IR Blog

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.

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

    

Last week we signed an agreement to create a mobile virtual network operator (MVNO) using MTS’ network with the X5 Retail Group N.V., Russia’s largest retailer in terms of sales. X5 will offer its customers special tariffs that they can subscribe to at the Perekrestok and Karusel stores in Moscow and the Moscow region. It is expected that the launch will take place by the end of summer 2010. This is the second project that MTS has concluded as part of its efforts to expand its distribution channels. Previously, in May 2009, MTS partnered with Auchan, one of the world’s largest food retailers, enabling the company to offer its A-Mobile tariff plan through its stores in Russia.

We are launching an instant money transfer service using our retail network to provide customers with the ability to make money transfers in Russia and abroad. This will allow us to expand our service portfolio, as well as to attract more customers to our retail stores.

Currently, customers can transfer money after paying a commission that amounts to 1.6% of the total amount for intra-Russia transfers and 2% for transfers to the CIS. In the near future, the service will expand outside of the CIS to include transfers to such countries as Bulgaria, Germany, Israel, Spain, Italy, Canada, China, Poland, Vietnam, the UK and the USA. Customers can make use of the service at all MTS-owned stores in Russia - the current list of locations is available on our Russian-language website.

One of our major initiatives in 2009 was the rapid expansion of our mobile retail network and distribution of devices through it. As we have indicated in our Q4 and FY 2009 results presentation, we have sold over 2 million handsets through our network during 2009, gaining a market share of 11.7% by the end of the year (from just over 2% in Q1 2009).

Today we are issuing a report on mobile retail in Russia during Q1 2010, based on the estimates from our mobile retail network. You can download it here.

          
MTS 835, 3G-enabled phone with a 2 megapixel camera and a 2.4 inch screen

We have been selling MTS-branded phones since the end of last year through our monobrand retail network in Russia. Currently, we have a total of four models on offer ranging from a basic model at 980 rubles* (or around $32**) - one of the most affordable in the market - to a 3G-enabled one at a very attractive price point  of 6,490 rubles (or around $215).
 
Lower-end phone models dominate in Russia, and we estimate that phones for under 5,000 rubles (around $165) accounted for over 35% of the market in 2009. This price point is attractive to customers who are buying their first phone, but also to those that want a phone for a second line or to use during vacation.

So far, we are quite pleased with the sales of MTS-branded phones. At the end of 2009, MTS was among the top five mobile phone brands, accounting for approximately 2% of the market in Q4’2009 (based on our estimates, in terms of sales of devices). During the months of November and December, MTS-branded phones accounted for 15% of phone sales through the MTS monobrand network. MTS-236, the entry-level model, was one of the 10 most popular models in December.

MTS is pleased to announce that we launched the first MTS Comstar bundle offer – the STREAM Versatile Box product – through our retail stores in Moscow and Zelenograd, a Moscow suburb, in December 2009. This is one of the first steps of our previously announced Comstar integration plans following our acquisition of the company in October 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.

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.

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.