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Russia - Telecoms, Mobile, Broadband and Forecasts

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, Internet society, IPTV;
  • Mobile voice and data markets;
  • Broadband (FttH, DSL, cable TV, wireless);
  • Digital Media.Researcher:- Paul KwonCurrent publication date:- June 2010 (9th Edition)Next publication date:- June 2011


Russia possesses one of the largest telecoms markets in the world due to its sizeable population. Like much of Russia’s economy, the telecoms sector is developing, with total revenue growing by 2.7% during 2009 to reach RUB1.3 trillion.

As seen in the recent past in the commodities and broadcasting sectors, increasing government encroachment and control upon the telecoms market is evident; rejection of privatisation and the reacquisition of telecoms incumbent holding company Svyazinvest highlights the return of increased state control of the economy. Re-nationalisation of the incumbent holding company will undoubtedly increase uncertainty over the future state of fair competition.

Incumbent and alternative operators alike have spent much capital modernising existing networks or deploying new ones, in hopes of selling broadband and convergence services such as broadband TV (IPTV). Infrastructure-based competition extends to the last mile due to the lack of a regulatory regime in relation to network access, increasing the start up costs for new operators. Despite this major players have invested heavily in the last mile, deploying fibre and wireless technology platforms, with capital expenditure programs continuing in 2010.

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 which have invested in fibre access. The transition to DTTV broadcasts is underway, with analogue switch off proceeding on a region by region basis ahead of switchoff in 2015.

Russia possesses the largest mobile market in Europe. Three major operators (MTS, VimpelCom and MegaFon) dominate the national market ahead of a number of regional service providers. Russia’s recent economic woes have impacted growth which is expected to pick up again in line with the overall economy. The big three are leveraging off past HSDPA network deployments, offering mobile broadband services with sizeable buckets of data and opening up a new revenue growth opportunity.

Russia broadband and telecoms statistics - 2009 - 2010
Sector | 2009 | 2010 (e) |
Broadband |   |   |
Fixed broadband subscribers (thousand) | 10,630 | 14,000 |
Fixed broadband penetration rate | 7% | 10% |
Mobile broadband penetration rate | 1% | 2% |
Subscribers to telecoms services |   |   |
Fixed-line telephone subscribers (thousand) | 44,000 | 45,900 |
Mobile phone subscribers (thousand) | 195,000 | 207,800 |
(Source: BuddeComm based on industry data)

Market highlights:Increased market uncertainty is likely due to the government’s re-nationalisation of incumbent holding company Svyazinvest, with major players such as MTS and VimpelCom most likely to encounter friction as they compete in the fixed telephony and broadband markets after recently acquiring major fixed network operators.Despite the state of the economy, the number of fixed broadband subscriptions grew by 11% in the first two months of 2010 alone. Short to medium term future growth is certain given the significant number of remaining narrowband subscribers, with longer term growth dependent on the growing range of broadband content such as IPTV.The broadcasting market was sharply stung by a drop in advertising revenue in excess of 30% although the market is expected to pick up in line with the overall economy in 2010. In addition TV advertising is expected to continue growing its share of the total advertising spends. Broadcasters are beginning to embrace 3D technology, with a number of test transmissions undertaken.The major mobile network operators are taking advantage of past HSDPA network builds, offering mobile broadband services with generous data bundles. The challenge in 2010 will be managing traffic growth and the impact on transmission networks previously dimensioned only for low bandwidth voice traffic. This in turn is expected to lead to increased capital expenditure in transmission networks, particularly in the aggregation layer.Data in this report is the latest available at the time of preparation and may not be for the current year.

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 Market
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
5.4 Satellite networks
5.5 Telecoms and IT
6. Internet Market
6.1 Overview
6.1.1 Internet statistics
6.1.2 Russia’s emerging Internet society
7. Broadband Market
7.1 Overview
7.2 Fixed broadband statistics
7.3 Asymmetrical Digital Subscriber Line (ADSL)
7.4 Cable modems
7.5 Fibre-to-the-Home (FttH) networks
7.6 Broadband Powerline (BPL)
7.7 Wireless broadband
7.7.1 Overview
7.7.2 WiFi
7.7.3 WiMAX
7.7.4 Internet via satellite
7.8 Forecasts - fixed broadband market - 2010 - 2013; 2020
7.8.1 Scenario 1 - higher fixed broadband subscriber growth
7.8.2 Scenario 2 - lower fixed broadband subscriber growth
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
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 VolgaTelecom
9.4.9 Mobile Virtual Network Operators (MVNOs)
9.5 Mobile voice services
9.5.1 Prepaid
9.5.2 Satellite mobile
9.6 Mobile messaging
9.6.1 SMS/MMS
9.7 Mobile data services
9.7.1 Overview and statistics
9.7.2 General Packet Radio Service (GPRS)
9.7.3 Enhanced Data for GSM Evolution (EDGE)
9.7.4 Mobile broadband
9.7.5 i-mode
9.7.6 BlackBerry
9.7.7 Mobile TV
9.8 Mobile content and applications
9.8.1 Overview
10. Glossary of Abbreviations
Table 1 - Country statistics Russia - 2010
Table 2 - Telephone network statistics - 2010
Table 3 - Internet user statistics - 2010
Table 4 - Internet subscriber statistics - 2010
Table 5 - Broadband subscriber statistics - February 2010
Table 6 - Mobile statistics - January 2010
Table 7 - National telecommunications authority
Table 8 - Centertelecom financial data - 2008 - 2009
Table 9 - Centertelecom revenue breakdown - 2008 - 2009
Table 10 - Dalsvyaz financial data - 2008 - 2009
Table 11 - Dalsvyaz revenue breakdown - 2008 - 2009
Table 12 - Sibirtelecom financial data - 2008 - 2009
Table 13 - Sibirtelecom revenue breakdown - 2008 - 2009
Table 14 - Southern Telecom Company financial data - 2008 - 2009
Table 15 - Southern Telecom Company revenue breakdown - 2008 - 2009
Table 16 - Uralsvyazinform financial data - 2008 - 2009
Table 17 - Uralsvyazinform revenue - 2004 - 2010
Table 18 - VolgaTelecom financial data - 2008 - 2009
Table 19 - VolgaTelecom revenue breakdown - 2008 - 2009
Table 20 - VolgaTelecom fixed-line performance data - 2007 - 2010
Table 21 - Rostelecom financial data - 2008 - 2009
Table 22 - ER-Telecom financial data - 2009 - 2010
Table 23 - ER-Telecom ARPU - 2008 - 2010
Table 24 - ER Telecom operational data - 2007 - 2010
Table 25 - Comstar group financial data - 2008 - 2009
Table 26 - Comstar group voice subscribers - 2008 - 2009
Table 27 - Comstar group voice ARPU - 2008 - 2009
Table 28 - Fixed lines in service and teledensity - 1998 - 2010
Table 29 - Rostelecom long distance voice data - 2003 - 2010
Table 30 - Russian IT market revenue - 2005 - 2010
Table 31 - Internet users and penetration rates - 1999 - 2010
Table 32 - Top 4 search engines, traffic by market share in Russia - May 2010
Table 33 - Internet advertising revenue - 2004 - 2010
Table 34 - Rambler Media revenue breakdown - January - June 2009
Table 35 - Fixed broadband subscribers and penetration rate - 2003 - 2010
Table 36 - Fixed broadband subscribers by ISP in Russia - February 2010
Table 37 - Moscow fixed broadband subscribes by ISP - February 2010
Table 38 - St Petersburg fixed broadband subscribers by ISP - February 2010
Table 39 - Comstar fixed broadband subscribers - 2007 - 2009
Table 40 - Comstar fixed broadband monthly ARPU - 2007 - 2009
Table 41 - VolgaTelecom broadband data - 2007 - 2010
Table 42 - Golden Telecom FttB subscribers - 2007 - 2010
Table 43 - Forecast fixed broadband subscribers - higher growth scenario - 2010 - 2013; 2020
Table 44 - Forecast fixed broadband subscribers - lower growth scenario - 2010 - 2013; 2020
Table 45 - Estimated pay TV households - 2015
Table 46 - Audience share by broadcaster (all day, 18-54 age group) - 2009
Table 47 - TV advertising revenue - 2004 - 2010
Table 48 - Ren TV financial data - 2008 - 2009
Table 49 - CTC Media revenue - 2007 - 2010
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 - January 2010
Table 53 - Mobile subscribers and penetration rate - 1995 - 2010
Table 54 - Total MOU for MTS, VimpelCom and MegaFon - 2005 - 2012
Table 55 - Mobile handsets sold - 2009 - 2010
Table 56 - MTS group financial data - 2005 - 2009
Table 57 - MTS Russia subscribers - 2004 - 2009
Table 58 - MTS Russia operational data and ARPU - 2001 - 2009
Table 59 - VimpelCom mobile subscribers - 2005 - 2010
Table 60 - VimpelCom ARPU and churn by quarter - 2007 - 2009
Table 61 - VimpelCom group financial data - 2007 - 2009
Table 62 - MegaFon financial data - 2009
Table 63 - Tele2 financial data - 2007 - 2010
Table 64 - Tele2 subscribers - 2007 - 2010
Table 65 - VolgaTelecom revenue and subscribers - 2007 - 2010
Table 66 - VolgaTelecom MOU and ARPU - 2007 - 2010
Table 67 - MTS and VimpelCom prepaid subscribers - 2004 - 2010
Table 68 - Messaging revenue per operator - 2008 - 2009
Table 69 - Mobile VAS as proportion of total mobile revenue - 2002 - 20010
Table 70 - Breakdown of mobile VAS revenue by service - 2007 - 2009
Table 71 - Breakdown of mobile VAS revenue by operator - 2007 - 2009
Table 72 - MTS data revenue by type - 2008 - 2009
Table 73 - Mobile broadband subscribers and penetration rate - 2006 - 2010
Table 74 - Mobile data revenue by operators - 2008 - 2009
Table 75 - Mobile content revenue by operators - 2008 - 2009
Exhibit 1 - The Economist Intelligence Unit (EIU) annual E-readiness criteria

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