Russia’s fixed broadband market, the world’s fourth-largest, is entering a stage of maturity, characterised by high competition and slowed growth that is especially noticeable in Moscow – the latest country profile from Kagan, the TMT arm of S&P Global Market Intelligence, has highlighted.

The Eastern European country’s broadband sector is overcoming the economic crisis of 2014-15 that had caused a decrease in average revenue per user, with 2017-end numbers showing at 32.6 million subscribers, translating to a penetration rate of 57.6 per cent of households. Penetration is, however, not homogeneous.

Key report highlights:

• Broadband providers were hit hard during the 2014-15 crisis:

• Piotr Gaber, analyst at Kagan, S&P Global Market Intelligence says: “The dramatic decline in revenues and ARPU is much more visible when expressed in U.S. dollars, with both metrics decreasing almost by half between 2013 and 2016. The collapse of the rouble in 2014–15 has severely affected the Russian economy, causing a decrease in operators’ incomes and slowing technology development.”

• Broadband revenues are showing recovery – annual growth rate over the past two years has returned to the 4 per cent level
• Fixed telecom markets in large and medium-sized cities, like Moscow, are reaching saturation of fixed broadband. However, the areas outside of these cities still offer some opportunities for revenue and subscriber-base growth.
• Kagan estimates Russian fixed broadband revenues in 2017 at 148.5 billion Russian roubles, or $2.55 billion. Over the last five years, the subscriber base increased, bringing continuous growth of fixed broadband revenues in the local currency.
• Bundled services are attracting more customers – Kagan does not anticipate any further ARPU reductions (since slowdown of 2015), as subscribers migrate toward higher-speed plans of 100 Mbps and up, enabled by the growth of connections in optical technologies, including passive optical networks.
• The top five broadband providers in Russia serve 71 per cent of subscribers and earn 83 per cent of total revenues, which reached 148.50 billion roubles in 2017.
• The average fixed broadband ARPU in the country amounted to an estimated 380 roubles, or $6.52, in 2017, though individual operator ARPUs varied substantially, Kagan data shows.

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