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ARMENIAN MOBILE MARKET NEARS MATURITY
/PanARMENIAN.Net/
18.02.2010 GMT+04:00
Market data indicates that growth is with the internet services market
and we will continue to see high-speed mobile offerings here.
Armenian mobile services market edged closer to full saturation
in 2009, with nearly every working adult in the country of 3.2
million people having one or more mobile phones, and the number of
mobile subscribers passing the 2,5 million mark. While the mobile
operators say that there is still a lot of room to grow and compete,
the question is - how exactly that competition will take place, and
will the customers and the telecom sector benefit from the fight for
market or otherwise.
/PanARMENIAN.Net/ The number of Vivacell-MTS subscribers grew 46
percent in 2008 compared to the previous year, and Beeline registered
growth of 23 percent. The numbers tumbled in 2009, with Vivacell-MTS
growing as little as 2.4 percent, and Beeline apparently losing some
customers, even if it is hard to tell for sure as the company has
moved to a new system of counting subscribers. Hence, according to
the latest data available by the end of 2009, Vivacell-MTS was the
unchallenged market leader with 2 million 70 thousand subscribers,
while Beeline followed by 502 thousand subscribers (latest Beeline
data available for the 3rd quarter of 2009).
Meanwhile, Armenian mobile market saw the aggressive entry of Orange
Armenia at the end of 2009, which generated a fair amount of buzz and
ensured impressive growth of mobile subscriber numbers, which totaled
at 200 thousand within 3 months of the official launch of Orange in the
country, and forced the 'big guys', Vivacell-MTS and Beeline to react
with a range of price cuts and special offers, to retain their existing
customers. With increased competitive pressures, the market is set
to reach 100% or more saturation within the next year or two, and the
operators are already looking for other possibilities for competition
in areas other than growth by expansion of customer numbers.
"There is plenty of room for growth. There is no clear direct
correlation between the number of population and the rate of
penetration and service utilization," VivaCell-MTS told PanARMENIAN.Net
commenting on current market situation. "There are always new services
and products. At least twice a month we have a new offer to the
market. In particular, at present there is a demand for data transfer
services, including high-speed mobile internet. So far VivaCell-MTS
has increased the capacity for data transmission five times to cater
for market ongoing growing demand on Internet usage."
Indeed, Russia, UK, France, Germany are examples of countries, where
market penetration of is close to or over 100 percent. The example
of those markets highlights a problem - with continuous price wars,
the average revenue per user declines for the companies, and big
investments don't pay off, so customers suffer in the end.
This is a concern shared by Beeline: "The future of the mobile market
depends primarily on the pricing policy that the operators choose. Our
company has always been opposed to price wars, as in these innovative
services and subsidization of hi-tech initiatives are not justified and
become meaningless. The company plans a lot of interesting initiatives,
so in 'peaceful' conditions our clients will really see pleasant news."
The market, however, is far from being 'peaceful' at the moment, with
Orange Armenia mainly setting the pace. The company does not have to
think of profits yet. It plans $75 million investment in Armenia, and
the company is hoping to grab its chunk of the pretty steady mobile
communications services market which in 2009 generated revenues of
105 766.6 million drams (about $280 million) and a growing internet
connectivity market, which tripled last year reaching 10 404.2 million
drams in revenues (about $27.5 million).
Market data indicates that growth is with the internet services market
and we will continue to see high-speed mobile offerings here.
Deployment of mobile internet is quite costly and it puts tremendous
load on the network of the operators, so it is yet to be seen, how
justified investment in this area is.
More importantly, the mobile data service provided by operators in
Armenia has generally fallen short of customer expectations. The
connection is often inconsistent, and none of the operators has
delivered service which would be even close to the advertised speeds
of 7.2 Mbps. Orange, which was especially active in promoting mobile
internet via its 3G USB modems, suffered a big blow to its image. The
company admitted in February, that 1/3rd of their customers experienced
"inconveniences" due to "record amounts of used traffic", but the
impact was much wider and the customers found themselves locked into
1-year contracts.
The consumer demand in this area is still huge. At some point in
December 2009 the operators were struggling to meet the demand
while trying to avoid overloading their networks. But in internet
connectivity services market the mobile operators are not only
competing with each other, but also with dozens of ISPs, including
WiMAX operators like Cornet and iCon.
Other area of growth, as the experience of other more saturated markets
around the world has shown, is the provision of subsidized phones
(like the iPhone) and equipment (Amazon Kindle). Vivacell-MTS and
Orange have both come out with initiatives offering cheaper phones and
subsidized prices for their 3G USB modems and 3G Wi-Fi router devices
within 'Home Zone', 'Office Zone" tariff plans for Vivacell-MTS and
Flybox in the case of Orange.
The operators have also done little steps into the phone market,
with Vivacell-MTS's low-cost "Ð~ТС 236" phone, which is locked
into their network, providing a preview of what is still to come.
The market is however, ready for the killer phone - Apple's famous
iPhone. The phone currently sells for $1000 US in Armenia and is far
from being affordable. Orange Armenia have announced plans to deploy it
into the Armenia market back in November. Speaking to PanArmenian.net
Orange Armenia neither confirmed, nor rejected the possibility, that
their iPhone will be a subsidized offering, but said the phone will
be deployed soon.
Interestingly, the initial plans for launching the iPhone on Christmas
shopping season were changed. The company said "promotion "Christmas
miracles" has a big success and introducing iPhone in the same time
would unavoidably generate queues. Orange will postpone the launch
of the iPhone in order to welcome the customers in a comfortable
environment and keep the best service quality."
One of the possible conclusions is that customers wouldn't queue for a
$1000 phone, so the Orange's iPhone will very probably be a subsidized
offering. Depending on the size of subsidy and related contract terms,
this move could dramatically shift the mobile landscape in Armenia and
force the other operators to react with similar moves. So overall,
the mobile outlook is very promising for the Armenian consumers,
but the mobile companies will have to really fight for market.
/PanARMENIAN.Net/
18.02.2010 GMT+04:00
Market data indicates that growth is with the internet services market
and we will continue to see high-speed mobile offerings here.
Armenian mobile services market edged closer to full saturation
in 2009, with nearly every working adult in the country of 3.2
million people having one or more mobile phones, and the number of
mobile subscribers passing the 2,5 million mark. While the mobile
operators say that there is still a lot of room to grow and compete,
the question is - how exactly that competition will take place, and
will the customers and the telecom sector benefit from the fight for
market or otherwise.
/PanARMENIAN.Net/ The number of Vivacell-MTS subscribers grew 46
percent in 2008 compared to the previous year, and Beeline registered
growth of 23 percent. The numbers tumbled in 2009, with Vivacell-MTS
growing as little as 2.4 percent, and Beeline apparently losing some
customers, even if it is hard to tell for sure as the company has
moved to a new system of counting subscribers. Hence, according to
the latest data available by the end of 2009, Vivacell-MTS was the
unchallenged market leader with 2 million 70 thousand subscribers,
while Beeline followed by 502 thousand subscribers (latest Beeline
data available for the 3rd quarter of 2009).
Meanwhile, Armenian mobile market saw the aggressive entry of Orange
Armenia at the end of 2009, which generated a fair amount of buzz and
ensured impressive growth of mobile subscriber numbers, which totaled
at 200 thousand within 3 months of the official launch of Orange in the
country, and forced the 'big guys', Vivacell-MTS and Beeline to react
with a range of price cuts and special offers, to retain their existing
customers. With increased competitive pressures, the market is set
to reach 100% or more saturation within the next year or two, and the
operators are already looking for other possibilities for competition
in areas other than growth by expansion of customer numbers.
"There is plenty of room for growth. There is no clear direct
correlation between the number of population and the rate of
penetration and service utilization," VivaCell-MTS told PanARMENIAN.Net
commenting on current market situation. "There are always new services
and products. At least twice a month we have a new offer to the
market. In particular, at present there is a demand for data transfer
services, including high-speed mobile internet. So far VivaCell-MTS
has increased the capacity for data transmission five times to cater
for market ongoing growing demand on Internet usage."
Indeed, Russia, UK, France, Germany are examples of countries, where
market penetration of is close to or over 100 percent. The example
of those markets highlights a problem - with continuous price wars,
the average revenue per user declines for the companies, and big
investments don't pay off, so customers suffer in the end.
This is a concern shared by Beeline: "The future of the mobile market
depends primarily on the pricing policy that the operators choose. Our
company has always been opposed to price wars, as in these innovative
services and subsidization of hi-tech initiatives are not justified and
become meaningless. The company plans a lot of interesting initiatives,
so in 'peaceful' conditions our clients will really see pleasant news."
The market, however, is far from being 'peaceful' at the moment, with
Orange Armenia mainly setting the pace. The company does not have to
think of profits yet. It plans $75 million investment in Armenia, and
the company is hoping to grab its chunk of the pretty steady mobile
communications services market which in 2009 generated revenues of
105 766.6 million drams (about $280 million) and a growing internet
connectivity market, which tripled last year reaching 10 404.2 million
drams in revenues (about $27.5 million).
Market data indicates that growth is with the internet services market
and we will continue to see high-speed mobile offerings here.
Deployment of mobile internet is quite costly and it puts tremendous
load on the network of the operators, so it is yet to be seen, how
justified investment in this area is.
More importantly, the mobile data service provided by operators in
Armenia has generally fallen short of customer expectations. The
connection is often inconsistent, and none of the operators has
delivered service which would be even close to the advertised speeds
of 7.2 Mbps. Orange, which was especially active in promoting mobile
internet via its 3G USB modems, suffered a big blow to its image. The
company admitted in February, that 1/3rd of their customers experienced
"inconveniences" due to "record amounts of used traffic", but the
impact was much wider and the customers found themselves locked into
1-year contracts.
The consumer demand in this area is still huge. At some point in
December 2009 the operators were struggling to meet the demand
while trying to avoid overloading their networks. But in internet
connectivity services market the mobile operators are not only
competing with each other, but also with dozens of ISPs, including
WiMAX operators like Cornet and iCon.
Other area of growth, as the experience of other more saturated markets
around the world has shown, is the provision of subsidized phones
(like the iPhone) and equipment (Amazon Kindle). Vivacell-MTS and
Orange have both come out with initiatives offering cheaper phones and
subsidized prices for their 3G USB modems and 3G Wi-Fi router devices
within 'Home Zone', 'Office Zone" tariff plans for Vivacell-MTS and
Flybox in the case of Orange.
The operators have also done little steps into the phone market,
with Vivacell-MTS's low-cost "Ð~ТС 236" phone, which is locked
into their network, providing a preview of what is still to come.
The market is however, ready for the killer phone - Apple's famous
iPhone. The phone currently sells for $1000 US in Armenia and is far
from being affordable. Orange Armenia have announced plans to deploy it
into the Armenia market back in November. Speaking to PanArmenian.net
Orange Armenia neither confirmed, nor rejected the possibility, that
their iPhone will be a subsidized offering, but said the phone will
be deployed soon.
Interestingly, the initial plans for launching the iPhone on Christmas
shopping season were changed. The company said "promotion "Christmas
miracles" has a big success and introducing iPhone in the same time
would unavoidably generate queues. Orange will postpone the launch
of the iPhone in order to welcome the customers in a comfortable
environment and keep the best service quality."
One of the possible conclusions is that customers wouldn't queue for a
$1000 phone, so the Orange's iPhone will very probably be a subsidized
offering. Depending on the size of subsidy and related contract terms,
this move could dramatically shift the mobile landscape in Armenia and
force the other operators to react with similar moves. So overall,
the mobile outlook is very promising for the Armenian consumers,
but the mobile companies will have to really fight for market.