MegaFon is on the US sanctions list. What does it mean

MegaFon, one of the largest mobile operators in RUSSIA, was included in the US sanctions list. Experts don't expect

On Wednesday, April 12, the United States imposed sanctions on MegaFon for being owned by the USM Group, which is 49% owned by businessman Alisher Usmanov, follows from a message from the US Treasury. The billionaire (eighth place in the FORBES ranking with a fortune of $14.5 billion) was included in the sanctions lists in 2022. According to the regulator, Usmanov owns "a wide network of offshore businesses registered to members of his family, through which he can conduct financial transactions, which potentially allows him to circumvent sanctions."

A representative of MegaFon called the sanctions "unfair, illegal and unfounded." “We are a commercial company providing services of high social value to millions of clients. We intend to challenge these restrictions by all means available to us, ”the operator said.

MegaFon is not the only operator that was included in the sanctions lists: in February 2022, Rostelecom (owns T2 RTK Holding, provides services under the Tele2 brand) was added to the list of companies that fall under sectoral restrictions on attracting American financing. Then the operator was assured that the sanctions would not affect its activities.

What is the essence of sanctions

US Treasury documents state that MegaFon is prohibited from transactions related to correspondent accounts or settlement accounts with payment and processing of transactions involving certain foreign financial institutions; any write-off of funds from an account in the books of a US financial institution and any transactions.

However, the prohibition does not apply to the provision of telecommunications services, including the EXPORT, re-export, sale or supply from the United States or by American persons of software, hardware or technology for the provision of communication services related to instant messaging, video conferencing, chats and e-mail. , social networking, image sharing, movies and documents, web browsing, blogging, web hosting services and domain name registration.

Clarification

The initial version of the material incorrectly provided information on the structure of sanctions against MegaFon in terms of the areas of application of restrictions.

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According to Leonid Delitsyn, an analyst at FG Finam, falling under the sanctions "hardly came as a surprise to MegaFon." The company is not public, so "the stock market doesn't pay much attention to it," he adds. The HEAD of the Telecom Daily agency, Denis Kuskov, emphasizes that the Russian market accounted for most of MegaFon's revenue, therefore, according to him, the complication of working with foreign markets will not have any effect on the company's financial performance.

What foreign products does MegaFon use?

As the RBC correspondent was convinced, one of the operator's main sites is protected by a special SSL certificate (using it, the user can determine the site's security level), which is issued by the international company Global Sign, which operates worldwide and has representative offices in the United States.

Will the sanctions affect the number of MegaFon subscribers?

MegaFon did not answer RBC's question about how the inclusion of the company in the sanctions lists will affect subscribers and the company's business as a whole. Delitsyn is confident that this event will not affect the number of MegaFon's subscriber base. According to the results of the fourth quarter of 2022, the operator served 75.3 million subscribers, the company's press service reported, and ranked second in terms of subscriber base among the "big four" Russian operators.

Kuskov notes that subscribers will continue to receive communication services in the same format: “Base stations are still available. In addition, MegaFon has the widest frequency range at its disposal.” As for the potential outflow of subscribers, according to the interlocutor of RBC, this should not be expected in the near future, since, according to the latest research of his agency, subscribers first of all pay attention to the quality of services and the price range.

What problems may arise due to sanctions

Kuskov points out that now any work with MegaFon must be accompanied by a special permit-license issued by the US authorities. So, for example, payment for a subscription to APPLE services will most likely remain unavailable to MegaFon subscribers. Now this function is still available to MTS and VimpelCom subscribers (provides services under the Beeline brand), but not to T2 RTK Holding. Earlier, in an interview with RBC, the head of MegaFon, Khachatur Pombukhchan, said that it was illogical to disable the ability to pay for Apple services, since at that time the company was not under sanctions.

Despite the absence of potential problems for subscribers, Kuskov admits that a situation may arise when MegaFon will not be able to provide roaming services due to sanctions. Although the interlocutor of RBC emphasizes that "perhaps the company will quickly find a solution to this problem." The rest of the interviewed experts found it difficult to answer the question of what will happen to MegaFon's roaming. A company representative did not answer this question.

Will there be hardware problems?

After the start of a special military operation in Ukraine, a number of large foreign telecommunications equipment vendors announced that they were ending their business in Russia. However, some companies have tried to obtain export licenses from foreign regulators in order to supply the missing equipment under previously concluded contracts. Khachatur Pombukhchan said that the Finnish Nokia (one of the world's key suppliers of communications equipment) filed four applications for export licenses, one of which was approved positively, while the rest were awaiting decisions.

“It is clear that equipment for operators was supplied mainly by Chinese companies in the last year. But now MegaFon will have to restructure the format of work and, possibly, create third companies to conclude contracts for the supply of equipment, ”Kuskov suggested. At the same time, the head of TMT Consulting, Konstantin Ankilov, insists that the entire telecommunications industry has been under the influence of sanctions for a year now, so “this is unlikely to radically worsen the situation for MegaFon.” “Now all market players have no access to telecommunications equipment from the world's leading suppliers. Of course, this affects financial performance, but this is a common problem for the entire industry, not just MegaFon,” Ankilov said. In this regard, he does not expect the company to decide to significantly raise the cost of tariffs, as for MegaFon "preserving the subscriber base is becoming even more important than before." “Prices, of course, will be raised periodically by all telecom operators. This happened in previous years due to inflation and rising costs, and remains relevant now,” Ankilov summed up.

Aleksey Zamesov, head of special projects at RU-CENTER, believes that MegaFon, as a large telecommunications company, is heavily dependent on software and hardware: from servers and base stations to system and application software. Therefore, the company "will undoubtedly now have to use more complex procurement schemes and accelerate the transition to non-commercial and Russian software."