In the wake of a volatile 2014, the repercussions in Russia and the CIS are continuing to be felt as we enter the New Year.
Recession on the way
Russia is heading to recession following the significant fall in oil prices and a 40% plunge in the ruble against the US dollar and euro. Because operators typically pay 60-70% for their CAPEX and OPEX expenses in foreign currency, Russian service providers will have to reduce their investments and find different ways to continue modernization and product development. One approach to achieve this will be via managed services projects that include modernization and simplification of back-end components. Indeed, this will be a top priority during 2015 for all operators, in both network and IT environments.
Joint LTE investments
Operators will continue to invest in LTE and collaborate to build the necessary network infrastructure. In December, Russian MTS and VimpelCom already agreed to jointly build and operate faster networks in 36 Russian regions to cut costs in the face of currency devaluation. Experts believe this will save operators about a quarter of the required capital spending and half the operational spending in those regions. Local market analysts are also predicting an increase in RAN sharing activity during the coming year.
With Tele2 having just finalized its deal on acquiring Rostelecom’s mobile assets to become a new national mobile operator, the company is now set to roll out its services in the Moscow region in the latter half of the year. This will increase competition as Tele2 begins to compete against incumbents MTS, MegaFon and Vimpelcom. I expect significant movement towards to true quad play offerings. Possible strategies include joint ventures as well as more M&A activity in the cable and satellite space.
Big Data and Innovation
With the continuing hype over big data, operators are looking for ways to take advantage of the customer data they already have. Some operators are going for quick monetization by selling anonymized data in the form of scores to the relevant industries. But the traditional use of this information will continue to evolve. One innovative strategy is to use this data to attract SMB customers by constructing offers based on their specific needs.
Oleg Volpin is the VP of Amdocs Russia & CIS.