Competitive Russian Mobile Services Market Booms in 2005, Says IDC
MOSCOW, RUSSIA – SEPTEMBER 8, 2006 – The mobile services market in Russia exploded last year with the number of subscriptions shooting up by more than 50 million in 2005, bringing penetration to 87%. According to a recent IDC study, Russians racked up more than 155 billion call minutes and sent more than 15 billion text messages. Mobile penetration in the country's two largest cities, Moscow and St. Petersburg, has already exceeded 100%, with the level of penetration decreasing as one moves east across the nation or into rural areas.
Although Russia now boasts more subscribers than any other country in Europe, the still relatively low purchasing power of most residents means they spend less per user than those further west. As a result, total spending on mobile services rose to $9.5 billion last year, a number significantly lower than the 2005 total for Germany, Italy, the U.K., or France, the largest markets in Western Europe.
"The recent explosive growth of the market is coming to an end," said Kresimir Alic, senior analyst, Communications, IDC CEMA. "Most cities are quickly approaching saturation if they are not already there and the regions will soon be maxed out. Operators need to develop programs to encourage both retention and increased usage per customer to maintain their margins."
The Russian mobile services market is very competitive. In addition to the three main nationwide operators, there is a second tier of smaller national operators and a third tier of regional operators. MTS led the pack, followed closely by VimpelCom. MegaFon was a distant third. Together, these three vendors accounted for more than 87% of total subscriptions.
The prepaid segment constituted more than 80% of total subscriptions but generated less than 50% of revenue in 2005. IDC expects this to change this year, with prepaid subscriptions bringing in more than half of the revenue by the end of 2006.
"Although voice will continue to drive the market, other areas are underserved and ripe for additional development," said Natalia Korotkova, research analyst, Communications, IDC CEMA. "Text messaging and data services accounted for only around 10% of revenue last year, meaning there is ample room to roll out service bundles that encourage greater data and text use."
IDC's Russia Mobile Communications Services 2006-2010 Forecast (Doc #EW06N, August 2006) examines the development of the mobile services markets in Russia. The study includes market breakdowns for 2005 and five-year forecasts through 2010 for Russia's mobile services market, with data segmented into subscription numbers split according to prepaid and postpaid contract. The study analyzes end-user spending by voice, SMS, and data communications services and provides operator profiles.
For more information about IDC's telecommunications research in Russia, please contact Robert Farish (+7 495 739 22 50; firstname.lastname@example.org) in Russia and the CIS or Tatiana Hinova (+420 221 423 140; email@example.com) outside the CIS.
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