We are pleased to announce that we have recently signed an agreement with Vimplecom and Megafon to jointly develop mobile commerce in Russia. The agreement provides for integration of our mobile commerce platform Easy Payment with similar platforms of other operators. For our subscribers this will result in the expansion of services and products that can be purchased through Easy Payment.

Likewise, Megafon and Vimpelcom customers will now be able to pay for the services of vendors currently only available through Easy Payment. Collectively, the Big 3 will enable payments to more than 5,000 vendors.  

Easy Payment, first launched in August 2010, allowed MTS subscribers to make quick payments from their mobile accounts or bank cards. Easy Payment has quickly become a popular application with over two million downloads. Most of the subscribers are using the service for topping up accounts with mobile operators, paying for internet services, redeeming consumer loans and transferring money to electronic money systems as well as for transactions with e-commerce merchants.

The pace of the mobile payments’ growth are in Russia astounding. According to the estimates of AC&M consultancy, the volume of mobile payments in Russia more than tripled reaching 14 billion Russian rubles. AC&M expects it to at least double in 2012. The new initiative will help to further increase customers’ awareness of mobile commerce and promote instant payments helping Russia to expand the size of non-cash economy. Cooperation between mobile operators will facilitate access to payments systems for vendors and stimulate e-commerce in Russia.

Alexey Kornya, MTS Vice President and CFO, was interviewed by Finance EE - The executive magainze for Emerging Europe. Click here to read the interview.

Today we are issuing a report on mobile retail in Russia during Q4 2011, based on the estimates from our mobile retail network. 

Highlights from the report:
- During Q4 2011, the number of phones sold in Russia increased by 11% compared to Q4 2010 with around 11.7 mln devices sold
- During Q4 2011, the mobile handset market in Russia expanded by 6% in sales compared to Q4 2010 to reach 51.7 bln rubles
- The average price of mobile phones during Q4 2011 decreased by 4% compared to Q4 2010 to reach 4421 rubles

- Share of smartphones in the sales mix in the MTS retail network during Q4 2011 reached 25%

- MTS continued to roll-out its retail chain and expand its network of franchise stores. At the end of Q4 2011 the total number of MTS retail outlets reached 4146 with 2460 own stores and 1686 franchise stores  

Please download the complete report

Retail Report Q4 2011.pdf (458.69 kb)

In 2011, MTS has installed 12,000 3G base stations  – twice as many as were installed in 2010. These new additions bring the total to 20,000 3G base stations that cover more than 3,000 population centers across Russia.

With these installations we’ve seen a sharp rise in monthly internet traffic on the MTS network – increasing fivefold year on year – and with 3G traffic reaching 85% of the total data traffic. Demand for 3G data services is particularly strong in the Moscow Region, North-West Region, South Region, Siberia and the Urals region. In the Moscow region, monthly data traffic has increased seven times with the number of mobile internet users growing by 30% year over year.
 

We’re moving quickly and providing the necessary support to meet these demands. We’ve upped the pace of our 3G roll-out and have extended coverage to 80% of the populated territory of Russia. We continue to invest in network upgrades by enabling data transmission at speeds of up to 21 Mbps, improving the quality and accessibility of 3G services, and launching new smartphones and 3G modems.

Subscriber data for Russian mobile operators is compiled by Advanced Communications and Media, a management consulting and research agency specializing in telecommunications and media. You can view their November subscriber report here.

¹ MTS owns a 49% stake in Mobile TeleSystems LLC, a mobile operator in Belarus, which is not consolidated.

Sergey Irevly, MTS B2B Products Director, has contributed a byline article to M2M Now business magazine. In this article Sergey writes about M2M contribution to Russia's social and economic advancement and the role MTS plays in it. Click here to read the article

MTS President and CEO Andrei Dubovskov was interviewed by Alan Burkitt-Gray from Global Telecoms Business. Andrei spoke about Company's strategy and GPON roll-out in Moscow that will make Russia's capital one of the best wired cities in the world. Click here to read the article

The Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast projects that global mobile data traffic will increase 26-fold between 2010 and 2015 – reaching 6.3 exabytes per month by 2015.  Likewise, in Russia mobile data traffic will grow 24-fold from 2010 to 2015, a compound annual growth rate of 89%.
 
MTS is managing this exceptional growth through the optimization of mobile data traffic. We recently deployed Flash Networks' Harmony Mobile Internet Services Gateway to optimize the volume of traffic.
 
Online video already accounts for more than 40% of the Russia's mobile data traffic, and this will go up to 61% by 2015, Cisco forecasts. With Flash Networks' solution video, picture, and other mobile data will be optimized for the fastest possible download speed, thereby reducing mobile network traffic load by up to 40%.
 
All in all, this means MTS customers will have faster Internet access.  It will optimize up to 90% of our mobile Internet traffic and reduce content and web page download times. This new technology will be available to all MTS mobile Internet users in Russia before the year is out.
 

Oracle has released “Opportunity Calling: The Future of Mobile Communications – Take Two” a survey of 3,000+ mobile phone users around the world which examined areas such as “changes in global mobile phone use,” “interest in new mobile technologies,” and “expectations for service providers in the new mobile frontier.”

Some stats about data use that we found particularly interesting:

·         “47% of mobile customers say their data use has increased in the past 12 months;

·         Nearly 70% of consumers use smartphones – which are replacing cameras, MP3 players, and GPS tools more quickly than anticipated;

·         55% report having downloaded a free mobile application, up significantly from 42% in 2010; and

·         16% of mobile customers have purchased a tablet computer and another 41% plan to purchase one in the next 12 months.”

Based on this research, Oracle recommends that companies “scale for the future,” meaning “[a]s more and more devices and services hook into the network, providers must prepare for growing complexity and competition. Continue to work to ensure your network and back-end systems are scalable, securely open to developers, and integrated across services.”

Great advice – and very much in line with our 3i Strategy.

We have recently opened a unified operations center in Russia's third largest city Nizhny Novgorod that will handle all finance and accounting functions for MTS in Russia.  The move is part of our multi-year centralization strategy that will save the company about 3.5 billion rubles (US $114m) by 2017. 

In April, we completed a similar consolidation of our customer service function in Smolensk and found the financial and efficiency return on investment to be well worth the effort.

There has been a small wave of similar consolidations across Europe led most notably by Vodafone and British Telecom in recent years.  More specifically, Vodafone is the middle of a global SAP ERP rollout, and last year British Telecom opened a unified financial center with 750 employees.  These and other efforts clearly indicate that there are tangible scale benefits in doing so.

The Nizhny Novgorod center will handle all revenue accounting, settlements with vendors, accounting of fixed assets, inventory accounting and tax accounting practices. 

The new office will create 300 new jobs in a city well known as an economic center and for its tech-savvy citizens. Here is a picture of the new office.