Russia Q1 2008 Market Update
The rate of mobile customer growth in Russia has fallen to its second-lowest level ever in the first quarter of 2008. However, at 2.73%, the rate of growth was over double the record low seen in the first quarter of 2007, when the number of customers increased by just 1.18%. It is perhaps too early to tell whether this is a sign of renewed impetus in the market or not, but it did serve to increase the rolling annual growth rate from 13.9% for the year to 31st December 2007 to 15.6% in the year to 31st March 2008. As a result, net additions increased to 22.68m for the year to March - the highest total seen since 2006.
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Change in Market Share since Q1 06
At the end of Q1 the Russian national customer base stood at 167.7m, up from 163.2m at the end of last year, which gave the country a penetration rate of 118%, up from 115% three months earlier.
Of the national total, 139.0m or 82.9% was accounted for by the three national operators, MTS, Vimpelcom and MegaFon. This in fact represents a decrease compared to the 83.5% seen at the end of Q1 07, which is largely a result of VimpelcomÃ's below-average growth rate of just 8.9% over the year. VimpelcomÃ's slow progress has seen it lose 5pp of market share over the last two years, as it has focused on ARPU and revenue rather than raw connection growth.
The main beneficiary has been third-placed operator MegaFon which recorded customer growth of 19.7% over the 12 months - comfortably in excess of the national average. MTS also managed to beat the market average for the first time in almost two years, with rolling annual growth of 16.3%. This led to its first year-on-year market share gain since Q2 2006, albeit amounting to just 0.2pp.
RussiaÃ's fourth largest operator, Tele2, has also been a clear outperformer over the last two years, as the chart shows, although progress has slowed considerably over the last year.
The Russian market is absolutely dominated by GSM technology, which accounted for 99.53% of the total at the end of Q1 08. The 0.02pp drop compared to December was accounted for by the fact that MegaFon is now actively operating a W-CDMA 3G network, which took 0.03% market share at the end of the quarter. MTS followed suit at the end of May with its own offering rolling out in St. Petersburg, whilst Vimpelcom is a little off the pace with a launch not expected until later this year.
Posted to the site on 18th June 2008
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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