Tougher times ahead for MTS; unveils new 3D strategy

Tougher times ahead for MTS; unveils new “3D” strategy

04 FEB 2014

MTS, the largest mobile operator in Russia, reckons its domestic mobile voice market will have a negative compound annual growth rate (CAGR) of 1 per cent between 2013 and 2016.

This was one of the more worrying figures revealed at MTS’ investor day conference. Mobile voice forms a large chunk of telecom service revenue in Russia (over 30 per cent), so any decline is sure to hurt operators.

MTS attributed the squeeze in voice call revenue to a difficult economic backdrop and lower roaming revenues. Cash-strapped consumers are unlikely to travel as much.

More encouragingly, MTS expects the market for mobile broadband in Russia to have a 16 per cent CAGR over the same period.

The market will no doubt get a boost thanks to Russia’s leading operators, including MTS, agreeing to distribute the latest iPhone models from October. They previously cold-shouldered the Cupertino giant, apparently over the imposition of strict conditions.

But since the size of the mobile broadband market is still relatively small (7.3 per cent during 2013), MTS can only foresee an overall CAGR of 3 per cent for all telecoms services in Russia between 2013 and 2016. The growth rate covers both fixed and mobile services.

To try and gain as much share as possible in a constrained market, CEO Andrei Dubovskov outlined the operator’s “3D” strategy. 3D refers to data, differentiation and dividend.

MTS claims it has the fastest data networks in Russia and Moscow, while CTO Andrei Ushatskiy outlined plans at the investor day conference to increase 3G population coverage up to the level of 2G (93 per cent) and to undertake “aggressive deployment” of LTE at 2.6GHz.

The plan is to roll out LTE in 600 cities by the end of 2014 and to roll out LTE at 800MHz “where clean spectrum is available”.

On differentiation, MTS places emphasis on its fibre-to-the-home network. On the dividend, MTS re-affirmed its commitment to pay out “a significant portion of its free cash flow” to shareholders.

At a group level, MTS expects CAGR in revenue of 3-5 per cent between 2014 and 2016.

The operator added that financial services, such as MTS Money, will account for at least 5 per cent in group net income during its 2017 fiscal year.

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Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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