Smartphone sales to soar as Russia joins WTO

Smartphone penetration in Russia is set to soar after the country joined the World Trade Organisation (WTO) last week. The country has finally been given membership of the organisation after an 18-year wait, and will benefit from lower charges being levied on imports and cheaper products for Russian consumers.

According to Angel Dobardziev, practice leader for emerging telecoms markets at Ovum, there is strong demand for mobile broadband services in Russia, but laptop and dongle usage continues to be the main traffic and revenue driver for operators.

“While smartphone penetration is growing strongly, smartphones remain a small proportion of total connections, and operators suggest that only 15 per cent of the devices on their networks are smartphones,” he said.

However, according to Alexander Vengranovich, telecommunications analyst at Russian financial services firm Otkritie Bank, Russia joining the WTO will see smartphone manufacturers begin selling directly into the country, easing their reliance on regional distributors and resellers. This new model will decrease the price of handsets in the market and also curb the illegal supply of products, he explained.

“All smartphone manufacturers work through their subdealers in Russia; Apple and Samsung do not sell directly to the market here,” Vengranovich explained.

“A lot of handsets imported into Russia are also done so illegally, but if these manufacturers begin to work directly in the Russian market, that will decrease the price of smartphones, which will stimulate sales and increase usage of mobile broadband services. Apple is already planning to open up retail outlets to sell directly into Russia,” he added.

Another implication of Russia joining the WTO is that price of roaming in Russia and for Russian consumers while abroad, will also decrease,  Vengranovich explained. As this will be due to lower administrative costs, it will have no negative effect on operators’ financial performance.

However, while membership of the WTO usually opens doors to foreign investors, operators looking to enter the Russian mobile market are likely to find the going tough. The Russian mobile market is dominated by MTS, Megafon, and Vimpelcom, which have a combined market share of approximately 88 per cent, while Tele2 is struggling in fourth place.

“I don’t think that joining the WTO means that foreign operators will enter the Russian market as the market is already very saturated,” said Vengranovich. “There are already four players and another player would find it difficult to start up in the country.”


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