Rostelecom looks to pay TV to compensate voice decline

Russian service provider Rostelecom expects pay TV and fixed broadband growth to partially compensate a decline in its fixed voice business over the next five years, with revenues from its overall fixed business, which currently accounts for 50% of all revenues, expected to decline.

Rostelecom’s digital TV subscriber base doubled in 2012 to reach 1.4 million, with solid growth in the adoption of interactive services. Over 15% of video-on-demand users subscribed to thematic TV packages, such as Children’s Club and NBC Universal’s Picture Box” which were launched in September 2012 and proved to be especially popular in the Volga and Ural regions.

Pavel Zaitsev, vice-president and commercial director at Rostelecom, said: “We expect pay TV services to grow at an average annual rate of 50% over the next few years, making it one of our business’s fastest growing segments. Our Interactive TV subscriber base doubled during 2012 and revenues generated by the segment have also doubled. As we develop this service, we expect to expand our presence in the market at a similar pace.”

Rostelecom expects the key growth drivers over the next five years to be cloud services and wireless broadband. The company expects to grow its revenues by about 6% a year between now and 2017.

The state-owned company plans to significantly reduce costs in its fixed line business by modernising the network and eliminating overlaps. Investments in pay TV and its fixed transport network will amount to 60% of total capex over the period to 2017, with investment in mobile amounting to 24%.