Cellular Service Prices to Rise More Than Expected

According to a survey conducted by TelecomDaily, top managers of telecommunications companies believe that the increase in mobile service rates by the end of the year may exceed previous forecasts. While at the end of 2019 it was assumed that cellular service prices would rise by 10% in 2020, most market participants now believe the increase will be even greater.

Specifically, 24% of industry respondents think that mobile service prices will rise by more than 20%, while 38% are confident the increase will be between 10–15%. Overall, 84% of those surveyed have no doubt that prices for communication services will go up.

Main Factors Driving Price Increases

The main factors influencing the business, according to respondents, are the worsening economic situation and declining consumer purchasing power, the rise in foreign currency exchange rates, and increased rental payments. Another important factor is the loss of a significant portion of customers from small and medium-sized businesses. Many of these companies are already refusing to renew previously signed contracts, and providers’ revenue from this segment has already dropped by 30–40%.

Operators’ expenses are also affected by a surge in traffic, which has increased by 30–50% in recent weeks. Experts note that all of this requires network upgrades, which are hampered by the falling ruble and delays in equipment deliveries from China.

Industry Survey Results

A total of 114 company and organization leaders participated in the survey, excluding federal operators.

Only ER-Telecom told Kommersant that they expect a 10–15% increase in rates in 2020. VimpelCom declined to comment on the survey’s findings, stating only that “under the current circumstances, we are doing everything possible to help customers by providing free and discounted services.” MTS, MegaFon, and Tele2 also declined to comment.