MTS Challenges VimpelCom in Fixed Broadband

The number of broadband internet users in Russia increased by 2% during 2015, reaching 30.3 million. These fi gures were provided by J’son & Partners Consulting. The experts claim that top 5 stakeholders of the Russian fi xed broadband market changed during the last year.

MTS took the third place by the number of fi xed broadband customers, making VimpelCom move to the fourth place. J’son & Partners Consulting reports that the Russian fi xed broadband internet market is currently in the saturation stage and its growth rates continue to decrease. “In the nearest future, they will not exceed 1-2%”, says J’son & Partners Consulting. The preliminary estimations show that the number of fi xed broadband internet customers in Russia grew by 2% and reached 30.3 million during 2015.

Last year, the total customer base of top 5 stakeholders of the Russian fi xed broadband market (Rostelecom, Er-Telecom Holding, Mobile TeleSystems, VimpelCom, TransTeleCom Company) increased by 2.5, adding 490 thousand customers. 

Telenor to sell VimpelCom stake

Telenor Group has decided to sell its 33% economic interest in the Russian telco VimpelCom.

Commenting on the move, Svein Aaser, chairman of the board of directors of Telenor Group, said: “The VimpelCom asset, where Telenor holds a minority position without the possibility to fully control the company, has been challenging. Based on a strategic review by the Board and the CEO, and after due considerations, Telenor Group has decided to divest its shares in VimpelCom Ltd. The disposal of our shares is in the best interest of our shareholders, and in accordance with Telenor Group’s long-term strategic focus”.

Telenor Group has invested NOK15 billion (€1.59 billion) in VimpelCom. The company has received NOK20 billion in dividends and the current market value of its ownership stake is approximately NOK20 billion.

The market value of VimpelCom shares represents around 8% of Telenor’s capitalisation value.

Sigve Brekke, president and CEO of Telenor Group, added: “We have maintained growth through solid performance from our controlled operations and will continue to focus on value creation in our core operations. Our ambition is to drive profitable growth in the telecom business, where Telenor will continue to monetize on the exponential data usage taking place across our footprint”.

Although no timetable for the divestment has been set, Telenor acknowledges it could take some time.

VimpelCom currently lists Mikhail Fridman’s L1 Technology, previously known as Altimo, as the largest shareholder, with a 48% stake in the telco.

Russian broadband battle intensifies

VimpelCom has lost its position as one of the top three providers of broadband services in Russia.

Quoting data produced by Telecomdaily,Vedomosti says the company now finds itself in fourth spot, claiming just over 2.3 million subscribers as of the end of Q3, or 48,000 fewer than three months earlier.

Third spot is now held by MTS, which gained 35,000 subscribers in the third quarter to end September with 2,330,000.

Rostelecom remains the market leader with over 9 million broadband subscriber at the end of Q3, followed by the cable operator ER Telecom with over 2,630,000 subscribers.

VimpelCom occupied second spot as recently as the end of 2012, before falling behind ER Telecom and now MTS.

The changes in position are due to growing competition in the regional broadband market and at the same time MTS sttengthening its position in Moscow.

However, VimpelCom is now selling broadband services in over 100 cities – and pay-TV in 36 – and could bounce back, especially if it restructures its business.