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Russian Telecom Market Overview 2008

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agency Rustele.comThe Russian telecommuni market is the largest in Europe due to the size of its population. Its telecoms market is not homogenous

due to the concentration of wealth in the west. All market have been liberalised with competition most prevalent in Moscow. Svyazinvest, the holding company for Russia’s incumbent telecom operators continues to dominate the fixed-line market. Network developments are underway with incumbent and alternative operators deploying and modernising fixed-line network infrastructure to offer broadband and convergence services, utilizing a host of technologies including WiFi, WiMAX, NGN and FttH/FttB. According to preliminary evaluations in 2008 Russian telecommunications market grew up to 1234,4 billion rubles (112,8% growth in reference to 2007 in comparable prices). Despite common negative expectations and forecasts the telecommunications industry didn't suffer any heavy losses. Its great potential and daily demand for its services defined the inertia of plunging into the crisis. The dynamics of telecommunications market’s sales volume were determined by the level of public income, enterprises’ business -activity, infrastructure’s further development resulting in services’ quality improvement and implementation of the new ones.

Telecommunications services’ growth rates (%, in comparable prices)

Telecommunications services’ breakdown, %

Despite the occurring crisis and market’s saturation in terms of subscriptions fixed-line telecommunications sector managed to attract some 23 million of the new subs during 2008, thereby slightly overcoming the threshold of the overall 194 million. This growth was influenced by the implementation of new services attracting new consumers, high subscribers’ churn rate, migrating between different operators and the increase of the number of subscribers using several sim-cards.

Telecommunications’ segments contribution into overall industry’s growth rates, %

Internet access sector kept its picking up speed of growth, just as it did in 2007. The preliminary established percentage of Internet users per 100 people amounted to 33 (132% compared to 2007). The total number of computers used in the country made up 40 million machines, 128,2% growth compared to 2007. Number of computers per 100 people — 28. Overall Internet-traffic volume consumed in Runet grew 3 times more compared to the previous year.

Postal service is still most available and socially important means of communications which delivers its services’ level of quality to every customer by the due date and by affordable price. Nevertheless low service quality, insufficient range of services and low level of security hinders its development.

The growth of telecommunications market was defined by the development of its infrastructure as in 2008 the whole process of its refinement had been continued, especially regarding backhauls and engineering level of telecommunications systems.
The number of main stations in 2008 made up nearly 43 million making 101% growth compared to 2007. The dynamics of main line stations increase is widely influenced by the growth of demand for mobile telephone communications and IP-telephony.

Main stations overall number growth rates

Information technologies market’s sales volume is initially estimated in 2008 about 580 billion rubles, exceeding the figures of 2007 by 17,8% in comparable prices. Sector’s functioning was influenced by the income level, financial solvency, industry’s potential and considerable amount of investments, assigned to the industry during the past few years.
The majority of Russian IT-market consists of hardware segment - 51,6%. Software segment is evaluated as 21,2% of the market, services’ segment – 27,2%. Compared to 2007 the market’s total sales volume is marked by diminishing share of hardware segment coupled with the increasing shares of software and services’ segments.
Despite the positive dynamics of key-figures in 2008, there is still persistent threat of further slowdown in the rates of the IT-market growth, headcount reduction and rapid growth of default in payment for services rendered by the business.
System integration, software development and hardware production segments are affected by the expectations of crisis consequences which results in headcount reduction on a bigger scale ( from 20% to 60%) than in the operators segment, cutting equipment investments size and restricting the development of technical basis for innovative production.
The current situation is engraved by the international banking systems recess, acute shortages of credit volumes, which includes the renegotiation of credit agreements concluded earlier on.

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