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Russia’s third largest mobile operator MegaFon may enter the Chinese mobile telecommunication market, a market source said, “Business” daily reported on Tuesday.

MegaFon may start operations in China as a mobile virtual network operator (MVNO), the source said, the daily reported.

The company refused to comment on the rumor, the daily reported.

Earlier in December, Boris Antonyuk, deputy IT and telecommunications minister, said that his ministry was holding negotiations with China’s telecom regulator about a Russian mobile operator’s entry into the Chinese market, the daily reported.

Under current Chinese legislation, foreign operators are allowed to own up to 35% in joint ventures in China and the cap is expected to increase to 49% in December 2007, the daily reported.

In March, Vladimir Yevtushenkov, the owner of major Russian holding AFK Sistema, said that the holding may create a joint venture with a Chinese company to provide mobile services. Sistema controls MegaFon’s rival, Russia’s largest mobile operator Mobile TeleSystems (MTS).

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