MTS will be fixed in other people’s networks – Newspaper Kommersant No. 140 (7341) dated 08/04/2022

The MTS operator is negotiating partnerships with regional home Internet providers to sell convergent tariffs under two brands. Thus, by the end of the year, the operator plans to enter 15 new regions where it does not have its own wired Internet. Such a strategy will allow MTS to save money and gain a foothold in the regions. But market participants doubt that the operator will be able to seriously increase the base, since it will not be able to guarantee the same quality of service on the networks of different partners.

MTS plans to increase its presence in regional markets through partnerships with local fixed-line operators, Kommersant was told in the company. By the end of the year, the operator plans to enter 15 entities in partnership with regional fixed-line operators, offering joint convergent products (fixed and mobile services). Now MTS provides wired Internet services in 58 regions, but not everywhere in all cities. Such a partnership strategy, they hope in MTS, will save money and gain a foothold in territories where the company does not have its own fixed network.

Such a project has already been launched in the Krasnoyarsk Territory with Orion Telecom, in August MTS plans to launch similar projects in Khakassia, Lipetsk and Irkutsk regions. By the end of 2022, the operator hopes to increase the number of households to 10%, which will have access to a converged product with home broadband access of a partner operator and MTS services (mobile communications, IPTV or Kion online cinema). The subscriber will enter into an agreement with two operators: with a regional operator for fixed communications, with MTS for mobile communications, including access to ecosystem services. In this case, the subscriber will have a single account linked to the MTS mobile number. A product can be promoted under two brands.

The construction of a network or the purchase of a local large market participant with an existing network will amount to billions of rubles per region, explains the interlocutor of Kommersant in the telecom market: “Construction of the network and commissioning will take at least 1.5–2 years, an M&A deal will take months.” Another interlocutor in the telecom market notes that in the face of a shortage of equipment supplies from foreign vendors – Huawei, Ericsson, Nokia, ZTE – such a strategy is logical.

MTS competitors are also developing convergent tariffs. MegaFon noted that it has been actively cooperating with regional operators since 2019, offering users a converged product: home Internet, cellular communications and TV. “We plan to further develop cooperation in regions where we do not have our own broadband access infrastructure,” the operator added.

Vimpelcom noted that at the end of 2021 the company had 2.9 million subscribers in the fixed-line segment, of which more than 60% accounted for convergent tariffs. “We really continue to grow both in the broadband subscriber base and in revenues from this direction. This happens due to convergent products,” the company noted.

Tele2 does not have its own broadband access network, but the operator offers converged solutions in partnership with the federal Internet provider Rostelecom (controls Tele2). “Its optical access networks cover more than 40 million households across the country. Synergy allows Tele2 to quickly launch a converged product on the territory of any constituent entity of the Russian Federation,” the company added, adding that the service, which combines mobile communications, home Internet and digital TV, was launched in November 2021 and is available in 15 regions of the country.

At the same time, Kommersant’s interlocutor in one of the major Internet providers doubts that the MTS partnership scheme with local market participants will be effective: “Formally, everything can be fine on paper, but the demand for such services is low for various reasons. One of them is that it is impossible to guarantee the same level of service and speed in all regions, since regional operators have different infrastructure.” Even if MTS offered a very favorable price, the interlocutor admits, there is a risk that partner networks will not withstand the influx of subscribers.

Julia Silence