Megafon expects no material impact from latest US sanctions

Russian telecoms company Megafon said U.S. sanctions imposed on Wednesday would have no material impact on its business, as Washington issued a licence allowing it to continue providing telecoms and other services and to trade with U.S. entities.

In its latest sanctions, Washington targeted Russian billionaire Alisher Usmanov’s company USM and firms it owns stakes in, which includes Megafon.

Megafon said it viewed the sanctions as “an unfair and illegal step that has no basis,” adding it intended to challenge them.

USM also said it considered the restrictions on the company and Usmanov as “unjust and unfounded” and pledged to challenge them.

The Treasury Department’s Office of Foreign Assets Control (OFAC) on Wednesday issued a licence which authorises Megafon to provide telecoms services, as well as to trade with U.S. entities in software, hardware and technology for providing internet services.

“This essentially means that there is no direct, material impact on our business, our subscribers and the services, including roaming, we provide to them, from the U.S. regulator’s decision,” Megafon said in a statement.

Western sanctions have so far stopped short of targeting Russia’s telecoms infrastructure, but the industry is under pressure as Western hardware providers depart.

Senior telecoms executives and other industry sources told Reuters late last year that the departure of telecoms gear makers Nokia (NOKIA.HE) and Ericsson (ERICb.ST) could cripple the country’s mobile networks over the long term and lead to a deterioration in communication for Russians.

Research from news and analysis company Telecom Daily has shown that Russian mobile internet speeds dropped in regions outside Moscow in February, as the departure of foreign equipment makers limited operators’ access to hardware, although operators including Megafon disputed those findings. Reuters