“MegaFon” has almost ceased to increase revenue from mobile Internet

Salon of communication “MegaFon”

Photo: Vadim Skryabin/TASS

Increased competition and lower prices for services led to the stagnation of the revenue of MegaFon Internet from mobile, the only significant driver of growth for operators. In the third quarter the index rose only 0.5%

Proceeds of “MegaFon” mobile services in Russia in the third quarter of 2016 decreased by 3.8% compared to the same period in 2015, to 66.7 billion rubles, according to the report of the operator. The index has now declined for the second consecutive quarter, the pace of decline intensified: at the end of April-June revenue decreased by 2.4%, while in January-September grew by 0.9%.

Previously, the reduction in mobile revenue is reported to the operator “VympelCom” in the third quarter increased yoy decreased by 1% to 58 billion rubles, MTS will publish financial results later in November.

Mobile revenue operators have traditionally supported access services in the Internet. They, according to the statements by cellular companies, offset the decline in revenue from voice services. However, in the third quarter, the net profit of “MegaFon” from data transfer grew by only 0.5% to RUB 21.4 bn In the second quarter, the growth was 6.2%, in the first — 16%. During a conference of the stake, the representative of “MegaFon” explained that the company focuses on growth in the number of subscribers to bundled tariff plans (offer a range of services, calls, SMS, Internet traffic for a fixed fee per month). “We are increasing the traffic in packages, but reserve attractive to customers prices. This affects the revenue from the mobile Internet,” he explained. In the third quarter, the average bandwidth consumption of Internet subscribers increased by almost a third, while the average score of this user has decreased by 5.3% to RUB 231

The “VimpelCom” revenue growth from mobile Internet during the year from quarter to quarter was about 20%. MTS may have ceased to disclose the income from the mobile Internet. The company explained this step the fact that with the increasing penetration of bundled tariffs segmentation mobile revenue looks “mathematical exercise” and could lead to incorrect comparison operators.

Analyst FK “Opening” Alexander Vengranovich links the reduction of Internet revenue of MegaFon errors of the tariff policy. In his opinion, the increase of traffic in packet rates made it possible not only to entice subscribers to competitors, but has kannibalisierung own subscriber base of MegaFon, which switched to cheaper tariffs. The subscriber base grew by 2.1%. At the end of September MegaFon served 75.5 million mobile subscribers in Russia, of which 41% used the Internet services.

In reducing the rate of growth of online revenue there is nothing dramatic, continues Vengranovich, at the same time paying attention to the reduction of the annual forecast of the company’s OIBDA. MegaFon expects that by the end of 2016 this figure will reach 118 billion rubles, while the previous forecast was 120-126 billion. part of the downward shift is due to large marketing costs of the company in the fourth quarter, says Vengranovich.

In the third quarter total consolidated revenue of MegaFon declined by 0.2%, to 81.1 billion rubles. Russia accounted for 98.5% or 79,87 billion rubles (the company also operates in the markets of Tajikistan, Abkhazia and South Ossetia). Revenues in the domestic market of “MegaFon” declined by 0.1%. The operator expects that the total proceeds will increase the share of revenues from the sale of smartphones and other devices (now 9%). “The growth of equipment sales in future will result in greater demand for mobile services of data transmission”, — said General Director of “MegaFon” Sergey Soldatenkov, was quoted as saying in a statement.

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