UPDATE: Russian tycoon Fridman says cell operators should sell data

(Adds comments of operators in last four paragraphs)

MOSCOW, Nov 23 (PRIME) -- Mobile operators should follow the business model of Internet companies that sell client information to advertisers, Russian tycoon Mikhail Fridman, a co-owner of investment company LetterOne, a shareholder of telecom giant VimpelCom Ltd., said on Wednesday in an interview to the Rossiya 24 television channel.

“I’m deeply convinced that the (cellular connection) business has room to expand its income base. These chances lie beyond the traditional model of activities of cellular connection. For example, if you have a look at income items of any cellular company in the world, I think there is no such an item as income from sale of information to advertisers,” Fridman said.

Companies like Google and Facebook are successful, because their model has been based on the exploitation of data on habits of their users in the network and sale of the data to advertisers from the very beginning, the businessman said.

“I want to point out that cellular operators have knowledge about their clients, which is much wider and deeper than the one of the companies I’ve mentioned. First, the lion’s share of Web surfing is done via mobile devices. Besides, they’re aware of clients’ location, financial applications and so forth,” Fridman said.

“But almost no cellular company in the world has a well-developed business model with the use of these advertising data. I think the change in phase, for which the operators are in, is transition from a subscriber system of income to the one of selling packaged information about their clients to its potential users, advertisers.

“In order to build a model of efficient data sales, they’ll have to reshape their mindset fundamentally and profoundly and move away from the roots of the connection industry to a more advanced IT positioning. Only few will succeed. Those who will, will build a model that will be more resilient than the existing one.”

Amsterdam-based VimpelCom Ltd., the sole owner of Russian mobile operator VimpelCom, known under the Beeline brand, will try to create such a model, Fridman said.

The country’s top three operators – MTS, MegaFon and VimpelCom – said they use information about subscribers mainly to develop their own infrastructure and retail. The operators cooperate with other companies as well.

MTS and VimpelCom provide anonymized statistics on the number of subscribers and dynamics of movements to optimize the city infrastructure. “The Moscow city government can use the data when it plans new highways…new underground stations and tackles other transport issues,” an MTS spokesperson said.

MegaFon gives ready-made solutions on big data analysis to financial institutes, retail, services and other industries working with clients.

“We’re ready to cooperate with trading chains, advertisers, banks and other interested entities on the data that have subscriber approval for processing with corresponding purposes,” a VimpelCom spokesperson said.

End