5G is the next generation cellular technology with download speeds stated to be 10 to 100 times faster than the current 4G LTE networks.
It comes as some Western countries, led by the USA, have blocked the Chinese firm on concerns it poses a national security risk.
The deal calls for MTS and Huawei to jointly develop 5G networks in Russia, MTS said in a statement.
Huawei has faced intense global scrutiny in recent months, and this has affected stock price significantly.
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Huawei's Guo Ping, one of the company's chairmen on rotation, was quoted in the statement as saying he was "very happy" with the new agreement "in an area of strategic importance like 5G".
Huawei has filed last week a "motion for summary judgment" in its legal lawsuit challenging the United States law constitutionality banning its federal agencies from purchasing Huawei products. This led U.S. Commerce Department to restore Huawei's ability to maintain its network, according to a 90-day temporary general license issued by federal officials. Several western countries have acted against Huawei taking a leaf out of the U.S. position. The US government's actions also make it significantly harder for Huawei to source components for its devices.
"We remain concerned that if the USA export ban on Huawei remains in place for some time, and is even extended to other Chinese tech companies, it will be very hard for China to build 5G in scale", Jefferies said in a note.
The Ministry granted the 5G licenses to the nation's major three telecom carriers - China Mobile, China Telecom and China Unicom - as well as the state-owned China Broadcasting Network Corp, reports the China Daily. The Trump administration added the company to its "entity list".
China on Thursday gave its major state-owned companies the green light to start rolling out 5G services in its efforts to move ahead in the global race for setting up the super-fast telecommunications system, amid simmering tensions with the USA over technology and trade. Big technology companies like Google, Microsoft, and Qualcomm have already cut ties off with Huawei.