Russia Telecommunications Report Q1 2013
Business Monitor International, January 2013, Pages: 139
BMI View:
The Russian telecoms market is the largest in Central and Eastern Europe, with high levels of penetration in mobile, fixed-line and increasingly broadband services. There are major international operators in mobile and fixed line including MTS, VimpelCom, MegaFon, Rostelecom and Tele2 - as well as competition in the wireline segment from ER-Telecom. Competition between these operators has helped to expand the reach of telecoms services and drive down prices. Meanwhile, competition has also contributed to advances in technology, with higher capacity broadband (both wireless and wireline) a key developmental trend in the market as operators roll out LTE, fibre and associated pay-TV services.
Key Data:
New data from MTS indicate that smartphones have expanded more rapidly than previously expected,
with smartphone penetration reaching 26.7% at the end of June 2012. This creates a rapidly expanding market for wireless data services and VAS content.
Broadband subscriptions continued to expand rapidly, with total wireline subscriptions increasing 16.4%
y-o-y to reach 20.277mn at the end of June 2012, equal to a penetration rate of 14.4%. While growth remains robust, it is notably down from 31.2% y-o-y growth to June 2011. BMI believes the market has slowed due to saturation in high-income markets and increasing competition from mobile broadband services with investment in 3.5G and 4G LTE services.
Key Trends And Developments:
In late November 2012, MegaFon completed the listing of 15.2% of its shares on the Moscow and London stock exchanges. TeliaSonera received US$1.3bn in exchange for diluting its 35.6% interest to 25%. The offering raised US$1.9bn and MegaFon plans to use half of the proceeds to repay or refinance existing debt. The IPO had been delayed earlier in 2012 due to market conditions and then by the withdrawal of Goldman Sachs from lead organiser due to corporate governance concerns. The concerns arose because the deal, which allowed Usmanov to merge his MegaFon holding with Yota, required the creation of a new investment vehicle to take control of 100% of Scartel and 50%
plus one share of MegaFon. The new vehicle is 82% owned by Usmanov's AF Telecom, with the remainder owned by Scartel's prior shareholders Telconet Capital and Rostekhnologii - the state-owned technology company.
In October 2012 MTS announced it would acquire 25% of the domestic financial institution MTS Bank for around GBP100mn (US$160mn). The two share a common shareholder in Sistema but MTS now holds a direct stake enabling it to develop its financial services strategy further by accessing the bank's licences and expertise. MTS is reportedly targeting 5% of net income to be derived from financial services by 2017. BMI believes MTS to have a strong basis for success in Russia's nascent m-banking market where traditional financial service penetration is low, as is trust in banks.
BMI Industry View 7
Russia - Q1 2013 7
SWOT 9
Mobile SWOT Analysis - Q1 2013 9
Wireline SWOT Analysis - Q1 2013 11
Political 13
Economic 14
Buisness Environment 15
Industry Forecast 16
Mobile - Q1 2013 16
Table: Telecoms Sector - Mobile - Historical Data & Forecasts, 2010-2017 16
Mobile ARPU - Q1 2013 18
Table: Monthly Blended ARPU (RUB) Forecast, 2010-2017 18
Fixed Line - Q1 2013 19
Table: Telecoms Sector - Fixed Line - Historical Data & Forecasts, 2010-2017 19
Internet - Q1 2013 21
Table: Telecoms Sector - Internet - Historical Data & Forecasts, 2010-2017 21
Industry Risk Reward Ratings 23
CEE Risk/Reward Ratings 23
Table: Central And Eastern Europe Risk/Reward Ratings, Q113 27
Russia - Q1 2013 28
Market Overview 30
Mobile - Q1 2013 30
Regional Perspective 30
Table: Russia Mobile Market Regional Comparisons, 2011 31
Key Developments 31
Mobile Growth 32
Market Share And Net Additions 34
Table: Russian Mobile Market, Q312 36
Subscription Mix 36
Usage (ARPU/MOU) 37
Table: Market Share Of VAS (%) 40
MVNOs 41
Networks 42
Table: Mobile Contract Wins 47
Mobile Content/Value Added Services 48
Table: Value-Added Services Timeline 51
Mobile Operator Tables 52
Table: Russia Mobile Market Overview 52
Table: MTS 52
Table: MegaFon 53
Table: VimpelCom 54
Table: Tele2 55
Table: Rostelecom 56
Mobile Regional Content 57
Data Heavy Content Places Networks In Spotlight 59
Fixed Line - Q1 2013 61
Broadband - Q1 2013 66
Table: Wireline Developments, 2009-2011 80
Industry Trends And Developments 81
Industry Trends And Developments 81
Regulatory Development 85
Regulatory Development 85
Table: Russia - Regulatory Bodies & Their Responsibilities 85
Competitive Landscape 92
Competitive Landscape - Q1 2013 92
Table: Key Players In The Russian Telecoms Sector 92
Company Profile 93
Rostelecom - Q1 2013 93
Table: Rostelecom Revenue By Service (RUBmn) 96
Table: Rostelecom Subscriptions By Service And Geography ('000), Q312 97
Mobile TeleSystems (MTS) - Q1 2013 100
VimpelCom - Q1 2013 107
MegaFon - Q1 2013 116
Regional Overview 125
Ericsson Nikola Tesla 125
Business Divisions 125
Table: Revenue By Business Segment (HRK '000) 125
Financial Performance 125
Geographical Performance 126
Table: Revenue By Geography (HRKmn) 126
Domestic Market 126
Export Markets 127
Ericsson Market 128
Outlook 128
Table: Key Contracts, 2011-2012 129
Demographic Forecast 130
Russia Demographic Data 130
Table: Russia's Population By Age Group, 1990-2020 ('000) 131
Table: Russia's Population By Age Group, 1990-2020 (% of total) 132
Table: Russia's Key Population Ratios, 1990-2020 133
Table: Russia's Rural And Urban Population, 1990-2020 133
Glossary 134
Glossary 134
Table: Glossary Of Terms 134
Methodology 136
Methodology 136
Table: Key Indicators For Telecommunications Industry Forecasts 136
Telecoms Business Environment Ratings 137
Table: Ratings Indicators 138
Table: Weighting Of Indicators 139
Company Profile
Rostelecom - Q1 2013
Mobile TeleSystems (MTS) - Q1 2013
VimpelCom - Q1 2013
MegaFon - Q1 2013
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