Russia - Telecoms, IP Networks, Digital Media and Forecasts

This report provides a comprehensive overview of trends and developments in Russia’s telecommunications market. The report analyses the mobile, internet, broadband, digital TV and converging media sectors.

Subjects include:

- Market and industry analyses, trends and developments;
- Facts, figures and statistics;
- Industry and regulatory issues;
- Infrastructure;
- Major Players, Revenues, Subscribers, ARPU, MoU;
- Internet, VoIP, IPTV;
- Mobile Voice and Data Markets;
- Broadband (FttH, DSL, cable TV, wireless);
- Convergence and Digital Media;
- 3G subscriber and mobile ARPU forecasts to 2015;
- Broadband market forecasts for selective years to 2020.

Key Developments:

- ER Telecom completes first stage of backbone network
- Rostelecom to modernize infrastructure for US$10 billion over ten years
- Polarnet to build US2 billion trans-Arctic cable
- government plans to sell stake in Rostelecom by 2014, MTS and VimpelCom sign LTE network construction deal
- Rostelecom given Ministry of Defence clearance to develop LTE in the 2.3GHz band
- MegaFon completes IPO
- MNOs join forces for m-commerce platform
- VimpelCom merges with subsidiaries
- MTS awarded Moscow’s first LTE license
- MNP bill clears second parliamentary reading
- Roskomnadzor cancels large number of radio frequency permissions
- government withdraws DVB-H funding
- MegaFon signs partnership deal with Telefónica
- 900MHz used for 3G following technological neutrality ruling
- four licensees receive 800MHz spectrum for LTE
- Tele 2 Russia sold to VTB Group
- MTS migrates DSL subscribers in Moscow to GPON
- MTS and VimpelCom invest RUB2 billion on 4,500km fibre infrastructure
- Moscow Metro tenders for WiFi contract across its network
- Aeroflot extends in-flight WiFi service
- regulator announces regional WiMAX licensees
- government approves RUB3.1 billion investment for satellite broadband in remote areas
- mobile internet subscriber base reaches 63.5 million
- STV and Tricolor TV withdraw from broadband market
- regulator’s market data to September 2012
- telcos’ financial and operating data to Q1 2013
- market developments to May 2013.regulator’s market data to June 2012
- telcos’ financial and operating data to Q1 2013
- market developments to May 2013. SHOW LESS READ MORE >

1. Key Statistics

2. Telecommunications Market
2.1 Overview of Russia’s telecom market

3. Regulatory Environment
3.1 History
3.1.1 Telecommunications Law 2003
3.2 Regulatory authority
3.3 Telecom sector liberalisation in Russia
3.3.1 Privatisation
3.3.2 Interconnection
3.3.3 Access
3.3.4 Carrier selection
3.3.5 Universal service obligation
3.3.6 Calling Party Pays (CPP) legislation
3.3.7 Local call tariffs

4. Fixed Network Operators
4.1 Market overview
4.2 Svyazinvest
4.2.1 Regional operators
4.3 Rostelecom
4.4 Central Telegraph
4.5 VimpelCom/Golden Telecom/Beeline
4.6 Multiregional Transit Telecom
4.7 TransTeleCom (TTK)
4.8 PeterStar
4.9 ER-Telecom
4.10 MTS

5. Telecommunications Infrastructure
5.1 Introduction
5.2 Local
5.2.1 Central Telegraph
5.2.2 MTS
5.2.3 Golden Telecom
5.2.4 PeterStar
5.3 National
5.3.1 Golden Telecom
5.3.2 Rostelecom
5.3.3 TransTeleCom
5.3.4 ER Telecom
5.4 Satellite networks
5.5 Telecoms and IT

6. Internet Market
6.1 Russia’s emerging internet society
6.2 Regulatory developments

7. Broadband Market
7.1 Overview
7.2 Fixed broadband statistics
7.3 Asymmetrical digital subscriber line (ADSL)
7.3.1 Rostelecom
7.3.2 MTS
7.3.3 VimpelCom
7.4 Cable modems
7.5 Fibre-to-the-home (FttH) networks
7.5.1 Golden Telecom
7.5.2 MTS
7.5.3 Other operators
7.6 Broadband powerline (BPL)
7.7 Wireless broadband
7.7.1 WiFi
7.7.2 WiMAX
7.7.3 Internet via satellite
7.7.4 Mobile broadband
7.7.5 Cloud computing
7.7.6 eHealth developments

8. Digital Media
8.1 Overview of broadcasting market
8.1.1 Free-to-air (FTA)
8.2 Digital TV
8.2.1 Broadband TV (IPTV)
8.2.2 Cable TV (CATV)
8.2.3 Satellite-based digital pay TV developments
8.2.4 Digital terrestrial TV (DTTV)

9. Mobile Communications
9.1 Overview and analysis of Russia’s mobile market
9.1.1 Mobile statistics
9.2 Regulatory issues
9.2.1 Mobile Number Portability (MNP)
9.2.2 3G licences
9.2.3 800MHz spectrum
9.2.4 1800MHz spectrum
9.2.5 Calling Party Pays (CPP) legislation
9.2.6 Roaming
9.2.7 Infrastructure sharing
9.3 Mobile technologies
9.3.1 Digital
9.3.2 Third Generation (3G) mobile
9.4 Major mobile operators
9.4.1 Mobile TeleSystems (MTS)
9.4.2 VimpelCom
9.4.3 MegaFon
9.4.4 Tele2 Russia
9.4.5 SMARTS Group
9.4.6 Uralsvyazinform
9.4.7 Rostelecom
9.4.8 Mobile Virtual Network Operators (MVNOs)
9.5 Mobile voice services
9.5.1 Prepaid
9.5.2 Satellite mobile
9.5.3 Voice-over-LTE (VoLTE)
9.6 Mobile data services
9.6.1 SMS/MMS
9.6.2 General packet radio service (GPRS)
9.6.3 Enhanced data for GSM evolution (EDGE)
9.6.4 High-speed packet access (HSPA)
9.6.5 Long-term Evolution (LTE)
9.6.6 Mobile broadband
9.6.7 Mobile TV
9.7 Mobile content and applications
9.7.1 Overview
9.7.2 M-commerce
9.7.3 Machine-to-Machine (M2M)

10. Forecasts
10.1 Scenario 1 – higher fixed broadband subscriber growth
10.2 Scenario 2 – lower fixed broadband subscriber growth
10.3 Notes on scenario forecasts

Table 1 – Country statistics Russia – 2012 (e)
Table 2 – Telephone network statistics – 2012 (e)
Table 3 – Internet user statistics – 2012 (e)
Table 4 – Broadband subscriber statistics – 2012 (e)
Table 5 – Mobile statistics – 2012 (e)
Table 6 – National telecommunications authority
Table 7 – Telecom revenue and annual growth (€) – 2004 - 2012
Table 8 – Telecom revenue by operator (RUB) – 2003 - 2013
Table 9 – Telecom sector capital expenses– 2009 - 2013
Table 10 – Rostelecom financial data – 2008 - 2010
Table 11 – Rostelecom (post-merger) financial data – 2008 - 2013
Table 12 – Rostelecom subscriber data – 2008 - 2013
Table 13 – VimpelCom financial data (Russia) – 2007 - 2013
Table 14 – VimpelCom subscribers by sector (Russia) – 2008 - 2013
Table 15 – ER-Telecom financial data – 2005 - 2011
Table 16 – ER Telecom subscribers – 2007 - 2011
Table 17 – MTS financial data (Russia) – 2009 - 2012
Table 18 – Historic - Fixed lines in service and teledensity – 1998 - 2004
Table 19 – Fixed lines in service and teledensity – 2005 - 2013
Table 20 – Russian IT market revenue – 2005 - 2012
Table 21 – Historic - Internet users and penetration rate – 1999 - 2004
Table 22 – Internet users and penetration rate – 2005 - 2014
Table 23 – Fixed broadband subscribers – 2003 - 2013
Table 24 – Fixed broadband penetration – 2003 - 2014
Table 25 – Fixed broadband subscribers by ISP in Russia – 2010 - 2012
Table 26 – Moscow fixed broadband subscribes by ISP – 2010 - 2012
Table 27 – Fixed broadband market share by operator (Russia) – 2010 - 2012
Table 28 – Rostelecom fixed broadband subscribers – 2008 – 2013
Table 29 – Rostelecom broadband ARPU – 2008 – 2013
Table 30 – MTS fixed broadband subscribers – 2009 - 2012
Table 31 – Comstar annualised residential fixed broadband monthly ARPU – 2009 - 2011
Table 32 – VimpelCom fixed broadband subscribers – 2008 - 2011
Table 33 – ER-Telecom subscribers by sector – 2011
Table 34 – ER-Telecom broadband subscribers – 2010 - 2012
Table 35 – ER-Telecom revenue by sector – 2011
Table 36 – VimpelCom FttB subscribers – 2010 – 2013
Table 37 – VimpelCom FttB revenue – 2010 – 2013
Table 38 – Estimated pay TV households – 2015
Table 39 – TV advertising revenue – 2004 - 2012
Table 40 – CTC Media financial data – 2004 - 2012
Table 41 – MTS pay TV subscribers – 2009 - 2012
Table 42 – Estimated total DTTV implementation cost – 2010 - 2015
Table 43 – Historic - Mobile subscribers and penetration rate – 1995 - 2004
Table 44 – Mobile subscribers and penetration rate – 2005 - 2013
Table 45 – Mobile market share – Mar 2013
Table 46 – Mobile service revenue – 2003 - 2013
Table 47 – MTS mobile financial data (Russia) – 2004 - 2012
Table 48 – MTS Russia subscribers – 2004 - 2013
Table 49 – MTS Russia operational data, SAC, MOU, churn and ARPU – 2001 - 2012
Table 50 – MTS Russia annualised VAS as proportion of total ARPU – 2004 - 2012
Table 51 – VimpelCom mobile subscribers (Russia) – 2005 - 2013
Table 52 – VimpelCom ARPU and MOU (Russia) – 2007 - 2013
Table 53 – VimpelCom group financial data – 2007 - 2013
Table 54 – VimpelCom mobile financial data (Russia) – 2007 - 2013
Table 55 – MegaFon consolidated financial data – 2007 - 2013
Table 56 – MegaFon mobile revenue – 2005 - 2013
Table 57 – MegaFon mobile subscriber data – 2008 - 2013
Table 58 – Tele2 financial data – 2007 - 2012
Table 59 – Tele2 subscribers – 2007 - 2013
Table 60 – SMARTS Group subscribers – 2009 - 2013
Table 61 – SMARTS Group financial data – 2006 - 2010
Table 62 – SMARTS mobile revenue by type – 2010 - 2011
Table 63 – Rostelecom mobile subscribers – 2010 - 2013
Table 64 – Rostelecom mobile revenue – 20108 - 2013
Table 65 – VolgaTelecom mobile revenue – 2007 - 2010
Table 66 – VolgaTelecom mobile subscribers – 2007 - 2010
Table 67 – VolgaTelecom MOU and ARPU – 2007 - 2010
Table 68 – MTS and VimpelCom prepaid subscribers – 2004 - 2011
Table 69 – Mobile VAS as proportion of total mobile revenue – 2002 - 2013
Table 70 – Mobile VAS market share by operator – 2007 - 2012
Table 71 – Data revenue by type – 2008 - 2012
Table 72 – Mobile broadband subscribers and penetration rate – 2006 - 2012
Table 73 – Forecast fixed broadband subscribers – higher growth scenario – 2010 - 2013; 2020
Table 74 – Forecast fixed broadband penetration – higher growth scenario – 2010 - 2013; 2020
Table 75 – Forecast fixed broadband subscribers – lower growth scenario – 2010 - 2013; 2020
Table 76 – Forecast fixed broadband penetration – lower growth scenario – 2010 - 2013; 2020

Chart 1 – Telecom revenue by operator (RUB) – 2003 - 2013
Chart 2 – Rostelecom financial data – 2008 - 2013
Chart 3 – Rostelecom subscriber data – 2008 – 2013
Chart 4 – VimpelCom financial data – 2007 - 2013
Chart 5 – VimpelCom subscribers by sector (Russia) – 2008 - 2013
Chart 6 – ER-Telecom financial data – 2005 - 2011
Chart 7 – ER Telecom subscribers – 2007 - 2011
Chart 8 – MTS financial data (Russia) – 2009 - 2012
Chart 9 – Fixed lines in service and teledensity – 2002 - 2013
Chart 10 – Internet users and penetration rate – 2005 - 2014
Chart 11 – Fixed broadband subscribers and annual change – 2003 - 2013
Chart 12 – TV advertising revenue – 2004 - 2012
Chart 13 – Mobile subscribers and penetration rate – 2002 - 2013
Chart 14 – MTS mobile financial data (Russia) – 2004 - 2012
Chart 15 – VimpelCom mobile subscribers (Russia), annual change – 2005 - 2013
Chart 16 – VimpelCom group financial data – 2007 - 2013
Chart 17 – MegaFon financial data – 2007 - 2013
Chart 18 – Tele2 financial data – 2007 - 2012
Chart 19 – Tele2 subscribers, annual change – 2007 - 2013
Chart 20 – SMARTS Group financial data – 2006 – 2010
Chart 21 – VolgaTelecom mobile revenue – 2007 - 2010
Chart 22 – VolgaTelecom mobile subscribers – 2007 - 2010

Network deals help extend LTE services in RussiaBuddeComm’s annual publication, Russia - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media sectors of one of Europe’s largest markets. The report includes the regulator’s market data to September 2012, telcos’ financial and operating data to Q1 2013 and market developments to June 2013.

Economic background

Until 2009 Russia experienced more than a decade of strong GDP growth, averaging about 7% per annum. The global financial crisis led to a fall in GDP for 2010 but the economy has since outshone most others in the region, partly due to the country’s reliance on commodity exports. Growth of 3-4% is anticipated for 2013 and 2014, so increasing consumers’ purchasing power.

Telecom market overview

Supported by the largest population in Europe, Russia’s telecom market has enormous potential, particularly in the broadband sector which remains relatively underdeveloped. The fixed-line sector has undergone substantial changes following the restructure and consolidation of Svyazinvest’s holdings and the merger of interregional incumbent operators into Rostelecom. The government’s plan to divest itself of its stake holding in Rostelecom by 2014 will spur new challenges and changes and encourage effective competition in the local fixed-line market.

Mobile market

The mobile market has one of the highest penetration rates in Europe. With few limited growth opportunities for voice services, operators have concentrated on mobile data and investments in LTE networks. Russia’s LTE market is partly operated through Yota managing a national network, with operators offering services as MNOs, though separate networks have also been built to service a growing number of cities. Like their Western European counterparts, the major players have also diversified through merger and acquisition activity. Number portability, expected to become available from the end of 2013, will further encourage competition and improve service offerings as operators struggle to reduce churn and retain customers.

Key telecom parameters – 2010; 2013

Sector | 2010 | 2013 (e) |

Subscribers by sector (thousand): |

Fixed broadband subscribers | 15.37 | 23.1 |
Mobile phone | 220 | 232 |
Fixed-line telephony | 44.6 | 41.1 |
Penetration by sector: |
Fixed broadband | 13% | 17% |
Mobile | 154% | 159% |
Fixed-line | 32% | 27% |

(Source: BuddeComm)

Market Highlights

The number of mobile internet subscribers with access via smartphones grew 88% in 2012, while average monthly traffic using a smartphone reached broached 300MB. Higher data use is helping to stimulate the enormous investment in LTE networks across the country.

The long-delayed MNP facility should be implemented by the end of 2013, costing about RUB100 to port a number. The service should encourage MNOs to improve offerings to customers, and so reduce churn.

Government subsidies to provide affordable satellite internet to remote areas has been suspended after the state considered it unprofitable.
WiFi services are becoming increasingly ubiquitous, with Aeroflot expected to provide WiFi on many aircraft by the end of 2013, and the Moscow Metro preparing for WiFi services across its network by late 2014. Russian Railways is also quadrupling the number of stations equipped with WiFi access.
The number of Russians using the internet has climbed from about 20% in 2006 to 60%. Almost half of all citizens use the internet daily, compared to 5% in 2006.Russia’s broadband market has shown substantial growth in recent years as users benefit from rising PC penetration, more affordable offerings and a wider choice of services. The sector holds much potential given the size of the market, which is expected to be worth some €3.8 billion in 2013.This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Russia.

It provides further information on:

- Market liberalisation and regulatory issues;
- The impact of the global economic crisis;
- Telecoms operators – privatisation, acquisitions, new licences;
- Mobile data market developments in coming years in light of spectrum auctions and new license awards;
- 3G developments, regulatory issues and technologies including HSPA and LTE;
- Broadband migration to an FttH architecture;
- Historical and current subscriber statistics and forecasts;ARPU statistics and forecasts.

Data in this report is the latest available at the time of preparation and may not be for the current year.

- Comstar
- Comstar
- ER-Telecom
- Enforta
- Golden Telecom
- MTS
- MegaFon
- MetroMAX
- PeterStar
- Rostelecom
- SMARTS Group
- Skylink
- Summa Telecom
- Synterra Telecom
- Tele2 Russia
- TransTeleCom
- Uralsvyazinform
- VimpelCom
- Virgin Connect
- Volga Telecom
- Yota