PMR – Telecommunication PFA

Russian Telecommunications Market Moderate Forecasts For 2011

Posted on May 29, 2019 by blogger

In recent years, the Russian telecommunications market has demonstrated strong growth, driven by the country’s continuing strong economic performance. Until 2009, Russia experienced more than ten years of GDP growth, which equalled 7% per annum on average. In 2009 with the changing environment on the external markets, Russian GDP dropped by 7.9%.

The slowdown in the purchasing power growth of the Russian population was evident even in 2008. While in 2007 real disposable incomes of households increased by 12.1%, in 2008 the growth amounted to only 4% and in 2009 this indicator remained almost at the level of the previous year. What is more, income levels vary considerably depending on the region. In 2010 the Russian economy has started to recover after the crisis period, however, current year-end forecasts for the GDP growth have been revised down and they now stands at around 3%. Forecasts for the telecommunications market are also cautious.

The value of the telecommunications services market in Russia amounted to EUR22.7bn in 2009, declining by more than 11% year-on-year. As measured in local currency the market was even able to report an increase of 4.2%, however, the growth rate was the lowest since 2000. Despite still growing (in terms of RUB), last year the worst-affected sector was the fixed-telephony market, which declined by 1.9% after 6.4% growth in 2008. By far better result was reported on the ISP market which went up by a third over the same period.

Currently PMR expects that the Russian telecommunications market will grow by 5.7% this year. In the next years the market will continue to be triggered by the growing demand for internet and data transmission services. PMR also predicts that the fixed-line telephony market will stagnate or decrease in the medium term and mobile telephony will grow at a rate of 2-4% per year.

The mobile telephony market in Russia, which currently represents more than a half of the market value, in the coming years will not be driven by adding millions of SIM cards (often distributed for free and active for a very short period), but rather by attracting customers to actively use the services. Non-voice and value-added services will continue to gain in significance and an increasing proportion of mobile carrier revenues will come from this source. In our opinion, the development of 3G networks will bring new growth opportunities for the market and their significant impact on mobile operators’ revenues will become visible in 2011-2012.

The fastest growth in the coming three years is expected on the ISP market. The sector will benefit strongly from a further expansion of broadband in the residential sector as well as a growing demand for data transmission services from the corporate sector. Factors behind broadband’s rapid growth will be the relatively low broadband penetration in Russia, decreasing tariffs and the development of new technologies in the market.

Conversely PMR assumes that the number of new installations of fixed-lines in the coming few years will not be significant. Despite the latest actions of the regulator aimed at improving fixed voice revenues by the increase of rates of local calls, PMR does not expect the fixed-voice market to return to growth. In our opinion, the market will stagnate over the short term and will decrease due to the strengthening effects of fixed-to-mobile substitution and a further erosion of DLD/ILD revenues (liberalisation and VoIP providers).

It is also worth noting that in line with the overall macroeconomic climate, investments in the development of telecommunication networks in Russia declined by more than a third last year. Most of the fixed-line ISPs halted regional expansion plans and even 3G networks were developing at a much slower pace than expected. In H1 2010, major providers of telecommunication services in Russia declared the recovery of the investment programmes, what will also make a positive impact on the industry in 2011. PMR expects the investments to grow by at least 30% in 2010, however, they will still remain lower than in 2008. “Investment budgets of the companies will depend not only on their current financial resources but also on available investment opportunities. One of those might be a tender for LTE network development” concludes Pawel Olszynka, PMR analyst and one of the report authors.

The press release is based on “Telecommunications market in Russia 2010. Development forecasts for 2010-2014”, a report published by PMR in the second half of 2010.

Russian Telecommunications Market To Be Worth More Than 30bn In 2012

Posted on November 29, 2018 by blogger

Current situation

According to the latest report The telecommunications market in Russia 2011. Development forecasts for 2011-2015 published by PMR, a market research company, the value of the telecommunications services market in Russia increased by 17.3% year on year to 27.3bn in 2010, from approximately 23.2bn in 2009. The growth rate measured in local currency was lower and amounted to 10%. It should be noted that PMR last year forecasts concerning the telecoms market value in 2010, excluding exchange rate fluctuations, assumed the growth rate of 4 p.p. lower than the actual result.
Overall economic recovery in the country continue to be one of the main market growth drivers in 2010. The demand for telecommunications services in Russia went up after the crisis which hit the Russian economy end of 2008. In 2010, after a sharp decline in 2009, operators also increased the investments in the construction of new networks and the improvement of service quality.

The Russian telecommunications market has been steadily increasing, starting in 2000 with the development of mobile telephony and internet access. In the last two years, the market was affected by the migration of voice traffic from fixed to mobile networks and also to the internet and, as a result, the segment of fixed-line telephony began to stagnate. The growth of mobile voice services also declined with the increasing maturity of this market. The most dynamic during recent years was the segment of internet access, including both fixed and mobile technologies. This market was an area of business growth for the operators in 2009-2010, and it will continue to play a role of the development driver for the entire telecommunications market in Russia, considering its relatively low maturity.
Mobile telephony is by far the largest segment of the Russian telecommunications market. Based on the revenue reports provided by operators, total sales of mobile voice and non-voice services in Russia in 2010 amounted to RUB 710bn (17.7bn), which is 10.6% more than in the previous year measured in roubles, or 17.9% measured in euros. The mobile telephony market accounted for the largest part of the telecommunications spending in Russia last year. Even if to exclude mobile VAS and to consider only the mobile voice segment, the mobile telephony share would reach the level of almost 50% in 2010, while the total number of registered SIM cards already exceeded 150% of the total population of Russia.
Provision of access to the internet remains the most dynamic and fast growing segment of the telecommunications market in Russia, which increased by 30% year on year in 2010. This growth of the market was driven by quickly increasing penetration of fixed-line broadband but also enhanced by the fast expansion of 3G networks and the operators active promotion of mobile internet.

3G and LTE uptake

With the commercial launch of UMTS networks in 2008, an increasing contribution to the growth of the mobile telephony market in Russia is already coming from non-voice value-added services provided in mobile networks, especially from broadband internet. Development of 3G networks is also changing the landscape of the Russian mobile telephony market. Operators from the Big Three group got a new source of revenue from the development of mobile broadband internet, which became the main 3G application.
Meanwhile, two concepts of the future LTE networks development in Russia have been recently presented. In December 2010, the Russian government proposed to create LTE Consortium which was expected to come up with proposals related to the development of 4G networks in the country. The consortium was created by the leading national telecommunications operators, including Rostelecom, MTS, VimpelCom and MegaFon. Smaller regional operators were not invited to join. Mid of 2011, LTE Consortium presented a report which states that the available radio spectrum is feasible to be shared between four operators and each of the operators will need to invest RUB 85.7bn (2.1bn) to install approximately 20,810 base stations covering over 10,400 of locations in the country with more than 1,000 of inhabitants, i.e. to build a federal LTE network. The condition is that the operators will use simultaneously a 690-880 MHz and 2,500-2,700 MHz radio bandwidth having 30 MHz spectrum each. In March 2011, there was also an agreement between MTS, MegaFon, VimpelCom, Rostelecom and Skartel, which had already had available a bandwidth for LTE, that Skartel would build LTE networks in 180 cities and towns in Russia and would give each of the operator 20% capacity in this network. Skartel expects to invest approximately RUB 60bn (1.5bn) in the project.
It is not certain yet what kind of strategy for LTE development will be applied in Russia. Either the government will announce a tender for four federal licences or Skartel will build the network. A real barrier for the development of the LTE network in the country is the fact that radio bandwidth is already used by military communication systems and the investments in conversion are considered to be very high. All in all, the most probable scenario now could be the launch of the first LTE networks in Russia not earlier than in 2014 comments Pawel Olszynka, a PMR analyst and one of the report authors.

Short-term forecasts

Macroeconomic development forecasts for Russia for 2011-2012 are positive. GDP is expected to reach 4.5% annually. This remains a good background for the business development and investments in telecommunications services and networks. The growth in the consumers confidence boosts the demand for IT and telecommunications services and facilitates the spending on personal computers, mobile phones and the internet.
The Russian telecommunications market will continue its upward trend over the next two years or so, triggered by the growing internet services market, both in fixed and mobile networks. One strategic advantage of the Russian ISP market over other Central and Eastern European countries is its big size, poor development and territorial coverage, therefore, almost all providers and all wire and wireless technologies will have a chance to get their niche. In a broader perspective, the services connected with the telecommunications market, e.g. digital pay TV, will also play a more important role. The mobile market in Russia will not be driven by simple emission of millions of SIM cards, but rather by attracting customers to actively use new services. Non-voice and more advanced value-added services will continue to gain in significance and an increasing proportion of mobile carrier revenues will come from this source.

This press release is based on information contained in the latest PMR report entitled Telecommunications market in Russia 2011. Development forecasts for 2011-2015

For more information on the report please contact:
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Romanian Telecoms Market Waiting For Growth

Posted on April 20, 2018 by blogger

According to preliminary data from the latest report by the research company PMR, the value of the telecommunications market in Romania decreased by 3.9% to approx. 3.3bn in 2010. Even though this was the second consecutive year the market dropped, an improvement could be seen in terms of the scale of the decline. By comparison, in 2009 the market slumped by 18.8%. It is also important to note that the rate of change is given based on the changes of the market values as measured in euros. It is significant that the Romanian leu weakened seriously against the euro during the crisis period, which significantly influenced our calculations. When calculating in the local currency, the value of the telecommunications services market in Romania decreased by 6.5% in 2009 and 4.5% last year.

Over the last two years, the market witnessed the first declines after a long period of growth. What stood behind the decline was the serious cuts of mobile termination rates on the mobile market (between September 2006 and June 2010, the level of MTR of the major mobile operators in Romania declined by approx. 30%), the growing competition and decreasing prices of telecommunications services. Overall, the economic slowdown and the financial crisis caused the trend to be even more pronounced.

The most significant declines were seen on the fixed-line telephony market. The Romanian telecommunications market, similarly to other Central and Eastern European countries, was deeply affected by the shift to mobile telephony services from fixed-line services. For the first time, the share of revenues of fixed-line telephony providers in the total telecommunications services market dropped below one fifth. By comparison, the share of fixed-line telephony was 26% in 2006 and over 54% in 2000.

The data transmission and internet services provision market grew steadily, although its share remained low compared with the other two segments (15% in 2010). The market was also strongly influenced by steadily decreasing mobile telephony and internet services tariffs due to increasing competition. This trend has started to be counterbalanced by the non-voice offers and value-added services on the mobile telephony market. Bundled (double play, triple play or even quadruple play) services continued to gain a share of the market. Strong competition maintains a constant pressure on the prices of services, thus negatively impacting operators revenues.

Over the last four years the ISP market in Romania has been characterised by an intense consolidating process (the acquiring of smaller ISPs or neighbourhood networks) and has been affected by acquisitions on the CaTV market (RCS & RDS and UPC Romania becoming the most important players). As a result, the number of ISPs in the country began to decrease.

Forecasts for 2011
Market participants express mixed opinions about the market development in 2011. Most of them are slightly optimistic and they predict a minimal growth of the market this year. In the short term the market will be stagnant and balancing around zero percent dynamics. The contracting national economy and the cut-backs of the business segment influenced the market in 2009-2010 their negative outcomes will be visible also in 2011. So will be the falling disposable incomes of Romanian households and the increasing competition comments Pawel Olszynka, an IT&Telecoms market analyst at PMR.

In report entitled Telecommunications market in Romania 2010. Development forecasts for 2011-2014, PMR forecasts that in 2012-2013 the negative trend on the mobile market connected with MTR cuts will be reversed and together with the continuously increasing DLISP segment will trigger the market upwards. The mobile telephony market has a growth potential even despite the already high penetration rate of these services in Romania. On the other hand, it is hard to predict high growth rates. The number of mobile SIM cards is expected to continue to grow although the pace is not going to be significant. Market competition is also forecast to become fiercer, having a negative impact upon the revenues of the market players. However, this trend is expected to be offset to a certain extent by a shift towards content-based services. PMR also claims that there is a small chance that in the next 3-4 years MVNOs will appear in Romania.
The segment with the highest growth potential is the data transmission and ISP market, which will increase by between 12-15% yearly until 2014. The main factor behind the markets growth will be the relatively low broadband internet penetration in Romania. PMR expects the fixed broadband penetration to reach approx. 22.5% by 2014, while including mobile telephony to 40.5% over the same period.

Among the services identified by the operators we canvassed as likely to experience high growth rates within the next two years are: bundled services, VoIP services for corporate clients, mobile value-added services and xDSL internet access. Mobile internet access will be the fastest developing mobile telephony service, with 3G and beyond technologies as well as the spread of smartphones being the foundation for the development of these services.