2020 was a year that showed the capabilities and growth potential of telecommunications companies whose total market revenue reached $1.55 tln. At the same time, it exposed many problems and revealed the need to develop new technologies and services. Companies have to constantly monitor the situation and promptly respond to all changes. Yota general director Oleg Telyukov told Invest Foresight about the company’s development prospects and future plans.
Yota’s general prospects and development plans
— Investors are increasingly interested in the technologies of the future and are willing to invest in this market sector. Does your company plan to introduce new technologies anytime soon? Are there any developments yet?
— Everybody puts a great deal of hope in the advanced technologies expecting that they will make our life easier and better in all areas. Some of these technologies such as drones are already being widely used. Others like artificial intelligence do not even amaze us anymore. At Yota, we are testing various innovations, including end-user functionality and various internal service tools. Not every initiative is adopted, but due to this selection we can introduce the best practices on a permanent basis.
— The telecom market has been rapidly changing over the past few years. The main intrigue is the launch of the 5G network. How fast will the market change, if at all?
— Many have been talking for a while about the capacities of 5G, but the first commercial 5G networks were launched only in 2019. It is too soon to make final conclusions about the development scenarios even based on the global experience. In Russia, the expansion of the 5G network is going in its own way. As of today, there are issues that need to be dealt with. But we can be sure that the 5G standard will replace 4G and we will be able to assess the new possibilities and results of its deployment. It is a matter of time.
— The traditional mobile services such as voice calls and text messages are becoming a thing of the past. Operators have to look for new development models, for instance, they may have to transform into digital service providers. What do you think about it?
— There’s no denying that users have shifted away from voice calls and text messages to messaging apps, but it doesn’t mean that we should say goodbye to the traditional mobile services. Users keep making voice calls; this option has been especially popular during the pandemic. Thus, voice traffic increased by 13.9% in 2020 as compared to 2019, and online traffic grew by 19.8%. At the same time, telecom operators, including us, understand the importance of searching for new development models and are working on expanding their services. As for Yota, the request of the user is our priority. We have developed a customized package that offers users to pick the minutes of voice calls and data in increments of 1 minute and 1 GB. We are also considering digital products, cashback services and partner projects. In addition, we are looking for mutually beneficial cooperation models and launching pilot products.
Impact of the COVID-19 pandemic
— The pandemic has affected the work of many sectors, including communications. Will the market be able to cope with the new challenges if the virus continues to spread?
— In this case, the survival and development of businesses is an issue of being able to adapt to the new conditions. During the first wave of the pandemic, many companies not just reorganized their business processes but became more flexible and thus more prepared to deal with sudden changes.
Speaking of the experience of Yota, the lockdown did not affect us much. To a large extent it is because we have been engaged in developing digital solutions, so the transfer to the online mode did not come as a challenge for us. Of course, restrictive measures did affect the retail sector, but we were able to expand our online sales channels. Thus, during the first wave we began cooperating with online stores such as Wildberries, Goods.ru, Ozon, TMall, onlinetrade.ru and others.
— There have been reports on operators gaining a greater benefit during the pandemic – however, actual figures do not prove it. Last year’s telecommunication market shrunk by 3%. What is your forecast? How difficult is the situation?
— While analyzing the entire lockdown period, we do not observe any outflow of users – on the contrary, the number of them has been consistently growing. During the first three days of the mandatory self-isolation between March 30 and April 3, the number of modems and modem SIM cards sold online increased fourfold as compared to the period from March 23 to March 25. In the first half of April, online sales of SIM cards for smartphones went up by 62% as compared to the similar period in March, which is unsurprising as people needed quality communications and internet services more than ever to have comfortable conditions for their working and learning activities as well as to be in contact with their friends and families. Of course, certain services such as roaming have largely lost their relevance, yet the demand for telecom services has only increased. Today people choose to handle business and personal issues via phone or online rather than in person – and mobile operators help them organize this process.
— Over the past year, the domestic telecommunications market has shown a slower growth than the global one. What are the reasons? Is this due to high competition, or are there specific factors?
— The Russian telecom market’s slight gap is primarily due to a tough competition. We are trying to view this from a positive perspective; intense competition in the market prompts operators to constantly develop and provides an opportunity for users to seek the most suitable offer.
— According to IDC experts, the market revenue totaled $1.55 tln in 2020, or nearly 1.5% less than in the previous year. Did you expect this to occur given the increased demand for telecommunications services observed in the year’s first six months?
— We have not seen any slump in users’ interest for telecom services. Amidst the pandemic, people have started to increasingly use remote communication methods. The market growth slowdown can be due to many factors, not all of them being negative. As we have mentioned, they include high competition, which has a positive effect on both operators and users.
New development and technologies
— The only way to increase revenue is to offer services that users seek. Operators have to consistently improve their offers and follow trends. What efforts is your company taking to monetize new services?
— When handling new offers we consider clients’ demands; before launching any update we analyze requests from users as well as popular current services. In late 2020, we launched several services: Yota Money, Yota TV and Yota Books, which meet our clients’ current demands.
— Several weeks ago, Yota launched the Yota Money service, which allows users to use a mobile phone to transfer money to a bank card as well as to top up their phone. How does this service differ from similar ones? What are major competitors?
— Like all top mobile operators, we are working extensively to develop our own services. Money transfer services are highly popular in the market; we analyzed our clients’ demands and saw that this offer would be relevant for them as well. Yota Money allows making money transfers from mobile phone accounts to bank cards, making payments for internet and mobile service, paying utility bills, topping up the Troika transport card, and many other options. We sought to create a service that offers fast and convenient money transfers.
— The company has fully switched to Nexign Network Monetisation Suite, which has allowed for very fast and efficient launch of new services. Can introduction of the new technology reduce the cost of Yota products?
— We have achieved the faster implementation of new products and services due to several factors: vast internal development resources and successful IT transformation, partnership approach and involvement of CBOSS and Nexign as Yota’s key telecom suppliers, and considerable contribution from many other vendors and partners. This has allowed us to implement more products and projects with lower costs.
By Christina Firsova