Developing Telecoms | MTS: we will double 3G cities by year-end

23 May 2012

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MTS: we will double 3G cities by year-end

Tuesday, 19 May 2009 16:42 | Michael Schwartz

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Russian 3G player MTS has announced an ambitious strategy for the Russian market. Aware that many international players do not have an advanced presence in Russia, MTS is confident that its current presence in more than 20 cities will double to 50 by the end of this year.

In one of the most aggressive marketing strategy statements made for the Russian market, Mobile TeleSystems (MTS) is making an ambitious drive into the country's web connections and services. MTS is buoyed both by the absence or low-key presence of major global players in the country and by Russia's overall low Internet penetration rate.

To demonstrate just how aggressive MTS will be, its target is to be in 50 major Russian cities by the end of the year. Chief Commercial Officer Mikhail Gerchuk made this announcement, adding that if MTS achieves the target it will have doubled its presence in Russia. This in turn will inspire the company to develop it fixed-line presence.

As if this was not enough, MTS also envisages a role as a key player in a growing Russian market for mobile content such as music and video. This has not been a success as far as western players are concerned; MTS even launched a web portal dedicated to entertainment, Omlet.ru.

Explaining his comments about the absence or low presence of global brands (Amazon, Apple and Google were singled out)

Mikhail Gerchuk said that this factor will assist MTS. The foreign companies have used their Internet strength to exploit and win mobile services in the developed world, where they have beaten telecoms operators to a number of services.

"We want to become what iTunes is for America," in Mikhail Gerchuk's words in an interview (over six billion songs have been bought and downloaded from this source since 2001). He also declared that with a need for certain types of bank accounts or credit cards to purchase goods or services from the key Internet companies these companies' successes could not be easily replicated in Russia. MTS, however, can pay phone bills as normal or use prepaid cards to buy content.

Other observations were first that 95% of Russian mobile phone users pay as they go, but that for MTS the average is less than 90%. Secondly, only about 25% of Russians were wired tothe Internet and that was to dial-up. Quite clearly there were opportunities in getting Russians to sign up for the Net and then to upgrade users to broadband.

"Acquisition is faster than building for fixed networks, but it has to be profitable," in Michael Gerchuk's words.

* MTS plans to invest US$1.5 billion in capital expenditure this year, including US$450 million to develop infrastructure. Outside Russia, by far its biggest market, MTS has 3G networks in Armenia and Uzbekistan. The company also has operations in Ukraine, Belarus and Turkmenistan and has more than 95 million subscribers in total. It has also recently ventured into India, franchising its brand to Sistema Shyam TeleServices, but providing no services itself. MTS is 53% owned by services conglomerate Sistema.

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