The 2010 Frost & Sullivan Russia Growth Leadership Award in the Mobile Telephony market is presented to MegaFon. The company entered the Russian mobile market in 2000 as the country's third nationwide operator and rapidly forged a strong market position. In 2007, it became the first, and continues to be the only, operator in Russia to achieve complete national coverage.
"The focus on covering the entire Russian territory has contributed to considerable growth in terms of both active subscribers and revenues - active subscribers grew from 39.8 million at the end of 2006 to 50.9 million at the end of 2009, representing average annual growth of 19 per cent," remarks Frost & Sullivan Research Analyst Edyta Kosowska. "In comparison, the overall growth rate of the Russian market over the same period was a much lower 12.7 per cent."
In 2009, MegaFon had the highest share of net additions of the market - 39 per cent - allowing the company to increase its market share from 23 per cent in 2008 to 24.4 per cent in 2009. Revenue growth has also been continuous and rapid; even during the financial crisis, MegaFon continued to deliver strong revenue growth. In 2009, the company generated total revenues of RUR 150 billion, a 2.3% increase over 2008 levels.
Aiming to improve in-store communication with customers, provide additional services and increase customer loyalty, MegaFon built its own retail network. By the end of 2009, the company had a total of 1,470 owned and franchised distribution units; a further 600 stores were planned by the end of 2010.
"Despite focusing on organic distribution network growth, MegaFon has also decided to continue its cooperation with two distribution partners as well as signing a new agreement with Russian Post," adds Kosowska. "The main benefit of this strategy will be to ensure the company's presence in the main population centers across the country."
MegaFon has consistently provided its customers with high quality, innovative services. One of the ways in which it has achieved this is via the continuous development of its 3G network. By the end of 2009, MegFon's third generation network covered most Russian regions, making the company the market leader in terms of coverage and, consequently, data transfer speed.
In addition, MegaFon, has been declared the General Partner and official mobile phone operator of the 2014 Olympics in Sochi. It is therefore deploying advanced 4G infrastructure in the area.
A strong focus on increasing loyalty among its existing subscribers is highlighted by its reward programme - one of the most recognisable in the Russian telecommunications market. Currently, MegaFon's has the highest percentage of unconditionally loyal subscribers among the three largest mobile operators. Furthermore, strong control over costs enabled the company to keep prices stable during worsening economic conditions, resulting in higher subscriber base growth.
"Since its establishment, MegaFon has primarily grown organically, setting up subsidiaries in the majority of Russian regions, allowing the company to create a relatively unified structure and a common corporate culture," concludes Kosowska. "While increasing the scope of its operations, MegaFon decided to merge with its regional subsidiaries; the process was completed in the first half of 2009, helping the company further optimise operations and reduce costs."
The Frost & Sullivan Award for Growth Leadership is presented to the company that has demonstrated excellence in capturing the highest annual compound growth rate over the last 3 years.
Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service, and strategic product development. Industry analysts compare market participants and measure performance through in-depth interviews, analysis, and extensive secondary research in order to identify best practices in the industry.
MegaFon (english.megafon.ru) is one of three major mobile networks in Russia, and the only one that operates its own network and provides a range of services throughout the country. MegaFon have more than 57 million active subscriber accounts, and subsidiaries in Tajikistan, Abkhazia and South Ossetia.
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