Strategic Partnerships Will Drive Growth
Russia's MegaFon has partnered with Spain's Telefónica to enable it to benefit from better buying power and technical knowledge provided by the Spanish operator. The deal is part of Telefónica's Partners Program which also includes China Unicom and Telecom Italia . The deal enables business clients of both companies to benefit from access abroad, helping to build stronger ties with major enterprise clients. BMI believes the partnership will bring benefits to both companies as costs are lowered and products expanded.
One key part of the agreement will see shared equipment purchasing, boosting the purchasing power of both companies. With operators committed to rolling out new infrastructure to meet subscriber demand or regulatory requirements, the deal has long term potential for both companies in reducing costs and ensuring their networks remain competitive. As the larger player, Telefónica has plenty to offer MegaFon given its presence in 19 markets compared with the Russian operator's two.
However, MegaFon's position as one of Russia's major players will be strategically useful to Telefónica's corporate clients. In subscriber terms, consumer connections provide the bulk of revenues and growth for operators. Nevertheless, corporate clients offer stable revenues and higher average income per user, making these a key target segment for operators.
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