FOCUS: Tele2 to step up first to sell SIMs via Ulmart, ‘big three’ may follow

By Yekaterina Yezhova

MOSCOW, Nov 30 (PRIME) -- Russian mobile operator Tele2 will launch SIM card sales via Ulmart, one of the country’s biggest online sellers, in December in a trial balloon as companies are engaging new partners to ramp up sales. Analysts say that although the online distribution channel is expensive, it will serve to raise Tele2’s market share in Moscow, whose lucrative market the operator entered only in late October.

“Tele2 has always wanted to be closer to its existing and potential subscribers. A growing number of people buy online as it’s a simple and easy way of shopping. We see a large potential of the online channel and think the direction is promising,” Tele2 press secretary Olga Galushina told Russian Connection.

The service will be available for citizens of Moscow and the Moscow Region at the first stage and later for all regions of the companies’ presence, Galushina said, adding that the partners will share revenues.

At present, the key channel of Tele2 contracts sales is its monobrand chain, which functions under franchising. It accounts for some 50% of all subscriptions of the operator, Galushina said. Tele2 is the country’s fourth biggest cellular operator with 35.5 million subscribers. Tele2 does not disclose its Moscow and Moscow Region bases.

As of the end of June, MTS occupied 31% of the country’s mobile market; MegaFon – 29%; VimpelCom – 24%; and Tele2 – 14%, according to research company Advanced Communications and Media.

Operators widely use all channels of sales. MegaFon’s total retail chain counts over 8,000 outlets, including 2,080 own stores that account for a third of sales, the operator’s press secretary Yulia Dorokhina said. The company opened its online store in 2009 and offers clients to choose a phone number and a free delivery. “In 2014, hundreds of thousands of contracts were sold via this online channel,” she said.

“It’s evident that the agreement on sales of Tele2 contracts via Ulmart is concluded to back up the operator’s expansion on the Moscow Region market, where Tele2’s monobrand chain is still inefficient,” Finam senior analyst Timur Nigmatullin said.

“I don’t expect the online channel to gain a serious share in the total volume of the operator’s sales due to its specifics,” he said.

“Russian online channels are too much expensive due to high logistics costs and an expected poor quality of contracts, as there is a higher outflow of subscribers here as compared to offline retail. I think that the online channel will be justified only from the point of view of a fast increase of the share on the market.”

Ulmart said that the launch of telecommunications services sales will become a new step in the transition from classical Internet retail to the largest integrated marketplace platform of new generation.

“A new category, called SIM Cards and Tariffs, on ulmart.ru is part of a large project allowing companies-partners to locate their goods and services on our electronic shop window,” Mikhail Daikhin, head of the digital goods program at Ulmart, told Russian Connection.

Apart from Tele2, Ulmart plans to start cooperation with all operators of the ‘big three’ – MTS, MegaFon and VimpelCom, known under the Beeline brand – by April 2016. “Customers will be able to subscribe to any Russian operator through our shop window soon,” Daikhin said.

The SIM Cards and Tariffs section will offer popular tariffs of connection operators and a service to choose a number. Filters and navigation will help a client easily choose a number with favorite figures and a good tariff for a smartphone or a tablet. The client can fill out documents for a SIM card on the Ulmart Web site. To complete the procedure, the client will have to sign an original contract when picking up an order at the nearest collection point or Ulmart’s Outpost point.

“Services of connection operators can be of interest primarily for clients buying feature phones, smartphones and tablets on Ulmart. Our shop window has a wide range of mobile devices and we expect steady demand for telecommunications services. Ulmart plans to sell some 10,000 SIM cards of Tele2 during the first month of collaboration,” Daikhin said.

“We offer a comprehensive product: by buying a handset or a tablet in Ulmart, a client can order a contract with the operator. Assortment and prices of communications services in Ulmart and in direct channels of sales of operators will not differ. We will offer an extra monthly bonus: we will reimburse the client 10% of expenses on mobile connection in special Ulmart bonuses, which can be spent on any purchase on ulmart.ru.”

Galushina at Tele2 said that the operator will engage new partners to sell its services online.

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