Boston, MA -- (SBWIRE) -- 11/22/2013 -- Russia's telecoms market is one of the most dynamic in Central and Eastern Europe - with rapid development of 4G LTE services, mobile VAS such as mobile banking, expansion of high capacity wireline services and intense competition in converged services. This has seen it buck the trend of declining average revenue per user (ARPU) observed across much of Europe. There are major international operators in mobile and fixed line, including MTS, VimpelCom, MegaFon and Rostelecom, as well as competition in the wireline segment from expanding regional provider ER-Telecom and, most recently, TTK. Competition between these operators has helped to drive innovation, expand the reach of telecoms services and reduce prices.

Key Data:

- The mobile market bounced back in Q213 after a net subscription loss in Q113, with net additions of 3.71mn as the penetration rate (mobile phone numbers as a proportion of the population) increased to 163.9%.
- Wireless data subscriptions have continued to expand rapidly, with MegaFon reporting a total of 149,000 LTE-standard subscriptions at the end of Q113, adding a new layer to the already well-developed market for mobile data services.
- Smartphones have proved popular with Russian consumers and supported expansion in the mobile broadband market. MTS data show smartphone penetration in its registered base increased to 27.5% at the end of June 2013, up from 18% a year earlier.

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Key Trends And Developments

In July 2013 ER-Telecom secured regulatory approval to acquire AKADO Telecom in a deal estimated at US$1.1bn, including US$490mn in debt. The deal came after MegaFon and Rostelecom had both been linked with the operator, looking to capitalise on its strong presence in the key metropolitan markets of Moscow and St Petersburg. The move by ER-Telekom, which had been anticipated for some time, will consolidate its position as a key alternative player in Russia's fragmented broadband and TV markets but, more significantly to BMI, marks its first step away from organic expansion to a strategy that seemingly includes the acquisition of existing players.

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