FOCUS: Antitrust ready to force major mobile operators cancel reg roaming at all costs

By Yekaterina Yezhova

MOSCOW, Aug 21 (PRIME) -- The Russian antitrust is persistently forcing the four biggest mobile operators to eliminate what it sees as groundless difference in tariffs in home and other regions, which is intra-network or regional roaming, bringing 2% to the companies’ revenue, analysts say. MegaFon had the guts to complain to court about the demands, but later preferred to come to a compromise.

“We filed an application (on August 14 to the Moscow Arbitration Court). I’d like to stress that it’s not a statement of case as is, but a complaint about claims made by the Federal Antimonopoly Service,” head of MegaFon’s press service Yulia Dorokhina told PRIME after the motion.

The operator, however, went to court on August 17 to withdraw its complaint, and the court satisfied the application. “The company is asking to put off the deadline and is building a dialogue with the Federal Antimonopoly Service,” a source in MegaFon said on August 18.

A spokesperson for the antimonopoly service said that MegaFon’s “application is being considered, and a decision will be made shortly.”

In mid-July the Federal Antimonopoly Service deprecated that the top four national carriers – MTS, MegaFon, VimpelCom (Beeline), and T2 RTK Holding (Tele2) – had set and maintained different tariffs in home and other regions of the country.

When travelling across the country, but still being covered by services of the same operator, subscribers pay differently than in their home region, the authority said. The more expensive is the tariff plan, the less is the difference in prices.

“A study conducted by the Federal Antimonopoly Service revealed that connection service prices – including calls inside a region, beyond a region, SMSs, data transfer – in trips should not vary from the home region, and such a discrepancy is neither economically nor technologically justified,” the service said in a statement when issuing the warning.

The service in fact ordered the operators to eliminate intra-network or regional roaming, when a carrier provides services via its own network. Russia also has national roaming, when subscribers use networks of other operators across the country, and there is a special type of roaming for Crimea as well.

The watchdog ordered the top four carriers to revise intra-network tariffs within 14 days and notify subscribers of changes 10 days in advance, meaning that the warning should be executed on August 7 and August 10 with three more days given to notify the authority.

MegaFon’s Chief Operating Officer Anna Serebryanikova said in late July that it would be impossible to execute the authority’s demands within the imposed period. If intra-network roaming is cancelled, MegaFon will bear several billions of rubles of expenses with no compensation in view. The other operators are in the same situation and think likewise, the top manager told reporters then.

Brokerage BCS said, “Although the result of the service’s efforts to cancel roaming in Russia is still unclear, continued pressure from the regulator may have a moderately negative influence on the operators’ profit in the mid-term.”

The antitrust authority’s Deputy Director Anatoly Golomolzin said on August 14 that the service had received a motivated petition from an unnamed operator to prolong the period of fulfilling the warrant and an expressed readiness to obey within a new timeframe.

On August 15, the service prolonged the period of executing the warning for this operator with the motivated petition until December 15. The company should provide the authority with suggestions on changing tariff plans by September 15 and ensure a technical transition to the new plans within the following three months, Golomolzin said.

One of the other three operators sent a motion to explain the warrant and asked for prolongation of terms without sufficiently motivated grounds, and the request was rejected on August 4 with no repeated motions submitted.

Two other operators made motions to get familiarized with reports on the state of competition on the market on August 4 and August 10. The antimonopoly may open cases against the three of them soon, as Golomolzin said.

MegaFon’s complaint to court seemed not much of a trouble for the antitrust authority because at least 85% of court decisions on companies’ lawsuits have been made in the watchdog’s favor, according to Golomolzin. “We have very good statistics on mobile operators. We think the problem of intra-network and national roaming should be tackled,” he said on Tuesday.

Finam analyst Leonid Delitsyn said that some operators can sue the antirust service, while others can meet it halfway.

“Operators are sticking to the ‘milking cow’ strategy now on the mature, yet not shrinking market, I mean, they’re trying to find options to pay dividends to their shareholders, while the share value is spiraling down and no new growth drivers are on the horizon. The court won’t support the operators. There are no weighty reasons for it,” the analyst told PRIME.

If intra-network roaming, which brings operators 1.5–2% of revenue, is cancelled, tariffs will certainly rise for all subscribers, although they will barely notice that.

“A subscriber pays 250 rubles per month, and operators’ expenses will rise by 1–2%, which means that a subscriber will pay 5 rubles more on average,” Delitsyn said.

Moreover, the antimonopoly service opened earlier in August cases against the four operators for their prices in national roaming and will consider the cases in late September.

(59.3612 rubles – U.S. $1)

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