Rostelecom Forms JV to Build TEA NEXT Backbone Network in Russia

Rostelecom PJSC announced recently that it has entered into a legally binding parity agreement with VEB Ventures (VEB. RF’s venture fund) to acquire a stake in Atlas (or Operating company) and develop a new generation backbone fiber-optic communication line TEA NEXT (Transit Europe – Asia).

TEA NEXT will connect the Russian western and eastern borders with the largest cities and link to Russian borders with Mongolia and China. The network will also be extended from the country borders with Europe to the main European traffic exchange centers in Frankfurt and Stockholm, and will link Vladivostok to Busan, Tokyo and Hong Kong via underwater communications channels.

Started in the summer of 2020, Rostelecom founded the operating company Atlas and commenced the construction of the first segment running from Moscow via Saint-Petersburg through to the Latvian border. 

VEB Ventures is a company of the VEB.RF group, created to support high-tech projects through direct transactions and venture capital fund management. 

Rostelecom and VEB Ventures will each invest around RUB 6 billion in Atlas at the initial stage, while the strong interest expressed by financial partners signals the potential for external investor groups to join the project.

The total investment of the TEA NEXT project is expected to reach around USD 650 million in the next few years with a view to finance the project up until 2025, partially by Atlas (through the JV fund) and a syndicated loan facility from VEB.RF, other Russian and international banks, many of which have already contractually committed to the development of the project.

As noted by Russia’s Deputy Prime Minister, Dmitry Chernyshenko, TEA NEXT will be instrumental in shaping the national digital economy and boosting innovation in every sector. The state of the art infrastructure developed by the joint partnership of Russia’s two digital leaders under a brand new business model is also a highly attractive investment project both in Russia and internationally.

The construction of the main segment of the TEA NEXT project is expected to start in 2022.

By 2025, the operating company plans to launch a set of brand new fiber optic rental services to help Russian and international companies set up communications lines throughout the entire country geography and along the Europe-Asia transit.