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Russian pay TV growth slowing, but ARPU pushes revenues higher

The number of subscribers to pay TV in Russia grew by 3.2% last year to 42.7 million, representing a penetration rate of 75%, according to research by TMT Consulting.

Growth was driven by the big five Russian operators, which collectively saw their pay TV bases rise by 1.5 million. This offset declines among smaller players, which collectively lost 130,000 subscribers over the course of the year, according to the research outfit.

The leading growth operators were Rostelecom, which added 600,000 customers in the year, MTS , which grew primarily through the expansion of its satellite base, and ER-Telecom, which grew by acquiring Novosibirsk operator Novotelecom and Akado’s networks in St Petersburg and Yekaterinburg.

Growth rates for pay TV, cable TV, satellite TV and IPTV (TMT Consulting)

IPTV operators accounted for the bulk of the growth in subscribers, with 900,000 new customers signing up for IPTV services over the course of the year. Growth in the satellite segment increased year-on-year, which was attributed by TMT Consulting to MTS’s active promotion of its satellite service.

Satellite TV operators Tricolor TV and Orion Express grew their respective bases at a slower rate than previously, according to TMT Consulting.

Tricolor TV remains the leading player in absolute numbers, with 12.28 million, up 1.2%, followed by Rostelecom with 9.77 million, up 4.9%. ER-Telecom takes third place, with 3.342 million TV customers after its acquisitions, up 12.1%.

MTS is the fourth ranked operator with 3.231 million TV customers, up 13.2%, followed by Orion-Express with 2.855 million, up 4.1%.

The overall cable TV base meanwhile declined year-on-year by 150,000 according to the research group.

According to TMT Consulting, about 71% of pay TV customers across Russia now take digital services, up three percentage points year-on-year.

Pay TV revenues grew by about 10% to RUB83.8 billion, driven by the increase in the overall base and by 6% growth in ARPU from RUB156 to RUB166.

ARPU growth was driven by increased prices and the growing dominance of larger players with bigger, more expensive packages.

The research group predicted that the number of pay TV subscribers will grow by only 1.8% this year to 43.5 million, with revenue growth slowing to 6% and likely to reach about RUB90 billion by the end of the year.