Boston, MA -- (SBWIRE) -- 12/19/2013 -- Executive Summary

The heavy presence of the government in the Belarusian telecoms market continues to hold it back, leaving it as one of the more underdeveloped in the region. During the 2014 update, this was highlighted by the licensing of beCloud to provide a singular LTE network for the country. While this is a positive move in that it cuts costs for operators and prevents duplication of infrastructure, beCloud is part-owned by the state and could therefore poses problems for private companies in the market. This highlights the problems of doing business in the country and results in a telecoms sector which lacks investment, leading to delays in the latest technology and some of the lowest ARPU rates in the region. If the government is able to sell its stake in MTS Belarus, there is potential for strong growth, particularly as consumers have demonstrated a demand for data. This has manifested itself in the uptake in 3G services over 2012, as well as the expansion of international gateways and roll-out of FTTB networks. The entrance of beCloud seems to imply the market has taken a step back, and with the Belarusian ruble set to depreciate further in 2013 and into 2014, our outlook for the sector remains bearish.

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Key data

- Mobile subscriptions returned to y-o-y growth in Q213, with an increase of 0.5% from Q212. The number totalled 11.115mn and the penetration rate improved to 118.8%. This was despite further subscription discounting by Turkcell owned BeST, although its rivals' growth has noticeably slowed down .
- 3G subscriptions had a 33% penetration at end-2012, representing roughly 3.1mn users. This has been by cheap handset driven offers and extensive coverage by operators.
- Fixed-line subscriptions bounced back in 2012, recovering from the macroeconomic driven decline in 2011. Subscriptions increased by 1.9% in 2012 as Beltelecom pushes multi-play packages and consumer spending power improved in H113. .

Key Trends And Developments

The Ministry of Communications and Informatisation of Belarus issued a licence to Belarusian Cloud Technologies (beCloud) in August 2013 to provide telecoms services in the country. The licence, which has been granted to the operator, is valid until 2028. The operator also revealed plans to roll-out a national data transmission network. In September 2013, beCloud was awarded frequencies to build the country's only 4G LTE wireless network. The LTE-enabled spectrum was granted to construct a sole national network, which will be provided on a wholesale basis to other operators in Belarus to save on infrastructure costs. BeCloud is reportedly 51% owned by domestic group Operative Analytical Centre, which operates under the President of Belarus' national centre of traffic exchange, and includes Russian businessman, Konstantin Nikolaev, as a significant player in the venture.

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