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MOSCOW, Jan 19 (PRIME) -- The Russian antitrust authority asked at the end of 2014 three leading mobile operators – MTS, MegaFon and VimpelCom – to consider slashing international roaming tariffs. Analysts said the initiative is challenging due to the falling ruble and would reduce revenues of the operators, which are already cutting tariffs to attract clients.
Anatoly Golomolzin, deputy director of the Federal Antimonopoly Service (FAS), said the idea behind the suggestion to reduce roaming prices, depending on service, was that the tariffs should not differ dramatically from local tariffs. The firms must report to the service about the progress in two months.
The antitrust authority was not the only to raise the issue of reducing tariffs of international roaming in December. Prime Minister Dmitry Medvedev said at a meeting of the Shanghai Cooperation Organization that member-countries should consider reducing tariffs on connection in roaming.
The service has been depressing the prices for several years.
“Some years ago, roaming revenue could bring Russian operators up to 10% of income, or 2–3% a couple of years ago, now, for example, MegaFon showed roaming income in its July–September 2014 report only at 0.3% of total revenue. According to our estimates, other operators of the ‘top three’ have similar figures,” UFS IC’s analyst Anna Milostnova told Russian Connection.
She said that cutting tariffs when the tourist flow and the ruble are falling is not the best of ideas.
“But the operators will unlikely argue with the authority and will reduce tariffs,” Milostnova said.
“Losses from the reduction will be partially compensated by growing traffic. The operators could also offset the move by rising prices of other services. But the development of the industry and growth of competition, introduction of ‘packaged tariffs’ are, on the contrary, leading to a fall in prices of connection services for Russian subscribers. That is why the current situation and a potential reduction of tariffs will most likely eat away incomes of cellular operators.”
Vitaly Solonin, director of the wireless technologies department at J’son & Partners Consulting, agreed that possible losses could be offset through an increase in tariffs for basic connection services, which most subscribers are unlikely to notice.
The three operators confirmed they are gradually reducing roaming tariffs, but they are not the only actors in the play.
“We are constantly cutting roaming tariffs and introducing options enabling subscribers to reduce their expenses abroad. However, in the matter of reducing tariffs, a lot depends on positions of our roaming partners, whose charges account for about 70% of subscribers’ expenses,” MTS’ spokesman Dmitry Solodovnikov said.
Milostnova from UFS IC explained that devices of Russian cellular subscribers switch to a network of a local operator when they find themselves in a roaming zone, for which Russian operators pay foreign partners.
“By paying for voice connection, subscribers pay for minutes or for the consumed traffic in case of data transfer. An average price of a minute of talk at Russian cellular operators is about 1 ruble, and an average price of transfer of 1 megabyte is at 0.1 rubles,” she said.
Price forming in roaming does not fully depend on Russian operators.
“Our foreign partners calculate the price of roaming services in foreign currencies, and the weakening of the ruble influences their position on the matter. Besides, prices of roaming services depend on competition on foreign national markets of roaming partners, as well as a balance of traffic generated by roaming partners and Russian connection operators,” VimpelCom’s spokeswoman Anna Aibasheva said.
Solonin from J’son & Partners said that the initiative to cut tariffs “looks economically unreasonable, because mutual settlements between roaming partners are made in foreign currency, while Russian subscribers pay for services in rubles.”
To persuade clients to use roaming services, the operators offer special packages and options.
“MegaFon is offering and will offer a wide range of options to save money during journeys using special functions. For example, we offer the ‘Whole World’ option to save money on voice connection; it is switched on a free basis and allows clients to cut the price of incoming calls in roaming up to 35 times. Expenses on data transfer could be cut thanks to the ‘Internet Abroad’ function,” MegaFon’s press secretary Alia Beketova said.
She said that MegaFon will closely watch the situation with foreign exchange rates and terms offered by foreign partners. The operator will prepare its ideas for the antitrust service within the set period by February 15.
(65.1738 rubles – U.S. $1)