GSMA Intelligence, the research branch of international mobile operator association GSMA, has just released an overview of the mobile economy in Russia and 11 neighboring countries: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.
The findings of the report may be summarized as follows:
- Mobile penetration rates
The region was home to 232 million unique mobile subscribers at the end of 2017, which corresponds to a rather high penetration rate – 80% vs. global average of 66%. The three largest markets – Russia, Ukraine and Uzbekistan – together account for 80% of the region’s total subscriber base.
With 89% of the population subscribing to mobile services, Russia is one of the most highly penetrated countries in the world –ahead of the European and Northern America averages (85% and 84%, respectively) as well as Latin America and Asia Pacific (both 67%). Some of Russia’s neighbors are at a lower stage of development, such as Turkmenistan and Uzbekistan with 60% subscriber penetration rates.
“Given the relatively high level of penetration, growth over the next few years will be limited,” expect the GSMA analysts.
In 2025, the number of mobile subscribers in Russia will be the same as in 2017 (128 million), while the region will see only a 2 percentage-point increase in penetration (242 million unique subscribers in the region, accounting for 82% of the population. Almost half the additional subscribers will come from Uzbekistan, a country that is the third most populous but one of the least penetrated in the region.
The mobile economy in Russia and neighboring countries (2017-2025)
- Shift to mobile broadband
Russia was one of the first countries in the region to launch 4G in 2012, notes the report. “4G coverage and network quality remain key competitive factors in the Russian market, with all four of the main operators launching LTE-Advanced networks in recent years.”
4G networks will account for over a half of connections by early 2022, predicts the report, up from one fitfth at the end of 2018.
Mobile broadband will progress fast at the regional level, too, with “4G overtaking 2G as a proportion of connections in early 2020, and becoming the leading mobile technology in 2021.” 4G will account for nearly two-thirds of total connections by 2025, the GSMA analysts believe.
5G will follow fast, with “network launches expected in Russia from around the end of 2020 [and] more than 80% of the Russian population covered by 2025.” The report sees enhanced mobile broadband (eMBB) as a likely initial focus in Russia, which will increase capacity and speeds for mobile Internet access.
5G services are also expected to be launched in Azerbaijan, Belarus, Georgia and Uzbekistan by 2025, according to the report.
There are several ways in which policy and regulation may be used to accelerate 5G rollout in the region. These include “the timely availability of harmonised spectrum at a suitable price; new approaches to supervise network development; updates to network architecture regulation; and the introduction of legislation covering network neutrality and data collection,” write the GSMA experts.
“The implementation of 5G networks should be considered by regulators as not just a new technical advancement for the telecoms industry, but as a condition for delivering the digital economy and to drive the transformation of industries. With such a mindset, the regulation of the mobile industry should shift from controlling and supervising the industry to fostering its development,” the report recommends.
Smartphone, 4G and 5G evolutions in Russia and neighboring countries (2017-2025)
Excludes licensed cellular IoT
- Revenues
“Despite ongoing competitive pressures, relatively low smartphone adoption and relatively low pricing, service revenue trends have been improving in recent quarters, with revenues growing in the low single digits (largely below the level of in ation),” notes GSMA.
However, “beyond 2019, growth in real terms is forecast to remain subdued at a rate of less than 1%. Rapid growth in smartphone adoption over the coming years (reaching around 80% of connections by 2025, up from less than 60% now) will fuel an explosion in data traffic. Any upside to existing revenue forecasts will therefore depend on mobile operators more effectively monetizing this data growth and developing new revenue streams.”
- Internet-of-Things
The report expects the number of IoT connections in the region to “triple over the next few years, reaching 660 million by 2025.”
“While consumer IoT accounts for the majority of IoT connections (68% in 2017), the biggest increase is expected in industrial IoT; it will reach 48% of total IoT connections by 2025. This will be driven by increased interest in smart cities and smart utilities. IoT revenue meanwhile will reach almost $26 billion by 2025 (up from $5 billion in 2017), driven by applications, platforms and services – the largest source of revenue – growing from 53% of total IoT revenue in 2017 to 62% in 2025.”
