FOCUS: Antirust expects Russian cell operators to void internal roaming soon

By Yekaterina Yezhova

MOSCOW, Mar 6 (PRIME) -- Russia could follow Europe in its intention to cancel internal roaming in 2017, and the country’s antimonopoly service says the move matured long ago and will not entail tariff hikes. Analysts said local mobile connection operators, which receive up to 8% of their revenue from national and internetwork roaming, are technically ready to obey in time.

The Federal Antimonopoly Service held a meeting on roaming in February with the participation of operators and involved authorities. The service’s Deputy Director Anatoly Golomolzin said after the session that problems will be solved gradually this year.

“We expect connection operators to present their proposals on abolition of the unreasonable difference in tariffs for internetwork roaming in the middle of March and stop using this notion at all. Roaming is used only when a subscriber gets connection services on a network of another operator. If a subscriber is in the network of the same operator, tariffs cannot vary much,” Golomolzin said.

The service expects internetwork roaming, which works inside an operator’s network across the country, to be cancelled in April–June and national roaming, when operators use networks of other carriers, in July–September. All the prerequisites to cut tariffs exist, according to the service.

The lag in timing roots in the necessity to introduce changes not only to the interoperator settlements across the country, but to facilitate the character of internetwork relations, which is currently controlled by an order of the Communications and Mass Media Ministry.

The antimonopoly service and mobile operators are going to submit their proposals to amend the order, which could be adopted by July.

MegaFon, one of the country’s leading mobile operators, is “in a constructive dialogue with the Federal Antimonopoly Service and has presented its suggestions on national roaming issues,” according to the head of the company’s press service Yulia Dorokhina.

Natalya Milchakova, deputy director of Alpari’s research department, said roaming contributes 10–25% of operators’ revenue.

“The bulk of the amount comes from international roaming. National and internetwork roaming services secure 6–8% of operators’ revenue. This means that national roaming is not critically important for operators. Moreover, their incomes from mobile connection services are gradually declining,” Milchakova told PRIME.

“We assume that the abolition of national roaming will not become a painful loss for mobile operators. After the move, the operators, charging higher prices for the service, will see their revenue edge down, but in the mid-term the initiative will improve loyalty of subscribers and even attract new ones, which will pay off.

“Besides, in order to offset shrinking incomes from connection, almost all mobile operators develop mobile data services and equipment retail, which raise their operating and OIBDA margins.”

The antimonopoly service does not expect connection prices to grow in the wake of national roaming cancellation. “We don’t see such threats, because in this case the reduction of tariffs for connection services in roaming is compensated by a possible increase in traffic. Both operators and subscribers will win,” Golomolzin said.

Finam financial analyst Timur Nigmatullin disagreed with stable prices, saying that the forced abolition of national roaming would hike tariffs for mobile connection by at least 1–2% at a time.

“Internal roaming brings companies some 2% of their operating revenue. Since the move will engage all market players, the mechanisms of price competition will fail,” Nigmatullin told PRIME.

“If we take small local operators, the lack of roaming for the rest of the country will surely imply losses from expenses on interconnect and so forth. They would be most likely forced to leave the market. In theory, the government could subsidize local operators’ roaming expenses from the budget, but, keeping in mind a wide budget deficit, this scenario does not look much realistic.”

The analysts said the leading mobile operators are technologically prepared for the no-roaming initiative, but not everywhere.

“The terms announced by the antimonopoly service seem realistic and feasible. Meanwhile, in some cases, the cancellation of roaming will be impossible. If we take the big three operators – MTS, MegaFon and VimpelCom – they would not be able to abolish roaming in Crimea technically since they don’t have network infrastructure there. This is why without roaming, people of the region could be deprived of the networks of the federal operators or the operators would suffer losses,” Nigmatullin at Finam said.

In Crimea, which joined Russia in 2014, advanced mobile connection standards are developing, but customers complain about high roaming tariffs. The antimonopoly service said connection prices in the region can become equal to the average national level at the end of the first or beginning of the second quarter.

Milchakova at Alpari said that if national and internetwork roaming is voided in the country, it would mean Russia follows the general European path.

The European Parliament approved cancellation of roaming in the E.U. from June 15 for clients of local mobile operators.

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