Russia's most valuable digital company Yandex is considering launching its own mobile virtual network operator (MVNO), Kommersant daily reported on January 9 citing unnamed market sources.
As reported by bne IntelliNews, in 2019 concerns over shareholder structure and pressure from the state were resolved with a governance revision deal between Yandex and authorities, with the company remaining one of the preferred exposures in Russia.
Now Yandex is considering expanding into mobile telephony with an MVNO based on the Tele2 network. It could offer services integrated into the Yandex.Plus subscription (such as access to Yandex.Music and discounts to Yandex's other services).
The sim cards for the subscriptions could be distributed through Yandex delivery services, such as Yandex.Lavka grocery delivery.
The total MVNO market in Russia is estimated at about 10mn subscribers, growing by 40% in 2019 versus 1% client base growth for traditional mobile operators, Kommersant reports citing TMT Consulting data.
The largest MVNO market player is Yota, which saw its market share decline by 10pp to 57%, as banking players such as Tinkoff Mobile of TCS Group and SberMobile of Sberbank expanded their share of the market to 9% and 5%, respectively at Yota’s expense. Another large player with 16% share is the MVNO of state integrated telecom major Rostelecom that controls Tele2.
The daily also reminds that previously Vkontakte social network (controlled by Mail.ru Group) launched its own MVNO on the network of Megafon operator in 2017, but had to roll the project back after less than a year.
While the timing of MVNO rollout for Yandex is unclear, for the internet major "it would be a loyalty tool and an extra source of data to improve its other services and, if the tariff offering and distribution approach is well designed, it should not be a big drag in terms of costs," BCS Global Markets commented on January 9.
At the same time for established telecoms, it would confirm a mid-term risk of increased competition from companies beyond the telecom sector. "So far, MVNOs, including from TCS and Sberbank have not significantly impacted the key players, but if Yandex, with its scale, joins this group, the probability of a mid-term negative impact will increase," BCS GM argues.