Russian Federation - Telecommunication Services: Mature market with growth opportunities (Strategy, Performance and Risk Analysis)
Russia is a mature telecoms market, in which the penetration of mobile subscribers increased from 76% in 2012 to 86% in 2016, and is expected to grow to 90% by 2021. Due to high penetration levels in the country, operators are focused on retaining customers by offering value added services. Postpaid subscriptions were the primary driver due to such bundle packages, as well as promotional plans offered by operators. As such, mobile subscriptions increased at a CAGR of 3.8% during 2012-16 from 229.6 million in 2012 to 266.2 million in 2016, and are expected to increase with a CAGR of 1.2% during 2016-21.
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Mobile services dominate the total telecom revenue
Increased usage of data for voice calls and proliferation of VoIP based apps are resulting in a decline in mobile voice revenue. Mobile revenue declined at -15.1% CAGR during 2012-16 from US$26,999.0 million in 2012 to US$14,033.4 million in 2016 and expected to increase at 1.8% CAGR during 2016-21 to reach US$15,330.7 million by 2021.
Subscription penetration levels contributes to top-line
The Russian Federation is a highly technologically advanced country that enables high subscription penetration levels. Mobile subscriptions as penetration of the population increased from 160% in 2012 to 182% in 2016 and is expected to reach 194% by 2021. The increase is attributed to increased investment in the development of LTE and R&D for 5G.
Mergers and Acquisitions
The Russian telecom segment is highly fragmented and has many small players across the country accounting for 32% of the overall market share. This also indicates an expected consolidation in the telecom space owing to pressure margin over 2016-2021. For instance acquisition of two companies by Rostelecom; namely Morton Group, a telecom assets manufacturer, and AIST, a telephony and broadband provider, helped Rostelecom to improve its position in the broadband segment.
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