Russia Passes 100 Million Subscriber Mark
Russia's subscriber mark passed the 100 million mark last month, after a total of 4.8 million new subscribers were added in July. In addition, cellular development did not slow down in July - net additions were 500,000 more than in June, which is in line with the trend for the last few years. Vimpelcom and MTS clearly managed to rev-up sales and off-set the potential negative effect of seemingly inevitable higher churn (repercussions of the aggressive give-away campaign in December 2004 and early 2005). Apart from organic growth Vimpelcom also consolidated 100 thousand subscribers of ST Mobile (Sakhalin).
Finally MTS retained leadership position in Russia, accelerating sales in the capital cities and in the regions. Having stated this, the record high sales in July (second only to ultra aggressive December 2004 campaign) are difficult to explain from the seasonal factors only. It looks as MTS boosted sales at the expense of unprecedented give-aways.
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MTS and VimpelCom had broadly equal market share (35%) and took a balanced 34% share of July additions. MTS, however, continues to take a greater share of (slower) growth in Moscow and St Petersburg while VimpelCom is taking a higher portion of (faster) regional growth. The Moscow market grew at 50% yoy, raising reported penetration to 122%; growth elsewhere in the country was 111%, with penetration now at 64%.
Has this growth pick up come at the expense of profitability? Merrill Lynch analysts say that they don't believe so - July has historically proved a seasonally strong month for customer growth and they are not aware of any large scale promotions in place currently aimed at driving subscriber growth."
Posted to the site on 11th August 2005
