MTS blog


VASYL LATSANYCH INTERVIEWED BY RBC DAILY

Wednesday, March 07, 2012

 

Vasyl Latsanych, MTS Vice President for Marketing, spoke with RBC Daily. See some of the highlights from the interview below. Click here to read the full article in Russian. 

 

SIM cards sales. In the past in order to realize strong growth, operators simply needed to boost sales of SIMs. Today, with market penetration exceeding 150%, this model embraced by mobile operators no longer works. The high turnover of short-lived SIMs results in enormous dealer commissions. As dealers were interested in generating subscriber additions, this resulted in high churn rate. Around 70% of new SIM card sales are effectively subscribers of the same operators that were sold new SIMs with a new tariff plan. Revenues from such “new” subscribers are short-lived; effectively operators were reducing OIBDA to boost topline. This is merely a stimulation of expansion, not real growth. Hence, our decision to reduce new additions. As a result, in Q3 2011 we witnessed a year-over-year reduction of churn rate by 1.6 percentage points.

 

Our key objective is to ensure quality additions. Back in 2011 we abandoned the practice of paying fixed-bonuses to the regional dealers, shifting to a revenue-sharing basis. In 2012, we renegotiated agreements with all of the dealers, including Svyaznoy and Euroset, on the basis of revenue-sharing. This enabled us to eliminate fraud in SIM card sales and motivate dealers to attract quality subscribers. We are confident that by reducing turnover of low-quality subscribers, we will grow the bottom line. We consider greater penetration of smartphones as a real opportunity to increase ARPU. We are focusing on smartphones sales as we see from our experience that a subscriber who has bought a smartphone will spend 30% more as they will increase their consumption of data products. In addition to greater spending on data, we are also seeing greater spending on voice after switching to smartphones.

 

Data revenues. Focus on data generation is yet another way of increasing profitability. MTS has invested hundreds of millions of dollars in deployment of 3G networks – and covering nearly all of Russia at this point. However, the load on the networks is still quite low. This allows us to promote data services as our core business. That said, the growth of data revenues is limited as subscribers are not willing at this time to spend a lot on mobile internet – monthly data tariffs plans vary depending on speed from 200 rubles to 500 rubles. This is not a lot of money given that penetration of mobile internet is still low. To make a long story short, increasing efficiency of the business and building new drivers of growth is a long and tedious process which may result temporarily in a slower pace of growth, but in the long run it will create real value for the business.

 

Fixed-line business. In our fixed-line business we are focused on building networks and creating platforms for future growth. We have invested millions of dollars in upgrading our broadband network from which we see returns starting in 2013. By that time we will have deployed digital TV networks and will be able to offer our clients enhanced channel packages. Television in Russia is still very cheap and the prices are unlikely to go up. Still, on the basis of social package, we can create premium packages and offer our subscribers content that is in demand – sports, movies, and television series.

 

Roaming. Before the New Year holidays we launched an offering that allows subscribers to cut costs on international roaming. During the holidays we saw the number of roamers go up by 20% when compared to last year with voice traffic in roaming increasing on average by 40%. Users stopped switching off phones when going abroad, they no longer fear to take incoming calls, the length of the calls is going up, but APPM is decreasing. That’s exactly what we expected – to grow consumption of roaming services through more affordable pricing. 


 

LTE. We don’t expect LTE to evolve into a mass market offering earlier than 2014-2015 for several reasons, one of which is the pace of development of end-user equipment. I can assure you that we are ready to switch on LTE network in Moscow in a week. But in the best case scenario LTE network will only start to generate stable returns in six months, probably even later. Moscow is far ahead of other regions in terms of demand for LTE service. In order to ensure LTE speeds available in laboratories, one needs to have a network with fiber backhaul networks. MTS has a competitive advantage in this respect, as our subsidiary, MGTS, is deploying a unique fully fiber - or GPON - network in Moscow- with total investments around 50 billion rubles - which will enable us to support quick mobile internet in 3G as well as LTE networks.

 

Retail. We are looking at the development of the retail chain as a part of the Group. Our retail subsidiary - RTK - has had two years of strong growth. During that period RTK has established itself as a major retailer, built a solid customer base and brought retail business to a break-even-level. In H2 2011 we adjusted our strategy and focused on sales of MTS services which was reflected in the change of KPIs for the management and in the incentive program for the retail division employees. This approach has resulted in declining RTK’s share in mobile retail market and lowering the sales of handsets. However, during the same period we increased the share of smartphones in the sales mix, which has enabled MTS to grow its number of mobile Internet users. Going forward, this will enable us to boost data traffic and grow ARPU. 

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REPORT ON MOBILE RETAIL IN RUSSIA, Q4 2011

Tuesday, January 24, 2012

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)

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REPORT ON MOBILE RETAIL IN RUSSIA, Q2 2011

Friday, July 15, 2011

Today we are issuing a report on mobile retail in Russia during Q2 2011, based on the estimates from our mobile retail network. 

Highlights from the report:
- During Q2 2011, the number of phones sold in Russia is set to increase by 20% compared to Q2 2010 with around 8.8 mln devices sold
- During Q2 2011, the mobile handset market in Russia has expanded by 16% in sales compared to Q2 2010 to reach 36.8 bln rubles
- The average price of mobile phones during Q2 2011 decreased by 3.2% compared to Q2 2010 to reach 4172 rubles
- Sales of smartphones in the sales mix in the MTS retail network during H1 2011 reached 17%
- The market share of MTS retail network grew to 15.2% in Q2 2011 up from 13.7% in Q2 2010 in terms of handests sold (including wholesale sales) 
- MTS-branded handset MTS Basic 140 was the most popular device sold through the MTS retail network, accounting for 4.9% of total units sold  

Please download the complete report
Mobile retail report_H1 2011 ENG_final.pdf (271.97 kb)

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MTS LAUNCHES FIRST GLONASS PHONE

Tuesday, April 12, 2011



We have recently launched the МТS Glonass 945, the first mobile phone that supports both the U.S. Global Positioning System (“GPS”) and Russia’s Glonass navigation system. Glonass (“Global Navigation Satellite System”) operated by the Russian Space Forces has a constellation of 24 operational satellites, which cover 100% of Russian territory and 98% of world’s territory. Combining Glonass and GPS significantly increases reliability and precision of the location-based services, which helps users navigate through extreme topography and in the cities with tall buildings that could block the transmissions of some satellites.

The new smartphone has a multi-touch screen and runs on the Android 2.2 operating system. It costs RUB 10 490 when purchased with an MTS tariff.

Pre-installed MTS Navigator app features in-car and “pedestrian mode” directions, complete with 3D moving maps, audio guidance with street name articulation, and thousands of points of interest including restaurants, bars and hotels. MTS Navigator is one of the many location-based services MTS offers to its subscribers. MTS Locator is used for tracking whereabouts of friends and family members, while the Mobile Employees service helps corporate customers to pinpoint location of its employees and vehicles. With MTS Parking, if you have parked your car in the wrong place, and it has been evacuated, you will receive an SMS with directions where to go to get it back. More than 1.2 million of the Company’s subscribers are already using MTS location-based services, and we expect the demand for such services to grow further as more GPS- and Glonass-enabled devices come to market.

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REPORT ON MOBILE RETAIL IN RUSSIA, Q1 2011

Friday, April 08, 2011

Today we are issuing a report on mobile retail in Russia during Q1 2011, based on the estimates from our mobile retail network. You can download it here.

Highlights from the report:

- MTS estimates that during Q1 2011 the sales of handsets in Russia in terms of the units sold increased by 20% compared to the same period of 2010. Around 8.7 mln devices were sold during the quarter
- In Q1 2011, the mobile retail market has expanded by 19% in sales compared to Q1 2010 to reach 39.4 bln rubles
- During Q1 2011, the average retail price of the handsets decreased by 1% compared to Q1 2010, but came in higher than the average price during 2010 – 4 453 rubles
- The market share of the MTS mobile retail network in terms of handsets sold (including wholesale sales) is estimated at 17.2% in Q1 2011
- The share of the MTS-branded handsets sold in the MTS retail network has increased from 10.7% in Q1 2010 to 14.5% in Q1 2011
- In Q1 2011, the MTS-branded MTS 236 was again the most popular device sold through the MTS retail network, accounting for 6.3% of total units sold
 
Please download the compete report here:

 Mobile retail report Q1 2011

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REPORT ON MOBILE RETAIL IN RUSSIA, Q4 2010

Monday, January 17, 2011

Today we are issuing a report on mobile retail in Russia during Q4 2010, based on the estimates from our mobile retail network. You can download it here.

Highlights from the report:
- MTS estimates that during Q4 2010 the sales of handsets in Russia in terms of the units sold increased by 18% compared to the same period of 2009 and by 6% compared to Q3 2010
- We estimate that 10.4 mln devices were sold during the fourth quarter. Overall, in 2010 the volume of mobile retail market increased by 25% to reach 34.8 mln of handsets  
- The average retail price of the handsets went up for the second quarter in a row
- During Q4 2010, according to our estimates, the market share of the MTS mobile retail network (excluding franchise stores) in terms of handsets sold  reached 14.8% (an increase of 3 percentage points compared with Q4 2009)
- In Q4 2010, the MTS-branded MTS 236 was the most popular device sold through the MTS retail network, accounting for 7.8% of total units sold
 

Please download the compete report here:

 Mobile retail report Q4 2010

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FIRST MTS-BRANDED ANDROID PHONE LAUNCHED

Monday, November 29, 2010

We have recently launched the first MTS-branded Android handset, the MTS 916, through our retail network. It’s a 3G enabled phone with a 3.4 megapixel camera and a 2.8 inch screen. At RUB 5,990, the smartphone currently provides buyers in the Russian market with the lowest entry price as devices with similar functions are in the range of RUB 7,000–30,000. 

In line with the global trends, Android phones are becoming increasingly popular in Russia. According to the data compiled by MTS, sales of Android phones in the third quarter of 2010 accounted for 18% of the overall smartphone sales in Russia. This is expected to reach 25-30% by year’s end.

MTS-branded phones are in great demand on the back of affordable prices and unique value propositions. In September 2010 sales of MTS-branded handsets constituted around 17% of the sales in our retail network. To see the full list of MTS-branded handsets, please follow the link.

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REPORT ON MOBILE RETAIL IN RUSSIA, Q3 2010

Monday, October 18, 2010

Today we are issuing a report on mobile retail in Russia during Q3 2010, based on the estimates from our mobile retail network. You can download it here.

Highlights from the report:
- MTS estimates that during Q3 2010 the sales of handsets in Russia in terms of the units sold will increase by 34% compared to the same period of 2009 and by 33% compared to Q2 2010
- We expect around 9.78 mln devices to be sold during the quarter
- We estimate that the average retail price of the handsets will increase for the first time in a few quarters. The share of phones priced at under 5 000 rubles constitutes around 77% of total units sold during Q3 2010.
- During Q3 2010, according to our estimates, the market share of the MTS mobile retail network (excluding franchise stores) in terms of handsets sold will reach 14.1% (an increase of 5 percentage points compared with Q3 2009)
- In Q3 2010, the MTS-branded MTS 236 was the most popular device sold through the MTS retail network, accounting for 10.8% of total units sold

Please download the compete report here:

 Mobile retail report Q3 2010

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MTS LAUNCHES BLACKBERRY® IN ARMENIA

Wednesday, August 18, 2010

We are pleased to announce that this past Monday we became the first company to launch the BlackBerry® solution in Armenia. The move was made possible through a partnership with Emitac Mobile Solutions (EMS), a Dubai based solutions and service provider and a strategic channel partner of Research In Motion (RIM). Coupled with the speeds offered by our 3G network, which is now operational in 50 towns and cities across Armenia, our customers will be able to fully satisfy their mobile and information needs by using the BlackBerry® solution.

We will offer the BlackBerry® Enterprise Server (BES) for corporate customers and the BlackBerry® Internet Service (BIS) for smaller businesses and individual users. The initial portfolio of handsets will consist of three models – BlackBerry® Bold™ 9700, BlackBerry® Bold™ 9000 and BlackBerry® Storm 2™ 9520.

A tariff plan for BIS users will carry a monthly fee of AMD 9,900 (around $27) and will include 500 free on-net minutes and 500 free on-net SMS as well as unlimited access to the email and messaging.

BlackBerry Enterprise Server is designed for organizations that manage their own email servers. The BlackBerry Enterprise Server software tightly integrates with IBM® Lotus® Domino®, Microsoft® Exchange and Novell® GroupWise® and offers advanced security and IT policy controls to enable secure, push-based wireless access to email and other corporate data.

BlackBerry Internet Service is designed for smaller businesses and individuals. It allows customers to access up to 10 supported corporate and personal email accounts (including most popular ISP email accounts such as Yahoo! Mail, Microsoft Live and Google Mail) from a BlackBerry smartphone.

 

 

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REPORT ON MOBILE RETAIL IN RUSSIA, Q2 2010

Friday, June 25, 2010
Today we are issuing a report on mobile retail in Russia during Q2 2010, based on the estimates from our mobile retail network. You can download it here.

Highlights from the report:
- During the first half of 2010, the number of phones sold in Russia is set to increase by around 24% compared to the same period of 2009
- At the end of the first half of 2010, mobile handset market in Russia is expected to reach 63.9 bln rubles in sales
- The average price of mobile phones on the market during Q2 2010 was 4,303 rubles, approximately 74% of devices sold through our stores were below 5,000 rubles
- The market share of MTS retail network grew to 13.9% in Q2 2010, an increase of 6.9 percentage points compared with the second quarter of 2009 (in unit sales)
- MTS-branded handset MTS 236 was the most popular device sold through the MTS retail network, accounting for 13.2% of total units sold

Please download the compete report here:

 Mobile retail report Q2 2010

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Recent Tweets

Follow me, Josh Tulgan, MTS Director for Corporate Finance and Investor Relations, on twitter

Twitter January 16, 09:36
$MBT moves to #gaming industry being on the forefront of working with tech disruptors that challenge, inspire and i… https://t.co/gsx8CZErXp

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#MTSS bought #eSport club #Gambit Esports $MBT https://t.co/laI883plOz

Twitter January 16, 09:23
$MBT enters #eSports market through acquisition of Gambit Esports, one of the world’s leading #eSport clubs #MTSS https://t.co/8my0cQKkfs

Twitter January 15, 12:49
$MBT: #Smartphone sales in #Russia rise 17% to RUB386 bln in 2017 #MTSS https://t.co/hOvsG4HMd0

Twitter January 12, 07:47
New historical record in #smartphone sales in #Russia 🏆 https://t.co/S7y9YKE8xo

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