MTS blog


Tuesday, September 29, 2009

Global Telecom Business, a leading telecommunications trade magazine, recently interviewed Mikhail Shamolin, President and CEO of MTS. The interview is now available on GTB’s website, where Shamolin discusses the acquisition of Comstar and MTS’ plans for delivering content to subscribers.

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Friday, September 25, 2009
By Timothy Doherty, Research Analyst for Small and Medium Business Mobility Markets for IDC

IDC has recently published a report examining the small and medium business initiatives of MTS, and we wanted to share the key insights here on the MTS IR Blog.

As in other regions worldwide, the small and medium-business (SMB) market in Russia represents a significant untapped revenue opportunity for operators, but presents a number of challenges. SMBs typically have fewer IT resources than large enterprises to rely on when making technology purchase decisions, making customer education vital. Although the SMB market in aggregate constitutes a substantial opportunity, each individual customer represents a relatively modest volume; efficiencies in marketing and ongoing customer support are therefore of paramount importance. MTS has implemented a number of strategies in its core Russian market to target the small and medium-sized business market.

Like SMB-savvy operators in the United States and Western Europe, MTS is leveraging an SMB web portal to better manage its SMB customers. Online portals not only allow direct payments, but also let customers explore and opt in and out of services. Given the vast size of Russia, the web portal is one of the efficient ways MTS can interact with subscribers and provide customer support.

While enterprises frequently have a dedicated operator support representative to rely on, this model is not cost-effective for SMBs. Still, to cultivate customer loyalty and sell deeper into customers, some sort of support relationship must exist. Akin to small business specialists at other operators in more developed markets in North America and Europe, MTS has small business curators: development managers who analyze service usage by customers and promote the benefits of additional services. The curator program allows MTS to educate its existing customer base and sell through additional phone lines and services; since the launch of the program, MTS reports that a typical small business customer initially purchases two lines, but adds another four lines inside the first 6 months.

To get more insight into the MTS work in the SMB market, please refer to our recent report.

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Tuesday, September 22, 2009

In early September, we launched the new Red Energy tariff, aimed at the youth segment. The ad above is currently running on Russian television.

As part of the new advertising campaign, our marketing team implemented an innovative way to interact with customers, merging the print ad medium and the website, called augmented reality. Application of augmented reality in marketing is still in its infancy, and we are proud to be the first company in Russia to apply it. We have recorded a video with our partners, JWT International and Lemonade Animation, explaining how it works.

Check out the promotional website where you can test augmented reality (in Russian).

Click here for key facts about the Red Energy tariff (in English).

Update October 1, 2009: An article in Mobile Marketer about our augmenter reality implementation.

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Thursday, September 17, 2009

Last week, we launched – an online and mobile content portal that offers the largest selection of licensed videos, music and games. The goal behind this is to further stimulate our content revenues, which already contribute significantly to our performance. For example, content revenues for the full year 2008 were around 9 billion rubles with the second quarter 2009 revenues growing 31% year-on-year.

The new content portal is unique to our markets as it offers a high degree of interoperability between mobile devices and PCs / laptops as well as the necessary flexibility in terms of access network (e.g. EDGE vs. 3G) and phone model. also offers a “dual delivery” system, whereby purchased music tracks can be downloaded to both a mobile device and a computer.

Given the nature of our business, MTS is best positioned to offer paid content as we already have the necessary financial arrangements with our subscribers and can utilize their pre-paid accounts for content purchases. This differs from the Western markets where the vast majority of content stores rely on credit card payments whereas the Russian credit market is still its early development stages.

By the virtue of our customer base and brand recognition, our content portal has already become a major force in the Russian Internet space. In test mode since April 2009, the portal attracted around 1.5 million users. It must be noted that there is a lack of legal content providers in Russia at the moment, and piracy is widespread. MTS is one of a few companies able to sign partnerships with the entertainment industry’s major players. Recently, we signed an agreement with Paramount Pictures that allows our customers to watch streaming videos for free and download them for a price lower than they would pay for a pirated copy on the streets.

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Tuesday, September 08, 2009

As we have discussed before on this blog, we believe that distribution of exclusive and innovative handsets through the MTS monobrand retail network is key to subscriber acquisition, usage growth and customer retention. For Russian consumers, the purchase of a handset is very much an emotional purchase that we see as being key in strengthening their ties with MTS in order to encourage more loyal behavior. By signing exclusive deals with leading device manufacturers, we will be able to drive greater customer traffic to MTS stores and gain competitive advantage over our peers. Selling handsets through MTS stores will also allow us to customize these phones and pre-install handset-specific software and applications to drive data and content usage.

Over the past couple of weeks, we have launched a number of new phones:

The new MTS-branded phone, MTS 236, is the first device to be sold in Russia under the MTS brand through the partnership with Vodafone. The phone was developed by ZTE for Vodafone. MTS 236 is an entry-level phone, priced at RUB 890 (around $28), that will be offered with a Super Zero tariff.

HTC Hero (promo site:, the first Android phone to be sold in Russia, is arriving to our retail network this week. For the first month, the phone will be sold exclusively through our stores with an introductory offer of free 100 Mb Internet traffic for three months. The phone features such high-end specifications as multi-touch touchscreen, 3G HSDPA/WCDMA capability, Wi-Fi and a 5 megapixel camera with autofocus. It will be sold for RUB 22,990 (around $733).

Samsung BEATDJ (promo site:, the new flagship Samsung device aimed specifically at music fans. The phone is to be sold exclusively at MTS stores for a month following the launch, and we are offering a few music tracks for free to encourage usage of our online content store, (more on that in upcoming blog posts). The phone features multi-touch touchscreen, 3G HSDPA/WCDMA access, 3 megapixel camera and a 50 Mb internal storage capacity. It is priced at RUB 14,990 (around $478).

By the end of the year, we will launch more MTS-branded phones that we will deliver through the Vodafone partnership. We aim to continue to offer exclusive flagship devices such as Nokia N97 or HTC Hero in our markets.

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Thursday, September 03, 2009
MTS recently won the 2009 Summit Marketing Effectiveness Award for our customer segmentation. We were recognized in the Consumer Services category for the robust approach we took to deliver most suitable products and services across our footprint of 6 countries with a total population of over 230 million. We became the first company in our markets to be recognized for customer segmentation, a testament to the fact that we have implemented world class solution.

To develop our customer segmentation, we have partnered with Kantar, one of the world's largest insight, information and consultancy networks. In fact, you can view a case study of the work we have done together on their website:

Approaching six markets with significant economic and cultural differences, we intended to create a common language and a consistent platform that would allow us to offer better tailored services as well as make our marketing effort more efficient. This overarching platform was meant to guide the development, implementation and evaluation of all our marketing initiatives and improve marketing effectiveness of the MTS Group.

To this end, we have implemented multi-market macro segmentation, aiming for unique consistency of approach and a new level of accountability. Our segmentation is based on the needs, attitudes and the actual usage dynamics, taken both from market surveys across our markets and customer databases, allowing to define segments more consistently and address them with maximum efficiency.

A particularly unique aspect of our segmentation approach, one that’s on the leading edge of global marketing practice, is that it is directly linked to our customer base. This allows us to set and measure segment-specific metrics when we launch a new customer offer, such as the size of the segment, revenues, ARPU, MOU and many others.

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Tuesday, August 25, 2009

Earlier in August, we have opened the doors of our new flagship store in Moscow. The new store is located on the first floor of the Evropeiskiy shopping center, one of the more popular locations with the residents of Moscow. Around 190,000 people visit the center daily and over 220,000 per day come there during the weekend, according to the data provided by the shopping center.

The new flagship store is part of the development of MTS’ monobrand retail network in Russia, which includes the acquisition of multibrand retailers, increasing franchisees and the rebranding and optimization of existing locations. The key focus of MTS’ retail strategy is to provide personalized customer service and better tailored products, including exclusive devices bundled with applications developed by MTS. For instance, we have recently launched Nokia’s N97 mobile computer exclusively in our retail network.

The new flagship store has been developed using global best practices. We have particularly benefited from our partnership with Vodafone, whereby we have been able to draw from their experience operating retail networks around the world. The key feature of the store lies in its open lay-out with the majority of the retail space dedicated to handsets and devices. Customer can also handle and test the devices, something that has not been possible in Russian retail before.

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Wednesday, August 19, 2009

Mobile Internet is taking off rapidly in Russia, as all three national mobile operators already operate 3G networks and offer mobile Internet modems. We have been selling the MTS Connect modem in Russia since early 2008 and have sold over 600,000 modems since July 2008, as 3G networks were launched across the country. Currently, we estimate that around 200,000 modems are being sold monthly in Russia by mobile operators, CDMA operators and WiMAX providers, and MTS Connect accounts for around 30% of the total.

Yesterday, we announced a partnership with Intel to support the uptake of mobile Internet solutions in Russia. The first joint initiative under this partnership is a promotion of a bundled offer that will include an Intel-powered netbook, an MTS Connect modem and a special MTS tariff plan.

The first netbook made available under the initiative is Acer Aspire One D250, powered by Intel® Atom™ Processor ( Starting August 18, the netbook will be available across Russia in MTS monobrand retail stores, packaged with an MTS Connect modem, an MTS SIM card with a mobile Internet tariff plan and 600 MB of free traffic.

With a price tag of RUB 14,990 (approx. $470), the new netbook will be an attractive offer to customers in Russia who are looking for greater portability or an entry-level PC solution. As MTS’ 3G networks are already available in 39 Russian cities, the new netbook will let MTS subscribers connect to the Internet with speeds of up to 3.6 Mbit/sec using our HSPA networks. MTS Connect modem allows subscribers to connect to Internet in international roaming and through EDGE/GPRS networks in Russia where 3G is yet to be deployed.

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Monday, August 17, 2009
By Joshua Tulgan, Director of Investor Relations at MTS (NYSE:MBT)

Recently, we tracked a discussion about the role of IR in the M&A process on a couple of industry blogs (original entry and the response to it). Given the recent announcement of our intent to acquire a controlling stake of COMSTAR-UTS, I thought I could offer one perspective from an IR professional.

I would agree that investment banks are a great resource for information for M&A communications (i.e. the data points used to sell the deal, such as multiples and comparisons with other similar transactions, particularly in a global context). At the same time, I do believe that the IR department should be brought in to discuss such key questions as the strategic justification, valuation process, and key integration issues inherent in any M&A deal.

The IR department has been afforded an active role in many facets of the transaction due to the legal, governance and valuation issues involved. Our key task has been laying the groundwork for investors to appreciate the strategic importance of the transaction, followed by a multi-faceted approach to managing the information flow, investors’ expectations and management intent following the closing of the transaction. Our success so far has been due to our deep involvement in the deal and driven by the fact that long after the banks, our M&A team, the lawyers and DD advisors are gone, the IR department will be left to mind the store so to speak.

In the end, we do sell ideas, data points, etc. to our audiences, but IR affords the rare opportunity to craft the item being sold. And I think any salesperson would admit that the greater role IR has in shaping a product, the more the IR function will believe in the product. And this makes the product that much easier to sell.

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Thursday, August 13, 2009
Russia Today, the leading English-speaking TV channel based in Russia, has reported on our Q2 results and the intent to acquire a controlling stake in COMSTAR-UTS.

You can check out the video on their website, featuring an interview with our President and CEO, Mikhail Shamolin.

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