J’son & Partners Consulting presents preliminary results of the research on Development of LTE-Technologies in Russian Regions - LTE-Coverage Rating of Russian Regions, Results of 2014.
By December 2014, commercial LTE networks operated in all Russian regions excluding only Kamchatka region, Magadan region, Chukotka and Nenets. By number of 4G covered regions MTS is a leader (76 regions), next are Megafon (72 regions) and Vimpelcom (44 regions). Tele2 launched commercial LTE only in Tula. Each local operator – Vainakh Telecom, Motiv and Tattelecom had launched LTE-network in one region – the Chechen Republic, Sverdlovsk region and the Republic of Tatarstan accordingly.
According to preliminary estimations made by J'son & Partners Consulting, Megafon was a leader by number of 4G base stations (BS) at the end of 2014. Together with its subsidiary Skartel (Yota) operator deployed around 15 thousand BS or around 41% of all LTE BS in Russia/ Next is MTS (around 13.6 BS, 37%) and Vimpelcom (around 7 thousand BS, 19%).
MTS was able to overstep Megafon by number of 4G BS in Central and North-Western Federal Districts. According to preliminary data by J'son & Partners Consulting, MTS and Megafon deployed over 5 thousand and 1.5 thousand BS accordingly.
36.7 thousand LTE BS was constructed in Russia by the end of 2014, which is almost 3 times more than in 2013 according to preliminary data of J'son & Partners Consulting.
Moscow is the leader among regions-leaders by number of BS, 22% of all ongoing LTE stations in Russia. TOP3 also includes St.Petersburg and Moscow region, where 2.7 thousand and 1.9 thousand BS had been constructed (Table 1). Largest cities on federal level (Moscow and St.Petersburg) are leading also by such indicator as number of BS per 1000 inhabitants – 0.56 and 0.52 accordingly. Among TOP5 regions by number of BS per 1000 inhabitants are also Altai Republic, Amur region and the Jewish Autonomous region with 0.48; 0.46 and 0.45 accordingly (Table 2).
The highest number of LTE BS per 1000 inhabitants had been deployed in Central (0.29), North-Western (0.28) and Far-Eastern (0.28) Federal Regions.
Main perspectives for LTE development in the coming years of 2015-2016 include:
Appearance of the new federal LTE operator
New federal LTE operator under Tele2 brand is expected on the market in 2015. At the end of 2014, operator launched first commercial 4G network in Tula. 20 more regions will be covered by Tele2 network in 2015.
Joint use of network infrastructure (Network Sharing) in order to cut operators’ costs.
MTS and Vimpelcom signed an agreement for complex services in the sphere of planning, joint development and use of LTE networks in the end of 2014. Under the agreement, in 2014-2016 MTS will provide the construction of shared 4G networks in 19 regions, Vimpelcom will construct base stations in 17 Russian regions. Contract period is 7 years, during which operators will provide each other base stations, platforms, infrastructure and transport network resources in these regions. Moreover, companies can construct networks for individual LTE coverage. MegaFon, on the other hand, is ready to share the use of networks’ elements only in remote low-inhabitant regions, where it is difficult to cover costs for construction.
The use of lower bands 1800 MHz and 800MHz in order to cut the costs
Since January 1st, 2015 MTS launched LTE network in 1800 MHz band in Moscow. In 2015 operator plans to launch LTE-1800 on several thousand BS. Main operator’s goal – cut the costs in comparison with costs for new BS implementation in 2500 MHz band. As of January 2015, Megafon’s LTE networks operate in 1800 MHz band in Moscow and Volgograd. LTE-1800 by Tele2 works in Tula. Tattelecom had also launched LTE-1800 in Tatarstan in June 2014 (in Kazan and in more than 30 cities and regions).
At the end of January, MTS launched also LTE-800 in Moscow region. According to company’s estimations, the use of 800 MHz band provides 4 times more coverage vs traditional LTE-2600 networks.
Launch of LTE-Advanced
The fastest LTE-Advanced network - LTE Cat.6, till 300 Mbps in direct channel – was launched by Megafon in Moscow and St.Petersburg. Operator also had launched LTE Cat.4 (till 150 Mbps) in Chelyabinsk. Vimpelcom launched LTE-Advanced network in Moscow (till 110 Mbps).
4G subscriber base increase
LTE subscriber base dynamics kept high during 2014. For example, according to Megafon’s data, its 4G subscriber base increased almost twice during the year and by the end of 3Q2014 had reached 2.6 mln subscribers. J’son & Partners Consulting forecast: the number of LTE subscribers in Russia will grow from 7 mln in 2014 till 20 mln by 2018. Key market growth drivers will be:
- Expansion of LTE coverage zone
- Launch of new market players
- Increasing sales of devices with LTE technology; decrease of its average price in USD.
At the same time, we had to specify a range of negative factors, constraining market development:
- Ruble depreciation and difficulties in economy
- Increasing prices per premium smartphones and tablets with LTE technology
Slowing growth rates of LTE market could possibly happened due to the decreasing demand on premium smartphones, which support LTE (increasing price in RUB), as well as due to the increasing operators’ costs on telecom infrastructure (because of ruble depreciation) and all these resulted in decreased rates of new 4G base stations construction. On the other hand, the growth tendency will be supported by decreasing prices on LTE-devices – Chinese vendors actively enter the Russian market.
By any means, 4G devices sales rates increased in 2014. According to J’son & Partners Consulting, in 3Q2014 had been sold 2.5 times more LTE-smartphones (around 1 mln) vs same period in 2013. Sales of LTE devices in Megafon-Retail shops increased 3.1 times for 9 month in 2014 (company’s data).
Meanwhile, average price on LTE-smartphone is still considerably higher than average smartphone price on the market – 22 thousand RUB vs 8.3 thousand RUB accordingly (preliminary estimations by J’son & Partners Consulting for 2014). Minimal price per LTE-smarphone as of 27th January, 2015 was 4990 RUB (around $73.6 by Central Bank’s exchange rate on a specific date).
Detailed Results of the Research are Presented in the Full Version of the Report: LTE-Coverage: Rating of Cellular Communication Operators, Russia, Results of 2014
1. LTE Development in Russia: Key Results
1.1. Central Federal District (CFD)
1.2. North-Western Federal District (NWFD)
1.3. Southern Federal District (SFD)
1.4. North-Caucasus Federal District (NCFD)
1.5. Volga Federal District (VFD)
1.6. Ural Federal District (UFD)
1.7. Siberian Federal District (SFD)
1.8. Far Eastern Federal District (FEFD)
2. Operators Rating by Number of Base LTE Stations
2.1. Russia in general
2.2. By federal district
2.3. By constituent entity
3. Regions Rating
3.1. By number of base LTE stations
3.2. By number of base LTE stations per 1000 inhabitants
3.3. By number of base LTE stations per 1 square km.of territory
4. LTE Development Perspectives
4.1. New LTE operators
4.2. Cut of costs
4.3. LTE-Advanced launches
4.4. LTE subscriber base forecast in Russia, 2014-2018
List of Companies, Mentioned in the Report
List of Figures
List of Tables
This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.