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RUSSIAN MOBILE RETAIL REPORT 2017

Thursday, February 22, 2018

Growing customer demand for digital entertainment services, including video streaming and online TV, has stimulated higher sales of more advanced and premium smartphones. In 2017, the strongest trend in consumer behavior was an upsurge in sales of smartphones priced over RUB 40,000. In monetary terms, this category of smartphones demonstrated an impressive growth of 79% y-o-y. The second fastest growing category were smartphones priced at RUB 20,000 - 30,000, showing a 21% increase compared to 2016. In the RUB 30,000 - 40,000 price segment, sales grew by 15%. At the same time, lower-end devices priced below RUB 5,000 saw a 39% decline in sales.

The popularity of premium smartphones also fueled an overall growth in credit sales which increased by 40% in unit terms and by 74% in monetary terms. The average price of a smartphone bought on credit increased to RUB 19,000 (+24% y-o-y). At the same time, customers this year opted for loans repayable over 24 months sixteen times more often than in 2016 – a period corresponding to the average lifespan of a modern smartphone. Purchase costs distribution over a longer period of time allowed customers to choose premium tariff plans with higher data allowance.

Today, an advanced smartphone helps users manage their daily tasks and serves as a single access point for entertainment, replacing several devices – tablet, camera, music player, e-book and banking card. As a result, consumers are increasingly seeking more reliable and faster handsets which boast high-resolution screens, advanced cameras and NFC functionality. For operators this trend means greater data consumption – in 2017, MTS saw an increase of 252% compared to the previous year.

Kirill Dmitriev, Vice President, Sales and Customer Service, MTS, commented: “We are witnessing a turning point in consumer behavior, with smartphones increasingly seen as integrated hubs of digital life. This drives consumers, even those with low income, to buy more expensive devices so they can access heavier digital content everywhere and at any time. More and more of our subscribers prioritize powerful devices that enable them to watch movies, play games, use social networks, post photos and publish stories on social platforms such as Instagram.

Kirill continued, “To keep pace with evolving customer demand, we offer affordable handsets that provide easy access to digital entertainment. Moreover, at MTS, we are actively developing our own digital ecosystem - mobile music, mobile TV and video-on demand. Our menu of services has been enlarged with e-ticketing service as a result of our recent acquisitions of Ponominalu.ru and Ticketland.ru.”

The average smartphone price at MTS retail stores increased from RUB 9,502 in 2016 to 11,846 in 2017 (+24.7%) which is 13% lower than the average smartphone price on the Russian smartphone market (RUB 13,417). The difference is explained by the fact that MTS retail network keeps prices at minimum, offering its customers the option to choose higher-end devices without typical retail mark-ups.

Among the most popular brands were Samsung, Apple and Honor/Huawei, which collectively accounted for the majority of smartphone sales in MTS retail stores. The overall share of the three manufacturers totaled roughly 85.8% of all gadgets sold in 2017. In 2017, Apple demonstrated solid growth of 1.5x both in monetary and unit terms. One of the main contributing factors was a decrease in retail prices; in Q4 2017, for example, the most popular model on the Russian market was iPhone SE 32GB priced at RUB 18,490 in the MTS retail stores, an annual drop of 40% from the initial price of RUB 33,000 in Q4 2016. Honor/Huawei also boosted its sales showing a 285% and 342% growth in unit and monetary terms respectively. These developments negatively affected Alcatel branded smartphone sales which dropped by 64% in unit terms.


Russian smartphone market in 2017

In Russia, the overall smartphone sales in 2017 amounted to RUB 386 bln (+17.3% y-o-y). In unit terms, retailers together sold 28.4 mln devices (+6% y-o-y) and set a new record, exceeding the previous all-time high of 27.6 mln devices sold in 2014.

Samsung remained the most sought-after brand in 2017. The Korean manufacturer’s market share amounted to 25.2% in unit terms (+3.5 p.p.) and 29.2% in monetary terms (+3.5 p.p.). The main driver for such boost in sales was the successful start of Samsung’s flagship models - Galaxy S8 and S8 Plus.

Apple’s market share at the end of 2017 accounted for 12.8% in unit terms (+1.7 p.p.) and 34.4% in monetary terms (+0.5 p.p.).

The third most popular brand was Honor/Huawei. The vendor's market share demonstrated a strong growth and reached 9.6% (+5.3 p.p.) in unit terms and 8.5% (+4.7 p.p.) in monetary terms. Another rapidly growing player was Xiaomi – the Chinese manufacturer entered the TOP-5, most highly demanded smartphone brands in Russia with a market share of 4.1% (+3.5 p.p.) in unit terms and 3.7% (+2.9 p.p.) in monetary terms.

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Russian Mobile Retail Report Q2 2017

Thursday, August 24, 2017

The key consumer behavior trend in Q2 2017, arising from MTS Retail analysis, was growth in demand for advanced smartphones priced over RUB 40,000. Consequently, against the background of increasing interest in this category of devices, 60% of high-end smartphones in the MTS retail network were bought on credit.

In Q2 2017, the share of smartphones over RUB 40,000 bought on credit doubled from 32% to 60%. Overall, the sales of smartphones in this category grew 49.5% in revenue and 48.5% in unit terms. 

The overall share of affordable as well as premium category smartphones sold in the MTS retail network increased to 20% of sales in unit terms (+6 p.p.) and 35% in money terms (+13 p.p). The average sale price of smartphones bought on credit increased 22% y-o-y to RUB 18,500 due to larger share of such smartphones in total sales. Meanwhile, the average price of smartphones in general sold through the MTS retail network increased by just 8% to RUB 10,500. 

The growth in sales of smartphones bought on credit was attributable to wide availability of credit facilities including better installment terms under the 0-0-24 and 0-0-36 schemes, the launch of online lending in MTS e-shop, cashback options as well as changes in consumer behavior. The subscribers’ approach towards the acquisition of a new smartphone became more pragmatic: the average lifetime of a device increased from 1.5 to 2 years, with customers preferring to buy more advanced smartphones with longer service life from well-known brands such as Samsung, Apple and Huawei.   

Alexander Mosyakin, CEO of MTS Retail, commented: "We saw that today our customers are not just interested in purchasing a phone, but look for a universal device that assists them with everyday tasks: to buy tickets to the cinema, pay utility bills, watch a video, communicate on social networks etc. More and more people choose smartphones with a larger screen and a better camera. To meet this demand, we have enriched our traditional portfolio of available smartphones with more advanced and reliable models that also enable the full use our digital products such as the e-wallet, cloud services, TV, as well as a range of other apps in the MTS ecosystem. Meanwhile, we continue keeping our prices highly competitive and offer our clients favorable payment conditions and credit options. All this makes an acquisition of a new smartphone an attractive proposition for our customers”. 

As the interest in advanced smartphones is growing, the share of feature phones sold in the MTS retail network is declining: 270,000 devices were sold in Q2 2017, a decrease of 60%. The share of C-branded devices with basic functionality that cannot compete with the leading devices is also in decline.

Samsung, Apple and Huawei are the three key vendors in the MTS retail network. Although Samsung have now devices returned to the shelves of other retail chains, their share in MTS outlets remains high and comprises 32.8% of units sold and 44.4% of revenue. Huawei showed the most impressive growth: its share of retail sales grew from 1% to 17%. Another leader in sales in MTS retail network was Apple: its devices priced over RUB 40,000 sold 2.5 times better in Q2 2017 than a year ago. Meanwhile, the share of Alcatel sales dropped 12.5% in unit terms and 7.5% in cash terms. 

 

Russian smartphone market 

Samsung remained the most popular cellphone brand in Q2 2017. The Korean manufacturer’s market share was approximately 26% in unit terms (+5 p.p.) accounting for 32.4% of total revenue (+5p.p.). This increase is attributable to the successful launch of the new Galaxy S8. The model’s success allowed Samsung to outsell Apple, its nearest revenue competitor, in the months of May and June. iPhone sales accounted for 32.1% (- 0.3 p.p.) of revenue and 12% (+1 p.p.) of units sold for the reporting period.

The third most popular brand in Russia was Huawei. The company's market share reached 8.4% in unit terms. The number of smartphones by other Chinese manufacturers - LENOVO and ZTE - sold in the Russian market decreased by 4 p.p. and 2.8 p.p. y-o-y respectively for the reporting period. 

The share of smartphones in total handset sales grew to 74% in unit terms (+ 5.5 p.p.) and 96% in money terms. The average price of smartphones sold grew 6% y-o-y to RUB 12,900. 

Overall, in Q2 2017, 6.2 mln smartphones were sold, an increase of 12% to the previous year. The sales of feature phones in Russia declined 16% to 2.2 mln units. The revenue from smartphone sales grew 16% to RUB 79.9 bln, while sales of feature phones decreased 20% to RUB 4.3 bln.  

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Russian Mobile Retail Report Q1 2017

Wednesday, June 14, 2017

In Q1 2017, mobile phone sales in Russia grew 6.2% in monetary terms to RUB 79.4 billion. The key trend seen across MTS’ retail network was the outperformance of LTE-smartphone sales, which was driven by favorable purchase terms available for such gadgets. The total number of MTS online store users increased 11% y-o-y. The most rapidly growing segment for the online store was female users aged over 45, which grew by 17% y-o-y.

In January-March, 8.15 million mobile phones were sold in Russia - 6.12 million smartphones (+ 6% y-o-y) and 2.03 feature phones (-21% y-o-y). In Q1 2017, smartphones sales in Russia increased by 7.9% y-o-y to RUB 76.1 billion.

The average market price of mobile devices increased by 7.7% to RUB 9,749. Smartphones’ share of sales was 95.7% in monetary terms, an increase of 1.5% from the previous year. Smartphone sales represented 75.1% of total mobile sales by units, a year-on-year increase of 5.5%.The average price of smartphones sold on the market increased 1.4% y-o-y and amounted to RUB 12,423.

LTE devices were the main driver behind smartphone sales growth. The share of LTE devices in total smartphone sales reached 66% by units sold (+23.1 p.p. y-o-y) and 88.6% in terms of value (+15.5 p.p. y-o-y). 

The main reasons for increased sales of LTE-enabled smartphones include higher demand for multimedia content, the widespread development of 4G networks and the wider choice of models available. Lower average handset prices, which have fallen by 20% y-o-y to RUB 16,576 (Q1 2016: RUB 20,645), were also a key factor.

By the end of 2016, Samsung smartphones accounted for 24.4% of total sales in Russia, an increase of 3.5 p.p. y-o-y. Apple was the second most popular brand with a share of 11.9% (+1.6 p.p. y-o-y). The fastest growing brand of smartphones in Russia, Huawei, occupied third place and quadrupled its share of sales  to 9.3% from 2.3% a year earlier. ZTE has a stable market share at 5.8%, while Lenovo's share decreased by 3.4 p.p. to 5.7%.

 

MTS retail: women are increasingly buying gudgets online 

“During Q1 2017, MTS reduced the size of its retail chain by 469 stores to 5,725, in line with where it was in spring last year. Simultaneously, we noticed substantial growth of the number of people purchasing products through MTS’ online store. Interestingly, this sales channel is particularly popular with women over 45 years old. This is an important trend as it shows that online stores can be popular not only amoung young people but also across more conservative customers”, -commented Kirill Dmitriev, Vice President for Sales and Services, MTS. 

MTS continues to improve the affordability of advanced and multi-functional smartphones: the price of MTS’ LTE-devices is 24% lower than the average market price. Favorable purchase terms offer MTS customers more flexibily to choose more advanced LTE-smartphones with high-quality cameras and large screens. 

MTS’ sales of LTE-enabled smartphones increased by 27.1 p.p. y-o-y to a 73.4% share of sales by volume, which is 10 p.p. higher than the market. In monetary terms, the share went up by 20.5 p.p. to 90.8%, demonstrating how MTS’ LTE sales outperfomed the market both in absolute terms and market share growth rates.

The average price of smartphones sold through the MTS retail chain increased 14.3% y-o-y during 2016. The share of MTS’ smartphone sales in the RUB <5,000 and RUB 5,000 – 10,000 categories decreased by 5.2 p.p. y-o-y and 5.7 p.p. y-o-y, respectively, in monetary terms. The share of smartphone sales in the RUB >10,000 category increased, while smartphones in the RUB >40,000 price range demonstrated the fastest share of sales gain at 6 p.p. y-o-y.   

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МТS DEVELOPS ITS MONOBRAND RETAIL NETWORK IN MOSCOW BASED ON BIG DATA

Tuesday, October 04, 2016

Moscow, Russian Federation – PJSC MTS (NYSE: MBT; MOEX: MTSS), the leading telecommunications operator in Russia, announces the launch of a pilot project to utilize an impersonal analysis of high volumes of data for the development of its monobrand retail networks.  

By the end of 2016, MTS intends to open 10 monobrand retail outlets in Moscow, and the company will determine the location and the format of these outlets using Big Data technology. The multifactorial system of data analysis that MTS employs will allow the company to identify the most advantageous location, the best format, and the most favorable product portfolio for each outlet.  

By using Big Data for retail development, MTS has an opportunity to study consumer traffic in the area of the proposed outlet and analyze it objectively on a number of indicators. These include: 

Social and demographic factors;

The types of devices and operating systems being used;

Subscribers’ financial activity in the surrounding area; 

The duration of a subscriber’s presence in the vicinity;

The number of roaming subscribers; 

Volumes of voice and mobile internet traffic;

The concentration of the digital environment and popular internet resources.

Taking all of this information into account, experts at MTS can determine the appropriate size of each outlet and the number of employees required to staff it.  They can then select the portfolio of devices and accessories, plan sales and promotion activities, and identify the outlet’s priorities from the mobile, fixed, and banking services that MTS offers.

Igor Egorov, Director for the Moscow Region said, “The preliminary results of our Big Data analysis are very encouraging, though a little surprising, because they suggest new locations for outlets that differ from those initially considered. We decided to test this method in actual conditions as we believe it will improve the quality of service we provide for our subscribers and satisfy their expectations regarding the portfolio of products and services that we offer.”

MTS Retail network in Russia

MTS’s proprietary retail network is the largest non-grocery retail chain in Russia. In H1 2016, the number of MTS outlets grew by 30% year-on-year to 5,700 stores. Since the start of 2016, MTS has long been cooperating with brands such as Beats, Celly, Meizu, BQ, Highscreen, Prestigio, while other brands, including Huawei, Samsung, Asus, HTC, Alcatel, Philips, JBL, Sennheiser, Plantronics, and Jabra, have all increased their supply volumes.

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MTS RETAIL REPORT H1 2016

Thursday, July 07, 2016

We have recently released a report on MTS retail network in Russia for H1 2016. 

You can download the report by the link below.

H1_2016_Retail_report.pdf (322,48 kb)

LTE SMARTPHONES HIT 50% SHARE OF SALES

Thursday, June 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 RETAIL REPORT 2015

Friday, April 01, 2016

We have recently released a new report on mobile retail market in Russia for 2015. 

You can download the report below.

MTS Retail Report 2015.pdf (909.20 kb)

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MTS JOINS FORCES WITH QIWI POST

Wednesday, September 23, 2015

MTS has partnered with QIWI Post to install QIWI Post drop boxes in MTS shops in Russia. The first drop boxes have already been installed in Moscow, and boxes will be installed in five other cities by the end of the year. We expect this initiative to drive more traffic to our stores and increase the efficiency of our outlets by making the collection of orders placed through our Internet shop hassle-free. 

The drop boxes occupy an area of three square meters and are co-branded by MTS and QIWI Post. To pick up a delivery, customers simply need to enter their mobile phone number and confirmation code on the screen of the terminal.   

Qiwi Post provides automated delivery services to more than 200 of the largest online stores in Russia, including Ozon, MediaMarkt, Ulmart, Avon, Oriflame and Amway. QIWI Post has installed roughly 380 terminals in 21 Russian regions.

 

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REPORT ON MOBILE RETAIL IN RUSSIA, Q3 2012

Tuesday, November 13, 2012

Today we are issuing a report on mobile retail in Russia during Q3 2012, based on the estimates from our mobile retail network. 

Highlights from the report:
-  During Q3 2012, the number of phones sold in Russia increased by 26% compared to Q2 2012 with around 11.7 mln devices sold
-  During Q3 2012, the mobile handset market in Russia expanded by 30% in sales compared to Q2 2012 to reach RUB 55 bln 

 -  The average price of mobile phones during Q3 2012 increased by 13% compared to Q3 2011

-  Share of smartphones in the sales mix in the MTS retail network during Q3 2012 reached 28%

 At the end of Q3 2012, MTS retail network comprised 4,388 stores, including 1,612 franchised outlets. 


Please download the complete report here

Retail Report Q3 2012.pdf (428.64 kb)

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REPORT ON MOBILE RETAIL IN RUSSIA, Q2 2012

Friday, August 24, 2012

 

Today we are issuing a report on mobile retail in Russia during Q2 2012, based on the estimates from our mobile retail network. 

Highlights from the report:
-  During Q2 2012, the number of phones sold in Russia increased by 7% compared to Q2 2011 with around 9.4 mln devices sold
-  During Q2 2012, the mobile handset market in Russia expanded by 17% in sales compared to Q2 2011 to reach 42.9 bln rubles
-  The average price of mobile phones during Q2 2012 increased by 9% compared to Q2 2011

-  Share of smartphones in the sales mix in the MTS retail network during Q2 2012 reached 27%

 At the end of Q2 2012, MTS retail network comprised 4,156 stores, including 1560 franchised outlets. 


Please download the complete report here

Retail Report Q2 2012.pdf (429.51 kb)

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