About HKTDC | Media Room | Contact HKTDC | Wish List Wish List () | My HKTDC |
繁體 简体
Save As PDF Email this page Print this page
Qzone

Smartphones Conquer Moscow as Mobile Data Revenues Surge

Two-sim facility handsets particularly in demand as regional roaming costs still levied by many operators.

Photo: Day-to-day data users: Young Muscovites. (Shutterstock.com)
Day-to-day data users: Young Muscovites.
Photo: Day-to-day data users: Young Muscovites. (Shutterstock.com)
Day-to-day data users: Young Muscovites.

Moscow has joined an elite group of the world's most advanced cities, with its share of smartphone users now outnumbering those owning conventional mobile phones for the first time. As of the end of 2014, more than 51% of Muscovites had upgraded to the more digitally-enhanced handsets, a rise of 15% over the previous year.

The development underlines a clear distinction in uptake between the capital and the rest of Russia. Outside of Moscow, conventional mobile phones still outnumber smartphones by a ratio of almost three to one. This is despite the fact that smartphone penetration in the Russian regions has grown by 40% since 2013. Overall, this growth has been more in line with the youthful demographic of individual provinces, rather than as a measure of local prosperity, with the Northern Caucasus, South Russia, Ural and Western Siberia taking the lead.

Across Russia, revenue from mobile data transmission is the fastest growing profit centre for the country's cellular operators. Mobile internet fees now represent some 20-30% of the income of the country's Big Three players in the sector – MTS, Beeline and Megafon. It also represents a similarly high value revenue stream for many of the smaller regional operators, including SMARTS, Indigo and Tele2.

As well as being a direct consequence of the greater penetration of smartphones, this upsurge in mobile data usage also reflects the way many Russians have been swift to incorporate the use of apps into their everyday lives. Typically, this has seen many of the country's younger urban consumers routinely accessing train timetables, taxi ordering services, directions, news, weather and car parking payments via their handsets.

Overall, the bills of a typical smartphone user are three times higher than those of the users of conventional phones. If the current trends are maintained, the Big Three's revenue from their mobile internet services will outstrip that from their regular cellular telecommunication fees by late 2015, at least in Moscow and St. Petersburg. This pattern is expected to be followed in Russia's other cities with populations of one million or more by the end of 2016, and throughout the rest of the country by the end of 2018.

In line with this, Russia's leading mobile phone retailers, EuroSet and Svyaznoy, have been selling more smartphones than conventional mobile phones since mid-2013. In terms of consumer preferences, the handsets of choice vary from iPhones (largely favoured by the upper middle class) to Samsung, HTC and Sony, more popular among the middle-class and the more anti-US minded upper middle class.

The retailers also offer a wide range of second-tier affordable smartphones, often matching the specifications of the more heavily-promoted multinational brands. Among the most popular here are Explay, Prestigio, TeXeT and Highscreen. Overall, such smartphones rarely cost more than US$100, a price pitched just below that of the multinational brands' starter-level models.

One of the most appealing features for smartphone users is a two-sim card function, a major advantage in a country where inter-regional roaming charges are still levied.  This was a major factor in the success of Explay's Tornado handset, which offers a three-sim facility. This became a best-seller in the Russian provinces and the areas bordering Ukraine, the Baltics and Kazakhstan.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
Comments (0)
Shows local time in Hong Kong (GMT+8 hours)

HKTDC welcomes your views. Please stay on topic and be respectful of other readers.
Review our Comment Policy

*Add a comment (up to 5,000 characters)