Megafon Freezes Arctic Connect Cable Project

Megafon has frozen the construction of a communication line along the Northern Sea Route Due to the passive behavior of partners

The reasons for the suspension of the construction of the network, which was to connect Oslo and Tokyo, in "Megafon" was not named.By Valery Kodachigov
May 27, 2021

Two sources familiar with the organizers of the project told Vedomosti that Megafon had frozen the construction of Arctic Connect.

“We really made a decision to revise the structure and economics of the Arctic Connect project, it will take us time for such a regrouping – all the developments of the project will be used in the future, if we decide to continue it,” the Megafon press service commented on the situation. They noted that the company is now notifying partners and suppliers of its decision. The reasons for the suspension of the construction of the network, which was supposed to pass along the bottom of the Arctic and Pacific oceans and by 2023–2024. to connect Oslo and Tokyo, in “Megafon” was not named.

Sources of “Vedomosti” claim that the suspension of construction is connected with the delay in negotiations on the implementation of the project by the Japanese side. “The Japanese trade and investment company Sojitz Corporation and its partners are participating in the project. A cooperation agreement was signed last year. However, its structures, under various pretexts, are dragging out negotiations on co-financing the project and providing services to connect to a new network of clients in Japan. Many of them seem frankly far-fetched, ”says one of them.

The Japanese Sojitz did not answer Vedomosti’s questions. The Russian office of the corporation has nothing to do with Arctic Connect and the telecommunications business in general, his employee told Vedomosti.

Sojitz Corporation is engaged in trading business, investment and financial activities. The company’s sphere of interests includes the automotive industry, energy, mining, the chemical industry, etc. At the end of the 2021 fiscal year (ended March 31), its revenue amounted to $ 15.1 billion.

Megafon announced plans to build Arctic Connect in 2019. In the same year, Arctic Link Development Oy, a joint venture between Megafon and Finnish Cinia Oy, was established to implement the project (each of the participants received 50% of the shares in it). It was assumed that Megafon would be engaged in the construction and operation of the network, and a division of the Cinia Alliance specially created by the Finnish side would attract investments in the project outside of Russia. It was with him that Sojitz entered into a cooperation agreement in 2020. Neither sources of Vedomosti nor representatives of Megafon say what investments and other terms of cooperation were discussed with Japanese businessmen.

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