Telecommunications market in Russia 2010

The 3^rd edition of the report delivers the most current and comprehensive overview of the Russian telecommunications market. It includes analyses and forecasts for the entire telecoms market as well as its individual segments. The forecasts are provided for the three vertical segments of the telecoms industry: mobile telephony, fixed-line telephony as well as data transmission and internet services provision.
 
The report, prepared in accordance with the PMR MarketInsight methodology,is based on PMR’s own data, analysis and forecasts, as well as interviews with experts on the telecommunications market and public domain sources.
 
Forecasts
The forecasts presented in the report were prepared using a model employing historical data on the telecommunications market and its segments, macroeconomic data (both historical and forecast), and information on trends in the telecommunications sector and its various segments.
Other factors taken into account in formulating the forecasts were:

• trends observed in other countries,
• results noted and plans expressed by key players in particular market segments,
• the impact of new players to appear on the Russian telecommunications market.

The report consists of four major sections:

• Telecommunications market in Russia
• Mobile telephony market
• Fixed-line telephony market
• Data transmission and internet services provision

The study is an indispensable source of business information for any company active in the market.

From this report you will learn:

• What are the barriers and stimuli to the development of the Russian telecoms market?
• What is the growth potential of market segments over the next few years?
• What is the development perspective for 3G telephony in Russia?
• Are the future prospects for MVNOs positive?
• What are the key market trends in the fixed-line telephony segment?
• How theVoIPinfluences the fixed-line segments in Russia?
• What is the popularity of particular internet access technologies in Russia?
• Are there development perspectives for WiMAX?
• What is the forecasted number of internet and broadband internet access subscribers by technologies in 2010-2014?

Who should read the Telecommunications market in Russia 2010 report:

• top management and marketing departments of companies either already active or considering launching operations on the telecommunications market in Russia,
• cable TV operators,
• consulting, research and analytical firms, brokerage houses, banks and investment funds,
• the major IT companies,
• government institutions, embassies and sector organisations.

Extract from this report

• Among the specific characteristics of the Russian telecommunications market are the remaining significant regional differences in the development of the services and the gap between urban and rural areas of the country.
   
• Development of 3G networks is changing the landscape of Russian mobile telephony market. Operators from “Big Three” group got a new source of revenue from the development of mobile broadband internet which became the main application in 3G networks.
   
• Main trends on the ISP market in Russia in 2009 were the growth in numbers of those who use internet every day, growth of those who use the internet at home and growth of those with broadband (permanent) internet.

Market commentary by expert

The Russian telecoms market increased by 4% year-on-year in 2009. However, this is growth as measured in the local currency. Due to the strong weakening of the Russian ruble in the crisis period, in euro terms the market experienced a double digit decline. Among the specific characteristics of the Russian telecoms market have always been the significant regional differences in the development of the services and the gap between urban and rural areas of the country. Most significant is the difference in the ISP market segment. Moscow remains the biggest regional telecommunication market in Russia, accountable for almost one third of total industry revenues. The crisis and investment cuts of operators implemented in 2009 even strengthened the trend.

Nevertheless the crisis will not be here forever. Encouraged by the improvement of macroeconomic forecasts already in Q1 2010 telecom operators declared a recovery of their investment programmes and we expect that in 2011 this will impact positively on the industry. It is also clear that an area of further growth is in regional expansion and in the development of new services, including IP TV, broadband internet and different applications based on data transmission.

We should also keep in mind that Russian regulatory bodies and the government will continue to have a crucial impact on the market’s further development. One of their latest decisions was a condition that operators should use domestically produced equipment for the development of digital TV, WiMAX and LTE networks. Consequently, if the government launches planned tenders for LTE networks in 2010 this will definitely influence the level of investment of mobile operators.
 
Pawel Olszynka, IT&Telecom Head Analyst

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1. Methodology of the report p. 11

2. Executive Summary p. 15

3. Economic and demographic situation p. 25

4. Telecommunications market in Russia p. 31

   • Current market situation p. 31
   • Key trends, characteristics and events p. 35
   • Calendar of key market news and developments on the Russian telecommunications market between 2001 and H1 2010 p. 37
   • Key players in the telecommunications market p. 45
     • Consolidation of the telecommunications industry p. 46
   • Market transparency and business risk p. 48
     • State control p. 48
     • Corruption p. 49
     • Bureaucracy p. 49
     • Tax Law p. 49
   • Regulatory issues and the institutional environment p. 49
     • Russian Federal Law on Communications p. 49
     • Ministry of Mass Communications p. 51
     • Reform of Svyazinvest p. 51
     • Expansion of Russian telecommunications groups to the other countries p. 52
     • Reorganisation of Vimpelcom p. 52
     • Reorganisation of Megafon p. 53
   • Market development forecast for 2010-2014 p. 53
     • Key market trends to be visible in 2010-2014 p. 53
     • Recovery after the economic crisis p. 55
     • Market value forecasts 2010-2014 p. 56
   • Extra: Main capital groups on the Russian telecommunications market p. 59
     • Alfa Group p. 59
     • Sistema p. 60
     • Telecominvest 60
   • Extra: Satellite communications and positioning services p. 64

5. Wholesale telecommunications market p. 67

   • Traffic transmission, IP transit and line rental market p. 67
   • Leading operators on the wholesale telecoms market p. 70
     • Synterra p. 71
     • TTK (TransTelekom) p. 74
     • MTT p. 76
     • Start Telekom p. 77
   • Market development forecast for 2010-2014 p. 78
     • Key market trends to be visible in 2010-2014 p. 78

6. Mobile telephony market p. 81

   • Current market situation p. 81
   • Voice segment of mobile telephony market p. 83
   • Mobile non-voice and value-added services p. 84
   • Market structure p. 87
   • Key trends in the mobile market p. 90
     • Number of mobile telephony users and penetration p. 90
     • Pre-paid and post-paid subscribers p. 94
     • Business vs. individual users p. 95
     • Key market indicators (ARPU, AUPU, APPM, SAC, Churn) p. 96
     • Pricing of the mobile telephony services p. 100
   • Mobile handset market p. 102
   • Key players in the mobile market p. 104
     • Mobile TeleSystems p. 105
     • Vimpelcom p. 107
     • Megafon p. 110
     • Tele2 Russia p. 113
     • Smarts p. 115
   • Market development forecast for 2010-2014 p. 116
     • Key market trends to be visible in 2009-2011 p. 116
     • Acquisition of mobile handset retail p. 116
     • Promotion of end-user devices under own brand p. 117
     • Expansion of mobile operators in the fixed-line segment p. 118
     • Development of 3G networks p. 119
     • Development of MVNOs p. 119
     • Market value forecasts 2010-2014 p. 119

7. Fixed-line telephony market p. 123

   • Current market situation p. 123
   • Key trends in the fixed-line market p. 125
     • Fixed-line telephony penetration p. 125
   • Situation in particular market segments p. 127
     • Local telephony market p. 127
     • Internal zone, DLD and ILD market p. 129
     • Tariffs for fixed-line telephony services p. 134
   • Key players in the fixed-line market p. 136
     • Svyazinvest p. 136
     • MGTS p. 138
     • Rostelecom p. 139
     • CenterTelecom p. 140
     • Far East Telecom (Dalsvyaz) p. 142
     • North-West Telecom p. 143
     • SibirTelecom p. 145
     • Southern Telecommunications Company (Southern Telecom) p. 147
     • Uralsvyazinform p. 148
     • VolgaTelecom p. 150
   • Market development forecast for 2010-2014 p. 152
     • Key market trends to be visible in 2010-2014 p. 152
     • Market value forecasts 2010-2014 p. 154

8. ISP market p. 157

   • Number of internet users and penetration p. 158
   • Key trends on the ISP market p. 160
     • Wire internet access p. 162
     • Wireless internet access p. 164
     • Wire vs. wireless access p. 167
     • Institutional vs. household segment p. 169
     • Regional differences of the ISP market p. 172
     • Popularity of specific broadband technologies p. 175
   • Key players in the DLISP market p. 177
     • Comstar-UTS p. 182
     • Akado Group p. 185
     • SkyLink 186
     • Skartel (brand name Yota) p. 188
     • Prestij Internet (brand name Enforta) p. 189
     • ER-Telecom p. 190
   • Market development forecast for 2010-2014 p. 192
     • Key market trends to be visible in 2010-2011 p. 192
     • Market value forecasts 2010-2014 p. 200

9. List of graphs p. 207

10. List of tables p. 213

11. About PMR p. 215

12. Contact PMR p. 216

List of graphs

1. GDP growth, CPI and unemployment rate in Russia (%), 2003-2010f
2. Growth rate of disposal income in Russia (%), 2001-2010
3. Population in Russia (million) and growth (%), 2001-2009
4. Russian Federal Districts and their populations (millions and % of total), 2010
5. Population density in Russia by region (people per km2), 2009
6. Value (RUB bn) and growth rate (%) of the end user telecommunications market in Russia, 2001-2009
7. Value (RUB bn) of major segments of the end-user telecommunications services market in Russia, 2001-2009
8. Value (RUB bn) and share (%) of residence and institutional segments on the end user telecommunications market in Russia, 2009
9. Shares of the regions (%) in the value of telecommunications market in Russia, 2009
10. Value (RUB bn) and number of M&A deals in telecommunications sector in Russia, 2004-Q1 2010
11. Development perspectives of main telecom market segments in Russia, 2010- 2011f
12. Volume of the investments (RUB bn) in telecommunications industry in Russia and growth rate (%), 2006-2010
13. Investment budgets (RUB bn) of leading Russian telecom operators, 2008-2010
14. Value (RUB bn) and growth rate (%) of telecommunications market in Russia, 2009-2014
15. Value (RUB bn) and share (%) of main segments of telecommunications market in Russia, 2009 and 2014
16. Value (RUB bn) of major segments of the telecommunications market in Russia, 2009-2014
17. Comstar-UTS/MTS group
18. Megafon group
19. Svyazinvest Holding group
20. Vimpelcom group
21. Value (RUB bn) and growth rate (%) of wholesale telecommunications market in Russia, 2003-2009
22. Value (RUB bn) of line rental, interconnect and IP transit market in Russia, 2003-2009
23. Shares (%) of leading players on the line rental market in Russia, 2009
24. Synterra revenue structure (RUB bn and %) by services, 2009
25. Synterra revenue structure (%) by market segments, 2009
26. Value (RUB bn) of line rental, interconnect and IP transit market in Russia, 2009-2014
27. Value (RUB bn) and growth rate (%) of mobile telephony market in Russia, 2000-2009
28. Value (RUB bn) and growth rate of the voice segment of mobile telephony market in Russia, 2000-2009
29. Share (%) of non-voice services in the revenue of 3G mobile operators in Russia, Q4 2008/Q1 2009 - Q4 2009/Q1 2010
30. Value (RUB bn) and growth rate (%) of the mobile non-voice services market in Russia, 2001-2012
31. Shares of key sub-segments in the mobile
32. VAS market in Russia, Q1 2010 and Q4 2008
33. Share (%) of leading providers in the VAS market in Russia, 2009
34. Russian mobile market structure – shares of leading operators by the number of registered SIM cards (m), Q1 2010
35. Russian mobile market structure – shares of leading operators by revenue (RUB bn), 2009
36. Number of registered SIM cards (m) on the mobile telephony market in Russia and growth rate (%), 2000-2010
37. Number of total registered SIM cards (m), active SIM cards (m) and active users 3 (m) in Russia, 2005-2010
38. Mobile penetration (%) in Russia as measured by registered SIM cards, active SIM cards and actual number of users, 2005-2010
39. Growth rate (%) of registered SIM cards, active SIM cards and active users in Russia, 2008-2009
40. Mobile penetration (%) in Russia by the regions, 2008
41. Shares of pre-paid and post-paid subscribers (%) in the total number of SIM cards services by mobile telephony operators in Russia, 2000-2009
42. Volume shares (%) of mobile operators at the corporate users market in Russia*, 2009 and 2008
43. RUB ARPU growth rate (%, q-o-q) in Russia, Q1 2007-Q1 2010
44. Average monthly revenue per usrs (RUB) and growth rate (%) for the mobile telephony market in Russia, 2000-Q1 2010
45. ARPU (RUB) of leading mobile operators in Russia, 2009
46. Average usage per user per month (minutes) and growth rate (%) for the mobile telephony market in Russia, 2000-2009
47. Average price per minute (RUB) at the Russian mobile telephony market, Q1 2006-Q1 2010
48. Effective price per minute (Euro) of leading Russian mobile telephony operators, Q3 2009
49. Cost of mobile telephony basket in the different regions of Russia, H2 2009
50. Average cost of mobile telephony basket by operator in Russia, 2009
51. Number of new mobile handsets (m) sold in Russia and growth rate (%), 2000-2010
52. Shares (%) of leading mobile retailers in Russia, 2009
53. Market of smart phone and communicators in Russia, 2004-2009
54. Market of 3G phones in Russia, 2005-Q1 2010
55. The biggest mobile handset retailers in Russia, Q1 2010
56. Length (km) of backbone networks of leading mobile telephony providers in Russia, H1 2010
57. Number of SIM cards (m) and growth rate (%) in Russia, 2009-2014
58. Mobile penetration (%) in Russia, 2009-2014
59. Value (Rub bn) of voice and non-voice segments of mobile telephony market in Russia, 2009-2014
60. Value (Rub bn) and growth rate (%) of the end-user fixed line telephony market in Russia, 2001-2009
61. Value (Rub bn) and structure (%) of end-user fixed-line telephony market in Russia, 2009
62. Number of fixed lines (m) and growth rate (%) in Russia, 2000-2009
63. Fixed-line penetration (%) in Russia, 2000-2009
64. Fixed line penetration rate (%) in Russia by region, 2009
65. Value (Rub bn) and growth rate (%) of local telephony market in Russia, 2000-2009
66. Value share (RUB bn and %) of the institutional and household segments in local telephony market in Russia, 2009
67. Market share (%) of fixed-line telephony providers associated with Svyazinvest and MGTS in regional telephony markets in Russia, 2009
68. Value (Rub bn) and growth rate (%) of DLD /ILD / internal zone market in Russia, 2000-2009
69. Structure (Rub bn and %) of DLD/ILD/internal zone telephony market in Russia, 2008-2009
70. Share of VoIP traffic in DLD/ILD telephony traffic in Russia, 2007-2012
71. Value (RUB bn) and share (%) of corporate and household segments at the DLD/IDL/internal zone market in Russia, 2009
72. Market shares (%) of leading operators on DLD/ILD market in Russia, 2009
73. Average price per minute (RUB) for the DLD calls in Russia, 2004-2009
74. The operating area of regional companies belonging to Svyazinvest Holding, 2009
75. Segmentation (%) of households in Russia by telephone availability, 2010
76. Structure (%) of voice traffic in Russia, 2005-2010
77. Status of IP telephony projects in the corporate sector in Russia, 2009
78. Value (RUB bn) and growth rate (%) of the fixed telephony market in Russia, 2009-2014
79. Number of lines (m) of the fixed telephony market in Russia, 2009-2014
80. Value (RUB bn) and growth rate (%) of Russian ISP market, including both mobile and fix access, 2001-2009
81. Number (million) and growth rate (%) of internet users in Russia, 2001-Q1 2010
82. Internet penetration (%) in Russia, 2001-Q1 2010
83. Daily, weekly and monthly measurement of internet users in Russia (million), 2002-Q1 2010
84. Main places for access to the internet for Russian internet users (%), Q1 2010
85. Average speed of internet access in Russia, end of 2010f
86. Value shares (RUB bn) of broadband and dial up access in ISP market in Russia, 2001-2009
87. Number (‘000) and growth rate (%) of broadband internet subscribers in Russia, 2002-Q1 2010
88. Broadband internet penetration (%) in Russia, 2002-2010
89. Value (RUB bn) and growth rate (%) of mobile internet access market in Russia, . 2005-2010
90. Volume of data traffic (PB) and growth rate (%) in 3G and GSM networks of Russian mobile operators, 2007-2009
91. Number of locations covered by 3G networks by operator in Russia, May 2010
92. Value (RUB bn) and share (%) of fixed and mobile ISP market segments in Russia, 2008 and 2009
93. Share (%) of main internet access technologies and places in Russia, December 2009
94. Estimated share (%) of residential and business subscribers in the value of fixed broadband internet access market in Russia, 2004-2009
95. Key trends at the market of big companies (above $5,000 of monthly telecom spending) in Moscow, 2009
96. Changes of user behaviour on the residential ISP market in Russia, 2009
97. Internet penetration (%) in different regions of Russia, 2008-2009
98. Average monthly price for 1 mbps internet access for home users (RUB), February 2010
99. Average monthly price for 512 kbps internet access for home users (RUB), February 2009
100. Share (%) of main technologies at fixed broadband market in Russia by number of connections, end of Q3 2009
101. Number of cities of presence by the leading ISPs in Russia (except subsidiaries of Sviazinvest), Q1 2010
102. Number of fixed residential broadband subscribers (m) and share (%) of residential broadband market in Russia, end of 2009
103. Shares (%) of leading ISPs in Moscow market by the number of residential subscribers, Q1 2010
104. Shares (%) of leading ISPs in St. Petersburg market by the number of residential subscribers, 2009
105. Number of 3G modem users (m) and shares (%) of main operators in Russia, Q1 2010
106. Mobile internet revenue (RUB bn) and market share (%) of operators in Russia, 2009
107. Shares of mobile internet providers (%) in total volume of mobile internet data traffic in Russia, 2009
108. Number of households (m) which have PC and are connected to broadband internet in Russia, 2005-2012
109. Structure (%) of market capacity for wired internet connection in Russia and number (m) of households in each group, December 2008
110. Investments in the development of broadband internet by leading ISPs in Russia, 2008-2010
111. Investments in the development of 3G / WiMAX networks by leading operators in Russia, 2008-2010
112. Expected segmentation of internet users in Russia by type of access, 2011-2012f
113. Convergence at the Russian telecommunications market, 2010-2012f
114. Shares (%) of specific technologies by the number of pay TV subscribers and by revenue of pay TV services in Russia, 2009
115. Number (million) and growth rate (%) of internet users in Russia, 2009-2014
116. Internet penetration (%) in Russia, 2009-2014
117. Total number of broadband internet subscribers (million) in Russia by type of access, 2009-2014
118. Value (RUB bn) and growth rate (%) of ISP market in Russia including both fixed and mobile, 2009-2014
119. Value shares (RUB bn) of fixed and mobile broadband internet at ISP market in Russia, 2009-2014
120. Number of subscribers (m) of major internet access technologies in the residential broadband internet market in Russia, 2009-2014

List of tables

1. Average annual exchange rates $/RUB and €/RUB, 2000-2009
2. Selected economic statistics for Russia (%), 2008-2010
3. Telecommunications market in Russia – key data and forecasts, 2009-2014
4. The largest cities in Russia by population (million), 2009
5. Key data on the Russian telecommunications market
6. Biggest telecommunications companies in Russia, 2009
7. Important M&A transactions in the telecommunications sector in Russia, 2009-Q1 2010
8. Sistema: key data, 2004-2009
9. Key data on the data transmission and wholesale telecommunications market in Russia
10. Backbone telecommunications operators in Russia, 2009
11. Synterra: key financial data, 2006-2009
12. TTK: key financial data, 2007-2009
13. TTK: selected operating indicators, 2008-2009
14. MMT: key financial data, 2004-2009
15. MMT: selected operating indicators, 2004-2009
16. Start Telecom key financial data, 2006-2009
17. Key data on the mobile telephony market in Russia
18. Number of SIM cards serviced (m) and sales (RUB bn) generated at the mobile major market by telephony providers in Russia, 2008-Q1 2010
19. Mobile TeleSystems Group: key data, 2004-Q1 2010
20. Mobile TeleSystems in Russia: key data, 2004-Q1 2010
21. Selected operating indicators of MTS, 2004-Q1 2010
22. Vimpelcom: key data, 2004-Q1 2010
23. Revenue and net profit (RUB bn) of Vimpelcom in Russia, 2004-Q1 2010
24. Selected operating indicators of Vimplelcom, 2004-Q1 2010
25. Megafon: key data, 2004-Q1 2010
26. Selected operating indicators of Megafon, 2004-Q1 2010
27. Tele2 Russia: key data, 2004-Q1 2010
28. Operating indicators of Tele2 Russia, 2005-Q1 2010
29. Smarts: key data, 2005-Q1 2010
30. Selected operating indicators of Smarts, 2005-Q1 2010
31. Key data on the end-user fixed-line telephony market in Russia
32. Examples of the tariff rates (RUB per minute) for selected destinations from Moscow by leading Russian DLD/ILD providers, January, 2010
33. Leading fixed-line telephony operators in Russia, 2009
34. Svyazinvest: key financial and operational data, 2004-2009
35. MGTS: key financial and operational data, 2005-Q1 2010
36. Rostelecom: key financial data, 2004-Q1 2010
37. Rostelecom: revenue breakdown, 2004-Q1 2010
38. CenterTelecom: key financial and operational data, 2005-Q1 2010
39. CenterTelecom: revenue breakdown (RUB bn), 2005-Q1 2010
40. Far East Telecom: key financial and operational data, 2005-2009
41. Far East Telecom: revenue breakdown (RUB bn), 2005-2009
42. North-West Telecom: key financial and operational data, 2005-Q1 2010
43. North-West Telecom: revenue breakdown (RUB bn), 2005-Q1 2010
44. SibirTelecom: key financial and operational data, 2005-Q1 2010
45. SibirTelecom: revenue breakdown (RUB bn), 2005-Q1 2010
46. Southern Telecom: key financial and operational data, 2005-Q1 2010
47. Southern Telecom: revenue breakdown (RUB bn), 2005-Q1 2010
48. Uralsvyazinform: key financial and operational data, 2005-Q1 2010
49. Uralsvyazinform: revenue breakdown (RUB bn), 2005-Q1 2010
50. Mobile ARPU of Uralsvyazinform, 2005-Q1 2010
51. VolgaTelecom: key financial and operational data, 2005-Q1 2010
52. VolgaTelecom: revenue breakdown (RUB bn), 2005-Q1 2010
53. VolgaTelecom: key operational indicators, 2007-Q1 201053.
54. Key data on the ISP market in Russia
55. Main options for wireless internet access for private users in Russia, May 2010
56. Average prices (RUB) on ISP market for business and residential users in Moscow, Q1 2010
57. Average cost of the internet connection in different cities of Russia, June 2010
58. Leading internet services providers in Russia, 2009
59. Comstar-UTS: key financial data, 2004-Q1 2010
60. Comstar-UTS: key operating indicators, 2004- Q1 2010
61. Akado Group: key financial data, 2008-Q1 2010
62. SkyLink: key operating indicators, 2007- 2009
63. Skartel: key operating indicators, Q1 2009-Q1 2010 (end of the period)
64. Enforta: key operating indicators, 2008-2009
65. ER-Telecom: key financial data, 2004-Q1 2010
66. ER-Telecom: key operating indicators, 2006-Q1 2010

Alcatel
Alfa Group
Comstar-UTS
Deutsche Telekom
Enforta
Euroset
Golden Telecom
LG
Megafon
MGTS
MTS
Motorola
Orange Business Services
Rostelecom
Sagem
Samsung
Sistema
Sky Link
Smarts
Sony Ericsson
Svyazinvest
Tele2
Telenor
Teliasonera
Vimpelcom


and more...