Megafon spoke about the main threat to its business

    Yesterday, February 12, the mobile operator Megafon published a report on its work for the fourth quarter of 2015.

    “Risks associated with changes in prices for the products and / or services of the Company [PJSC Megafon] in foreign markets are insignificant. The share of revenue from the export of roaming services for subscribers of other operators is about 1% and cannot have a significant impact on the activities of the Company, ”the report says.

    On Thursday, February 11, Interfax reported that according to the results of the second regional stage of auctions on LTE frequencies in the range 2570-2595 MHz, Megafon won 20 lots. Megafon will pay 1.234 billion rubles for the frequencies won.

    “In order to continue its development, the Company needs to make cash investments in the development of the network, wireless Internet, new products and services, as well as finance transactions for the acquisition of new assets. An increase in interest rates in the market may result in the Company being unable to raise enough funds on commercially favorable terms. [Then] it may be forced to significantly reduce its investment costs, which could adversely affect its market share and operating results. ” But this is not the worst.

    MegaFon is most concerned about the expanding influence of the Tele2 operator on the market of Moscow and the Moscow region (Tele2 entered this market in October 2015):
    Such increased competition can lead to lower tariffs and, consequently, to a decrease in the total margin, which is a key threat to the business of the Company. However, the consequences of these risks are mitigated by the fact that MegaFon is one of the four largest mobile operators in Russia (taking into account T2 RTK Holding). Megafon has licenses to provide services in the GSM, 3G and 4G bands, and Megafon's leading position in the 4G / LTE market has been further strengthened through the acquisition of Scartel / Yota.

    A significant proportion of Megafon subscribers "may have a low level of income and, accordingly, be sensitive to price changes." Therefore, increasing tariffs, Megafon risks losing even more subscribers.

    The growth rate of the operator’s subscriber base is decreasing, therefore their struggle for the audience is becoming tougher. “This is the main factor in the possible deterioration of the situation in the industry,” the document says.

    In this regard, Megafon has taken measures to protect its subscriber base at all levels. One of these measures was advertising campaigns aimed at corporate clients and individuals.

    On November 9 "Megaphone" has ceased to be taken into account in batch tariff plans of "All Inclusive" (total of five) so-called on-net calls, reportedMegamind. Minutes of the conversation, for which a fixed fee was charged, now add up only from calls to numbers of other operators. You can call without restrictions within the network.

    According to the representative of Megafon, Yulia Dorokhina, about 25% of Russian Megafon subscribers use tariffs of the All Inclusive line. About 60% of their calls are on-net.

    The operator made such a gift for subscribers on the eve of Tele2 entering the capital market.

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