Comms industry growth in the CIS countries has seen an up-down market which may have delayed investment. The future path could a move to quality, since the mobile voice telephony markets have already reached their maturity or are quite close to being matured, both in terms of sales revenues and subscriber numbers, says researcher PMR. Conversely, the ISP segment – both wire and wireless – represents the highest development potential.
The estimated value of the telecommunications services market in CIS countries (Ukraine, Belarus, Moldova and Kazakhstan, plus some smaller markets) and Georgia amounted to approximately €11.7bn in 2013, which means a growth of 2.2% in comparison with 2012. In general, the market has almost stopped growing last year (in euro terms), which indicates that it has reached a relatively high level of saturation, especially of voice services, in most CIS countries.
Nevertheless, there is still a room for growth in the sales of fixed and mobile access to the internet in most CIS countries. Data transmission services will undoubtedly remain the main driving force behind the market development in the next few years. However, the value share of the ISP segment is not large enough to ensure a high growth rate for the national telecommunications markets in the CIS, even if internet service providers report a double-digit increase in their sales.
The telecommunications markets in CIS countries and Georgia differ in size and maturity, as well as availability, quality and prices of the main services. Whether or not a market is attractive for investors and whether or not the fixed-line or wireless infrastructure in a country may be developed depends to a large extent on the geographical conditions, economic development, liberalisation of the regulatory environment and cultural differences in the country.
PMR believes that in the next three to five years the telecommunications market in the CIS will show qualitative changes rather than any major increase in value. These qualitative changes may include improvement of the connection speed in fixed-line and mobile networks and decline in the prices of main services. The providers may also focus on the development of various value-added services and contents. In our opinion, these will be a prevailing trend on the matured markets of Ukraine, Belarus, Moldova and Kazakhstan. The markets of Caucasus and Middle Asian countries will undergo a mixture of qualitative and quantitative changes.
The voice segment of the market is going to show relatively modest growth, driven by users switching from fixed to mobile services and by organic growth in the mobile telephony consumption (which will result from increase in the number of users and minutes of talk they consume). The decline in mobile telephony prices is expected to facilitate this process. On the other hand, we expect that the share of ISP services in the telecommunications revenues will go up and the prices will gradually decline. Three key events that will define the market development in the mid-term period in the CIS countries are:
- Further development of FTTx networks in the main cities of CIS countries
- Further expansion of 3G networks, launch of LTE and growing popularity of mobile internet access
- Development of backbone networks and data exchange with other countries as well as higher growth of the ISP market.