Rostelecom fixed voice revenue decline offset by broadband/TV turnover

7 Mar 2017

Russian national fixed network operator Rostelecom posted a slight 0.03% increase in total annual revenue to RUB297.4 billion (USD5.1 billion) in full-year 2016, as a 12% decrease in revenue from fixed line telephony services was offset by: 5% growth in broadband services revenue (due to increasing subscribers and rising fibre broadband ARPU); a 22% increase in pay-TV revenue (due to IPTV subscriber growth, higher consumption of video-on-demand services and higher ARPU); and a 28% increase in revenue from VAS and cloud services (including growth in cloud/data centre and Smart City projects). FY 2016 EBITDA decreased by 4% to RUB96.8 billion, whilst annual net profit fell 15% to RUB12.2 billion, due largely to part-owned mobile subsidiary Tele2 Russia’s losses reflected in Rostelecom’s financial results (accounting for RUB6.7 billion in twelve months).

Rostelecom’s number of broadband subscribers grew by 6% year-on-year to 12.313 million at end-December 2016, including residential broadband (up 6% to 11.562 million) and B2B broadband (up 3% to 751,000), whilst the underlying fibre broadband (B2C/B2B) subscriber base rose by nearly 17% to 7.361 million (with a corresponding 7% drop in DSL lines to 4.952 million). Pay-TV subscribers grew by 8% to 9.3 million, including IPTV subscribers climbing 24% to 4.2 million. The number of local telephony subscribers decreased by 7% to 20.5 million. Also during the fourth quarter of 2016 Rostelecom returned to the mobile market under its own brand via an MVNO operation launched over the Tele2 network, with the service now available ‘across the country’.

CAPEX decreased by 1% to RUB61.9 billion (20.8% of revenue) in 2016 from RUB62.7 billion (21.1% of revenue) the previous year, reflecting the substantial fulfilment of a targeted 33 million fibre broadband homes passed – with the telco noting that it reached 32.2 million fibre home passes by end-2016. TeleGeography notes that the direct fibre household coverage figure represents roughly 56% of all homes across Russia, having grown from 26.1 million homes at end-2014. The telco also recently completed the construction of the Kamchatka-Sakhalin-Magadan submarine fibre transmission network, giving access to new high speed services to almost 500,000 people in the Kamchatka/Magadan region previously served via satellite links.

In related company news this week, Rostelecom has opened up wholesale access to its Kamchatka fibre-optic backbone to other operators including Mobile TeleSystems (MTS), MegaFon and VimpelCom (Beeline), enabling them to improve the quality and speed of mobile data services in the region.

Rostelecom’s management board also this week approved the acquisition of the remaining 49.9% in Moscow-based data centre operator SafeData to raise Rostelecom’s stake to 100%.

Russia, Rostelecom