Thursday, October 14, 2010


It was recently announced that the Moscow City Telephone Network (MGTS), the incumbent PSTN operator in Moscow and owned by Mobile TeleSystems (MTS) through its majority ownership of Comstar-UTS, will invest RUB 13 billion in the modernization of its fixed line network between now and 2013. The digitalization will allow the company to decrease its maintenance costs for analogue exchanges, modernize its business processes, optimize employee levels and boost overall efficiency.

We asked Sergey Ivanov, the CEO of MGTS, to elaborate on what the company plans to accomplish through the modernization program.

What is the percentage of digital lines in the MGTS network, and when does the company plan to complete the digitalization process?

As of the beginning of 2010, 63% of our active lines were digitalized. If we maintain the current pace of modernization, we will be able to reach the 100% level by the end of 2013.

How are you going to utilize the space that will become free following the replacement of analogue equipment with digital lines?

A significant effect from the execution of our modernization program will be the freeing up of space from under the automatic telephone exchanges through use of more compact equipment. We are already leasing out 50 000 sq. meters of office and utility space, which brings in more than RUB 0.5 billion of extra revenue annually. We expect this number to increase to up to RUB 2 billion during 2011-2013 as we continue to modernize the network. We are considering different options of utilizing unoccupied spaces, most of which are located in areas with significant investment potential, including leasing out the space outright, leasing it out after making minimal investments, or modernizing the space before leasing it out.

Starting this year, the numbering capacity being introduced is based on the IP Multimedia Subsystem (IMS) technology. Which new services will be made available to subscribers with the introduction of this technology, and when do you expect to launch them?

Based on this technology, an IMS gateway will be installed in each apartment that will provide access to modern fixed-line services (landline, Internet access, and IPTV) as well as additional high quality services (caller ID, call waiting, call forwarding, SMS, etc.).

How does MGTS as the main provider of fixed-line services and a key player in the broadband market benefit from the IMS technology?

IMS is a technology that enables us to simultaneously digitalize the MGTS network and to deliver broadband access to every single apartment in Moscow. Every apartment connected using the IMS technology will have broadband access – both fixed broadband and wireless using Wi-Fi – on top of the regular landline. Once the IMS gateway is installed, it becomes much easier to connect various services, in fact it is already connected, and it is only a matter of actually starting to use it. The IMS technology enables us to significantly decrease investments in network digitalization and to employ innovative technologies.

The MTS infrastructure also uses the IMS technology. Are there any synergies to be realized from MGTS introducing IMS?

The IMS architecture provides a base for convergent solutions for both fixed and mobile services. At this stage we are building up the technological base, but subsequently we will be offering our subscribers convergent solutions, including IMS-based ones.

How will MTS boost sales through integration with MGTS? How does the Group cross-sell services and which bundled offerings will be available to the subscribers?

Already today customers can pay for MGTS’ fixed-line services (local and long distance calls, broadband and TV) and MTS’ mobile services using a unified MGTS bill; payments can be made in the MTS stores. In addition, MTS SIM-cards are distributed in the MGTS offices. In early 2010 sales of a broadband package from MGTS were launched through the MTS retail chain. In the future we will be offering more bundled services.

(Text translated from Russian to English by MTS)

Please download the MGTS presentation here:

 Modernization of the MGTS

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