MTS blog


MTS AND VIMPELCOM INCREASE MOBILE INTERNET SPEEDS THROUGH SPECTRUM SHARING

понедельник, ноября 28, 2016

Moscow, Russian Federation – Mobile TeleSystems PJSC (“MTS” or the “Company” – NYSE: MBT; MOEX: MTSS), the leading telecommunications provider in Russia and the CIS, and «VimpelCom” PJSC (Beeline brand) announce the start of spectrum sharing in 4G-network in Cherepovetz (Vologda region) which allows to increase data transfer speeds available to the subscribers at peak speeds of 150 Mb/s. Vologda region became the first region where two operators united their spectrums within a large-scale project to jointly construct and utilize LTE networks in more than 30 regions in Russia.  

Sharing of the operators’ 10 MHz bandwidth in the 2600 MHz range spectrums will permit an increase in data transfer speeds over LTE networks up to a peak speed of 150 Mb/s.

In December 2015, MTS and VimpelCom signed an addendum to their agreement on the joint planning, development and usage of LTE networks, which they originally concluded in 2014 to unite their spectrum bands in 20 regions in Russia. In 2016, the list of the regions was expanded to 31.  Apart from Vologda region, in 2016-2017, the operators plan to unite their spectrum resources in other regions. 

The development of the project became possible due to adoption of amendments to the law “On Communications” that legislated the operator’s right to jointly utilize spectrum. 

“After two years of execution, our ambitious project with VimpelCom is entering its final stage – during the next year, we’ll unite our LTE networks on shared spectrums in more than 30 regions. The project allows us to minimize costs on construction and utilizing of the base stations, decrease the timeline for network launch and what is more provide our subscribers with the higher mobile internet speeds in modern LTE networks”, noted Andrei Ushatskiy, Vice President for Technology and IT. 

In December 2014, MTS and VimpelCom signed a partnership agreement to jointly plan, develop and use LTE networks in Russia in 36 regions in Russia. Under the agreement, in 2014 – 2016, MTS develops shared mobile data networks in 19 regions in Russia, while VimpelCom constructs networks in 17 regions.The agreement will last seven years with an option of prolongation. During this period, operators will share base stations, sites, transport networks and other infrastructure. The agreement will not preclude either company from develop their own networks in addition to shared infrastructure in the designated regions.

 

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Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of MTS, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify forward looking statements by terms such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “will,” “could,” “may” or “might,” and the negative of such terms or other similar expressions.  We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not undertake or intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. We refer you to the documents MTS files from time to time with the U.S. Securities and Exchange Commission, specifically the Company’s most recent Form 20-F. These documents contain and identify important factors, including those contained in the section captioned “Risk Factors” that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the severity and duration of current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of Russian, U.S. and other foreign government programs to restore liquidity and stimulate national and global economies, our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so, strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses, potential fluctuations in quarterly results, our competitive environment, dependence on new service development and tariff structures, rapid technological and market change, acquisition strategy, risks associated with telecommunications infrastructure, governmental regulation of the telecommunications industries and other risks associated with operating in Russia and the CIS, volatility of stock price, financial risk management and future growth subject to risks.

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MTS SUBS BOOST DATA USAGE IN RUSSIAN ROAMING

пятница, июля 01, 2016

MTS carried out a research on the use of services by our customers, while traveling inside Russia during the beginning of summer tourist season in May and June of this year.

The number of tourists traveling within Russia increased by 11% compared to the same period last year. Meanwhile, the number of data-users among those who travel increased by 21%. Data traffic itself increased by 96%, the volume of outcoming calls increased by around 90% and SMS-usage increased by 40%. These numbers reflect the fact that subscribers are using more data in roaming, due to MTS's more transparent voice & data (V&D) “Smart” tariffs, which today represent more than 50% share of tariff sales through MTS’s proprietary retail distribution. Another major factor for the increase in data-usage is the fact that MTS boasts the largest LTE-coverage by regions. According to data published by Roskomnadzor, the Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications, MTS has the highest number of LTE base stations and the fastest mobile broadband in Russia.

Moscow remains the leading city in terms of tourists, and data-traffic volume in Moscow has increased by 2.5x year-over-year, a result driven by a twofold-increase in mobile internet speeds compared with last year.

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LTE SMARTPHONES HIT 50% SHARE OF SALES

четверг, июня 23, 2016

In June 2016, the share of LTE-enabled smartphones in sales all over Russia exceeded 50% for the first time. In May 2016, Russian retailers sold 2.6x more LTE-enabled smartphones than a year ago. This achievement can be attributed to the fact that the average price of an LTE-enabled smartphone declined by 20% y-o-y to RUB 18,200.

In MTS’s retail network, sales of LTE-enabled smartphones broke through the 50% barrier in April 2016, while in May, LTE-enabled smartphones represented around 52% of total smartphone sales.

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MTS AND ERICSSON EXTEND PARTNERSHIP IN 5G AND IOT

четверг, июня 16, 2016

MTS, in partnership with Ericsson, has successfully tested a 5G technology solution - LTE-U (LTE-Unlicensed) - by aggregating two frequencies – 10 MHz at the LTE-1800 MHz and 20 MHz at the unlicensed 5 GHz spectrum range - at Wi-Fi spots. During testing, we realized speeds up to 200 Mb/sec.

This successful test on MTS networks is the first fruit from our agreement with Ericsson aimed at developing and implementing 5G technologies in Russia, which we signed in December 2015. Aggregation of two networks’ resources – LTE and unlicensed Wi-Fi spectrum - allows for better internet speeds indoors, better coverage and enhanced network quality.

In addition, MTS and Ericsson signed an agreement for the supply of software for upgrading MTS’s radio network through 2018, by which the companies will implement Internet of things (IoT) solutions for 5G networks and test radio interface EC-GSM-IoT (Extended Coverage GSM IoT), a technology which enables operations of M2M devices in operators’ current cellular networks.

EC-GSM-IoT technology significantly reduces the cost and accelerates the deployment of IoT ecosystems. Due to the economical use of the frequency spectrum, new radio interface allows for a multifold increase in the number of operating devices in the M2M network. Due to the increased sensitivity of radio modules, the technology provides for a seven-fold expansion of the range of devices, as well as a reduction in their energy consumption. The implementation of this technology does not require a large-scale replacement of equipment, and, in most cases, the software upgrade can be installed on the radio network nodes. This means that an operator can create an IoT environment virtually anywhere where GSM coverage is available and connect tens of thousands of devices within an area of one base station - where current mobile devices may not "access" a radio signal.

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MTS SPEEDS UP MOBILE INTERNET BY AGGREGATING TWO LTE STANDARDS

пятница, июня 03, 2016

MTS announces, that it will launch the first fragment of 4G that is an aggregation of spectrum in LTE FDD and LTE TDD standards in Moscow before September 2016 and later in other Russian regions. The aggregation of the two standards will enhance LTE coverage and increase speeds up to 187 Mb/s.

During the testing phase, MTS successfully aggregated the first fragment of its LTE commercial network by combining two carrier frequencies: 10 MHz spectrum bandwidth at the FDD 1,800 MHz standard and a 20 MHz bandwidth at the TDD 2,600 MHz standard. This resulted in increased internet speeds of up to 165 Mb/s outdoors, 85 Mb/s indoors, while the maximum limit was 187 Mb/s. At the same time, the spectrum aggregation directly improved coverage of a LTE TDD base station by 60%, while enhancing the quality of TDD network coverage inside the buildings.

In another set of tests, MTS successfully aggregated three LTE FDD carrier frequencies at the 800 MHz, 1,800 MHz and 2,600 MHz ranges with corresponding spectrum widths of 5 MHz, 10 MHz and 10 MHz. As a result, internet speeds exceeded 163 Mb/s, which is a strong result considering that on a standalone basis the speed would not exceed 112 Mb/s.

Both types of aggregation can work simultaneously, while the system determines automatically the optimal regime depending on network conditions and mobile carrier capabilities.

In Moscow, MTS serves over half of its data traffic over LTE, and the share is steadily growing. The aggregation of FDD and TDD standards will almost double average mobile internet speeds and multiply the effective network coverage of TDD technology by 2.5x. This technique will put MTS customers in a privileged position all over Russia since MTS won a 2,595-2,620 MHz LTE TDD federal spectrum auction in February 2016, while MTS has already been serving Moscow and the Moscow region since 2012 on this LTE standard. Already since the beginning of 2016, the number of LTE-TDD enabled devices has increased by more than 20%.

Development of LTE by MTS

- In Spring 2015, MTS launched a new step towards developing LTE in Russian regions by betting on tech-neutral and multi-range LTE network. To this day, MTS launched tech-neutral LTE-1,800 spectrum in 35 regions and LTE-Advanced with two aggregated frequencies (1,800+2,600 MHz or LTE 800+2,600 MHz) in 25 regions.

- By the end of 2015, MTS was the first Russian telecom operator to launch LTE in all 83 regions where it operated. 

- Since the beginning of 2016, MTS - in cooperation with Cisco – has been implementing a new solution called Cisco SON on its LTE network, which through an automated optimization process can improve internet speeds by 20% on average, enhance network access by 25% and decreases the amount of connection abruptions by 10%.

- Throughout 2015, MTS increased its Moscow LTE network by 50%, while quadrupling the number of indoor base stations.

MTS WINS SPECTRUM AUCTION IN RUSSIA

вторник, февраля 09, 2016

MTS won a spectrum auction today in Russia and has gained a lot in the 2.6 Ghz frequency range to provide services on the LTE-TDD standard. The spectrum block is valid throughout Russia and will be used to strengthen LTE network capabilities. The results of the tender give MTS a 25MHz block in the 2.6 GHz range, which we currently use to provision service primarily for USB modems, tablets and certain smartphone devices.

The total cost of the spectrum was RUB 4.0 bln. The license is valid for 10 years.

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MTS LEADING GREEN TELECOMS IN RUSSIA

четверг, декабря 10, 2015

As part of our commitment to environmentally friendly solutions, MTS has installed the first LTE base station powered by hydrogen fuel cells in Russia in the Noginsky district of the Moscow region.

The introduction of hydrogen power for LTE expands MTS’ portfolio of green energy sources, which already includes wind and solar powered stations across Russia from the Barents Sea to the Sea of Japan. Previously MTS has used hydrogen cells in its 2G and 3G networks and the company is now the first in Russia to use them for LTE.

The use of the hydrogen fuel cell brings both environmental and commercial benefits, as not only does it create zero carbon emissions but it is also more cost efficient and last five times longer than electrochemical cells. A further advantage is the long reserve power of the cell, which means that the station can continue to function for an extended period, even in the absence of direct source of powe supply, as the reserve module will turn on automatically.

 

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SMARTPHONE MARKET REPORT, Q2 2015

среда, августа 05, 2015

We are pleased to share with you our a new report on the smartphone market in Russia in Q2 2015 based on the estimates of our retail chain.

Highhlights of the report include:

- In Q2 2015, the Russian smartphone market grew by 4.1% year-over-year to RUB 48.7 bln.

- Roughly, 5 mln smartphones were sold in Russia during the period which represents a decline of 9.2% compared to Q2 2014.

Sales of smartphones in the MTS retail stores in rubles grew by 40.7% year-over-year and by 33.6% quarter-over-quarter, while the volume of smartphones sold in MTS’s stores in Q2 2015 increased by 36.2% year-over-year.

 

You can download the full report below.

Smartphone Market Report Q2_2015_FIN.pdf (1.02 mb)

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ANDREI USHATSKIY INTERVIEWED BY GLOBAL TELECOMS BUSINESS

вторник, июня 30, 2015

Andrei Ushatskiy, MTS Vicre President, Technology and IT, participated in a Global Telcoms Business  roundtable discussion of the leading telecom CTOs. Andrei commented on the challenges in rolling-out LTE networks, potential for VoLTE deployment and transition to a new technological paradigm post LTE. Clicke here to read the article.

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INTERVIEW WITH ARVIDAS ALUTIS, CEO OF MTS RETAIL NETWORK

среда, апреля 22, 2015

Arvidas Alutis was appointed the CEO of MTS’s retail network a year ago. Prior to his appointment, for three years, he oversaw MTS’s customer service department and began his career with MTS 15 years ago as a consultant in one of our retail stores.

 

Interfax spoke with Arvidas about the performance of MTS’s retail network, the company’s strategy in mobile retail, market trends and the outlook for 2015. See below the abridged and translated version of the interview.

 

What are the financial results for RTK (i.e. MTS’s retail division)? Is the retail business profitable?

 

Surprisingly we are. Usually any retail owned by a mobile operator is a money drain. Our profit resulted from two major factors. Firstly, we worked to improve efficiency throughout 2014 and will continue to do so in the future. For instance, we decreased our rental expenses by approximately 10% in 2014 over 2013.

 

The second factor is our impressive product line. Not only do we bring MTS new mobile subscribers, but we also develop segments, in which our competitors are not present, such as fixed-line broadband and financial products.

 

Our OIBDA remains positive and our net income almost doubled last year. We are the only retail business owned by a mobile operator staying above break-even. Everyone else is in the red.

 

What goals does the MTS retail business have?

 

I’ve set three major goals for our employees this year. First, we want to achieve significant growth in online sales. Sales through online channels allow us to decrease expenses, including rent and salaries. Besides, the Internet allows us to expand the products we offer indefinitely. For example, we will soon launch our own line of accessories, and customers will be able to customize these products online. For example, you will be able to simply upload any photo, edit and submit it and then receive a personalized phone case with an image of your dog or your family.

 

Our Internet sales have benefited a lot from our synergy with Ozon, in which MTS owns an 11% stake. Ozon has a great base of customers who already make purchases online and are accustomed to shopping online, while we offer products Ozon has not offered before. Recently we have launched a pilot project allowing customers to pick-up products ordered through Ozon in five MTS retail stores in Moscow and two stores in Saint Petersburg. We plan to open at least 50 Ozon delivery locations in all major Russian cities in 2015.

 

Our second largest goal is to become the most efficient retail business run by a mobile operator and offer the best quality of service. This is because clients who get used to high standards in customer service here and now are likely to return when they need to get a new phone or to purchase one as a gift. I see the future in improving quality of service, and I’m sure that this is the right path for every mobile operator. Clients no longer get in queues for products. Now we are the ones who get in queues for the clients.

 

The third goal is to develop our human resources. This is rarely emphasized in retail companies, where employee turnover may amount to 70-80% per year. Our goal is simple: we want to be the best employer in retail and reach the lowest possible level of employees turnover in this business. Our goal is to achieve employee turnover of less than 35%. Retail generally employs young adults, who are only testing the ice in adult life: we are the first employer for over 50% of our staff. We must make sure that they understand that they have an option to professionally develop within our company, to become a manager and to grow both vertically and horizontally within MTS Group.

 

Do you plan to diversify your product lines? Will we be able to buy a blender at a MTS store in the future?

 

I doubt you will be able to get a blender, but you will be able to buy a TV in our stores. That’s because MTS, unlike other players on the market, is developing other businesses besides mobile. We own a PSTN provider in Moscow, we are the second largest provider of fixed broadband in Russia, and we will soon launch our satellite TV service. Products which come as complimentary to these services, such as a TV with built-in IPTV or satellite TV options, are a logical purchase for the clients. And through our partnership with MTS Bank we are able to offer our clients a loan or an installment payment plan under our own brand.

 

Last year the number of mobile retail stores in Russia decreased from 28,500 to 28,000. But MTS retail chain increased its footprint by 3% up to 2,900 proprietary stores. Do you plan to increase or decrease the size of retail chain?

 

This year we are probably the only company to grow its retail presence rather than reduce it. MTS plans to increase both the number of its stores and number of employees per store. We plan to open 300-400 proprietary stores in 2015.

           

Where will you open new outlets: in Moscow or in regions? What is your priority: major cities or increasing availability of internet access in the regions?

 

There is no decisive answer here. We do realize that we need additional stores in specific locations. This depends on the dynamic of the operator’s client base in specific regions.  We know that Svyaznoy and Evroset reduced the number of their stores this year by closing unprofitable outlets. They are most likely focusing on large cities where there is money left. But we take into consideration not only sales of devices, but also developing the MTS client base. If clients used to top-up their accounts at a specific store that our competitors have closed and are not ready to go to another location, we will open a store there even if we don’t expect to make profit from selling devices there.

 

How have rent expenses changed? Do you expect the rent to grow?

 

We decreased rent expenses last year by almost 10% over 2013. Despite the fact that we expect to grow our number of stores by 10%, our rent expenses should remain the same as the last year. That’s possible even when you have many outlets.

 

You’ve mentioned that you plan to increase the number of employees per outlet. Will that result in increased expenses for the retail business?

 

Of course it will. But we understand that these expenses are necessary because, first of all, we don’t want clients and prospective customers queuing for services, and second, our employees should have sufficient time to serve every customer to not only help  them with purchase of a phone or a tablet, but also resolve any other problems they might have. That means spending money on training our employees, on professional development, on retaining our staff. Last year we increased our personnel cost per store by 10%, but this increase has already paid off. We saw an increase in sales per store which outweighed these expenses.

 

What percentage of MTS clients do you acquire through you retail chain?

 

Over 50% overall, and over 70% in some of the regions.  This is a lot, and you should also add up contribution from our franchising partners which generate up to additional 20% of SIM card sales in some regions.

 

You are experimenting with smartphone only format of the stores where you sell smartphones almost exclusively. When will MTS retail transition to this model?

           

Smartphones account for almost 60% of our sales, the latest monthly figure was 65%. We are once again ahead of the market here, by 3-4%. That’s only natural as the market follows the demand. Our goal as a retail business owned by a mobile operator is to shape this demand. That’s why we are ahead, and I believe that feature phones will become a thing of a past even without forcing it. However, a decrease in supply could also work.  We opened the first smartphone only outlet last year in Moscow, this year we plan to open around 40 such outlets in every city with population of over one million.

 

What product range will be available at these stores?

We will still offer mobile phones for senior citizens, with large buttons and a large screen. Also we will keep cheap phones you won’t mind giving to, say, a child. There will be only 1-3 models to choose from. Everything else will be smartphones.

 

What kind of smartphones? How many items?

 

There are three things customers pay attention to. First one is the price, especially now. Our goal is to either make a device affordable enough for instant purchase, or to provide customers with options for installment payment or taking a loan.

 

The second one is screen size. Tablet sales are in stagnation and will soon dwindle as modern large-screen smartphones are yesterday’s tablets. Why should you carry around two devices when you can have everything you need in one?

 

The third one is specifications: OS, support of LTE standard, camera resolution, memory size. I refer to the majority of the clients as there are also customers who will buy only Apple or other brands like Samsung, who would never choose anything else. But for most of the customers, these three things matter. 40 smartphone models meet set requirements of 80% of the customers. Those who want an exclusive device can order it either from our online store at home, or online at our outlet.

 

What are your Q1 2015 results? Did the forecasted decrease in sales following market saturation in December actually occur?

 

As of Q1 we slightly increased sales over the same period in 2014. Our revenue was stable, but sales of smartphones in units increased by roughly 4% despite the economic difficulties and lower customer demand. Sales of budget LTE smartphones increased 30x year-over-year and constituted one of the key drivers of growth. At the same time, we do see the demand shifting to a lower price segment. But we were prepared for that. In Q4, we aimed to smooth any increase in prices and didn’t let our prices skyrocket as would have been expected. On April 1 we lowered prices on 70 devices even further.

 

Did you lower the prices at the expense of markup? Or did your suppliers lower theirs?

 

We did it at the expense of the markup. We won’t end up in red ink though. Our negotiations with suppliers led to some interesting offers. We saw a significant decrease in sales of high-end devices priced over 30,000 rubles, because these devices were sold out before the New Year. But we never aimed to maintain strong presence in this segment.

 

Why is that?  IPhone users generate higher ARPU than average clients.

 

MTS has more Apple owners among its clients than its competitors.  But over 40% of them purchase their iPhones and iPads abroad. They order the devices from global online stores or they just purchase devices while they are on a business trip or travelling. There is no point in trying to win this segment.

 

What was share of your sales did LTE devices account for in Q1? What do you expect from the LTE segment going forward? Could these devices be getting too expensive for customers?

           

Last quarter LTE devices accounted for 25% of total devices sold. In Moscow we are ahead of the market in sales of LTE smartphones as we are focused on this region as the quality of our LTE network here is superb.

           

Customers do spend less now and the demand is probably bound to decrease. However, our prices for LTE devices are also declining. 4G chips still cost twice as much as 3G chips. Manufacturers promise that the prices will decrease by summer and that the prices depend on how many devices have been sold. It is the assembly line principle: the more units that are produced, the cheaper every single unit is. More than 1 million LTE devices are sold in Russia every quarter and penetration of LTE devices grows much faster than in many of the European markets.

 

Do you sell less LTE smartphones in the regions where the average income is lower?

 

It’s not a matter of income, it’s a matter of client experience. If the LTE network is there, if one’s friends start using LTE, a transition to LTE becomes enjoyable. Considering the fact that we are lowering our prices, money is not an obstacle. In some regions, LTE devices account for almost 20% of total sales. The difference from Moscow is not drastic by any means.

 

 

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