EUROSET IS TO OUST BIG THREE
Telecom
CNews
September 11, 2007, Tue 11:16 AM Moscow
Russia
Euroset, which became a virtual operator (MVNO) on the basis of SMARTS
in March, is going to significantly strengthen its positions after
3G network implementation by VimpelCom, MegaFon and MTS. But the Big
Three states full-scale MVNO operator creation is restrained by the
absence of excessive capacity.
MegaFon believes possible virtual operators planning to operate in
the market might jeopardize the company.
In March, 2007 Euroset started operating using a model close to
MVNO. As there is nothing in the RF Legislation at present concerning
virtual operators’ activity, then the retailer acts as an agent
selling the Volga operator SMARTS services, but Euroset sells the
mentioned services under its own brand. Euroset believes to gain a
lot from 3G implementation by the Big Three on a national scale.
CNews correspondent in Euroset says virtual operators in Europe
appeared prior to 3G implementation and gained momentum when 3G
networks were created. The correspondent believes the Russian market
is to follow the mentioned way. "As 3G networks being implemented
and MVNO enactments adopted Euroset will have enough experience
to create a full-scale virtual operator, – the company states. –
As soon as certain MVNO legislative base is created in Russia, we
will put in a bid for the license".
The company notes SMARTS project is practically not profitable, so
it is a testing technology project. "In the future we would like to
create a full-scale domestic MVNO", – Euroset states.
Big Three operators do not see Euroset virtual operator in their
networks because of limited power
Cellular operators believe it is more complicated to launch a virtual
operator in Russia than in other countries. The problem is that in
Russia the operators have no excessive power on a domestic scale. The
Big Three representatives agree to the given point of view. According
to MegaFon, MVNO is to find its own niche. A virtual operator creation
with a developed subsidiary network and the number of employees
coming to hundreds or even thousands by a large corporation might
become such a niche.
Analysts have different points of view regarding MVNO prospects. Denis
Kuskov does not agree to the statement of the Big Three concerning
absence of sufficient power for MVNO. "If there is an interesting
price offer then powers might appear", – he is sure.
Yuri Bryukvin, Rustelecom Analytic Agency Director General does
not agree to the give point of view. He believes there are no
niches at present in Russia, that might be occupies by virtual
operators. According to the analyst, under such conditions when
cellular operators are ready to develop even niche tariffs, MVNO is
to become their direct competitor.
Megafon believes potential virtual operators planning to operate in the
market jeopardize the company, as such operators have no advantages, do
not offer add value as compared to ordinary operators. "The only type
of competition, they might use, is the price war", – MegaFon states.
MTS (Mobile TeleSystems) is the largest mobile phone operator in
Russia and the CIS. Together with its subsidiaries, the Company
services over 72.86 million subscribers. The regions of Russia,
Belarus, Turkmenistan, Ukraine, and Uzbekistan, in which MTS and its
associates and subsidiaries are licensed to provide GSM services, have
a total population of more than 230 million. MTS completed its IPO and
listed its Level III ADRs on the New York Stock Exchange in July 2000,
under the symbol MBT. The Company’s shares have been listed locally on
MICEX since November 2003, under the symbol MTSI. The Company’s GDRs
are also traded in Europe. The free float of the Company’s shares
is approximately 46.7%. MTS is 52.8% majority-owned by Sistema,
the largest private sector consumer services company in Russia and
the CIS. The company’s consolidated revenues in the first quarter of
2007 reached $1,741mln.
MegaFon is the first all-Russian mobile operator in GSM 900/1800
standard. The company was founded in May 2002 as a result of renaming
and reorganization of Open Joint Stock Company "North-West GSM"
and integration under one brand with CJSC "Sonic Duo" (Moscow), CJSC
"Mobicom-Kavkaz", CJSC "Mobicom-Centre", CJSC "Mobicom-Novosibirsk",
CJSC "Mobicom-Khabarovsk", CJSC "Mobicom-Kirov", OJSC "MSS-Povolzhie",
CJSC "Volzhsky GSM" and CJSC "Uralsky GSM". The company’s total
revenues in 2005 and 2006 were $1,7mln and $2,6mln respectively.
VimpelCom Group includes cellular companies operating in Russia,
Kazakhstan, Ukraine, Uzbekistan and Tajikistan, and recently acquired
companies in Georgia and Armenia. The Company operates under the
‘Beeline’ brand. The VimpelCom Group’s license portfolio covers
approximately 240 million people. Geographically it covers 78 regions
of Russia with 136.5 million people, representing 94% of Russia’s
population as well as the entire territories of Kazakhstan, Ukraine,
Uzbekistan, Tajikistan, Georgia and Armenia. The company’s net income
and revenue for Q3 2006 was $268,4mln and $1,358mln respectively.
Euroset is the largest mobile handset retailer in Russia and one of the
Russia’s leading dealers for major mobile network operators. The main
business activity of the Euroset Group is the retail sale of mobile
handsets, digital cameras, CD, MP3 players and DECT-phones, mobile
handset accessories and subscription to mobile network operators. In
the first half of 2005, the Group estimated its share of the mobile
handset retail market in Russia to be 23%. As of 31 October 2005
Euroset has outlets in 626 Russian cities, as well as in 25 cities in
Kazakhstan, 19 cities in Ukraine and one city in Belarus. Euroset’s
nest goal is to further develop its business in the Commonwealth of
Independent States and the Baltic States.