2013 Russia - Telecoms, IP Networks, Digital Media and Forecasts

Publication Overview

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..

Companies covered in this report include:

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

Researcher:- Henry Lancaster
Current publication date:- June 2013 (12th Edition)

Executive Summary

Network deals help extend LTE services in Russia

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 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.

Table of Contents

  • 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

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