Market News
New Record Set in July 2004
Moscow alone brought 360k new customers or 12% of the overall Russian additions. Vimpelcom adopted a stricter churn policy in the Moscow License Area. The company reduced deactivation period of inactive (with zero balance) subscribers from 5 to 4 months, which resulted in modest net additions for the second month in a row. MTS attracted over 230k new customers in July and returned the leadership in Moscow that was lost to Vimpelcom back in January 2002. MegaFon signed up more than 110k net new users - record high result for the company on the Moscow market.
Vimpelcom was the leader in St Petersburg net sales, and attracted the largest number of subscribers in other regions (outside Moscow and St.Petersburg). MegaFon outperfomed our expectations and is to reach 10 mln subscribers already in August.
Russian Mobile Subscribers
| Mobile Subscribers | July 31, 2004 | June 30, 2004 |
|---|---|---|
| Russia | 52,520,000 | 49,470,000 |
| Penetration | 36.2% | 34.1% |
| Moscow | 13,759,384 | 13,397,720 |
| Penetration | 81.0% | 78.9% |
| St.Petersburg | 4,684,195 | 4,425,304 |
| Penetration | 73.9% | 69.8% |
Russian Cellular | Russian Net Additions, |
Beyond Russia
On 16 July 2004 MTS announced an acquisition of Uzdunrobita - leading GSM/AMPS operator of Uzbekistan. The deal was closed on August 2, 2004 and we plan to start consolidation of Uzdunrobita's subsciber numbers in MTS starting August 2004. Currently Uzdunrobita serves around 224,000 subscribers.
Very tough net additions race has been observed in Ukraine. So far MTS (UMC) leads the market with Kyivstar following it closely. The competition may intensify further as DCC and WellCOM roll-out nation-wide networks and get into the hunt for low-budget customers.
In Belarus MTS is close to win the leadership from the incumbent GSM operator - Velcom. MTS started providing service in Belarus in June 2002. Acceleration of cellular development in the country is also expected after the 3rd GSM player comes into arena (based on the tender that is currently under way). However, the majority of CIS contries are still lagging far behind Russia both in terms of the growth rates and penetration levels.
Put together all CIS cellular players had ~65 mln (including Russia) customers as of 30 June 2004 with Russia and Ukraine serving 76% and 13% subscribers respectively.
Top 10 Mobile Operators
| # | Company | July 31, 2004 | June 30, 2004 |
|---|---|---|---|
| 1 | MTS | 24,937,500 | 23,534,000 |
Moscow | 6,350,000 | 6,120,000 | |
Ukraine (UMC) | 4,960,000 | 4,634,000 | |
Belarus | 817,500 | 744,700 | |
| 2 | Vimpelcom | 17,300,000 | 16,300,000 |
Moscow | 6,204,000 | 6,183,000 | |
| 3 | MegaFon | 9,758,995 | 9,046,320 |
Moscow | 1,145,484 | 1,035,405 | |
Tajikistan | 25,300 | 24,180 | |
| 4 | Uralsvyazinform | 1,617,500 | 1,492,600 |
| 5 | SMARTS Group | 1,491,000 | 1,410,000 |
| 6 | Sibirtelecom | 710,175 | 677,800 |
| 7 | N.Novgorod Cellular | 453,000 | 451,834 |
| 8 | Ekaterinburg Cellular Communications | 304,906 | 294,231 |
| 9 | Skylink | 184,000 | 183,550 |
| 10 | New Telephone Company | 180,920 | 160,886 |
Moscow and St.Petersburg
Moscow License Area
Moscow Market Breakdown | Net Additions in Moscow, |
St.Petersburg and Leningrad Region
St. Petersburg Market Breakdown | Net Additions in St.Petersburg |
50 mln Cellular Subscribers? Not yet...
Subscriber additions totaled 2.6 mln in June bringing the number of cellular users to 49.5 mln. The country's penetration stands at 34% - twice as high compared to June 2003.
Penetration in Moscow increased to 79% mainly thanks to aggressive sales by MTS that enlisted about 270,000 new subscribers. MegaFon signed up 23,000 customers in Moscow while Vimpelcom for the first time in its history recorded negative (!) subscriber additions in Moscow region due to the numbering capacity constraints well predicted by the company's management.
MTS also posted impressive growth in St.Petersburg getting the largest stake of net adds while Vimpelcom signed the largest number of customers in the regions outside Moscow and St.Pete.
Russian Mobile Subscribers
| Mobile Subscribers | June 30, 2004 | May 31, 2004 |
|---|---|---|
| Russia | 49,470,000 | 46,890,000 |
| Penetration | 34.1% | 32.3% |
| Moscow | 13,397,720 | 13,138,560 |
| Penetration | 78.9% | 77.4% |
| St.Petersburg | 4,425,304 | 4,243,854 |
| Penetration | 69.8% | 66.9% |
Russian Cellular | Russian Net Additions, |
In June Vimpelcom entered Far Eastern market, the only Russian macro-region where it had no operations, after closing the long-anticipated acquisition of Dal Telecom International. We included DTI's subscribers (322,000 as of June 30, 2004) in Vimpelcom's numbers presented below. DTI acqusition combined with greenfield rollout made Vimpelcom the leader in terms of regional expansion - it has networks in 66 regions as of 7 June 2004 (MTS has 65 and MegaFon has 63).
The position of DTI in our Top 10 is now taken by Skylink - a new holding company with ambitious plans to build pan-Russian CDMA-2000 network in 450 MHz band. So far we have included Moscow (MCC) and St.Petersburg (Delta Telecom) NMT and CDMA operations in Skylink results but plan to expand the list as the holding consolidates other companies under Skylink umbrella. At the moment only MCC and Delta operate under Skylink brand; Uralwestcom (Ekaterinburg) and SONET (Moscow) are to be merged into Skylink shortly.
MTS signed an agreement with Dalsvyaz (PSTN incumbent operator) to purchase 50% of Primtelefon, GSM license holder for the Far East area where MTS already owns 50% stake. With this move MTS decreased its Russian unconsolidated subscribers from 200,000 to only 11,000. Remaining unconsolidated companies are Volgograd Mobile and Astrakhan Mobile. MTS holds 50% in both operators.
Top 10 Mobile Operators
| # | Company | June 30, 2004 | May 31, 2004 |
|---|---|---|---|
| 1 | MTS | 23,534,000 | 22,180,400 |
Moscow | 6,120,000 | 5,850,000 | |
Ukraine (UMC) | 4,634,000 | 4,360,000 | |
Belarus | 744,700 | 688,800 | |
| 2 | Vimpelcom | 16,300,000 | 15,053,000 |
Moscow | 6,183,000 | 6,185,000 | |
| 3 | MegaFon | 9,046,320 | 8,592,155 |
Moscow | 1,035,405 | 1,012,560 | |
Tajikistan | 24,180 | 23,100 | |
| 4 | Uralsvyazinform | 1,492,600 | 1,457,600 |
| 5 | SMARTS Group | 1,410,000 | 1,346,000 |
| 6 | Sibirtelecom | 677,800 | 662,800 |
| 7 | N.Novgorod Cellular | 451,834 | 445,636 |
| 8 | Ekaterinburg Cellular Communications | 294,231 | 285,052 |
| 9 | Skylink | 183,550 | 180,700 |
| 10 | New Telephone Company | 160,886 | 160,915 |
Moscow and St.Petersburg
Moscow License Area
Moscow Market Breakdown | Net Additions in Moscow, |
St.Petersburg and Leningrad Region
St. Petersburg Market Breakdown | Net Additions in St.Petersburg |
May Heats Up Summer Sales
One year ago (in May 2003) there was a 1.27 mln subscriber increase with penetration in Russia of 16.2%.
MTS was by far number one in the subscriber additions race in Moscow, while MegaFon managed to gain the net sales leadership in St.Petersburg. Vimpelcom was best seller in regions. As of May 31, 2004 cellular penetration in Moscow was at 77.4%, St.Petersburg - 66.9% and the rest of Russia - 24.2%.
Russian Mobile Subscribers
| Mobile Subscribers | May 31, 2004 | Apr 30, 2004 |
|---|---|---|
| Russia | 46,890,000 | 44,420,000 |
| Penetration | 32.3% | 30.6% |
| Moscow | 13,138,560 | 12,813,564 |
| Penetration | 77.4% | 75.4% |
| St.Petersburg | 4,243,854 | 4,066,771 |
| Penetration | 66.9% | 64.1% |
Russian Cellular | Russian Net Additions, |
Top 10 Mobile Operators
| # | Company | May 31, 2004 | April 30, 2004 |
|---|---|---|---|
| 1 | MTS | 22,180,400 | 21,000,514 |
Moscow | 5,850,000 | 5,605,849 | |
Ukraine (UMC) | 4,360,000 | 4,103,798 | |
Belarus | 688,800 | 636,000 | |
| 2 | Vimpelcom | 15,053,000 | 14,125,000 |
Moscow | 6,220,000 | 6,150,000 | |
| 3 | MegaFon | 8,592,155 | 8,128,165 |
Moscow | 1,012,560 | 1,002,315 | |
Tajikistan | 25,800 | 22,297 | |
| 4 | Uralsvyazinform | 1,457,600 | 1,395,389 |
| 5 | SMARTS Group | 1,346,000 | 1,317,000 |
| 6 | Sibirtelecom | 662,800 | 604,700 |
| 7 | N.Novgorod Cellular | 445,636 | 437,798 |
| 8 | Dal Telecom International | 295,713 | 276,448 |
| 9 | Ekaterinburg Cellular Communications | 285,052 | 276,189 |
| 10 | New Telephone Company | 160,915 | 160,714 |
Moscow and St.Petersburg
Moscow License Area
Moscow Market Breakdown | Net Additions in Moscow, |
St.Petersburg and Leningrad Region
St. Petersburg Market Breakdown | Net Additions in St.Petersburg |
Number of Cellular Users Up 5% in April
MTS outperformed competitors in Moscow area while Vimpelcom demonstrated the best performance in regional sales. MegaFon's final steps to 'clean' the subscriber base by introducing stricter churn policies in its subsidiaries across Russia resulted in rather weak performance in April, though the company's additions in Moscow were stable with subscriber base exceeding 1 mln in the capital as of April 30.
Russian Mobile Subscribers
| Mobile Subscribers | Apr 30, 2004 | Mar 31, 2004 |
|---|---|---|
| Russia | 44,420,000 | 42,260,000 |
| Penetration | 30.6% | 29.1% |
| Moscow | 12,813,564 | 12,424,223 |
| Penetration | 75.4% | 73.1% |
| St.Petersburg | 4,066,771 | 3,931,481 |
| Penetration | 64.1% | 62.0% |
Russian Cellular | Russian Net Additions, |
Top 10 Mobile Operators
| # | Company | April 30, 2004 | March 31, 2004 |
|---|---|---|---|
| 1 | MTS | 21,000,514 | 19,950,000 |
Moscow | 5,605,849 | 5,390,000 | |
Ukraine (UMC) | 4,103,798 | 3,849,000 | |
Belarus | 636,000 | 593,000 | |
| 2 | Vimpelcom | 14,125,000 | 13,348,000 |
Moscow | 6,150,000 | 6,034,000 | |
| 3 | MegaFon | 8,128,165 | 7,741,730 |
Moscow | 1,002,315 | 942,377 | |
Tajikistan | 16,500 | 16,000 | |
| 4 | Uralsvyazinform | 1,395,389 | 1,338,811 |
| 5 | SMARTS Group | 1,317,000 | 1,265,000 |
| 6 | Sibirtelecom | 604,700 | 599,800 |
| 7 | N.Novgorod Cellular | 437,798 | 430,981 |
| 8 | Dal Telecom International | 276,448 | 258,411 |
| 9 | Ekaterinburg Cellular Communications | 276,189 | 265,137 |
| 10 | New Telephone Company | 160,714 | 153,895 |
Moscow and St.Petersburg
Moscow License Area
MTS leapfroged over Vimpelcom in April winning 55% of all net additions. Vimpelcom still remains the leader with 6.15 mln subscribers leading by 0.5 mln users compared to its main rival, MTS. MegaFon finally reached 1 mln milestone in Moscow earning visible 18% of new users.
Moscow Market Breakdown | Net Additions in Moscow, |
St.Petersburg and Leningrad Region
St. Petersburg Market Breakdown | Net Additions in St.Petersburg |
More Than 6 Million Cellular Users Joined Cellular Networks in 1Q 2004
We berlieve there will be more than 60 mln cellular subscribers in the country by year-end 2004.
Russian Mobile Subscribers
| Mobile Subscribers | Mar 31, 2004 | Feb 29, 2004 |
|---|---|---|
| Russia | 42,260,000 | 39,880,000 |
| Penetration | 29.1% | 27.5% |
| Moscow | 12,424,223 | 12,052,148 |
| Penetration | 73.1% | 71.0% |
| St.Petersburg | 3,931,481 | 3,762,237 |
| Penetration | 62.0% | 59.3% |
Russian Cellular | Russian Net Additions, |
Top 10 Mobile Operators
| # | Company | March 31, 2004 | February 29, 2004 |
|---|---|---|---|
| 1 | MTS | 19,950,000 | 18,945,000 |
Moscow | 5,390,000 | 5,200,000 | |
Ukraine (UMC) | 3,849,000 | 3,652,415 | |
Belarus | 593,000 | 549,348 | |
| 2 | Vimpelcom | 13,348,000 | 12,549,000 |
Moscow | 6,034,000 | 5,909,000 | |
| 3 | MegaFon | 7,741,730 | 7,163,222 |
Moscow | 942,377 | 888,148 | |
Tajikistan | 16,000 | 15,294 | |
| 4 | Uralsvyazinform | 1,338,811 | 1,201,800 |
| 5 | SMARTS Group | 1,265,000 | 1,195,000 |
| 6 | Sibirtelecom | 599,800 | 574,700 |
| 7 | N.Novgorod Cellular | 430,981 | 415,383 |
| 8 | Ekaterinburg Cellular Communications | 265,137 | 245,944 |
| 9 | Dal Telecom International | 258,411 | 236,122 |
| 10 | New Telephone Company | 153,895 | 167,728 |
Moscow and St.Petersburg
Moscow License Area
Moscow Market Breakdown | Net Additions in Moscow, |
St.Petersburg and Leningrad Region
St. Petersburg Market Breakdown | Net Additions in St.Petersburg |
Cellular Subs Almost Doubled During Last 12 Months
Russian Mobile Subscribers
| Mobile Subscribers | Feb 29, 2004 | Jan 31, 2004 |
|---|---|---|
| Russia | 39,880,000 | 37,960,000 |
| Penetration | 27.5% | 26.1% |
| Moscow | 12,052,148 | 11,740,502 |
| Penetration | 71.0% | 69.1% |
| St.Petersburg | 3,762,237 | 3,656,389 |
| Penetration | 59.3% | 57.7% |
Russian Cellular | Russian Net Additions, |
Top 10 Mobile Operators
| # | Company | February 29, 2004 | January 31, 2004 |
|---|---|---|---|
| 1 | MTS | 18,945,000 | 18,070,000 |
Moscow | 5,200,000 | 5,061,000 | |
Ukraine (UMC) | 3,652,415 | 3,490,000 | |
Belarus | 549,348 | 505,400 | |
| 2 | Vimpelcom | 12,549,000 | 11,935,000 |
Moscow | 5,909,000 | 5,757,000 | |
| 3 | MegaFon | 7,163,222 | 6,737,771 |
Moscow | 888,148 | 867,646 | |
Tajikistan | 15,294 | 15,000 | |
| 4 | Uralsvyazinform | 1,201,800 | 1,251,100 |
| 5 | SMARTS Group | 1,195,000 | 1,172,000 |
| 6 | Sibirtelecom | 574,700 | 536,000 |
| 7 | N.Novgorod Cellular | 415,383 | 396,870 |
| 8 | Ekaterinburg Cellular Communications | 245,944 | 237,475 |
| 9 | Dal Telecom International | 236,122 | 220,093 |
| 10 | New Telephone Company | 167,728 | 159,492 |
Moscow and St.Petersburg
Moscow License Area
In February Vimpelcom won back its leading position in monthly net additions from MTS.
Moscow Market Breakdown | Net Additions in Moscow, |
St.Petersburg and Leningrad Region
MegaFon dominated the market in February with 43% of all new users attracted to the network. The company maintains its market share of 50% while MTS and Vimpelcom have 33% and 10% respectively. Penetration of mobile services in St.Pete is about to reach 60%.
St. Petersburg Market Breakdown | Net Additions in St.Petersburg |
