“Big Three” cutting prices for international communication.
MTS, MegaFon and VimpelCom have decided not to wait for sanctions imposed by the Federal Antimonopoly Service and have cut prices for international roaming. Calls will be one and half to two times cheaper, an SMS text messages three times less and mobile internet two to four times cheaper, Prime Minister Vladimir Putin said. These changes will cover the CIS and Baltic countries. It will be more difficult to reach an agreement with Western European countries.
The prices for cellular communication in CIS countries will be cut no later than December 1, the head of the Federal Antimonopoly Service, Igor Artemyev, said yesterday during a meeting with Vladimir Putin. In the near future, the “Big Three” will send letters with proposals regarding roaming plans to their Western European and North American counterparts, Artemyev promised. Vladimir Putin said the price of voice messages for international roaming would decrease one and half to two times, SMS text messages by three times and mobile internet two to four times. “The arguments offered by the Federal Antimonopoly Service aimed to make cellular providers rethink their approach to this issue (the cost of roaming – Kommersant),” said Minister of Communications and Mass Media Igor Shchegolev.
At the beginning of this year, the Federal Antimonopoly Service started an investigation against the “Big Three” regarding excessive roaming prices. The agency came to the conclusion that the prices for roaming set by the Russian cellular providers are two to two and half times higher than the prices for ordinary international communication. The providers were threatened with fines of between 1 percent and 15 percent of the revenue received from roaming charges.
The “Big Three” started reducing prices without waiting for sanctions from the Federal Antimonopoly Service. VimpelCom reduced prices in the countries, where it uses the Beeline brand (Armenia, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Ukraine) and in the Kievstar network and the Velcom network in Belarus. The cost of calls was cut from 49 roubles to 34 roubles, the cost of SMS text messages from 19 roubles to 9.5 roubles.
MTS will cut prices in half for calls (from 59 roubles to 33 roubles per minute), SMS text messages (from 15 roubles to 7.5 roubles per sms) and GPRS roaming (from 750 to 360 roubles per 1 megabyte) in the CIS countries it serves, said MTS news secretary Irina Osadchaya.
MegaFon will cut prices in Abkhazia, Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Uzbekistan, Ukraine, Tajikistan, Latvia, Lithuania, Poland, Turkey, Estonia, Finland, Turkmenistan and South Ossetia. The new price for incoming and outgoing calls to Russia will be 33 roubles (down from 46 roubles and 56 roubles, respectively) and the price for SMS text messages 13 roubles (from 19 roubles), the provider reported.
The Federal Antimonopoly Service had previously reported that prices for “Big Three” roaming were three to six times higher than maximum prices allowed by the European Commission. But high prices for international roaming are grounded, the providers explain. Three years ago, the European Parliament ordered a reduction in the cost of roaming in EU countries: prices for outgoing calls were to be cut to €0.43, for incoming calls to €0.19 per minute. In response, European cellular operators started compensating for the cuts at the expense of cellular companies not based in the European Union. The fact is the European Commission regulates prices between providers for roaming within the European Union, but does not regulate rates between EU and Russian cellular providers. In 2009, VimpelCom earned $298 million, or 4.8% of total proceeds, from roaming in Russia, and MTS earned $336 million, or 3.4% of total proceeds. As for MegaFon, it did not disclose the figures, but a source close to MegaFon told Kommersant that in 2008 MegaFon’s proceeds from roaming in Russia were $400 million.
“This is a great example of a compromise reached between the state and business: subscribers will have more affordable services, and businesses will not incur excess losses because prices will be cut only in the CIS countries, where prices for Russians are highest,” VTB Capital analyst Viktor Klimovich believes. He estimated that providers would suffer a total revenue drop of no more than 0.5 percent.
Inna Yerokhina