2015 Russia - Telecoms, Mobile, Broadband and Digital Media - Statistics and Analyses

Russia commits to improving IT services to 37 million rural citizens

The Russian telecom market is the largest in Europe, supported by a population of about 147 million. The market is dominated by the western regions where the main cities and economic centres are concentrated. All sectors have been liberalised, with competition most prevalent in Moscow. The network provider Rostelecom, having absorbed regional operators in 2011, has now merged its mobile business with Tele2 Russia, which launched mobile services in the important Moscow market in October 2015.

The government is investing billions of Rubles in a 200,000km telecom network which will provide a 10Mb/s broadband service to thousands of underserved villages. Rostelecom has been contracted to undertake and manage the work. Russia has also emerged as one of Europe’s fastest growing markets for fibre-based broadband, with Rostelecom’s own fibre broadband access network covering more than 30 million premises by December 2015, and with fibre making up more than half of its broadband subscriber base.

Russia also has the largest mobile market in Europe, with the number of subscriptions approaching 250 million. Mobile SIM card penetration is high, at around 175% by early 2016, although actual mobile user penetration is lower due to the popularity of multiple SIM card use. Several mobile network operators offer services, although the market is dominated by only four: MTS, VimpelCom, Tele2 Russia and MegaFon. Competition in the key markets of Moscow and St Petersburg is fierce, due to the size of the cities’ populations and the high concentration of wealth there.

The deployment of HSPA and LTE networks presents a new growth opportunity through mobile broadband and data services, which make up a growing proportion of overall mobile revenue.

Growth in the fixed-line broadband sector began to stall in 2013 in response to higher penetration. Nevertheless, incumbent and alternative telcos continue to upgrade infrastructure as part of a general trend for bundled services and a focus on fibre. Much of the copper network is of poor quality, while there remains considerable need to invest in infrastructure covering a large number of regional towns which still lack mobile or internet access.

This report provides an overview of Russia’s fixed-line telecom and IT markets, including information on key regulatory developments and an assessment of telcos’ financial and operating data and strategies. The report also covers the broadband market, assessing the status of the DSL, cable and fibre sectors as well as developments in network infrastructure. The mobile voice and data markets are also covered, including regulatory measures, profiles of the major mobile operators and their financial and operational statistics, and a review of technologies including LTE and 5G.

Key developments:

• Rostelecom merges with Tele2 Russia, extends LTE services;
• Rostelecom appointed the sole universal telecom services provider, contracted to develop telecom network offering improved services to 13,600 villages;
• MTS and VimpelCom agree on shared spectrum to expand LTE across 20 regions;
• MTS secures national licence in 2.6GHz spectrum auction;
• VimpelCom aiming to halt 3G investment by late 2016;
• MegaFon planning to spin off towers infrastructure into a separate company;
• Ericsson and MTS sign agreement to develop 5G services by 2018;
• Ministry of Communications removes restrictions on IMS, allowing for national VoLTE services;
• Rostelecom’s fibre broadband access network reached more than 30 million premises by end-2015;
• Moscow City Telephone Network with 700,000 on its GPON network;
• Fibre representing 52% of Rostelecom’s total broadband subscriber base
• RUB3.1 billion investment for satellite broadband in remote areas; mobile internet subscriber base reaches 96 million;
• MTG sells Russian pay-TV business;
• Report update includes the regulator’s market data to September 2015, telcos’ financial and operating data to Q3 2015, recent market developments.

Companies mentioned in this report:

TransTeleCom, VimpelCom, ER-Telecom, MTS, Rostelecom, PeterStar, MegaFon, Tele2 Russia, Skylink, Volga Telecom, SMARTS Group, Uralsvyazinform, Synterra Telecom, Comstar, Summa Telecom, MetroMAX, Yota, Virgin Connect, Enforta, Golden Telecom, Mostelecom, Akado Group, NTV, Ren TV, CTC Media, TV Radio Company.