Market Research Logo

Russia - Telecoms, Mobile, Broadband and Forecasts


Attention: There is an updated edition available for this report.

This report covers trends and developments in telecommunications, mobile, Internet, broadband, digital TV and converging media including VoIP and IPTV developments. 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)
  • Fixed broadband forecasts through until 2019
  • Convergence and Digital Media.


The recent global financial crisis has dented Russia’s strong economic recovery from the 1998 financial crisis, particularly due to the crash in commodity prices and associated customs duties and taxes which account for nearly half of the federal budget revenue. Exacerbating the situation was the highly leveraged Russian corporations, exposure to US mortgage-backed securities and capital outflows due to concerns over state interference in the economy and increasing tensions between Russia and the West over the conflict in Georgia; these concerns triggered rating agencies to downgrade Russia’s credit rating.  

Government assistance in response to the latest economic crisis has included refinancing banks and corporations, as well as a reduction in the corporate profit tax rate. The cost of government intervention and falling tax receipts from energy production have pushed the federal budget into a deficit of at least 7% of GDP in 2009, expected to ease to 5% for 2010. The impact to the real economy is only now becoming evident with the World Bank publishing revised projections in March 2009 of an economic contraction of 4.5% for 2009 with unemployment to rise to 12% by 2010.  

Despite the economic slowdown the telecoms market will fare relatively well given the essential nature of most telecom services although market segments will be affected differently; voice is expected to remain stable while the annual growth rate of the pay TV market in 2009 is expected to be half that of the previous year. The other impact is in capital expenditure, with the cost of financing pushing back projects as operators seek to preserve liquidity.  

As in other industries within Russia, government participation in the telecoms market is increasing following its deal in July 2009 to acquire the only private ownership stake in telecoms incumbent holding company Svyazinvest, possibly increasing uncertainty over the state of effective competition in the telecoms market. Incumbent and alternative operators alike have spent much effort modernising existing networks or deploying new ones altogether, in hopes of selling broadband and convergence services such as broadband TV (IPTV).  

Wireless access platforms such as WiMAX have garnered much interest and publicity, particularly in the regions, as alternative operators aim to capitalise on underserved markets by rapidly launching broadband services and build subscriber numbers while incumbents struggle to modernise existing PSTNs.

  Russia posses a vast broadcasting market undergoing rapid change. Both freely accessible and paid content is widely available from cable TV, terrestrial, IPTV and satellite platforms. Competition is driving new network deployments and network modernisation, as incumbent broadcasting network operators face challenges associated with digitising analogue networks and increased competition from new market entrants, particularly from the telecom sector.

  The desire to maximise APRU levels has led to the introduction of triple play services, bundling voice, video and broadband to consumers at a cheaper price. Digital terrestrial TV developments are progressing, with the government recently deciding to progress analogue switch off on a region by region basis.  

Russia has the largest mobile market in Europe. The rapidly growing sector is dominated by three major service providers (MTS, VimpelCom and MegaFon), and SIM card penetration has surpassed 100%. Perceiving the growth opportunities in the fixed-line market, the two largest mobile operators have acquired major fixed line operators to become integrated service operators. Future growth in the mobile market will hinge upon mobile broadband and applications, with the major three operators deploying WCMDA networks in 2009 and offering mobile broadband services.  

Key highlights:

  •          Increased government participation; the government reacquires full ownership of telecoms incumbent holding company Svyazinvest after reportedly concluding an agreement with Sistema, the only private shareholder in Svyazinvest, in July 2009 to purchase its 25% stake. This follows the appointment of Leonid Reiman to chairman of Svyazinvest’s board of directors, previously the controversial Minister of Communications and Information Technologies.
  •          Fixed broadband penetration grew by 70% in 2008, with DSL the main growth driver as DSL connections doubled during 2008 to represent almost 60% of total fixed broadband connections. Most of the growth has been in the underserved regions as regional incumbents use recently upgraded networks to launch xDSL services. Russia posses a two-tiered broadband market, with Moscow possessing a well developed and highly competitive fixed broadband market. It is only now that other regions are catching up. As a consequence Moscow is losing its significance in the overall broadband market, representing 30% of total fixed broadband connections in May 2009, down from 39% in January 2008. With Moscow’s fixed broadband market maturing, growth in 2009 will be greatest in the outer regions.
  •          The broadcasting market is rapidly changing due to digitalisation and competition. The pay TV market is well represented through cable, satellite and IPTV. Satellite has grown in prominence following the recent launch of a number of satellite platforms and take up has grown on the back of widespread availability. Despite representing the majority of pay TV subscribers, the cable TV market is in danger of being left behind as many operators are faced with the challenge of digitalising networks while currently possessing very low ARPU levels. IPTV is only a minor player in terms of subscriber numbers although this will change as numerous telecom operators across Russia gain more experience in marketing video services over recently deployed xDSL/FTTx networks.
  •          DTTV development is slowly progressing, with the government agreeing only in May 2009 to perform analogue switchoff on a region-by-region basis.
  •          The future for mobile is more uncertain given the saturated voice market. While the operators have managed to reverse sliding ARPU levels for the past 2-3 years by increasing MOU, the easy growth options are disappearing. Other growth opportunities include the high proportion of prepaid users to total users and low take up of mobile broadband services. While the first option is a marketing exercise, the second option is more costly and only now really feasible due to WCDMA/HSDPA networks currently under deployment across Russia.
  •          The two largest two mobile network operators have hedged their bets by acquiring some of the most largest fixed line operators - Comstar and Golden Telecom; Comstar majority owns Moscow’s incumbent PSTN operator and recently acquired a group of cable TV operators with networks bypassing 3.8 million households in 40 cities. Golden Telecom is deploying FTTx networks as part of an ambitious plan to reach 15.6 million households and market broadband and convergence services.
  •  
Russia - broadband and telecoms statistics - 2006; 2009
Sector | 2006 | 2009 (e) |
Broadband |
Fixed broadband subscribers (thousand) | 2,300 | 12,100 |
Fixed broadband penetration rate | 2% | 9% |
Mobile broadband penetration rate | <1% | 2% |
Subscribers to Telecoms Services |
Fixed-line telephone subscribers (thousand) | 42,000 | 44,000 |
Mobile phone subscribers (thousand) | 147,100 | 195,000 |
| (Source: BuddeComm based on industry data)

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 in Russia
4.1 Market overview
4.2 Svyazinvest
4.2.1 Svyazinvest regional operators
4.2.2 Rostelecom
4.2.3 Central Telegraph
4.3 Golden Telecom / Beeline
4.4 Multiregional Transit Telecom
4.5 TransTeleCom
4.6 PeterStar
4.7 ER-Telecom
4.8 Comstar / MGTS
5. Telecommunications Infrastructure
5.1 Introduction
5.2 Local
5.2.1 Svyazinvest regional operators
5.2.2 Central Telegraph
5.2.3 Comstar/MGTS
5.2.4 Golden Telecom
5.2.5 PeterStar
5.3 National
5.3.1 Golden Telecom
5.3.2 Rostelecom
5.3.3 TransTeleCom
5.3.4 Other
5.4 Satellite networks
5.5 Telecoms and IT
6. Internet Market
6.1 Overview
6.1.1 Internet statistics
6.1.2 Search engines
6.1.3 Russia’s emerging Internet society
6.2 Internet access locations
6.3 ISP market
6.3.1 RTComm
7. Broadband Market
7.1 Overview
7.1.1 Fixed broadband statistics
7.2 Asymmetrical Digital Subscriber Line (ADSL)
7.3 Cable modems
7.4 Fibre-to-the-Home (FttH) networks
7.5 Broadband Powerline (BPL)
7.6 Wireless broadband
7.6.1 WiFi
7.6.2 WiMAX
7.6.3 Internet via satellite
8. Convergence
8.1 Introduction
8.2 Triple play
8.3 Voice over Internet Protocol (VoIP)
8.4 Digital content
8.5 Overview of broadcasting market
8.5.1 Free-to-Air (FTA)
8.6 Digital TV
8.6.1 Broadband TV (IPTV)
8.6.2 Cable TV (CATV)
8.6.3 Satellite-based digital pay TV developments
8.6.4 Digital Terrestrial TV (DTTV)
9. Mobile Communications
9.1 Overview and analysis of Russia’s mobile market
9.1.1 Mobile handsets
9.1.2 Mobile statistics
9.2 Regulatory issues
9.2.1 Mobile number portability
9.2.2 3G licences
9.2.3 Calling Party Pays (CPP) legislation
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 Skylink
9.4.7 Uralsvyazinform
9.4.8 Mobile Virtual Network Operators (MVNOs)
9.5 Mobile voice services
9.5.1 Prepaid
9.5.2 Satellite mobile
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 Mobile broadband
9.6.5 i-mode
9.6.6 BlackBerry
9.6.7 Mobile TV
9.7 Mobile content and applications
9.7.1 Overview
9.7.2 Business market services
9.7.3 M-commerce
10. Forecasts
10.1 Forecasts - Fixed broadband market to 2019
10.1.1 Scenario 1 - higher fixed broadband subscriber growth
10.1.2 Scenario 2 - lower fixed broadband subscriber growth
11. Glossary of Abbreviations
list of Tables and Exhibits
Table 1 - Country statistics Russia - 2008
Table 2 - Telephone network statistics - 2008
Table 3 - Internet user statistics - 2008
Table 4 - Internet subscriber statistics - 2008
Table 5 - Broadband subscriber statistics - 2008
Table 6 - Mobile statistics - May 2009
Table 7 - National telecommunications authority
Table 8 - Total telecom revenue by service type - 2008
Table 9 - Centertelecom - revenue by service - 2006 - 2008
Table 10 - Dalsvyaz - revenue by service - 2006 - 2008
Table 11 - North-West Telecom - revenue by service - 2006 - 2008
Table 12 - Sibirtelecom - revenue by service - 2006 - 2008
Table 13 - Southern Telecom Company - revenue by service - 2006 - 2008
Table 14 - Uralsvyazinform - revenue by service - 2006 - 2008
Table 15 - VolgaTelecom - revenue by service - 2006 - 2008
Table 16 - Central Telegraph - revenue by service - 2006 - 2008
Table 17 - ER-Telecom financial data - 2007 - 2008
Table 18 - ER Telecom operational data - 2007 - 2009
Table 19 - MGTS fixed-line monthly ARPU - 2007 - 2008
Table 20 - Fixed lines in service and teledensity - 1995 - 1996; 1998 - 2009
Table 21 - Svyazinvest operators - fixed lines - 2006 - 2008
Table 22 - Svyazinvest operators - teledensity levels per operator - 2006 - 2008
Table 23 - Svyazinvest operators - urban and rural digitalisation - 2006 - 2007
Table 24 - North-West Telecom network data - 2005 - 2007
Table 25 - Centertelecom network data - 2005 - 2007
Table 26 - VolgaTelecom network data - 2005 - 2007
Table 27 - Southern Telecom Company network data - 2005 - 2007
Table 28 - Uralsvyazinform network data - 2005 - 2007
Table 29 - Sibirtelecom network data - 2005 - 2007
Table 30 - Dalsvyaz network data - 2005 - 2007
Table 31 - Central Telegraph network data - 2005 - 2007
Table 32 - Russian IT market revenue - 2005 - 2010
Table 33 - Internet users and penetration rates - 1999 - 2009
Table 34 - Top 5 websites in Russia - June 2009
Table 35 - Top 4 search engines, traffic by market share in Russia - 2008
Table 36 - Svyazinvest Internet revenue by operator - 2007 - 2008
Table 37 - RTComm financial data - 2001 - 2007
Table 38 - RTComm performance data - 2001 - 2007
Table 39 - Fixed broadband subscribers and penetration rates - 2003 - 2009
Table 40 - Fixed broadband subscribers by ISP in Russia - May 2009
Table 41 - Fixed broadband subscribers by access type - January 2009
Table 42 - Moscow fixed broadband subscribes by ISP - May 2009
Table 43 - St Petersburg fixed broadband subscribers by ISP - May 2009
Table 44 - Svyazinvest fixed broadband subscribers - 2006 - 2008
Table 45 - Comstar fixed broadband subscribers - 2007 - 2008
Table 46 - Comstar fixed broadband monthly ARPU - 2007 - 2008
Table 47 - Pay TV households - January 2009
Table 48 - Total value of advertising market - 2006 - 2010
Table 49 - Audience share by broadcaster (all day, 18-54 age group) - 2008
Table 50 - Forecast digital TV market share per broadcaster - 2010
Table 51 - Estimated total DTTV implementation cost
Table 52 - Mobile operators, subscribers and annual change - May 2009
Table 53 - Mobile subscribers and penetration rate - 1995 - 2009
Table 54 - Moscow mobile subscribers by operator - May 2009
Table 55 - St Petersburg mobile subscribers by operator - May 2009
Table 56 - MTS financial data - 2005 - 2008
Table 57 - MTS operational data and ARPU - 2001 - 2008
Table 58 - VimpelCom operational data and ARPU - 2001 - 2008
Table 59 - VimpelCom financial data - 2005 - 2008
Table 60 - Tele2 financial data and annual change - 2007 - 2008
Table 61 - MTS & VimpelCom prepaid subscribers - 2004 - 2008
Table 62 - Mobile VAS as proportion of total mobile revenue - 2002 - 2008
Table 63 - Breakdown of mobile VAS revenue by service - 2007 - 2009
Table 64 - Breakdown of mobile VAS revenue by operator - 2007 - 2009
Table 65 - Messaging revenue per operator - 2008 - 2009
Table 66 - Mobile broadband subscribers and penetration rate - 2006 - 2008
Table 67 - Mobile data revenue per operator - 2008 - 2009
Table 68 - Mobile content revenue per operator - 2008 - 2009
Table 69 - Forecast fixed broadband subscribers - higher growth scenario - 2009 - 2012; 2019
Table 70 - Forecast fixed broadband subscribers - lower growth scenario - 2009 - 2012; 2019
Exhibit 1 - The Economist Intelligence Unit (EIU) annual E-readiness criteria
Exhibit 2 - Overview of media convergence

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report