Russian high-speed Wimax operator Yota has a bold vision regarding what it could achieve with LTE in its home market and beyond.

 

We recently met senior managers including CEO Dennis Sverdlov, to talk about its strategy, future plans, and its decision to shift from Wimax to LTE.

 

The strong backing that Yota has received from the Russian state and deep pocketed investors has helped it get to where it is today. Management has used the strong financial position well, with refreshing branding, smart positioning, and simple yet effective broadband services.

 

Going forward, things will become tougher for Yota. As it increases its scale domestically and internationally, its challenges will multiply, competition will become tougher, and management attention will be spread thinner.

 

 

Yota is the most successful Wimax operator in emerging markets by a wide margin. Having launched its Wimax network in Moscow in June 2009, it now has approximately 700,000 customers, placing it second only to Clearwire in the US, which has 2.9 million customers. It currently has an ARPU of $24 (€18.27), an overall EBITDA of 19% (the company has an EBITDA of 40% in established areas), and it is still adding 3,000 customers per day, which is approximately half of Russia’s mobile broadband net additions.

 

We believe that there are three key factors to Yota’s current success. Firstly, it has strong backing from the Russian state, which is an investor in the business. This counts for a lot in any country, but even more so in Russia. Few Wimax players have been given 70MHz of spectrum as Yota was, with most having had to lobby extensively and pay heavily for a much smaller portion of spectrum. Secondly, Yota has investors with deep pockets. The company has invested $600m in the business in the three years of existence, and it has plans to invest another $2bn over the next five years. Thirdly, Yota has used its strong financial position well. Yota has been excellent with its marketing, its branding is refreshing, and its positioning has differentiated it in the Russian broadband market. The company has developed simple and attractive broadband access services including no usage caps, no contracts, and two simple tariffs, which it has combined with complete city coverage.