Great expectations: what to expect from the exit on the Moscow market of mobile operator Tele2

MOSCOW, October 22. /Corr. Ksenia Petrova, Ekaterina Kazachenko/. On Thursday in the mobile market of the Moscow region has a new player. Tele2 has created a great hype around its launch, including through aggressive advertising campaigns with a promise to offer the capital’s residents a very cheap communication. Competitive operators state that is not afraid of “discounter”. Analysts are wondering how many subscribers will be able to attract Tele2, has the situation and the balance of power in the market its appearance. Users wonder whether it will be possible to save money, without losing thus in quality.

Technical capabilities

Tele2 is a Telecom operator that was created by combining the mobile operator Tele2 and the mobile assets of “Rostelecom”. The share of Rostelecom in the JV is 45%, the rest – the former owners of Tele2 (VTB group owned 50% of Tele2, the other 50% were in structures of Bank Rossiya, SOGAZ and businessman Alexei Mordashov). The company operates in more than 60 regions and serves about 35 million customers.


Tele2 (“T2 RTK holding”) is a service provider created by merging the mobile operator Tele2 and the mobile assets of “Rostelecom”. The share of Rostelecom in the JV is 45%, the rest – the former owners of Tele2 (VTB group owned 50% of Tele2, the other 50% were in structures of Bank Rossiya, SOGAZ and businessman Alexei Mordashov). The company operates in more than 60 regions and serves about 35 million customers.

At launch, Tele2 expects that the network will be available to more than 90% of the population of Moscow and more than 75% of inhabitants of Moscow region. The region has already built about 7 thousand base stations of the operator (stations 5 thousand 2 thousand 3G and LTE stations), the network is deployed on frequencies of 800 MHz, 2.1 GHz and 2.6 GHz. As Tele2 has no GSM frequencies in the Metropolitan area, the operator will focus on smartphone users. Forecast by market share and the number of Tele2 clients in the Moscow region the company did not specify.

Priority for 2015-2016 will be to expand coverage and the network in the subway.

Sell SIM card of a new player in the Moscow market of mobile communication starts in more than 400 monobrand stores and shopping modules as well as about 10 thousand points of sales partners (including “Svyaznoy”, “Euroset”, “Pyaterochka”, “Mail of Russia”, “El Dorado”). Two weeks before launch in Moscow region was issued 30 thousand orders for the SIM card Tele2.

Investments in the launch of the network in the Moscow region and the payback period, the company did not disclose. Leading analyst Mobile Research Group Eldar Murtazin has estimated the cost of one base station in the range of $50 thousand For the construction of the network and opening of mono-brand stores were used as loans (including those provided to shareholder banks) and its own funds. In February 2015, the interdepartmental Commission at the Ministry of economic development approved the project of Tele2 for the construction of 3G/4G networks in Moscow with the support of the project financing. While Tele2 has spent about 25% of the credit line for 16 billion rubles, open operator VTB Bank on these terms.

Than that

Tele2 offered its subscribers in the b2c segment rate “Orange” without the subscription fee, which provides the same cost of calls to all phones within the Moscow region and throughout Russia (RUB 1 per minute). The cost of one SMS or 1 MB of Internet is also 1 RUB. Also there are 3 batch of the tariff for private users, which included minutes and Internet traffic: “Black” (subscription fee of 99 roubles per month 2GB Internet), “Very black” (299 rubles, 400 minutes and 4GB) and “The black” (599 rubles, 1000 minutes and 10 GB). Packages include on-net calls and calls to other operators ‘ calls over the limit are charged at the price of 1.5 rubles per minute.

Were also represented 4 of the tariff for corporate clients (b2b segment).

The company claims that Tele2 tariffs in the Moscow region in the b2c segment below the market by 25-50%, and in the b2b segment by 40%.

According to experts, the presented rates are not a “shock” to the market. According to the analyst of group “Opening” Alexander Vengranovich, they are not very aggressive. “They are in General, of course, lower than the “big three”, but one could expect much worse scenario for the Troika. Even at these rates they will work with a positive operating margin,” – said the expert. He added that the most popular are packet rates for 99 and for 299 rubles, and “Orange”. Just consider and Murtazin, who noted that now in the Moscow market of other operators popular “medium” packages, and those who just want to try to use the new operators will take the package for 99 rubles.

“The tariff for 99 rubles. good for tablets, for example, for devices where there is no need to use voice,” says Vengranovich. Tariffs for 299 rubles, in his opinion, compete with the rates of 400-450 rubles for the “big three”, the principal difference is only that Tele2 offers 100 rubles. and save on 1Gb more data. While it is difficult to judge whether this is enough for the subscribers of other operators switched to a competitor, the expert believes. “Now penetration rates where there is a “date” and the voice, together in the Troika about 25% in Moscow”, – said Vengranovich. In his opinion, at this stage, the Tele2 will focus on those who already use the program, but still “sit” on the hourly rate.

The tariff for 599 rubles. “The Black box” is not very popular, experts say. “If you look at how it differs fundamentally from the tariffs, too, for 600 RUB “big three”, there simply is 2 times more data, but the same amount of included minutes,” said Vengranovich, adding that it is not clear how large the part of the subscribers necessary. “Hard to Tele2 subscribers will not go, because for them there is no offer “in a forehead”, and quality of communication for people all it is not very clear,” agrees Murtazin. “On the basis of the tariffs, which they represented, they ARPU will be lower than the “big three”, but not catastrophically. The Moscow market is perceived higher than the regions, so no price war discount or not,” he said.

As for the b2b segment, then, according to General Director of “Telecom Daily” Denis Kuskov, the development of this area is not an issue this year, maybe next. “b2b – the more conservative the audience, there are greater demands, annual procurement tenders”, – he explained. Thus an analyst “UralSiba” Konstantin Belov considers that in this segment, Tele2 can find its niche, as in b2b there are a lot of old contracts that could be reviewed.

Ambiguous prospects

BCS analyst Igor Goncharov believes that the price does not guarantee Tele2 quick success in the Moscow market. In particular, because the operator cannot offer its services to owners of ordinary phones, the price is a more important criterion than for owners of smartphones, paying attention to the quality of voice and data. Vengranovich sees another problem is the lack of GSM carrier frequencies. “In Moscow the penetration of smartphones is already 65%. Therefore, for the purposes of, the lack of GSM – problem. The problem is that the 3G will and voice, and date together, that is high load on the system,” he said. In addition, according to Belova, the question remains coverage, which is now incomplete. “Subscribers are accustomed to, that everywhere there is a connection, and this situation they might be scared,” he said.

According to Murtazina, in the first six months of Tele2 will be quite “briskly” to sell SIM cards because there is the effect of novelty, marketing, advertising, customers will experience the new operator. “To predict the number who will fall off in six months is difficult, but I think it will be quite a significant number, since the operator does not have 2G for calls”, he said, to predict that towards the end of 2016, Tele2 will hit the milestone of 1 million subscribers in Moscow and the region. With further increase in the subscriber base will be slow.

Evaluation of Vengranovich possible subscriber base Tele2 is much more optimistic. “Discussing assessment 10% market share, which many experts gave, quite real until the end of next year. That is, they will need to get 4 million subscribers. Retail network can handle it without problems, considering that they have 10 thousand points of sale, so need to sell one SIM card per day at each point. For the year to do it,” he said. According to the analyst, Tele2 will be able to earn in the next year about 8 billion rubles, which is roughly 1% of the total mobile service revenue of the “big three” in Russia. “In Moscow they will be able to pick up about 3-4% of revenue next year,” added the analyst of group “Opening”. At the same time, Kuskov believes that if the company conducts a correct marketing policy, in the medium term, it will count for 20% of the market.

The balance of power in the market at the same time does not change: the “big three” as to dominate the market and will dominate, says Murtazin. “In Moscow the high level of competition, and the tariff plans Tele2 has shown, are not something very special,” he said. In addition, according to him, lower the prices of the “big three” “nowhere, and no sense.” From the point of view of the subscriber base of the “big three” in favor of Tele2 will not lose anything from the standpoint of money loss will not be large. “Just goes a little expansion on the Moscow market, 2-3 SIM cards. Costs people will increase, but the alignment of forces will not change. It’s good for business, but Tele2 will not be able to eating a big chunk of the market, so seriously to oppose their efforts, no one is going,” said Murtazin.

Vengranovich also sure that the competitors Tele2 will not reduce prices, but can increase the amount of service (minutes and data) to packages. In addition, most of the calls operators occur within the network, while Tele2 this advantage will not be, the majority of calls will be off-net. “It negates their price advantage,” added the analyst of group “Opening”. However, an analyst “UralSiba” believes that entering the market of Tele2 will lead to improved conditions for subscribers. “The more competition, the better” – I agree with him Pieces.

Vengranovich told that, in future, Tele2, who had already raised 7 thousand base stations may have to be put into operation as much again when the network load is increased. “With the new course costs more than 2 times will grow,” he added, noting that Tele2 is unlikely to lead an aggressive construction site, are more likely to look at the situation.

The response of competitors

Mobile operators already working in the Moscow region, prepared for the emergence of a new competitor.

The General Director of “VimpelCom” Mikhail Slobodin earlier in the week told reporters that he is not afraid of competition from Tele2 in the capital, and promised that “colleagues will be very difficult”. According to him, the operator already has prepared “a number of major initiatives”, including tariff proposals and servants. “This event makes us even more focused on maintaining and strengthening our positions,” – said the press service of “VimpelCom”.

MegaFon, in its turn, almost on the eve of the launch of the Tele2 is fully upgraded a range of tariffs for smartphones. “In the network “Megaphone” work on all types of mobile phones, and our rates allow consumers to pay only for the services that they need. Competition will make us even stronger,” – said the press service of the operator. In Yota also emphasized that successfully compete with Tele2 in other regions of their presence.

MTS President Andrei Dubovskov on air of TV channel “Russia 24” stated that the total investment of the operator in the Moscow market amounted to more than $ 20 billion over the past 25 years. “Of course, the arrival of new players, which, of course, also incurred significant capital expenditures but which nevertheless took them on a much smaller scale and in a smaller time period, it will be an irritant,” said he. “MTS has a significant technological advantage – the availability of quality basic GSM network to provide high quality communication services and half of Muscovites – those who uses simple push-button phones, will not be able to become subscribers of Tele2”, – noted in press service.