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16
May

Russian Cellular Market in April 2005

The number of Russian cellular customers grew 4% in April to reach 89.3 mln (3.7 mln net adds, slightly less than in March when 3.9 new subscribers were added). SIM-card penetration was at 62% as of April 30, 2005, compared to 31% in April 2004 and 51% at the end of 2004.

Russian Mobile Subscribers

Mobile Subscribers April 30, 2005 March 31, 2005
Total Russia 89,275,000 85,560,000
  Penetration* 61.5% 58.9%
Moscow 19,139,425 18,608,083
  Penetration* 112.7% 109.6%
St.Petersburg 6,220,025 6,053,309
  Penetration 98.1% 95.5%
Subscribers outside Moscow and St.Pete 63,915,550 60,898,608
  Penetration 52.5% 50.0%

* Please note that penetration figures are calculated based on official data from 2002 population census (17 mln for Moscow and 6.3 mln for St.Pete). Reportedly, the population in Moscow License Area reaches as high as 23-25 mln while St.Pete License Area population figure is above 7 mln.

Russian Cellular
Market Breakdown, April 2005
Russian Net Additions,
April 2005

Top 10 Mobile Operators

# Company April 30, 2005 March 31, 2005
1 MTS 42,084,667 40,085,000
Moscow
8,393,216 8,114,377
Ukraine (UMC)
8,325,515 8,079,556
Belarus
1,455,919 1,396,380
Uzbekistan
369,625 351,974
2 Vimpelcom 31,809,000 30,750,000
Moscow
8,267,500 8,120,000
Kazakhstan
1,195,000 1,131,000
3 MegaFon 16,269,861 15,684,945
Moscow
2,348,716 2,255,879
Tajikistan
51,329 50,138
4 Uralsvyazinform 2,480,000 2,400,000
5 SMARTS Group 2,150,000 2,101,000
6 Tele2 1,590,000 1,490,000
7 Sibirtelecom 1,267,622 1,198,255
8 N.Novgorod Cellular 826,556 798,036
9 Ekaterinburg Cellular Communications - MOTIV 537,665 509,384
10 New Telephone Company 345,670 326,770

Both Vimpelcom and MegaFon showed somewhat modest results in April compared to MTS, which was the unquestionable leader in net additions in Moscow, St.Petersburg and the regions.

Moscow and St.Petersburg

Moscow License Area

Moscow Market Breakdown
April 30, 2005

Net Additions in Moscow,
April 2005

St.Petersburg and Leningrad Region

St. Petersburg Market Breakdown
April 30, 2005
Net Additions in St.Petersburg
April 2005

Regions outside Moscow and St.Pete

Regional Market Breakdown
April 30, 2005
Regional Net Additions
April 2005
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20
Apr

Russian Cellular Market in March 2005

The number of Russian cellular customers grew 5% in March to reach 85.6 mln.

There were 59 SIM cards issued per 100 of population as of 31 March 2005 (compared to 29 in March 2004 and 51 at the end of 2004).

Russian Mobile Subscribers

Mobile Subscribers March 31, 2005 February 28, 2005
Total Russia 85,560,000 81,700,000
  Penetration* 58.9% 56.3%
Moscow 18,608,083 18,129,914
  Penetration* 109.6% 106.7%
St.Petersburg 6,053,309 5,911,085
  Penetration 95.5% 93.2%
Subscribers outside Moscow and St.Pete 60,898,608 57,659,001
  Penetration 50.0% 47.3%

* Please note that penetration figures are calculated based on official data from 2002 population census (17 mln for Moscow and 6.3 mln for St.Pete). Reportedly, the population in Moscow License Area reaches as high as 23-25 mln while St.Pete License Area population figure is above 7 mln.

Russian Cellular
Market Breakdown, March 2005
Russian Net Additions,
March 2005

Top 10 Mobile Operators

# Company March 31, 2005 February 28, 2005
1 MTS 40,085,000 38,480,000
Moscow
8,110,000 7,955,000
Ukraine (UMC)
8,080,000 7,895,000
Belarus
1,400,000 1,328,000
Uzbekistan
352,000 337,000
2 Vimpelcom 30,750,000 29,450,000
Moscow
8,120,000 7,945,000
Kazakhstan
1,131,000 1,055,000
3 MegaFon 15,684,945 14,867,250
Moscow
2,255,879 2,127,996
Tajikistan
50,138 49,212
4 Uralsvyazinform 2,400,000 2,283,100
5 SMARTS Group 2,101,000 2,010,000
6 Tele2 1,490,000 1,410,000
7 Sibirtelecom 1,198,255 1,116,000
8 N.Novgorod Cellular 798,036 775,322
9 Ekaterinburg Cellular Communications - MOTIV 509,384 486,520
10 New Telephone Company 326,770 311,570

Almost 0.5 mln net additions were signed in Moscow. Penetration in the city reached 110% (73% in March 2004). According to our estimates the real penetration in the capital (if one takes adjusted population figure of ~25 mln vs. 17 mln official and discount for inactive users) is around 60-65% at the end of March. Big 3 players were almost on par in terms of new customer additions. However, Vimpelcom did slightly better than others and returned the leadership in the capital (though 5-10k difference so far do not look very convincing).

MegaFon outperformed MTS and Vimpelcom on its home market of St.Petersburg where it had been losing to competition since Oct-04, while MTS attracted the largest number of customers outside Moscow and St.Petersburg license areas.

Moscow and St.Petersburg

Moscow License Area

Moscow Market Breakdown
March 31, 2005

Net Additions in Moscow,
March 2005

St.Petersburg and Leningrad Region

St. Petersburg Market Breakdown
March 31, 2005
Net Additions in St.Petersburg
March 2005

Regions outside Moscow and St.Pete

Regional Market Breakdown
March 31, 2005
Regional Net Additions
March 2005
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15
Mar

February 2005 Cellular Statistics

We estimate that the total number of valid subscriptions in Russia passed 80 mln in February to have reached 81.7m. Therefore, SIM-card penetration in the country reached 56% (27.5% in February 2004).

If Russia sustain the current growth pattern we may very well see 119 million subscribers in Russia at the year-end 2005 (>80% penetration).

Russian Mobile Subscribers

Mobile Subscribers February 28, 2005 January 31, 2005
Total Russia 81,700,000 78,260,000
  Penetration 56.3% 53.9%
Moscow 18,129,914 17,617,682
  Penetration 106.7% 103.7%
St.Petersburg 5,911,085 5,797,703
  Penetration 93.2% 91.4%
Subscribers outside Moscow and St.Pete 57,659,001 54,844,615
  Penetration 47.3% 45.0%

Please note that our penetration figures are based on official data from 2002 population census (17 mln for Moscow and 6.3 mln for St.Pete). Reportedly, the population in Moscow License Area reaches as high as 23-25 mln while St.Pete License Area population figure is above 7 mln.

Russian Cellular
Market Breakdown, February 2005
Russian Net Additions,
February 2005
Top 10 Mobile Operators
# Company February 28, 2005 January 31, 2005
1 MTS 38,480,000 37,220,000
Moscow
7,955,000 7,800,000
Ukraine (UMC)
7,895,000 7,730,000
Belarus
1,328,000 1,270,000
Uzbekistan
337,000 320,000
2 Vimpelcom 29,450,000 28,245,000
Moscow
7,945,000 7,775,000
Kazakhstan
1,055,000 995,000
3 MegaFon 14,867,250 14,153,090
Moscow
2,127,996 1,941,776
Tajikistan
49,212 48,624
4 Uralsvyazinform 2,283,100 2,167,800
5 SMARTS Group 2,010,000 1,905,100
6 Tele2 1,410,000 1,340,000
7 Sibirtelecom 1,116,000 1,029,742
8 N.Novgorod Cellular 775,322 725,000
9 Ekaterinburg Cellular Communications - MOTIV 486,520 440,000
10 New Telephone Company 311,570 280,810

Starting from this issue we include our estimates for Tele2 customers in Russia. With a very limited operational data available on Tele2 Russian operations we consider it is still important to share our vision with you as, according to our estimates, the company may soon reach 1.5 million subscribers (combined of all its 12 regional networks) and thus should be considered as a serious second-tier regional operator.

Moscow and St.Petersburg

Moscow License Area

Both MTS and Vimpelcom signed 150+ thsd new customers in February, which is typically not the best selling month. MTS leadership in the capital remained unchanged in February, though the difference with Vimpelcom is statistically insignificant. We would like to draw your attention to the performance by MegaFon, which for the first time since Sonic Duo (MegaFon operating entity in the Moscow License Area) came on air in November 2001, achieved more net additions in the capital than its two major competitors! Despite the fact that MegaFon uses stricter churn policy it has been slowly but surely expanding its market share in the MLA.

Moscow Market Breakdown
February 28, 2005

Net Additions in Moscow,
February 2005

St.Petersburg and Leningrad Region

St.Petersburg is quickly approaching 100 mobile accounts per 100 population. Vimpelcom signed more than 50,000 users in St.Petersburg in February - for the second month in a row winning leadership in net additions from MegaFon and MTS.

St. Petersburg Market Breakdown
February 28, 2005
Net Additions in St.Petersburg
February 2005

Regions outside Moscow and St.Pete

Regional sales are leaded by Vimpelcom this month (again), with MTS running closely.

Regional Market Breakdown
February 28, 2005
Regional Net Additions
February 2005
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15
Feb

Moscow Cellular Penetration is Over 100%

We estimate total number of Russian cellular customers at 78.26 mln as of January 31, 2004. Net additions in Russia were 3.9 mln, 55% decrease compared to December 2004 and 44% increase compared to January 2004.

Russian Mobile Subscribers

Mobile Subscribers January 31, 2005 December 31, 2004
Total Russia 78,260,000 73,855,000
  Penetration 53.9% 50.9%
Moscow 17,617,682 16,854,605
  Penetration 103.7% 99.2%
St.Petersburg 5,797,703 5,644,334
  Penetration 91.4% 89.0%
Subscribers outside Moscow and St.Pete 54,844,615 51,356,061
  Penetration 45.0% 42.1%

Please note that we have revised upward our December 2004 figure due to more detailed information available.

Russian Cellular
Market Breakdown, January 2005
Russian Net Additions,
January 2005

Top 10 Mobile Operators

# Company January 31, 2005 December 31, 2004
1 MTS 37,220,000 35,395,000
Moscow
7,800,000 7,470,000
Ukraine (UMC)
7,730,000 7,400,000
Belarus
1,270,000 1,215,000
Uzbekistan
320,000 310,000
2 Vimpelcom 28,245,000 26,550,000
Moscow
7,775,000 7,475,000
Kazakhstan
995,000 859,000
3 MegaFon 14,153,090 13,647,807
Moscow
1,941,776 1,817,314
Tajikistan
48,624 47,891
4 Uralsvyazinform 2,167,800 2,058,100
5 SMARTS Group 1,905,100 1,815,000
6 Sibirtelecom 1,029,742 1,001,900
7 N.Novgorod Cellular 725,000 656,441
8 Ekaterinburg Cellular Communications - MOTIV 440,000 405,467
9 New Telephone Company 280,810 262,205
10 Skylink 196,000 190,200

Moscow and St.Petersburg

Moscow License Area

MTS keeps the leading position in Moscow with Vimpelcom running very closely behind. MegaFon's market share remained stable at 11%.

Moscow Market Breakdown
January 31, 2005

Net Additions in Moscow,
January 2005

St.Petersburg and Leningrad Region

In January 2004 Vimpelcom attracted the largest number of customers in St.Petersburg and in the regions outside the capitals.

St. Petersburg Market Breakdown
January 31, 2005
Net Additions in St.Petersburg
January 2005

Regions outside Moscow and St.Pete

Regional Market Breakdown
January 31, 2005
Regional Net Additions
January 2005
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12
Jan

December 2004 Subscriptions Beat Expectations

December 2004 brought astonishing results: total cellular subscriber net additions in the country climbed to 8.3 mln - almost 2 times higher than in previous month and 3 times higher compared to December 2003. The cellular penetration in the country passed 50% milestone(!) - more than two times higher compared to 2003 results.

According to our esimates the total number of cellular subscribers in Russia reached 73.9 mln as of year-end 2004!

Russian Mobile Subscribers

Mobile Subscribers December 31, 2004 November 30, 2004 December 31, 2003
Total Russia 73,855,000 65,590,000 36,230,000
  Penetration 50.9% 45.2% 25.0%
Moscow 16,854,605 15,105,908 11,487,308
  Penetration 99.2% 92.1% 67.6%
St.Petersburg 5,644,334 5,313,694 3,532,859
  Penetration 89.0% 83.8% 55.7%
Subscribers outside Moscow and St.Pete 51,356,061 44,641,478 21,209,833
  Penetration 42.1% 36.6% 17.4%
Russian Cellular
Market Breakdown, December 2004
Russian Net Additions,
December 2004

Top 10 Mobile Operators

# Company December 31, 2004 November 30, 2004
1 MTS 35,395,000 30,595,000
Moscow
7,470,000 6,985,000
Ukraine (UMC)
7,400,000 6,266,000
Belarus
1,215,000 1,100,000
Uzbekistan
310,000 287,000
2 Vimpelcom 26,550,000 23,160,000
Moscow
7,475,000 6,960,000
Kazakhstan
859,000 745,000
3 MegaFon 13,647,807 12,756,890
Moscow
1,817,314 1,603,751
Tajikistan
47,891 38,817
4 Uralsvyazinform 2,058,100 1,937,300
5 SMARTS Group 1,815,000 1,690,640
6 Sibirtelecom 1,001,900 861,600
7 N.Novgorod Cellular 656,441 596,945
8 Ekaterinburg Cellular Communications - MOTIV 405,467 354,572
9 New Telephone Company 262,205 236,800
10 Skylink 190,200 189,000

Note: Although Tele2 has approximately 1.05 mln subscribers in Russia we do not list the company in the Top-10 table as the company does not provide officially confirmed figures for its Russian branch. Nevertheless, we do account our Tele2 subscriber estimates in Russia total numbers.

Moscow and St.Petersburg

Moscow License Area

The penetration in the Russian largest market - Moscow - was 99.2% (!) as of 31-Dec-04 (68% in 2003). With both MTS and Vimpelcom signing almost equal number of subscribers, the latter did slightly better and re-gained leadership in the capital. MegaFon's contribution to the Christmas sale campaign in Moscow was 18% or 215 thsd subscribers.

Moscow Market Breakdown
December 31, 2004

Net Additions in Moscow,
December 2004

St.Petersburg and Leningrad Region

MTS led in subscriber addition race in St.Petersburg signing up record high 131 thsd users. Vimpelcom came second with 117 thsd which is also a record high net adds for the company in St.Petersburg.

St. Petersburg Market Breakdown
December 31, 2004
Net Additions in St.Petersburg
December 2004

Regions outside Moscow and St.Pete

MTS came #1 in regional net sales. Please note that MTS' regional additions also included subscribers of the two regional telcos acquired in December - Horizont RT (~100,000) and Telesot Alaniya (~50,000). In terms of the regional market breakdown Vimpelcom has maintained leadership with 17.2 mln customers with MTS following with just a few dozen thousands less.

Regional Market Breakdown
December 31, 2004
Regional Net Additions
December 2004

Notice on Subscriber Accounting Policies

As penetration in Moscow approaches 100% there is a growing concern over the widening gap between the human penetration and what is reported based on the churn policy by the operators themselves.

Based on the end user surveys, AC&M believes, that the difference between the actual number of active users and combined subscriber numbers reported by the operators in Moscow license area is about 22%. However, several market observers are even more conservative. They reckon that the gap is between 25% and 35%. This gap is the result of marketing actions (including SIM-card give-aways) by operators.

There is also some discrepancy in the subscriber numbers caused by the difference in the churn policies by the operators. MTS, for example, terminates their pre-paid subscribers after one of the two events occur, whichever comes first: (i) their balance remains $0 or below for 183 consecutive days or (ii) they demonstrate no chargeable transactions within 183 days. Vimpelcom follows similar churn policy, but with a minor modification: provided there is no chargeable activity but the balance still remains positive, the customer is first blocked for 180 days and terminated only after the following 180 days. MegaFon has been historically practicing the strictest churn policy among the "Big Three". They unconditionally terminate the user's account if subscriber is blocked for more than 90 days.

Despite the fact that Vimpelcom's and MTS churn policies differ we believe that at the moment the subscriber base of two largest Russian operators are quite comparable:

  • Vimpelcom has performed a significant clean-up of subscriber base back in July-August 2004 when the company was short of numbering capacity. In the effort to free unused numbers Vimpelcom decreased inactivity period for subscribers to 3-4 months (depending on the region) from its normal inactivity time of 180 days. All subscribers inactive for the longer period were terminated. After receiving required numbering capacity the company returned to its usual churn policy in August-September 2004. Therefore, the maximum inactivity time for Vimpelcom subscriber with positive account balance was around 7 months in December 2004, which is pretty close to MTS subscribers maximum inactivity period of 183 days.
  • According to our information the share of Vimpelcom subscribers who have positive cash balance at the moment when they may be blocked is insignificant. The company states that this number is less than 5% of users which account is blocked or terminated after 180 days of inactivity.

We expect that cellular penetration will be over 100% in Moscow already in January 2005. One should understand that this is effectively a number of user accounts which are active according to operator's churn policy. The correlation between human penetration and number of active user accounts differs from region to region.

Although AC&M have estimations on the subject and conduct regular end-user survey, we do not publish this information as it is always a subject for additional research. If you are interested in more information on any particular region please do not hesitate to contant us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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05
Dec

New Year Sales Started

November 2004 brought record high net additions in Russia (3.8 mln). It seems this year operators decided to start Christmas campaign in advance. This could pay off as this Christmas promises to generate absolute maximum number of cellular additions in Russia ever.

Russian Mobile Subscribers

Mobile Subscribers November 30, 2004 October 31, 2004
Total Russia 65,590,000 61,770,000
  Penetration 45.2% 42.5%
Moscow 15,634,828 15,105,908
  Penetration 92.1% 88.9%
St.Petersburg 5,313,694 5,170,722
  Penetration 83.8% 81.6%
Subscribers outside Moscow and St.Pete 44,641,478 41,493,370
  Penetration 36.6% 34.1%

MTS was number one in net sales in St.Petersburg, while Vimpelcom led (for 9 months in a row!!) in regional net additions as well as in total Russia adds!

Russian Cellular
Market Breakdown, November 2004
Russian Net Additions,
November 2004

Top 10 Mobile Operators

# Company November 30, 2004 October 31, 2004
1 MTS 30,595,000 28,835,000
Moscow
6,985,000 6,830,000
Ukraine (UMC)
6,266,000 5,894,000
Belarus
1,100,000 1,041,000
Uzbekistan
287,000 264,000
2 Vimpelcom 23,160,000 21,580,000
Moscow
6,960,000 6,645,000
Kazakhstan
745,000 702,000
3 MegaFon 12,756,890 12,155,280
Moscow
1,603,751 1,514,166
Tajikistan
38,817 34,700
4 Uralsvyazinform 1,937,300 1,867,200
5 SMARTS Group 1,690,640 1,647,000
6 Sibirtelecom 861,600 782,700
7 N.Novgorod Cellular 596,945 554,388
8 Ekaterinburg Cellular Communications 354,572 336,185
9 New Telephone Company 236,800 224,450
10 Skylink 189,000 186,600

Moscow and St.Petersburg

Moscow License Area

Moscow passed 90% penetration mark (!). Vimpelcom grabbed more than half of total November net adds in the capital and came very close to its major competitor - MTS. The company announced that it had completely resolved numbering capacity issue and switched to its original 6-month churn period for pre-paid customers (up from 4 months introduced in June 2004). That translated in stronger than usual net additions for Vimpelcom in November.

Moscow Market Breakdown
November 30, 2004

Net Additions in Moscow,
November 2004

St.Petersburg and Leningrad Region

St. Petersburg Market Breakdown
November 30, 2004
Net Additions in St.Petersburg
November 2004

Beyond Russia

Quite by coincidence it turned out that in November Ukraine became an arena for both intensive political clashes and fierce competition between the rival GSM operators who rushed to capitalize on unprecedented subscriber growth. As of November 30, 2004 there were 12.2 mln subscribers or 26% penetration. In November MTS (UMC) returned leadership in net additions - 372k vs. 348k of its major rival Kiyvstar.

MTS continues to lead in Belarus and Uzbekistan both by market share and net additions.

There are a few acquisition deals pending in the CIS (Azerbaijan, Georgia).