The following key parameters were estimated in each region separately by enterprises of small, mediumsized business (SMB) and big business:

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1 J son & Partners Consulting Company presents main results of the study Research of the Competitive Situation on the Telecommunication Market in B2B Segment. Development of the Information and Communications Technology (ICT) is one of the strategic orientations of modernization of the economy of the Russian Federation. The growth of investments in development of enterprise modern telecommunications infrastructure contributes to their efficiency increase, call response acceleration and competitiveness improvement in the long term. Limited by quota quantitative survey of corporate sector, which included telephone and online methods, was the basis for the conducted research. The range of the analyzed services included: local phone communication services, wired Internet access, virtual private networks (VPN), lease of communications channel, and also mobile voice communication. Volume of collected information enabled to estimate the competitive situation in each of the services segment with acceptable accuracy. Research geography includes: Central Federal District (without taking into account Moscow and region) Moscow and region Northwestern Federal District Privolzhsky Federal District South and North Caucasian Federal District Ural Federal District Siberian Federal District Far Eastern Federal District The following key parameters were estimated in each region separately by enterprises of small, mediumsized business (SMB) and big business: Market volume Penetration of the services Key market players shares by revenue and clients Consumption parameters and expenses for communication services 1

2 Market Volume in Monetary Terms Total market volume of the studied services according to the results of 2012 comprised 240 bln rubles, of which 54% of the market was fixed communication. In spite of the small share in general structure of the Russian business (7% companies), almost half (49%) of the revenues from fixed and mobile communication services belongs to big business. Market Structure by Services 240 bln rubles Market Structure by Companies Size 240 bln rubles Fixed Commu nication 54% Mobile Voice Commu nication 46% Small business 51% Big Business 49% Sources: J son & Partners Consulting According to J'son & Partners Consulting forecasts, compound annual growth rate (CAGR) shall comprise about 10% and by 2016 total volume from fixed and mobile communication services in the corporate segment shall comprise about 360 bln rubles. Corporate market volume of communication services, bln rubles Sources: J son & Partners Consulting Telecommunication market growth will be provided with the further development of voice mobile communications services and wired success to the Internet. According to J'son & Partners Consulting 2

3 forecasts, the biggest growth will be shown by mobile voice communications by services due to smartphones spread among workers of the regional companies and lowering of the average price for smartphones. Compound Annual Growth Rate (CAGR) of the Market by Communication Services Service CAGR Fixed telephony 3% Wired broadband access 7% VPN 7% Channels lease -5% Mobile voice communications 17% Sources: J son & Partners Consulting Services penetration At the end of 2012, the quantity of the acting enterprises in Russia comprised about mln (apart from individual entrepreneurs). Share of large enterprises (with the staff of more than 250 people) is estimated in 7% (115 thous.). The research has found that geographical development of the company s business is an essential factor of telecommunication services use. If the enterprise structure is studied according to the number of offices within one region, then the majority of companies (79%) have the only one office. The biggest share of the enterprises (67%) also has the only one office outside their region. At that, the maximum quantity of medium and small enterprises offices doesn t exceed 30 pieces, while 100 offices are recorded in large companies. In Russia companies actively use services of fixed communication and wired access to the Internet. Penetration of these services made 93% and 66% respectively. According to J'son & Partners Consulting forecasts, the spread of the local phone communication will remain on the current level in the mid-term. In contrast, noticeable growth of the service penetration is expected in wired broadband access segment. The market growth in physical terms shall stimulate the following reduction of the tariff plans and development of the favorable environment for the development of the broadband access service penetration in small and medium-sized business. It is worth mentioning that in 2012 there was a break in the technological structure of the wired broadband access market: share of connections through fiber-optics (variety of FTTx technology) exceeded 50%, in total, across Russia. VPN services and channels lease are used by the companies with geographically divided structure. Mostly they are medium and large companies with branches and subdivisions located within big cities, inside of the region and all over the country s territory. Taking into account the average number of VPNports in one company, about 2.6% companies in SMB segment use the service, and about 6.7% among large companies and only 2.3% of the companies used channel lease service. Average Expenses for the Communication Services In Russia average expenses of the companies for 1 phone line comprised 825 rub./month. This index weakly depends on the company size and its location. On the average 3.7 thous. rub./month are spent 3

4 for the wired access to the Internet. At that, the large companies spend almost 6.5 times more than medium and small business. As compared to the Internet access services, on the average companies spend 7 8 times more on the data transmission services (VPN and channel lease). Competitive Situation Rostelecom has the largest share among all market players in the fixed communication segment. Though, in total, company s revenue share is less than subscriber share that proves prevailing of micro and small business operator in the client base structure. From 34% to 64% fall to share of other operators depending on service segment. MTS Group of Companies takes the second place on the market of fixed services. At that, operator is a leader across Moscow and Moscow region. VimpelCom makes the top three on the fixed data transmission services (VPN and channels lease). Revenue top three (Rostelecom, MTS GC and VimpelCom GC) have about 85% on the corporate VPN market. These companies dominate the channel lease market, 70% of the revenue falls to their share. MTS GC is in the lead by revenue on the market of the corporate mobile communication, MegaFon and VimpelCom are second and third by revenue respectively. About 95% of revenue from the corporate mobile voice communication in Russia falls to the share of the great three. 4

5 List of contents of the Report Full Version «Research of the Competitive Situation on the Telecommunication Market in B2B Segment» List of contents of the Report Summary 1. Introduction. Description of volume, sampling structure and data collection methodology 2. Macroeconomical indices 3. Estimation of telecommunication services penetration in the corporate sector 3.1. Fixed communication Voice communication Wired broadband access to the Internet VPN Channel lease 3.2. Mobile voice communication 4. Market structure according to the technoligies of Internet access 4.1. Market structure by connection type 4.2. Wired Internet access 5. Consumption of telecom and IT services in the Russian corporate segment 5.1. Volume of fixed communication market in B2B segment Voice communication Wired broadband access to the Internet VPN Channel lease 5.2. Volume of mobile voice communication market in B2B segment 5.3. Parameters of fixed and mobile communication consumption Fixed communication Average number of fixed lines per company Average number of phone numbers per company Average number of phones per company Medium speed of Internet access through wired technologies Average number of VPN-ports per company Average share of port use depending on the category Medium speed of leased channel Mobile voice communication 5.4. Average expenses of the companies by communication types Fixed communication 5

6 Voice communication Wired broadband Internet access VPN Channel lease 6. Estimation of the competitive situation on the telecom and IT services market in the corporate sector 6.1. Market shares of the key players by revenue from service provisioning Fixed communication Voice communication Wired broadband Internet access VPN Channel lease Mobile voice communication 6.2. Market shares of the key players by corporate clients number Fixed communication Voice communication Wired broadband Internet access VPN Channel lease Mobile voice communication 7. Market forecast up to Market volume in B2B segment Fixed communication Voice communication Wired broadband Internet access VPN Channel lease Mobile communication 7.2. Dynamics of telecom services penetration Fixed communication Voice communication Wired broadband Internet access VPN Channel lease Mobile communication 8. Conclusion 6

7 List of Figures Figure 1. Structure of the Russian market of the basic telecommunication services, 2011 Figure 2. Enterprise structure by location type in SMB+big business segment, 2012 Figure 3. Enterprise structure by location type in SMB segment, 2012 Figure 4. Enterprise structure by location type in big business segment, 2012 Figure 5. Fixed communication penetration in Russia in B2B segment, Figure 6. Fixed communication penetration by regions of the research, 2012 Figure 7. Broadband access penetration in Russia in B2B segment, Figure 8. Broadband access penetration by regions of the research, 2012 Figure 9. VPN penetration in Russia in B2B segment by ports, Figure 10. VPN penetration by regions of the research by ports, 2012 Figure 11. Channels lease penetration in Russia in B2B segment, Figure 12. Channels lease penetration by regions of the research, 2012 Figure 13. Mobile communication penetration in Russia in B2B segment, Figure 14. Mobile communication penetration by regions of the research, 2012 Figure 15. Market structure by connection type, 2012 Figure 16. Market structure by wired Internet access technologies in B2B segment, 2012 Figure 17. Market structure by wired Internet access technologies in SMB segment, 2012 Figure 18. Market structure by wired Internet access technologies in big business segment, 2012 Figure 19. Market volume of fixed communication in Russia, Figure 20. Market volume of fixed communication by regions of the research, 2012 Figure 21. Market volume of wired bradband access in Russia, Figure 22. Market volume of wired bradband access by regions of the research, 2012 Figure 23. Market volume of VPN in Russia, Figure 24. Market volume of VPN by regions of the research, 2012 Figure 25. Market volume of channel lease in Russia, Figure 26. Market volume of channel lease by regions of the research, 2012 Figure 27. Market volume of mobile communication in Russia, Figure 28. Market volume of mobile communication by regions of the research, 2012 Figure 29. Average number of fixed lines per company, 2012 Figure 30. Average number of phone numbers per company, 2012 Figure 31. Average number of phones per company, 2012 Figure 32. Medium speed of Internet access through wired technologies, 2012 Figure 33. Average number of VPN-ports per company, 2012 Figure 34. Average share of port use depending on the category, 2012 Figure 35. Medium speed of the leased channel, 2012 Figure 36. Average number of corporate sim cards per company,

8 Figure 37. Companies average expenses for 1 phone line by regions of the research, 2012 Figure 38. Companies average expenses for wired broadband access by regions of the research, 2012 Figure 39. Companies average expenses for VPN by regions of the research, 2012 Figure 40. Companies average expenses for channel lease by regions of the research, 2012 Figure 41. Fixed communication: market shares of the key players by revenue in B2B segment in Russia, 2012 Figure 42. Fixed telephony: market shares of the key players by revenue in B2B segment by federal Figure 43. Fixed telephony: market shares of the key players by revenue in SMB segment by federal Figure 44. Fixed telephony: market shares of the key players by revenue in big business segment by federal Figure 45. Wired broadband access: market shares of the key players by revenue in B2B segment in Russia, 2012 Figure 46. Wired broadband access: market shares of the key players by revenue in B2B segment by federal Figure 47. Fixed broadband access: market shares of the key players by revenue in SMB segment by federal Figure 48. Fixed broadband access: market shares of the key players by revenue in big business segment by federal Figure 49. VPN: market shares of the key players by revenue in B2B segment in Russia, 2012 Figure 50. VPN: market shares of the key players by revenue in B2B segment by federal Figure 51. VPN: market shares of the key players by revenue in SMB segment by federal Figure 52. VPN: market shares of the key players by revenue in big business segment by federal Figure 53. Channel lease: market shares of the key players by revenue in B2B segment in Russia, 2012 Figure 54. Channel lease: market shares of the key players by revenue in B2B segment by federal Figure 55. Channel lease: market shares of the key players by revenue in SMB segment by federal Figure 56. Channel lease: market shares of the key players by revenue in big business segment by federal districts, 2012 Figure 57. Mobile communication: market shares of the key players by revenue in B2B segment in Russia, 2012 Figure 58. Mobile communication: market shares of the key players by revenue in B2B segment by federal districts, 2012 Figure 59. Mobile communication: market shares of the key players by revenue in SMB segment by federal Figure 60. Mobile communication: market shares of the key players by revenue in big business segment by federal Figure 61. Fixed communication: market shares of the key players by number of clients in B2B segment in Russia, 2012 Figure 62. Fixed telephony: market shares of the key players by number of clients in B2B segment by federal Figure 63. Fixed telephony: market shares of the key players by number of clients in SMB segment by federal Figure 64. Fixed telephony: market shares of the key players by number of clients in big business segment by federal 8

9 Figure 65. Wired broadband access: market shares of the key players by number of clients in B2B segment in Russia, 2012 Figure 66. Wired broadband access: market shares of the key players by number of clients in B2B segment by federal Figure 67. Wired broadband access: market shares of the key players by number of clients in SMB segment by federal Figure 68. Wired broadband access: market shares of the key players by number of clients in big business segment by federal Figure 69. VPN: market shares of the key players by number of clients in B2B segment in Russia, 2012 Figure 70. VPN: market shares of the key players by number of clients in B2B segment by federal Figure 71. VPN: market shares of the key players by number of clients in SMB segment by federal Figure 72. VPN: market shares of the key players by number of clients in big business segment by federal districts, 2012 Figure 73. Channel lease: market shares of the key players by number of clients in B2B segment in Russia, 2012 Figure 74. Channel lease: market shares of the key players by number of clients in B2B segment by federal Figure 75. Channel lease: market shares of the key players by number of clients in SMB segment by federal Figure 76. Channel lease: market shares of the key players by number of clients in big business segment by federal Figure 77. Mobile communication: market shares of the key players by number of clients in B2B segment in Russia, 2012 Figure 78. Mobile communication: market shares of the key players by number of clients in B2B segment by federal Figure 79. Mobile communication: market shares of the key players by number of clients in SMB segment by federal Figure 80. Mobile communication: market shares of the key players by number of clients in big business segment by federal Figure 81. Market volume forecast of fixed communication in B2B segment up to 2016 Figure 82. Market volume forecast of wired broadband access in B2B segment up to 2016 Figure 83. Market volume forecast of VPN in B2B segment up to 2016 Figure 84. Market volume forecast of channel lease in B2B segment up to 2016 Figure 85. Market volume forecast of mobile voice communication in B2B segment up to 2016 Figure 86. Penetration forecast of fixed communication in B2B segment up to 2016 Figure 87. Penetration forecast of wired broadband access in B2B segment up to 2016 Figure 88. Penetration forecast of VPN in B2B segment up to 2016 Figure 89. Penetration forecast of channel lease in B2B segment up to 2016 Figure 90. Penetration forecast of mobile communication in B2B segment up to

10 List of Tables Table 1. Valid sample size obtained within establishment survey Table 2. Valid sample size on local connection services and Internet access. Table 3. Valid sample size obtained within additional collection Table 4. Number of enterprises acting by Rusian federal districts, thous., 2012 Table 5. Enterprise revenue from works and services implementation (without tax payments and similar compulsory payments), mln rubles, 2011 Table 6. Shares of small and medium enterprises according to the formation type, 2010 Table 7. Structure of the enterprises by number of offices within one region, 2012 Table 8. Structure of the enterprises by number of offices outside the region (without taking into account an office participating in the survey), 2012 Table 9. Structure of the enterprises by number of used personal computers, 2012 The newsletter was prepared by the J'son & Partners Consulting Company. We exert every effort to provide actual and forecasting data representing the situation in full and available at the time of the publication of the material. J'son & Partners Consulting reserves the right of revising the data after publication of some new official information by individual players. CONTACT FOR MORE INFORMATION: Pavel Yermolich Commercial Director 10