ICT Russia data

	2004	2005	2006	2007	2008	2009
Telecommunications market value (€ bn)	12.9	16.0	20.9	25.0	28.0	24.2
Telecommunications market growth rate (%)	32.0	23.5	30.6	20.2	11.5	-13.4
Phones at households (million)	21.8	26.8	28.1	29.3	29.5	29.3
- urban area	21.8	26.8	28.1	29.3	29.5	29.3
- rural area	4.1	4.4	4.5	4.5	4.5	4.5
Number of internet users (million)	19.1	23.7	26.7	30.6	36.8	42.5
Mobile penetration (%)	49.7	86.6	108.6	120.6	140.6	162.4
Fixed-line penetration (%)	27.5	29.0	29.8	32.1	32.6	32.0
Internet penetration (%)	13.8	16.6	18.8	21.5	25.9	36.6

 

Russia is the biggest European country in terms of population. However, its telecoms market is far from homogenous due to the significant concentration of wealth in the West and in the largest cities such as Moscow and St. Petersburg. As calculated by Rosstat, the total revenues on the communications and postal market in Russia grew by 2.7% during 2009 to reach a total of RUB 1.3tn or more than €30bn. The telecommunications market represented approx. 80% of the figure. As measured in euros, the market slumped in 2009 by 13% to approx. €24bn. Svyazinvest and its regional subsidiaries as well as the big three mobile operators (MTS, VimpelCom and MegaFon) are the major operators that dominate the market. The combined consolidated revenues of the four companies account for almost 90% of the total value of the telecommunications market in Russia.

Recent years have brought a notable shift from fixed-line to mobile telephony services. The year 2009 brought the first decline in the last 10 years in the Russian fixed-line sector. As a consequence, the gap between mobile and fixed-line markets, both in terms of value and number of subscribers, is increasing. After the 6.4% growth in 2008, the fixed-line telephony market in Russia declined by 1.9%. At the end of 2009, fixed-line penetration equaled 32%.

On the contrary, since 2004, the mobile telephony sector has been the largest and most systematically growing segment of the telecommunications market in Russia. In 2009, the total value of the mobile telephony market in Russia grew year-on-year by 6% (in local currency). As given by Rosstat, the mobile telephony penetration, defined as a relation of the total number of SIM cards to the population size, rose from 141% in 2008 to 162% in 2009. The highest level of mobile penetration (nearing 200%) is observed in Moscow and St. Petersburg, although the Russian mobile telecommunications market is relatively well covered geographically.

Considering all segments of the Russian telecommunication market, the highest growth rates belonged in recent years to the ISP market. As the number of internet users and broadband subscribers in Russia increases, so grows the penetration levels and the revenues of ISPs. Rosstat claims that in 2009, internet penetration for Russia increased year-on-year by over 10 p.p. and reached 36.6%. Still, it has to be noted that the percentage of people using the Internet in Russia varies strongly depending on the source and the model of the consumer survey. By comparison, according to ITU, internet penetration in Russia in 2009 was even higher and equalled 42.8%, which means there were 59.7m active internet users in 2009. Nevertheless, most other research companies indicate lower numbers. These differences in figures can be explained by the variety of used methodology.

Broadband internet penetration within Russian households and the development of mobile access explain the growth of the number of active internet users. Provision of internet access remains the most dynamic and fast-growing segment of the telecommunications market in Russia.

The penetration rates of fixed-line and cellular telephony, the number of computers per 100 inhabitants and the number of internet connections show whether a country is ready to become an information-based society. In Russia, it seems there is still a lot of space for improvement, especially when it comes to internet access in rural parts of the country.

 

 

 

The financial crisis, which had already hit the country at the end of 2008, caused a sharp reduction of the investments by the business sectors and a notable reduction of IT budget made by government in 2008-2009. As a consequence,the IT market in Russia in 2009 declined by more than 20% in ruble terms and by one third in euro terms. Among the particular segments, the biggest share of the Russian IT market still belongs to hardware. Nevertheless, in 2009 both IT services and software suffered lower year-on-year declines in comparison to hardware sales, which slumped by more than a quarter. The reason is a relatively high level of computer penetration in Russian companies while there is still a lot of space for significant improvement in the efficiency of use of IT services.The software industry is the smallest subsection of the IT market in Russia and its 2009 value represented one sixth of the whole IT market.

 

 

Based on a survey commissioned by Rosstat in 2009, approx. 94% of Russian enterprises (excluding micro-firms and small companies) of almost all kinds of economic activities and all regions of the country possessed computers, about 78% of interviewed companies had internet access and almost the same percentage used e-mail communications. Out of 174,137 enterprises that were included in the study, only one in four surveyed companies had its own website in 2009.

The corporate sector is the main user on the software market (70%), the public accounts for 20% and the private sector up to 10%. According to Rosstat, in 2009 the Russian enterprises spent one third of all their expenses on ICT on the purchase of software. Anti-virus software is used by 78% of the Russian enterprises. Special software such as ERP, CRM or SCM is used by only 6.4% of surveyed companies. Due to the recent financial crisis and the reduction of IT spending, the share of hardware declined from more than 30% to around 20%. In the next years, however, due to a wave of replacements of hardware in Russian companies (frozen during the crisis), the share could pick up again.

 

 
More information about Russian IT and telecommunications market can be found in PMR reports: