MTS company the leader in subscriber base in Moscow and Moscow region, is one of the major regions for all operators. At the beginning of the third quarter, the operator struggled to increase ARPU, in November, the task for some political reasons, changed, and the priority was to connect new subscribers. Saturation of the market in the Moscow region suggestion would be unique in order to attract new subscribers. This proposal was the "New REDaktsiya prices," action, which progressed only in salons Svyaznoy, as well as their own stores MTS. In essence, this tariff RED with the subscription fee of 1 ruble 70 kopecks a day, and connecting service "cool", which was only available to students upon presentation of certificates. Here, as described by the operator of this action on your site:
We are interested in the period with sales of 20 November 2006 (early action) before the end of December 2006. The minimum number of contracts REDaktsiya sold during this period of not less than 75,000 pieces. That received short-term operator of these sales?
At first glance, the answer is obvious and lies on the surface: fare is a fine add to the original RED, intended to close the offer at the lower price segment, to provide to subscribers a low ARPU (less than 5 dollars).But besides this, the tariff provides for the level of the central region of short-term surge in subscriber growth, talking about it and the dynamics of sales in such a short time. A little trick is that 22.5 thousand subscribers of MTS, who have migrated to this tariff, in the accounting system will be subscribers of the company. The trick with the statistics is obvious from the parameters of your plan and show a desire to MTS 'fan' base, albeit slightly, but increase it. The reason for this is probably a desire to neutralize the inevitable technical outflow, which the operator will have to show in 2007. VimpelCom took this step in October 2006, according to ACM Consulting, subscriber growth from September 30 to October 31, 2006 in the Russian market was negative. Outflow amounted to 369,134 subscribers. The company explained the technical reasons for the outflow, indicating that the number of active subscribers in Russia during the same period increased by 200 thousand people. There is no reason to believe that MTS is in the other operating conditions, both operators have similar business as their tariff offers (except in the same RED). It follows that the MTS will also need to show the high technical outflow or to leave their base "dead" subscribers.
In favor of the fact that in November and December MTS actively fought for the active connections, and said free distribution maps with the tariff plan RED and three dollars in the account. This activity is made possible only after the market situation is in favor of the operators. So after spending the end of June 2006 fixing the dollar at around 28.7 rubles, the company increased its profit in the third quarter of 2006. The reasons for the successful performance of the third quarter 2006 financial statements referred to:
- Revenue from interconnect.
- The increase in profit due to roaming and summer holidays.
- Introduction segmental approach to pricing and new tariff plans.
- The introduction of a fixed exchange rate.
- The purchase cost per subscriber decreased from 8.23 dollars to 03.22 dollars due to the reduced marketing and advertising costs.
Of the 5 major factors can be considered as income from interconnection, roaming, fixation of the ruble, as well as cost reduction company. Suffice to note that only fixing the dollar at 28.07 rubles gives us a significant increase in income. If we take into account the dollar CBR on September 30, 2006 (26.77 rubles) and calculate the difference, then it will be equal to 6.7 percent. Let's look at its impact on ARPU, given the average change rate of 6.4 percent in the third quarter.
| 3 quarter 2005 | 4 quarter 2005 | 1 quarter 2006 | 2 quarter 2006 | 3 quarter 2006 | |
| ARPU (USD) Data MTS | 9 | 7.4 | 6.6 | 7.5 | 8.6 |
As such, without exaggeration, "chocolate" conditions when the actions and activities of the operator does not affect the rate ARPU, could only be born the idea to increase its subscriber base, partially sacrificing a further increase in ARPU in the 4 th quarter of 2006. Increased base is essential for that to reduce the negative effects of technological churn or by some other political reasons. In particular, the 4 th quarter 2006 it became known that Sistema main asset of which is the operator MTS provides an exchange of shares with the German operator Deutsche Telekom. In light of these negotiations, an increase in subscriber base of MTS even in a small number, lack of negative dynamics increases the value of the company, improves the terms of the transaction.
Depreciation of the dollar in the 4 quarter of 2006 at the rate on 30 December 2006 at 26.33 rubles to the dollar gives us an average growth of 7.5 percent for the quarter. That is, the operator while maintaining the volume of transactions could be expected to increase ARPU by at least 7.5 percent, which amounted to 9.2 U.S. dollar. On the positive side as it should be noted maintain high levels of income from the interconnect, high seasonal income from roaming in December, the surge in consumption of traditional voice services later this year. The time is ideal for larger subscriber base. For this purpose, the market and there was a family calling plans, in particular, RED, REDaktsiya We. All plans are aimed at increasing voice in the 4 quarter of 2006 and first half of the 1 quarter of 2007 or the beginning. This is supported by the fact that key indicators of "thin" customized calling plans vary in the first quarter of 2007. For example, for rate plan "we" call cost to the subscriber group is 0.69 rubles, and February 16, 2007 is changed to 1.35 rubles, ie, grows twice. This suggests that the operator using the natural advantages of 4 quarters of 2006, gaining its subscriber base to different tariff plans, in order to then change the terms of the tariff plans and raise their own profitability. A similar technique is used very rarely and is extremely unpopular among subscribers. Another thing is that, following the letter of the law, MTS seems to be said about the changes, but consumers of services the company will not know about them. However, in late 2006 the company made a mistake, particularly in official materials for one of the tariff plans in plain text stated that the conditions and fees perpetual and can not be changed.
The mechanism of cheating or how to earn 11 per cent just
As an epigraph to the material that Grzegorz Ash will soon leave the MTS, I would like to use here are his words: "With regard to the status of the MTS, it has always been, is and will remain, regardless of the color logo. Status - this is not a picture, and service quality, market position. If it even easier, in my understanding of the "status" - that's what you do, not what you look like. " But since we are talking about the mechanisms used by the operator to increase profitability, we use this passage here, she's interesting.Not for nothing at the beginning of this article, we talked about the tariff plan REDaktsiya, this is the tariff was a "moment of truth" for MTS. By law, the rules of providing communication, section 17.3, the operator has the right to independently determine the price indices of services, in our context of tariff plans, with notification of changes of subscribers for 10 days. Does not require any written notices to those may be, for example, the message on its Web site.
And that's what it says:
December 15, 2006
On December 27, 2006 changed the price for services under the tariff plans "First», «RED» and Onlayner. All prices will now be made in euro, including taxes.
This reduces cost of outgoing calls, SMS and in some areas of local services, including fees for establishing connections to the tariff plan "First" and the cost of GPRS-WAP traffic on the tariff plan "Onlayner.
Now you do not need to perform complex calculations: tariffs in rubles - that is understandable, easy and convenient.
The law formally complied with, the more that changes in the ruble calculations do not take place on December 27, as stated, but only on January 7. This message contains a large portion of wickedness, for tariff RED not reduce the cost of calls in some areas of local connection, only for calls to other regions of Russia for MTS (from 3.15 to 2.95 rubles per minute including VAT). Cost per minute, declare startup tariff RED, when calling the subscriber with the same rate plan was 0.0354 U.S. cents, including VAT. I will not talk about that all the rounding operator holds a big party, it is normal practice. It is important that the price per minute of conversation was within the tariff plan RED RR 1 2 kopeks. On December 27th minute cost is 1 ruble 15 kopecks. Not easy to estimate that the increase in price per minute was 11 percent.
I'll note that the operator had the right to make such a price increase and change the price per minute. This is stipulated in the contract with the subscriber, a notification was posted within 10 days on its Web site. Such a move does not look very nice, but you can somehow explain the "complexities" of transition to ruble settlement system.
Go back to the tariff REDaktsiya and remember that it is derived tariff RED. Not surprisingly, he had thought exactly the same increase in cost of a local call to a phone service plan REDaktsiya. Exactly 11 per cent increased price minute call. Everything was good, but only subscribers of the service plan, MTS did not warn of such change. It is unlikely that a warning can be considered as description appears in the ruble rate on the page rate, in line news no statements were made. Line of protection from the MTS looks amazing and simple. REDaktsiya is not a service plan, there is a tariff RED-enabled service "cool." Warning to change the tariff on the tariff plan of RED has been done. Everything seems to be sedate and peaceful, and we can safely forget this story.
But in this case the question arises why in advertising tariff proposals REDaktsiya were uttered these words:
By purchasing a set of «RED» c label "New REDaktsiya prices" You get an unlimited period of super soft terms:
- All local outgoing calls at 0.06 U.S. dollars
- Calls within the tariff «RED» - 0,03 Euro
- 50% discount on SMS and MMS messages in the network
- All incoming calls are free.
Hidden price increase for prepaid-rates increases the profitability of the company's operations for at least 5 percent of tariff plans. In particular, we can take into account that subscribers do not use calls to other regions, their share is minimal in the total number of phone calls. For tariff REDaktsiya due to the presence subscription fees average traffic is about 200 minutes a month (it's higher than normal fares and prepaid-RED). Not difficult to calculate that the cost of subscriber account since January with the 281 ruble (200 minutes of communication and payment for the month). In December, during the same time talking caller would have given 251 rubles.If we make a simple calculation, the per subscriber per year the company receives more than 30 rubles. Assume that all calls are always just on the phone with the tariff RED, it is impossible, so we take the proportion of such calls for 50 percent. Total get 13 rubles per month or 156 rubles a year. Given the minimal amount of sales REDaktsii at 75,000 sets, we get 11.7 million rubles, or at the rate of MTS 407,000 dollars. If the company could sell more sets with this action, these numbers will grow. In general, within a company such as MTS, is a trifle, but a pleasant trifle. If subscribers recalculated hidden, but the laws change in the cost minutes for other tariff plans, then they will realize that an increase in their cost of communications will be in January of about 5 percent. Remembering the fall of the dollar and its fixation by the extremely high level, we can say that the cost of communication compared to the first half of 2006 will grow at least 12-15 percent while maintaining the volume of traffic. Due to the growth of voice traffic can talk about more growth. MTS Company initiated a process of increasing the hidden cost of telecommunications services in this way it will not stop, because it had no reason in particular, subscribers are unaware of such mechanisms to increase their spending.
Eldar Murtazin (