Russian Mobile Market Consolidating Already?
By Mike Masnick, Tue Jun 07 00:30:00 GMT 2005

Russia was supposed to be an emerging market for mobile services -- but it's acting a bit more mature these days, as there's been some consolidation.

The growth of the Russian mobile market has been nothing short of impressive over the past half decade. However, it's still clearly an emerging market. By the end of last year, it was estimated that mobile penetration was at 46%, but growing rapidly.

With that in mind, it's a bit surprising to see continued consolidation in Russia -- which seems like the type of story you'd expect further down the road, when the market were a bit more mature and operators are more concerned about growth by acquisition, rather than convincing new customers to sign up.

At the same time, given the history of the Russian mobile market, it isn't all that strange. The big three mobile operators were mostly formed out of consolidation between smaller regional subsidiaries, often made up of former state-owned telecom offerings. In some sense, it looks like the Russian market is using the consolidation process in the same way operators in more mature markets use MVNOs: as a way to explore certain less lucrative or more niche markets without taking on the risk. In the latest case, MTS invested in this regional carrier last year, and let it build up a presence in Russia's far east, before deciding to buy up the rest of the company. Given the sometimes shaky nature of the economy in Russia, it looks like this is how the big three mobile operators are looking to expand, by hedging the risk and letting smaller regional operators explore new areas, sometimes with financial backing, before taking a full ownership stake.