TV drives Rostelecom growth

Russia’s Rostelecom ended 2015 with 8.6 million pay-TV subscribers, an 8% increase on a year earlier.

Of these, 3.4 million, or 26% more than a year earlier, received IPTV services.

In its latest set of results, the company notes that following a post-audit review the annual growth figures were slightly higher, at 9% and 27% respectively.

Rostelecom also notes that while its revenue decreased by 0.5% year-on-year to R297.4 billion (€3.8 billion) in 2015, growth in the IPTV base helped revenues from TV services increase by 27%. The revenues were also boosted by a rise in the consumption of VOD services and higher ARPU.

Rostelecom’s OIBDA in 2015 amounted to R100.8 billion (-2%), while its net income was R14.4 billion (+9%).

In his comments, Sergei Kalugin, president of Rostelecom, revealed that the company would launch a national quad-play offer this year.

Rostelecom grows pay-TV base

Russia’s Rostelecom ended Q3 with 8.4 million subscribers to its pay-TV services, or 8% more than in the same period last year.

Within that, the number opting for IPTV grew even more impressively, up 25% to 3.1 million. The figures were revised upwards following a post-audit review.

Similarly, following such a review, its broadband subscriber base grew by 3% to 11.4 million in the year to September 30.

Rostelecom’s revenues in Q3 amounted to R72,496 million (€1,042 million), down 3% on a year earlier, while OIBDA was 4% lower at R25,182 million. Its net income fell by 59% to R2,046 million.

Commenting on the results, Sergei Kalugin, president of Rostelecom, said: “In the third quarter we continued to develop our digital segment by increasing our broadband and pay-TV subscriber bases, whilst promoting value-added services.

“Rostelecom?s board of directors approved a new business development strategy during the quarter, which identified the most promising and fast-growing segments, including IoT, data centres, OTT video, cloud services and geodata. Our launch of “Interactive TV 2.0”, a service that can be used by customers of other networks, is an example of how we can grow our subscriber base by going beyond our network. We expect each of these areas to provide additional impetus to our future revenue growth.

“We continue to enhance our management team and we are pleased to welcome Valery Ermakov as head of B2B and B2G services. As a specialist with extensive experience in the industry, he will be instrumental in bringing the B2B / B2G segment to a new level.”

Pay-TV growth helps Rostelecom

Russia’s Rostelecom ended the first quarter with 8.1 million pay-TV subscribers, or 7% more than a year earlier.

Of these, 2.9 million opted for IPTV services, up 24% on the same period in 2014.

Rostelecom’s revenues in Q1 amounted to R71,710 million (€1,293 million), down 11% (consolidated) on the same period last year. OIBDA was R24,525 million (-7%) and net income R2,143 million (-69%).

Commenting on the results, Sergey Kalugin, president of Rostelecom, said: “Our first quarter results clearly demonstrate that we are delivering on our strategic objectives. Our broadband and pay-TV subscriber bases continue to expand, ARPU is growing and we remain committed to developing innovative services. As a result, these rapidly growing market segments are gradually increasing their overall contribution to Rostelecom’s revenue, which already accounts for 37%.

“Despite the promising growth of the digital segments, the high comparison base caused by one-off income gained during the Sochi Winter Olympics in the first quarter of 2014 meant that we were unable to increase revenues in nominal terms this quarter. We are pleased to have achieved a solid OIBDA margin and that our efforts to curb the rise in financial expenses have paid off, despite the significant increase in the market cost of borrowing and volatility in the capital markets.

“As reflected by our first quarter results, we are consistently achieving the goals set out in our five-year strategic plan. We remain on track to fulfilling our strategic objectives and we look forward to seeing the Company’s continued growth.”

Major Russian deal in the offing

Rostelecom is exploring the possibility of buying CTC Media, the Russian national commercial broadcaster backed by Modern Times Group (MTG).

Quoting a person close to one of the shareholders at CTC Media and a senior official at the state owned telco, Vedomosti reports that negotiations between the two are ongoing but still at an early stage.

However, Rostelecom is not the only party to have recently expressed an interest in CTC Media. Others include Alisher Usmanov and Ivan Tavrin, who together own the media holding YUTV.

CTC Media is required to transform its ownership structure due to new rules limiting foreign stakes in media companies to 20%. These come into effect at the beginning of 2016 and CTC Media is exploring all options, including a possible sale.

Rostelecom meanwhile took the strategic decision in 2013 to transform itself into a media company. Its aim is to become the country’s leading provider of pay-TV services and as of the end of 2014 it already had a 21% share of the market.

Last year it also entered into a joint venture with the state broadcaster RTR to establish a content company.

IPTV grows in Russia

Rostelecom is to undertake a large-scale modernisation of its Interactive TV platform, launched only three years ago.

According to Comnews, the process is likely to cost R344 million (€6.4 million).

It adds that the telco has already announced two tenders, the first being for the supply of equipment by Huawei, Juniper, Intel and Cisco.

The modernisation is linked to the strong growth of Interactive TV’s subscriber base.

Although Rostelecom has not provided a figure for its size, it is believed to have increased by 24% in 2014 to 2.7 million.

Rostelecom is the leading player in Russia’s IPTV sector, which though smaller than cable and DTH is growing much faster, even despite the current economic crisis.

The total number of IPTV subscribers in the country is expected to reach 5 million this year.

Rostelecom goes multiscreen with SmartLabs

SmartLabs enables Rostelecom to deliver content on multiple devices

Rostelecom subscribers can now enjoy their content on PCs, laptops, tablets and Smart TVs.

The new multiscreen feature is an extension of Rostelecom´s successful IPTV service, which is powered by the SmartLabs IPTV Solution, and delivers digital TV services to over 2.5 million homes across Russia.

At the heart of the SmartLabs solution are the SmartTUBE Service Delivery Platform (SDP) and SmartTUBE UI, with client applications, which combine to deliver a state of the art TV service on STBs and now also PCs, laptops, tablets and Smart TVs.

Users are not only able to view content on multiple devices but they are also able to pause a show, or a movie, on one device and resume playback on a different device. This enhanced service offers Rostelecom customers a new level of flexibility designed specifically to address their demands to consume content on different devices and not just on a TV with a STB. The multiscreen offering will be extended further in the near future and support for a variety of smartphones are planned to be added to the service.

The multiscreen service was launched after three months of trials and Rostelecom hopes the increased flexibility will offer customers an improved viewing experience, boost the use of on-demand services and attract new customers to the service.

“For Rostelecom´s subscribers, we have taken TV viewing to a totally new level,” said Mikhail Grachev, SmartLabs CEO. “Now the user can choose the best device to watch any content on. Today´s subscribers seek more viewing freedom, and we are happy to cater to their ever-changing demands. Our focus is to expand the operator´s portfolio with innovative services which are appealing to their subscribers.”

Russian telco gains TV customers

Rostelecom ended the first quarter with 7.6 million pay-TV subscribers, an 8% increase on the same period last year.

Its IPTV subscriber total meanwhile rose by 33% to 2.3 million. The Russian telco’s revenues were, at R80.4 billion (€1.7 billion) in Q1, 1% up year-on-year, while revenues from continued operations (fixed business) rose by 4% to R73.2 billion.

OIBDA amounted to R26.5 billion (R29.4 billion a year earlier) and net income rose by 8% year-on-year to R6.9 billion.

Rostelecom grows TV business

Russia’s Rostelecom ended 2013 with 7.5 million pay-TV subscribers, or 9% more than a year earlier.

At the same time, its IPTV subscriber total increased by 38% to 2.2 million.

The company’s broadband subscriber total at year’s end stood at 10.6 million (+8%), with B2C customers amounting to 9.8 million (+9%) and those connected by fibre-optic at 4 million.

The latter figure represented a 30% year-on-year increase and was equivalent to 38% of the subscriber base.

Rostelecom’s full-year revenues from pay-TV services in 2013 were 29% higher than a year earlier.

Rostelecom’s consolidated revenues in 2013 were R325.7 billion (€6.48 billion), 2% down on a year earlier. Its net income amounted to R24.1 billion.

Rostelecom eyes strategic shift

 Rostelecom is set to cut its capital costs over the next few years and focus more on the provision of internet and other services.

Quoting sources discussing the company’s strategy in the period 2014-18, Vedomosti reports that investment will fall from around 20% of Rostelecom’s revenues next year to no more than 10% in 2018. By way of comparison, the figures for 2012 and 2011 were 28.4% and 28% respectively.

Rostelecom is interested in disposing of its mobile assets (Tele2) to concentrate on providing broadband internet services.

Its plans include the development of its fixed broadband, IPTV and media business.

The plans still have to be discussed by Rostelecom’s strategy committee and board of directors, after which they have to be submitted to the government by December 4.

IPTV is already a lucrative business for Rostelecom, with revenues growing by 25% in Q2. Broadband internet access revenues meanwhile increased by 8%, and both services offsetting the long-term decline in the telco’s telephony business.

Pay-TV boost for Rostelecom

Russia’s Rostelecom ended the second quarter with 6.9 million pay-TV subscribers, an increase of 11% on the same period last year.

Of these, 1.7 million, or 69% more than a year earlier, opted for IPTV services.

Rostelecom also saw strong growth in its broadband subscriber total, up 11% over the same period to 9.6 million. The company’s total revenues in the second quarter amounted to R77,030 million (€1.740.4 million), an increase of 1% year-on-year.

However, its OIBDA was down by 6% year-on-year to R28,830 million and net income by 3% to R7,275 million.

Rostelecom’s president Sergey Kalugin noted: “In terms of our operational results, we are growing our subscriber base in some of the industry’s key growth segments – broadband and pay-TV. There is a great deal of work to do in improving financial results of the Company, but we are pleased with the early progress we are making.

“The Company’s reorganisation is almost completed, and in terms of our infrastructure, 3G networks have now been launched in 21 regions. We have also enhanced our management team, which is now made up of like-minded, highly successful professionals with vast experience in telecoms, finance and marketing.

“A number of key areas have been identified where improvements should be made if Rostelecom is to maximise its efficiency. We are finalising the details of our strategy, which will be submitted to the Board, and it will focus on accelerating the upgrade of our network infrastructure, improving customer experience and developing products that will distinguish Rostelecom from competition and deliver sustainable growth – Rostelecom now certainly has the ingredients in place to deliver this.”

Pay-TV takes off in Moscow Russia

The number of pay-TV subscribers in Moscow exceeded the number of homes by 700,000 in the first half of this year.

What was more, according to Vedomosti, more than one million homes received services from two or more pay-TV operators.

One reason for these surprising figures is that the fee for receiving services from Rostelecom, which with 3.26 million TV subscribers is the city’s largest cable operator, is included in the rent.

As a result, customers do not break their contracts by also choosing to receive services from another pay-TV company.

IPTV is also becoming increasingly popular, with up to 20% of broadband subscribers opting for services in some area.

The total pay-TV penetration in Moscow now stands at over 11%, while broadband penetrations is only 84%, according to data from iKS Consulting.

Rostelecom and Tele2 are coming close

National operator ‘Rostelecom’ and regional mobile provider ‘Tele2 Russia’ purchased by VTB in the beginning of 2013, have made a first step towards a possible merger: the companies are negotiating about using each other’s networks through MVNO (virtual network operator) scheme, communicated general director of ‘Rostelecom’ OJSC Sergey Kalugin at the company’s shareholders’ meeting in the end of June.

 When asked by the press whether ‘Rostelecom’ has plans of merging with ‘Tele2 Russia’ (recently acquired from the Swedish Tele2 AB by VTB bank for $3.4 bln), the top manager said they could start from sharing an MVNO.

Sergey Kalugin explained that if they implement an MVNO, ‘Rostelecom’ will provide ‘Tele2 Russia’, which only holds licenses for GSM, access to its 3G network, and in return it will be able to use ‘Tele2 Russia’ infrastructure in locations where the  federal  operator  lacks  presence.“It would make sense for us to employ the MVNO model in regions where we complement each other,” Sergey Kalugin said. He added that this would also resolve ‘Tele2 Russia’s difficulties with coming into the Moscow market. Tele2 has been desperately trying to find way to the capital for many years, meanwhile, ‘Rostelecom’ is planning to launch a cellular network in Moscow by  the  end  of  2013.