Russia Telecoms, IP Networks and Digital Media Research Report

Russia delivering the strongest fibre-based broadband growth in Europe

Russia’s huge and fully liberalised telecom market is supported by a population of about 143 million. Although the market is dominated by the western regions where the main cities and economic centres are concentrated, efforts continue to be made to improve infrastructure in remote areas, where many smaller towns still lack mobile or internet services.

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

Russia also has the largest mobile market in Europe, with more than 241 million subscriptions and a penetration rate of about 170%. Although a number of operators offer services, the market is dominated by MTS, VimpelCom and MegaFon, which have expanded nationally through the acquisition of smaller regional service providers. Competition in the key markets of Moscow and St Petersburg is fierce, due to the size of the cities’ populations and the higher concentration of wealth there. Significant market developments include the acquisition by Megafón of Scartel’s network, and the merger of Tele2 Russia with Rostelecom. The deployment of HSPA networks presents a new growth opportunity through the offering of mobile broadband services, while the rapidly evolving LTE sector offers considerable promise for operator revenue and the fast developing mobile broadband sector.

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Key developments:

Rostelecom completes first stage of JV with Tele2 Russia, appointed the sole universal telecom services provider; ER Telecom completes first stage of backbone network; Polarnet cleared to build $2 billion trans-Arctic cable; MTS and VimpelCom invest RUB2 billion on 4,500km fibre infrastructure; MegaFon collaborates with utility EuroSibEnergo, using power lines for fibre-optic network in Siberia; Moscow Metro tenders for WiFi contract across its network; regulator announces regional WiMAX licensees; government approves RUB3.1 billion investment for satellite broadband in remote areas; mobile internet subscriber base reaches 63.5 million; MegaFon signs seven-year infrastructure upgrade contract with Huawei; MNOs join forces for m-commerce platform; VimpelCom merges with subsidiaries, signs five-managed services contract with Ericsson; MNP now available for subscribers; 900MHz used for 3G following technological neutrality ruling; four licensees receive 800MHz spectrum for LTE; Space Systems (GSS) secures transponder on Astra 1F; amended TV broadcasting rules adopted; regulator’s market data to March 2014; telcos’ financial and operating data to Q2 2014; market developments to mid-2014.

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