MTS to stop selling ordinary cell phones at a number of single-brand stores
MOSCOW. Oct 20 (Interfax) - Russian cellular provider OJSC Mobile TeleSystems (MTS) is going to stop selling ordinary mobile phones at a number of its own single-brand stores, MTS representative Dmitry Solodovnikov told Interfax.
The first smartphone-only store will open in Moscow in November. The operator is planning to open up to 200 of such stores around Russia in 2015.
"The updated offices will help boost smartphone penetration in MTS' chain, which will lead to accelerated ARPU [average revenue per user] growth," Solodovnikov said. Switching a customer from a normal phone to a smartphone will boost ARPU by more than 50%. In Q2 2014, ARPU was 308 rubles, the lowest among the "big three," which also includes MegaFon , which had ARPU of 322 rubles, and Vimpelcom - 326 rubles.
It is expected that increased ARPU will stem from a growth in internet service usage. MTS estimates that a third of its customers with smartphones currently either do not use mobile internet, or use it spontaneously, which creates great potential for the development of data usage. According to company forecasts, the average annual growth rate of mobile internet will be 16% until 2016.
Smartphone penetration on MTS' network was 37% as of end-June. The company expects that by the end of this year, upwards of 40% of clients will use smartphones.
As reported, the share of smartphones in MTS' internet traffic grew year-on-year to 33% from 24% in the third quarter of 2014. The company expects over 40% of its customers to use smartphones by the end of this year.
Nearly a fourth (24%) of MTS' mobile internet traffic came from Apple devices, up a percentage point. The share of Samsung devices fell by three percentage points to 24%. Smartphones in the "other" category, represented by the brands MTS, Fly, Lenovo and Huawei, were gaining popularity. Thanks to the low cost, below 5,000 rubles, the market penetration of the category advanced 10 percentage points to 24%, according to MTS' research.
MTS' single-brand change currently consists of 2,700 MTS stores and another 1,200 franchise locations. Therefore, over 7% of MTS' stores will switch to the smartphone-only format by 2015.
Of the total amount of devices MTS sold in Q2 2014, 60% were smartphones, accounting for 86% of revenue. The average cost of a smartphone at MTS stores was 7,000 rubles.
Vimpelcom and MegaFon are not yet planning to do away with the sale of ordinary telephones, even partially.
"Demand for telephones, especially budget models, is fairly high. There are always clients attracted not to an accessible price, but to the simplicity and reliability of construction or to high battery life," MegaFon representative Olesya Yaremenko told Interfax. She added that 40% of the phones the operator sells are currently ordinary phones.
The number of ordinary telephones in Vimpelcom's sales fell 33.4%-50% this year, Vimpelcom representative Anna Aybasheva told Interfax. Additionally, the share of smartphones in the company's sales tripled.
