The slowdown in the growth of the Russian telecommunications market makes its players to reconsider their development strategies. On the new “points of growth” already think “Megaphone”, MTS, TransTeleCom, Tele2 and “AKADO”
To think about new strategies of development of Russian telecommunications companies have due to the slowdown in growth in key segments. Operators ‘ revenues from traditional services are stagnating, as subscriber growth slowed down due to already high penetration, explains the Director of practice on provision of services to companies in the field of telecommunications, information technology and media at PwC Russia Grigori Sidorov. This is especially true of large cities with population over 500 thousand people. ARPU (average revenue per subscriber. — RBC) does not grow because of high competition. “At the same time develop communication and content-based OTT players (over the top services are not tied to a specific operator, for example in telephony — Skype TV streaming — Internet cinema etc — RBC), which partially compete with operators. In this situation, the shareholders and senior management of operators naturally pay considerable attention to updating the long-term development strategies and to search for points of growth”, — said Grigori Sidorov. According to ACM-Consulting, at the end of 2015 the total number of cellular subscribers in Russia rose by 4.8% compared with the figure of 2014. In the second quarter of 2016, the index rose by 3.8% compared to the same period last year.
In this world players felt the trend and started to look for new directions for themselves. Some of them decided to go out in segments of e-Commerce, paid attention to the direction of Fintech (financial technology), ICT and even utilities (maintenance of the support infrastructure for networks such as electricity). Now companies need to update the strategy taking into account such areas as big data (big data), IoT (Internet of things), Fintech, e-Commerce, cloud computing, says the interlocutor of RBC.
The Internet of things and free communication
The question of strategy of MTS group in the 2017-2019 years have been in the agenda of the meeting of the Board of Directors on September 15. The press service of MTS said that the company has adopted an updated strategy, but the details of the document intends to present later.
MTS this year will expire the strategy of “3D” based on three categories: “data”, “differentiation” and “dividends.” One of the components of the former MTS strategy updated in April: the company adopted a new dividend policy, setting the minimum (20 RUB) and target (25-26 RUB) the level of payments per share at the end of the calendar year.
Analyst FK “Opening” Alexander Vengranovich believes that MTS in the updated strategy will reflect the following areas of development as the Internet of things, financial services, joint projects with Internet companies. According to him, the company will continue to experiment with the idea of free services for the subscribers. The President of MTS Andrey Dubovskov in may, said that in the future operators need to stop taking money from customers. “We don’t have to live on the money that the customer must pay for the satisfaction of their communicative needs. It and mobile communication, streaming, anything. Everything we give him, must be for free,” he said, speaking at the conference “Telecom-2016”. In October, MTS has already announced that it will provide users with free access to online cinemas, online stores, cloud storage and social networks. The cost of the traffic should pay for Internet services, attendance of which is growing at the expense of subscribers of MTS.
Until the end of the year, the new strategy will present and MegaFon, said earlier the company’s CFO Gevorg Vermishyan. The document was adopted against the background of the change of CEO at the end of June for the position returned, Sergei Soldatenkov, who has already led a statement in 2003-2012. The new CEO intends to return the financial performance of MegaFon to increase, reported by the analyst of Renaissance Capital Alexander Kazbegi after a meeting with Sergei Soldatenkov in June. By the end of 2015, the proceeds of “MegaFon” declined by 0.4% to an increase of 313.4 billion roubles, against a 6% growth in 2014. The operator needs to pay more attention to new partnerships and corporate businesses, particularly services to government agencies (B2G), spoke at the meeting Soldatenkov. He also wanted to reform the retail sector to improve the quality of new connections and to reduce the annual outflow of subscriber base to 35% from the current 50%. Within three years the company plans to reduce its retail network by 25-40%, up to 2.5–3 thousand salons, wrote analysts at UBS.
Another new element of the strategy “the Megaphone” should be a new optional dividend program. In particular, the previous dividend policy was adopted during the company’s IPO in 2012, according to financial Director of “MegaFon” Gevorg Vermishyan outdated.
To meet the constant changes in the market trying and T2 RTK holding (Tele2 brand), and, according to the source RBC, the strategy statement is reviewed annually. The source explained that this practice exists since the time when the company was owned by Swedish Tele2. In June, the CEO of T2 RTK Holding Sergei Emdin said that the operator will abandon the models of the discounter and go to the model lifestyle enabler. According to him, the operator will continue to try to offer customers the “best price”, but the emphasis on dumping will be no more. The press service of T2 RTK Holding, declined to comment on the contents of the model lifestyle enabler and timing of the adoption of another strategy.
Not only mobile
Look for new ways to develop and have players from other segments of the telecommunications market. In particular, the “daughter” Railways — “TransTeleCom” (TTK) — in mid-October, chose to contest the company, which will develop her strategy. The winner was included in PwC “PricewaterhouseCoopers Advisory”: the contract is worth 22.5 million rubles including VAT, to coordinate strategy with the customer and Railways, the consultant shall, until 31 January 2017. In the materials for the contest was stated that among the directions of development of the TTC that can be worked through: the provision of infrastructure partners, digital services, and also realization of complex integrators projects for the years 2017-2021. On the one hand, the Railways have repeatedly stated desire to sell the TTR as a non-core company. However, in this case the main asset of the operator backbone network, will remain in the ownership of the monopoly. Another reason to search for new strategies, according to the General Director of Agency “TMT consulting” Konstantin Ankilova, is that the main markets for TTK — trunking and broadband access is now almost do not grow.
In the second quarter a new strategy was accepted and GK “AKADO”, told RBC representative of the press service of the company. The main directions of the new strategy — launch of the interactive digital TV platform, the development of services for corporate clients and government agencies. As with TTR, the growth rate of major for “AKADO” markets — the broadband and pay TV has slowed.
In “TMT Consulting” pre-predict that the number of broadband subscribers this year will grow slightly more than 3%, whereas by the end of 2015 the rate was 3.6%, the number of pay TV subscribers will increase by 2.7 instead of 3.7% last year.