BELARUS NEWS AND ANALYSIS
DATE:
03/02/2010
With Belarus Market Close to Saturation, Velcom Focuses on ARPU and Margin
Summary
The basic mobile services are being commoditized and even regulated around the world, no reason to presume the picture will look different in Belarus. Revenue decline due to price erosion can be compensated with higher usage and additional services, which demand higher bandwidth and faster network. The rollout of 3G will help Velcom build efficient infrastructure to accommodate the increase in data usage. Growth will at least decelerate, though.
Analysis
The room for growth in Belarus based on new subscribers is shrinking. Better execution will bring Velcom to par with MTS, but both will continue to be challenged by Life.
The name of the game is therefore shifting to subscriber retention, revenue per subscriber (ARPU) increase, and operational efficiency.
Revenue from basic services not likely to increase, actually the pressure is towards decrease due to price erosion. This decrease can be offset with increased usage, which in turn increases costs.
New services require faster network and higher bandwidth.
Rolling 3G network can help Velcom launch such services, improve operational efficiency and compete for the share of wallet of the Belorussian customers.
Source:
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