet of things-based solutions, as well as digital financial platforms.
In 2019, MegaFon completed the buy-back of its remaining ordinary shares from non-affiliated shareholders, and, since June 2019, they are no longer being traded on the Moscow stock exchange.