Russian billionaire Alisher Usmanov has finalised a deal to combine his Russian telecoms assets, merging the country’s second-largest mobile firm MegaFon with the state-backed LTE network, Scartel.

Usmanov has created a new holding company that will own 100 percent of Scartel and 50 percent of MegaFon.

The company will be 82 percent owned by Usmanov's telecoms investment vehicle AF Telecom – with the remainder held by Scartel’s current shareholders, Telconet Capital and state-backed Russian Technologies.

In a press release, the companies involved said the merger would speed up the rollout of LTE services in Russia, and reduce operating costs.

AF Telecom took majority control (50 percent plus one share) of MegaFon in April and plans to list the operator in London later this year.

MegaFon was also one of four operators awarded LTE spectrum by the Russian regulator last month, which means – with the addition of Scartel – Usmanov now has access to huge swathes of next-generation spectrum in the country.

Scartel’s Yota – a former WiMAX operator – was transformed last year into a JV between MegaFon, MTS, VimpelCom and national broadband operator Rostelecom to build a shared LTE network. Several of the operators involved are reportedly now looking at launching LTE outside of the arrangement, though it is thought that Yota will still need to offer wholesale access to rivals following its merger with MegaFon. 

MegaFon inked a deal with Yota in February 2012 to use the latter’s LTE spectrum, enabling it to become the first of the big three operators to launch commercial 4G services (Yota has access to MegaFon’s network for its own operations in return).

The Russian number-two subsequently switched on LTE networks in Moscow, Krasnodar and Novosibirsk and Sochi, the venue for the Winter Olympics in 2014. It plans to go live in at least four more cities by year-end.