Total Telecom spoke to Andrey Ershov, CEO and Chairman of the Management Board, MGTS PJSC, about the challenges and opportunities in the Russian telecoms market

What trends are you noticing developing in the global telecom sector at the moment? 

The key trend is market transformation – what was previously a consumer market is now developing into a digital market. New revenue streams are increasingly segmented; we see changes in consumption models based on consumer variables including age, gender or social behavior.  There is a growing menu of interfaces for content delivery; from TV sets and desktops to laptops and smartphones. 

To access these revenue streams, telecom operators have to design and adapt their product offering taking into account the larger number of available interfaces and the varied needs of different consumer profiles.     

The opportunity for telecom operators in the new IT eco-system lies in leveraging their existing strength and market position to compete with traditional content suppliers, producers and vendors – Clouds, M2M, smart home, entertainment, complex services. That is the future.


What challenges and opportunities are particularly pertinent to the Russian market at the moment?

The Russian telecom market follows global trends. In a world with relatively high basic network connectivity, data capability and digital delivery remain the main market differentiators. 

Unlike mobile, the fixed market in Russia is not yet settled. There are some players that are still growing fast, while others are losing their positions. We are pro-actively targeting new customer acquisition to take advantage of the situation and substantially increase our footprint. 

Looking at business models, Russian telcos have a choice between being a network company that continues focusing on basic services; a data and IT services provider; or a specialised player focused on gaining a leadership position in a niche service. 

Speaking about MGTS, we are transforming into a multi-service provider with an eye toward future IoT and home technologies. 


How important is the pursuit of full fibre networks across Europe – is there a role for alternative, copper-based technologies?

Technological leadership is a key competitive advantage for telecom operators. From the outset we have taken the strategic decision to invest in GPON. We now have the longest network in Europe (45 thousand km) and the largest number of optical ports (4.6 million installed). 

In 2013, we provided services through copper and our broadband market share was 25%. As of today, not only were we able to reverse that trend and rebuild market share to 33%, but we are continuing to see strong growth in customer numbers.

GPON speed allowed us to substantively increase our content offering. The number of subscribers using two or more services via the GPON network grew by 15% in 2017. The penetration of multiservice consumers exceeded 65% of our GPON subscriber base. We were able to increase our pay-TV market share from 12% to 38% due to GPON network for IPTV.

These results would simply not have been achievable using copper-based technologies. 


What predictions do you have for the market over the course of the next 12-18 months?

The majority of operators will maintain current revenue levels, primarily by increasing the quality of service and customer loyalty to reduce churn. 

At the same time, those that are capturing new sources of revenue will accelerate digital growth and deepen customer relationships.


What new markets are particularly interesting to you at the moment? 

Our superior technology offers us a wide scope of new markets to consider. 

Having successfully launched digital TV, home security and smart home solutions, we continue to explore non-traditional avenues for revenue generation and attracting new customers, both in the B2C and B2B segments. 

The most promising areas for us are financial services, e-health, e-learning, electronic trading platforms and Cloud services.