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Comprehensive analysis of the fixed broadband market in Moscow and the Moscow region. Analysis of the market potential

November 2015

Analytical Report (full version)

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Analytical Report (full version)

Comprehensive analysis of the fixed broadband market in Moscow and the Moscow region. Analysis of the market potential
Comprehensive analysis of the fixed broadband market in Moscow and the Moscow region. Analysis of the market potential
November 2015

Comprehensive analysis of the fixed broadband market in Moscow and the Moscow region. Analysis of the market potential

November 2015

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J'son & Partners Consulting have conducted an analysis of the market of fixed broadband in Moscow, New Moscow (Novomoskovsky Administrative Okrug) and the Moscow region. Analysts of the company have estimated the market volume in physical and monetary terms, described the competitive situation in the region and identified potential growth areas for fixed broadband operators working in Moscow and the Moscow region.

 

According to the obtained information the company’s specialists have developed recommendations for fixed broadband operators of Moscow and the Moscow region, which may allow them to increase their market share.

 

 

Key issues of the study

 

The study analyzed the fixed broadband and pay-TV markets in Moscow, New Moscow and the Moscow region in physical and monetary terms of the volume of the market of fixed broadband, identified significant market players and their market shares, carried out a comparative analysis of product portfolios of the broadband and PTV market leaders in the Moscow region. There were analyzed and identified points of market growth in the short and medium terms, there were also given recommendations for increasing the market share of fixed broadband operators working in New Moscow and the Moscow region.

 

 

Practical value of the study

 

The study made projections for changes in the size and structure of the market of fixed broadband services and pay TV in the Moscow region, described the competitive situation and the distribution of market shares between the leading players. In addition, it provides a comparative analysis of product portfolios of all leaders of the market in the region and points of growth for the market as a whole and for individual services. The study contains recommendations for broadband operators for use of the identified growth points to increase their market share.

 

 

Target auditory

 

The study results and findings will be of interest to fixed-line operators, manufacturers of equipment and solutions for telecom operators, system integrators, venture and investment funds, startups and research agencies.

 

 

Summary of the study

 

Macroeconomic indexes of the region

 

A significant macroeconomic factor for the fixed broadband market is the pace of construction of new housing in the region. The region in aggregate is the leader in the construction of new multi-storey housing, and these new households are not provided with fixed broadband access and paid TV. Recently the Moscow region has built 14.7 million m² of housing, that is, there are potentially tens of thousands of new households.

 

 

Analysis of the fixed telecommunications market in the Moscow region

 

According to J'son & Partners Consulting, the fixed-line market of Moscow and the Moscow region continues to grow, but its growth rates have slowed down over the past few years (Figure 1). Analysts of the company forecast that in 2015 the fixed-line market in Moscow will amount to 496 billion rubles, and in the Moscow region - 21 billion rubles.

 

Sourse: J’son & Partners Consulting

 

At the same time, it should be noted that the growth of the fixed broadband market will mainly be basing on the subscriber base growth with a slight decrease in ARPU, and only in New Moscow ARPU will grow.

 

The most consolidated is the Moscow fixed broadband market, where the top five operators in 2015 will occupy almost  90% of the market by subscriber base and slightly less on revenue. In the region, the market is much more fragmented: the market leader has 16% of the subscriber base, all the rest are divided between a large number of medium and small operators. In New Moscow, two operators with the largest subscriber base own a total of less than 50% of the market.

 

In the future, the fixed broadband market of the region expects a slow growth with a CAGR of 2-3%, while analysts expect stabilization of the ARPU (Figure 2).  

 

Source: J’son & Partners Consulting

 

The cable and IP TV market in the region is similar to the fixed broadband market by main trends, but some of its distinctive features should be mentioned. They are:

  • higher penetration of services in Moscow (it is expected to reach 101.9% in 2015) and a lower one in New Moscow and the region;
  • J'son & Partners Consulting analysts forecast slow growth of ARPU-services in the region throughout the forecast period;
  • The Moscow cable and IP TV market is even more consolidated than the fixed broadband market (two market leaders receive more than 90% of the revenue from these services), while the Moscow region market is more fragmented (the market leader occupies less than 10% in both subscribers and in the revenues).

 

 

Growth drivers and constraints

 

The key drivers of the market are:

• organic growth of the number of households in the Moscow Region and New Moscow due to mass construction of apartment buildings;

• increasing attractiveness of tariff plans at the expense of complex tariffs (package offers);

• appearance of new additional services that can increase ARPU.

 

The main constraining factors for the market were the decrease in incomes of the population, the inability to attract financing for the development of the infrastructure on reasonable terms, the growth of prices for network and user equipment due to changes in foreign currency exchange rates, and low perceived value of additional services for subscribers.

 

A number of products and target segments considered in the study will not become a driver of the market development in the short and medium term, but operators should include these services in their development plans if they want to retain or increase their market percentage in the future.      

 

 

Key recommendations according to the study

 

  • the most attractive markets for operators of fixed broadband access are the markets of New Moscow and the Moscow region;
  •  the highest growth rates for a fixed broadband operator can be ensured by the growth of the subscriber base (in B2C and SMB segments) due to the connection of new subscribers in the areas of active multi-storey construction and construction of commercial and office real estate in New Moscow and Moscow region;
  •  the drivers of cross-sales and new connections can be the expansion of the range of packaged offers, new additional paid-TV services, construction of networks connecting small settlements, cottage and holiday villages, offers of complex packages of services for small and medium-sized businesses, targeted advertising via appropriate channels;
  •  the impact of existing and new additional services on business growth remains generally small, but offering a wide range of additional services can increase ARPU and reduce the outflow of subscribers.

 

 

 

More detailed results presented in the full version of the report

«Comprehensive analysis of the fixed broadband market in Moscow and the Moscow region. Analysis of the market potential»

 

Example of contents:

 

Summary

  1. Introduction
  2. Description and methodology of the study
  3. Description of the macroeconomic, demographic and social sphere of the Moscow region

3.1.Population, average size and number of households

3.2.Socio-demographic characteristics

3.3.Construction of multifamily housing

  1. Analysis of the market of fixed communication in Moscow and Moscow region
  2. Total revenues of communication operators of Moscow and Moscow region*
  3. The market of wired broadband Internet access (ADSL, FTTX, DOCSIS), 2014-2015

6.1.Penetration of fixed broadband

6.2.Broadband subscriber base, million households

6.3.The market volume in monetary terms

6.4.ARPU

6.5.The competitive situation

6.6.Forecast of the market dynamics to 2019

6.7.Marketing assessment of the market services

  1. The market of CTV and IPTV, 2014-2015

7.1.Penetration of KTV+IPTV

7.2.KTV+IPTV subscriber base in Moscow

7.3.The market volume in monetary terms

7.4.ARPU

7.5.The competitive situation

7.6.Forecast of the market dynamics to 2019

7.7.Marketing assessment of the market services

  1. Main reasons and drivers of growth of the market of Moscow and Moscow region. Constraints.

8.1.General drivers and constraints

8.2.Drivers and constraints for broadband and TV

8.3.Small and medium business

  • Cloud services
  • Other services for SMEs as a growth point
  1. Impact of new products on the market growth in Russia

9.1.OTT services

9.2.The Internet of things

9.3.Security services

9.4.Public network of broadband wireless access based on Wi-Fi and services over such networks

 

Recommendations and conclusions

 

 

 

 

The newsletter was prepared by J'son & Partners Consulting. We make every effort to provide factual and forecast data that fully reflect the situation and are available at the time of the release. J'son & Partners Consulting reserves the right to revise the data in case of publication of new official information by individual players.

 

 

Copyright © 2016, J'son & Partners Consulting. The media can use any text, graphics and data contained in this market review, only using a link to the source of information - J'son & Partners Consulting or with an active link to the JSON.TV portal

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J'son & Partners Consulting have conducted an analysis of the market of fixed broadband in Moscow, New Moscow (Novomoskovsky Administrative Okrug) and the Moscow region. Analysts of the company have estimated the market volume in physical and monetary terms, described the competitive situation in the region and identified potential growth areas for fixed broadband operators working in Moscow and the Moscow region.