management MTS considers it possible to increase prices in the mobile communications market, according to a review by VTB Capital analyst Ivan Kim following a meeting with the operator’s management. We are talking, in particular, about tariff plans with unlimited mobile Internet. MTS plans to raise prices for these tariffs or completely abandon them in 2017, Kim reports, citing operator executives. In addition, MTS management allows for the possibility of reducing the amount of mobile Internet traffic on regular package tariffs, the review says.

An MTS representative confirmed that there was a meeting with analysts, but declined to comment in detail on what was discussed there. The operator will analyze the consumption profile of its subscribers in order to offer them optimal tariffs, he added.

Tariffs or options that allow subscribers to use data transfer without restrictions were introduced by all operators in 2016. MTS opened its first tariff with unlimited mobile Internet called “Smart Unlimited” for connection in May 2016. Now these tariffs account for the majority of the operator’s new connections, as follows from the VTB Capital review.

MTS may have the opportunity to revise prices for mobile communications due to the end of the price war in cellular retail and the operator’s refusal to expand its retail network, according to a review by VTB Capital. It is difficult or impossible to think about how to monetize the growth of data traffic through prices during the race to connect new subscribers, Kim explained.

The operator can monetize data transfer by reducing the amount of traffic in package tariffs and, for example, instead of 5 GB, give 4 GB for the same price, says Kim. The main task of MTS when changing the cost of mobile Internet is to reduce the amount of traffic in package tariffs and at the same time increase revenues from mobile Internet in the LTE (4G) standard. As LTE penetration increases, data consumption increases, and “repackaging” will allow LTE to be monetized as subscribers move to tariffs with more traffic, Kim explains.

Imperceptible increase
MTS has been implementing targeted increases in its tariffs since the end of last year. Last Friday, the company announced changes to its Smart+ tariff plan. If previously subscribers connected to this plan paid 900 rubles....
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Imperceptible increase

MTS has been implementing targeted increases in its tariffs since the end of last year. Last Friday, the company announced changes to its Smart+ tariff plan. Previously, subscribers connected to this plan paid 900 rubles. monthly, they will now be switched to weekly payment mode. The price for each week of use is 250 rubles.

Any option that MTS management ultimately chooses will improve the monetization of Internet traffic and will be a positive signal about the improvement of the competitive environment in the mobile market, says Sberbank CIB analyst Maria Sukhanova. The third quarter of 2016 saw the peak of the negative effect from the reduction in the cost of package tariffs, she recalls. Operators began to think about how they could change the situation, and during a conference call with analysts, they spoke in unison about the need to reduce competition. Now we see how operators are gradually beginning to realize these intentions, concludes Sukhanova. In the third quarter, MTS's revenues from mobile communications in Russia fell for the first time since 2010. In the third quarter of 2016, they decreased by 2.7% year-on-year - to RUB 75.9 billion. Revenue from mobile services and OIBDA then decreased for all Big Three players.

Russian operators will gradually abandon unlimited tariffs, VimpelCom CEO Shell Johnsen previously predicted. Operators simply have no other choice, he noted: 3G networks are already overloaded, and 4G networks load very quickly. The first of them to do this was not VimpelCom , but Scartel (the Yota brand is owned by Megafon and provides services on its network as a virtual mobile operator). At the end of January, the operator introduced a new tariff line, where unlimited Internet access was no longer available.

VimpelCom representative Anna Aibasheva believes that unlimited tariffs, in fact, have turned into a marketing tool and, in fact, the actual traffic consumption on them is not much higher than on regular tariffs. Unlimited tariffs are holding back further development of the market, as mobile Internet consumption is growing, but in the case of unlimited tariffs, both active users and those who use the Internet a little pay the same amount, she explains.

Megafon . agrees with the reasoning of MTS management, a representative of the operator said He did not specify whether Megafon itself plans to refuse unlimited data transfer and reduce services in package tariffs. T2 RTK Holding (Tele2 brand) does not intend to reduce the content of current packages in the near future and is not yet going to give up unlimited tariffs, but will monitor market trends, promises the operator’s representative Konstantin Prokshin.

Finam Group analyst Timur Nigmatullin calls the main problem with unlimited tariffs that operators mistakenly positioned this essentially niche service for a wide market. Thus, they set an unnaturally low ceiling for themselves in terms of possible ARPU (revenue per subscriber) and, in addition, increased the load on their networks, he argues. In order to solve the problem, the optimal strategy is to close mass unlimited tariffs for new connections, he agrees. It would be advisable for operators to leave the unlimited access service itself as a relatively expensive option, with a price of two to three ARPU, suggests Nigmatullin.

Imperceptible increase MTS has been implementing targeted increases in its tariffs since the end of last year. Last Friday, the company announced changes to its Smart+ tariff plan. If previously subscribers connected to this plan paid 900 rubles.... Read in full

Imperceptible increase
MTS has been implementing targeted increases in its tariffs since the end of last year. Last Friday, the company announced changes to its Smart+ tariff plan. If previously subscribers connected to this plan paid 900 rubles....
Read in full

Operators cannot go without a limit