Vodafone goes east to make 87m friends

Vodafone has signed a deal with the largest Russian operator, MTS, to offer Vodafone-branded services to MTS's 87 million customers, as well as providing 3G expertise to MTS as the company rolls out the next-generation network.

The deal doesn't involve any equity, but is more accurately a partnership that extends the Vodafone brand into Russia, Ukraine, Turkmenistan and Armenia without taking the risks associated with launching, or acquiring, a network. It should also provide Vodafone customers with a better roaming experience when travelling east.

Vodafone has more than 40 partners of this kind around the world, particularly in Eastern Europe where products are dual-branded, and the strategy has proved successful. The company will want to emphasise a cooperative approach before the end-of-year figures come out on November 11 - those will likely see more cost-cutting and thinner margins in developed markets.

The deal also shows Vodafone, at least, has confidence in doing business in Russia, something that has taken a few knocks over the last year with BP's joint venture with local company TNK running into political problems.

Despite Russian oligarchs losing billions, the global economic downturn has been portrayed in the Russian media as a capitalist problem - but then if it really is down to a loss of confidence, then not knowing the scale of the problem might be a good thing. ®