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Fixed broadband Ukrainian operators rating in III’2013: integral indicators

4 years ago

3190 words

E&C consulting group (www.encint.com), interviewed the key market participants to sum up the quarter. Also in order to meet the operators wishes E&C extended the rating system. Now place in the ranking are allocated based on the positions of top 10 companies in three categories:
– The number of subscribers (individuals and legal entities);
– The dynamics of the subscriber base;
– The size of ARPU (average revenue per user per month excluding VAT, only fixed broadband access to the Internet).

Total score of the operator in the integral rating is the sum of points of operators on all the above categories. The score of operator in a particular category – the percentage of the operator’s indicator in this category from the maximum value in the same category. Operator position in a particular category – the serial number of score (from largest to smallest).

Thus, the integral rating determines not only the leaders on the subscriber base, as well as assesses how provider which manages to also get good performance on profitability per subscriber and growth dynamics. Value 100.0% of the total score means theoretically ideal operator, which reached the best performance in all categories simultaneously during the researched period. In fact, the integral rating allows to evaluate how well a particular operator has worked in the reporting quarter and does not reflect the actual long-term rating of the operators.

TOP-10

According to «E&C» estimation (www.encint.com), the integral rating* of fixed broadband operators in the 3-rd quarter of 2013, based on the performance of the subscriber base, its dynamics and ARPU (average revenue subscribers) was as follows:

Integral rating

Position in the category

Position №

Provider

Total Score

Subscribers

Dynamics

ARPU

1

«Triolan» GC

60,5% 4 1 5
2

«Ukrtelecom» PJSC

58,0% 1 10 7
3

«Lanet» GС

54,5% 10 2 3
4

«Kyivstar» GС

48,0% 2 4 8
5

«Datagroup» PJSC

45,3% 5 7 1
6

«NPP «TeNeT» Ltd.

39,8% 7 3 6
7

«Volia» GС

37,9% 3 6 9
8

Vega

34,5% 6 9 2
9

«Freenet» Ltd.

33,5% 9 5 4
10

«Fregat SP» Ltd.

27,0% 8 8 10

* This rating is an estimate. «E&C» reserves the right to review indicators in the rating. Total score in the integral rating is the sum of equally weighted rating scores for all categories of operators. Operator’s score in a particular category – the percentage of the operator’s indicator in the selected category from the maximum value in the same category, rounded to one decimal place. Operator’s position in a particular category – the serial number of scores in this category, from largest to smallest. The sources of information for companies indicators are operators’s interviews and / or evaluations of «E&C» group.
1. Subscriber base – considered the total (individual and legal persons) active base (based on the internal accounting system of the operator) of subscribers.
2. Dynamics of subscriber base reflects the growth from period to period.
3. ARPU is calculated blended (legal entities and individuals) for each quarter of the relevant period by dividing the revenue received by the company for the quarter for provided services, excluding revenue received for telephone services, TV / video content, and from the sale of computer accessories and other revenues not related to the provision of services by the average number of active subscribers between two quarters.”
** Taking into account the companies operating under the brand “Lanet.”

The integral rating consists of leading Ukrainian providers of fixed broadband by the number of subscribers as results of the third quarter of 2013:

Position №

Provider

3Q2013 (thousand)

1

«Ukrtelecom» PJSC

1 626
2

«Kyivstar» GС

739,5
3

«Volia» GС

566
4

«Triolan» GC

237
5

«Datagroup» PJSC

178,9
6

Vega

156
7

«NPP «TeNeT» Ltd.

126
8

«Fregat SP» Ltd.

113
9

«Freenet» Ltd.

93,6
10

«Lanet» GС

93

** Taking into account the companies operating under the brand “Lanet.”

Ther results of the previous ratings are available at: 2Q2012, 3Q2012, 4Q2012, 2Q2013.

OPERATORS COMMENTS

As part of the rating, were received the following comments and forecasts of market development and major events on it.

Vadim Sidorenko, Acting General Director of “Triolan”

The dynamics of our subscriber base repeats seasonal trend of subscriber growth in the third quarter. Our growth is primarily related to the return of subscribers who have used during the holidays the possibility to suspend the service with organic seasonal growth. Despite the fact that we expanded the coverage, in the near future we plan to concentrate on the development of areas already covered. In the first place is improving the quality and range of services in the cities where we operate.

The main trend of the last period is that the increased penetration of smartphones and the lack of high-speed mobile Internet stimulates demand for wireless solutions. For example, our company is already testing “Wi-Fi project” in Kharkov, the experience of which we plan to extend to other regions of our presence. Trend increase in demand for “heavy traffic” (primarily video) does not lose its relevance. We plan to increase its activity in the near future in this direction.

Alexander Danchenko, CEO of “Datagroup”

Overall, at the end of the current year and in 2014 in the retail broadband access will be relevant trend of starting additional services. Primarily, this is due to high competition in the million-plus cities and market saturation in 500+ cities. According to estimates of “Datagroup” choosing of provider is not only affected by the ratio of price / speed, and the presence of additional advantages. For example, in “Datagroup” increase in the number of subscribers of the operator in the broadband segment has become possible due to several factors: geographic expansion of coverage, network construction in regional and district centers, implementing the strategy of customer retention. In the last quarter efforts were focused on the development of additional services, as well as launch a loyalty program for existing subscribers.
We will not watch significant changes in the development of broadband segment. In fact, the fourth quarter is consolidating; operators will exert every effort to increase the subscriber base at the end of the year to show good results to shareholders. Especially this will involve local players. National operators, fortunately, already pay sights on a more important criterion for evaluating the effectiveness – ARPU. Datagroup plans to keep this figure at 65 UAH.

Dmitry Dzyabura Development Director fixed business “Kyivstar”

In Q3 2013 Kyivstar has strengthened its position in the market of broadband Internet. The number of customers, compared with the same period of the last year, increased by 30 %, while revenues from this business – by 50%. ARPU from the customers grew by 11%, due to the changing needs of customers: they are increasingly choosing tariff plans with high speed access. Penetration of “Home Internet” service is growing. The “Kyivstar” has about 50,000 multifamily housing (multidwell units) in 138 cities. It’s a big potential, which can be operated successfully. We continue to introduce new attractive tariff plans in different cities of Ukraine. So, in the 3rd quarter of 2013, in 26 cities of Ukraine subscription fee was reduced by 33%. Monthly contract price was balance by various additional features of the Internet: access to video portals with licensed movies, increase of the speed of access by subscriber’s choice, at a convenient time for him, etc.r ARPU growth in Q3 is connected with the changing needs of households: they are increasingly choosing tariff plans with high speed access.

Market fixed broadband Internet access in Ukraine continues to develop. Because of absence of access to modern rates in the mobile market, fixed broadband, in fact, is the only way of consumption of popular super- heavy content today. The market is still far from consolidation, and remains highly fragmented. A lot of small operators provide subscribers with questionable quality and reliability.

In Q4 we continue to work on the development of the previously constructed network access. Our plans – new tariff proposals, improving service processes, systems, self-management accounts through mobile phones, etc. In general, we believe that the fixed Internet broadband – long enough product that is capable to complement any high-speed mobile technology perspective .

Oleg Eliseev, CEO of «TENET»

Among the market trends is consistently allocated interest of providers and users to the new technologies of digital television and the development of supply and demand for wireless Internet access. This causes an increasing variety of complex proposals, extending from the classical scheme. Ever-increasing demand for additional services will lead to even higher diversity of complex tariff proposals, including not only the classic “Internet + TV + Telephony.”
In our opinion, one of the most significant news of the last quarter, as the second, was the sale of Ukrtelecom, the deal was closed in October. Also undeniable influence on the market will change in the regulation of construction of telecommunications networks in homes that are now transferred to make additional changes. Among the news market it is worth noting the new position of the National Commission for Communications Regulation and Information (NCCIR) on the measurement of the parameters of the telecommunications network which allows users to initiate a review of the communication parameters .

For TENET, however, the main news is the expansion of its network in Illichevsk. Next year we plan to continue our expansion and modernization of the network, and will focus on the further development of public wireless Internet access open air based on Wi-Fi technology . Currently TENET Wi-Fi operates in Yuzhniy city, in the center and some residential districts of Odessa. We also plan to build TENET Wi-Fi Zone in some hospitals that is a logical continuation of initiatives for the development of modern technologies in Ukraine. In addition, we are currently preparing several innovative digital television services TENET-TV.

Jaroslav Gumenuk, marketing director of “Volia”

Volia expanded coverage in the broadband segment in order to prepare to new business season – example is the launch of a new Internet network in Lutsk. Through expanding coverage and modernizing the network, we have launched a high-speed (100 Mbps) rates for most of the network in the regions – Lviv, Zaporozhye, Dnepropetrovsk, Krivoy Rog. Investments have a positive impact on subscriber base.

Earlier this year, the broadband providers were searching additional source of growth – the services that are provided in addition to or over the Internet networks.

In this direction, Volia was the first in Ukraine, who opened in September for small and medium business the technology previously (at the level of the decision) which was only available to large corporations – a cloud service VoliaCloud. It allows to save on support and upgrade IT infrastructure, to outsource it and to manage it through the Internet network.

Being primarily a serious player in the home entertainment segment, Volia make serious efforts on the development of OTT TV “Volia Smart HD”. Due to this in November the company presented new opportunities for interactive television, among which is showing of channels and VOD-libraries on the screens of tablets and smartphones – and vice versa, the output of images via the Internet from mobile devices to the TV screen on the drag & drop principle. This will help fill the Internet (Volia or any other provider) with quality content and in times to increase the convenience of watching video on such devices.

Globally, the market of broadband access is in a consolidation phase, but with a change in tone. The big players are not ready to buy assets at any price, putting in the first place is not the number of subscribers and the return of the business case. Again becomes actual the necessity to build own networks, if it is more cost-justified.

Market “matures”, although it has some regional bursts “anomalies” – such as, for example, cut ща networks in Kharkov, vandalism on networks in some other Ukrainian cities. However, the coordinated work of social institutions such as UIA , Telekompalata proves that it is possible in a civilized way to draw attention to the problem – and hopefully resolve it.

Also in Volia’s plans for the 4th quarter – to complete modernization program of Internet access networks, scheduled for 2013, and to successfully scale a number of projects aimed primarily at the quality of service and subscriber service. We understand that the main priority – user satisfaction with all aspects of cooperation with Volia, which is the main vector of innovation and quality .

Victor Frolov, CEO of “Freenet”

In this period remained the trend of consolidation and gradual absorption of small providers by large market players. The main news is the beginning of the government’s settlement of the issue of sharing of telecommunication networks infrastructure, namely the Draft Law of Ukraine “About the joint use of infrastructure of telecommunications networks.”

A major trend worth to noting is that broadband networks covering households in Ukraine continues to grow mainly due to FTTx- networks. Penetration in major cities is approaching saturation, which will strengthen the development trend of broadband provider networks in settlements with a population below 50 thousand inhabitants.

Our company plans to develop due to :
– Expansion of network coverage due to the active construction in cities of the current presence and in new settlements;
– Acquisitions and агкерук upgrades of the networks of purchased providers in different regions of Ukraine;
– Subscriber growth and further increase of penetration in already connected houses.

Artem Petrov, director of «MATRIX»

In 2013, the market of telecom services in Ukraine had no revolutionary changes that could dramatically change the course of events in this area. There is not intense but steady increase in the number of Internet users. This is evidenced from the growth of the subscriber base of providers. This trend is particularly interesting when you consider that the market of providers of fixed Internet access is approaching a saturation point .

As we expected, in 2013 increased the importance of digital television (IPTV). This service is positioned both by providers and subscribers as mandatory and same impoirtant service as Internet. In the field of digital television the spectacular event was widely recognizing of such OTT TV platforms as OLL.TV and MEGOGO.NET. This fact generates a vector of further development of the market of telecommunication services in general and digital TV in particular. Speaking of television, the resonant news for a large number of viewers was the purchase of rights by “Ukrainian Media Group” to the show of Comedy Club Production center in Ukraine in connection with what in our country was banned the Broadcast of Russian programs which liked by many viewers .

In the new season I would like to see the growth in the quality of all services provided by telecom operators in Ukraine. This trend has almost completely cancel extensive methods of development of the business. But it would be nice to see the positive results of expansion of large providers in small district towns and villages, where the overall level of telecommunications services requires increasing.

In the following year MATRIX will still follow the invariable rule: make every possible effort to ensure that the subscriber gets the ideal quality of services . Since September 2013 we have been working in two cities in Donetsk region (Donetsk, a new city – Krasnoarmiysk) . We plan to expand coverage both in Donetsk and Krasnoarmiysk. The company’s staff will take care about increase of quantity and quality parameters of the services necessary to subscribers for the most convenient and profitable use of services.

Alexei Davydenko, commercial director of «IPNET»

In the third quarter is traditionally somewhat improved performance – the end of summer vacation has allowed small companies to demonstrate the most positive growth both in revenues and in subscriber bases. However, this growth is unlikely to be able to completely neutralize the previous negative trend. Well, the main newsmaker is still Ukrtelecom because as was expected the change of owners was followed by reshuffle. Our opinion: after the autumn lull, the market inevitably expects wave of New Year and Christmas speicla offers. However, do not expect anything unusual – the price will continue to be a major competitive advantage. IPNET plans are unchanged: in the next quarter the company plans to focus on active promotion of new services: PVR, VoD (affiliate program). Another vector of development – our company continues to expand through M&A. In addition to two acquisitions this year, we have plans for at least one major deal in the next two quarters.

Press Service, Ukrtelecom

The main trend of the year remains unchanged – increased competition in large cities among the participants of the telecommunications market, which is expressed in realizing various activities to attract new customers often at dumping conditions. Since the major players do not increase the coverage of their networks outside the big cities, and significantly slowed the rate of growth of the market in terms of subscribers .

With an extensive network infrastructure our company is the only major market player actively expanding coverage in rural areas, but it should be noted that small local providers are already starting to go into villages.

In an increased competition, as we predicted, operators devote considerable attention to the development of additional services, the key of which becomes an access to video. Most major providers, including Ukrtelecom (service ” OGO!Cinema” was launched in mid-summer) , has launched for its subscribers such services.

Certainly continues the trend of competitive pressure increase, and it spread to the much larger number of settlements.

Key focus for Ukrtelecom becomes cardinal greater efforts to improve the quality of service and customer care and increase of clientoriented level.

Also in the fourth quarter together with our partners we plan to expand the opportunities for users of “OGO!Cinema.”

In general, Ukrtelecom will work to ensure customers with quality services and high level of service, holding leadership positions in the Ukrainian telecommunications market as the number of users, as well as economic indicators.

PR-service, Vega

Key market trends in 2013 became even more notable:
• The consolidation and integration of business providers;
• Due to the highly focused promotional programs continued to decrease the rates for basic service of an access to the Internet;
• To keep the ARPU level the providers have launched complex multi-service and additional new services aimed at monetizing traffic;
• more emphasis on subscribers retention policies.

The current market trends are the same. Telecom operators will pay great attention to optimizing their own business processes, as well as focused invest in the modernization and expansion of the network. Also it is worth to expect activity aimed to improve the quality of services and client oriented approach .
Vega Telecommunications Group plans to continue provision of quality services and service to customers in accordance with the strategic development vector of constant improvement, the use of a segmented approach in preparing proposals and customer service.

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Source: Expert & Consulting (www.encint.com). Reference to the source and active clickable link is obligatory.