Volume of telecom services in Russia increased by 6.9% against Feb 2020

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AK&M 12 April 2021 11:35

In February 2021, the volume of communication services provided to businesses engaged in all types of activities reached RUB 170.6 billion increasing by 6.9% year-on-year while decreasing by 3.7% against January 2021. The volume of communication services provided for 2 months of 2021 reached RUB 385 billion, which is 7.2% above the 2-month result in 2020, according to the latest issue (No. 1417) of AK&M Information Agency's "RUSSIAN INDUSTRIES: PRODUCTION, FINANCE, SECURITIES. Telecommunications" monthly paper dated April 7, 2021.

The volume of paid services provided to the population in January-February 2021 decreased by 0.2%. This decline resulted from the development of voice communication services provided by messengers and other similar Internet applications, but was virtually offset by an increase in tariffs in 2020.

At the end of 2020, the total number of SIM cards used in Russia was 252.2 million decreasing by 8.5 million (-3.3%) year-on-year. According to AC&M Consulting, mobile telephony penetration in Russia reached 172% in 2020 against 178% in 2019. Sales of SIM cards in Russia dropped by 7.1% to 92 million in 2020. The subscriber base of most cellular operators, except Tele2 Russia, also decreased. The companies' shares in the Russian cellular market were as follows in 2020: MTS 31.6%, MegaFon 28.3%, VimpelCom 20.1%, Tele2 Russia (T2 RTK Holding) 20%.

The main 2020 trend was a decline in the volumes of mobile communications contrasted with growing revenues from this segment. According to a research study by TMT Consulting, the number of mobile subscribers in Russia decreased by 1.3% to 257 million in 2020. The subscriber base changes slowed down to a record low amid COVID-triggered self-distancing amid customers' lower visits to mobile phone outlets. The closure of borders and the lower number of migrants also took its toll. However, revenues from communication services in Russia, according to Russia's Federal State Statistics Service (Rosstat) decreased by a mere 0.1% year-on-year to RUB 1.71 trillion. Revenue from mobile communications servces increased by 0.2% to RUB 423.2 billion, while revenue from connection and traffic throughput services increased by 3.7% to RUB 288.2 billion.

The requirement for mandatory pre-installation of Russian software products on smartphones, computers and Smart TV sets took effect from April 1, 2021. All major vendors, including Apple, are ready to comply with the law on pre-installing Russian software, as stated by Minister of Digital Development Maksut Shadaev. Under the law, 16 classes of programs need to be installed on smartphones and tablets, including applications of Yandex, Mail.ru Group, Kaspersky Lab, and other Russian companies.

In the first quarter of 2021, the Russian smartphone market grew by 27% year-on-year to RUB 153 billion. According to MTS, the average price of the purchased gadgets surged by 43% to RUB 24 thousand, the biggest quarterly increase in the history of the Russian device market. Sales of smartphones priced at more than RUB 50,000 increased by 58% in physical terms. Sales of low-budget devices priced at up to RUB 10,000 dropped by 38% less, the segment of devices priced at RUB 10,000-20,000 shrank by 6% in physical terms.

For a more detailed review, see issue No. 1417 of the "RUSSIAN INDUSTRIES: PRODUCTION, FINANCE, SECURITIES. Telecommunications" monthly paper issued on April 7, 2021. The paper reviews the Russian communications and telecommunications market, including mobile and broadband Internet services, digital TV and online cinema theatres, the Russian regulatory framework and legal innovations influencing the industry, the industry's performance as a whole, innovative strategies and activity priorities for the Big Four operators, including the 5G and MVNO segments, as well as their tariff policies . This is complemented by a brief overview of the stock market and an M&A update, as well as news of the leading industry players.