2012 Russia - Telecoms, IP Networks, Digital Media and Forecasts

Telcos and regulator step up a gear for national broadband infrastructure

BuddeComm’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 markets in one of Europe’s largest and most competitive markets. It includes the regulator’s 2011 market data, telcos’ financial and operating data to Q1 2012, and market developments into mid-2012.

Telecom market overview

Supported by palpable economic recovery during the last two years, Russia’s telecom sector is expected to grow 2.5% in 2012. The market has undergone significant recent changes since Rostelecom in 2011 absorbed the seven regional operators to become the dominant national player. Operators have shown a readiness to invest in networks, and expand their business portfolios, in recent quarters. This is in contrast to many European players which have been affected by declining revenue, and lower investment potential.

Broadband market

Russia has a two-tiered market, with Moscow and St Petersburg enjoying more intense infrastructure-based competition, but with the regions’ broadband penetration rising on the back of new network deployments, growing disposable incomes, and rising PC use. The market has shown substantial growth in recent years, and holds much potential given the size of the potential subscriber base: the market is expected to be worth some €3.8 billion by 2013.

Mobile market

Russia also has the largest mobile market in Europe. A number of mobile network operators exist although three major operators (MTS, VimpelCom and MegaFon) dominate. These have expanded nationally through acquisitions of smaller regional service providers. Given the high penetration rate, future revenue growth will be derived from mobile data services based on 3G networks and the deployment of networks based on HSPA+ and LTE technologies. The ‘Big Three’ MNOs have collaborated to expand LTE networks to numerous cities, in addition to serving as MVNOs on Yota’s network.

Key telecom parameters – 2010; 2013

(Source: BuddeComm)

Market Highlights

• About half of households were connected with FttB by mid-2012. The share of PON and FttB technologies may increase by an average 4% annually, reaching 65% of households by 2015.
• ASO taking place regionally, t to be completed by 2015. Siberia and the Far East were the first to receive DTTV transmissions.
• MTS and VimpelCom have begun construction of a 4,500km fibre infrastructure to support their 3G and LTE services. The network, expected to be completed by the end of 2012, will require an investment of around RUB2 billion.
• Cable broadband is developing well, with ER-Telecom’s total subscriber base growing 44% in 2011.
• Although the government in 2011 approved a RUB1.1 billion project to improve satellite broadband infrastructure, operators including STV and Tricolor TV withdrew from the market in 2012 to focus on pay TV. The development of LTE in regional areas will further undermine satellite broadband in coming years, as connectivity becomes increasingly mobile-based.

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.