MTS aims for 20 percent non-voice revenue by 2012

MOSCOW (Reuters) - Mobile TeleSystems (MBT.N: Quote, Profile, Research, Stock Buzz), Russia's leading mobile provider, aims to increase its revenue from services other than voice to 20 percent by 2012 from between 13 and 15 percent currently, its CEO said on Monday.

Leonid Melamed said at the Reuters Russia Investment Summit in Moscow that over the next five years the market will grow 142 percent in revenue terms as disposable incomes rise and Russian mobile users talk more and access the Internet on their phones.

"The average annual expenditure of a Russian citizen on mobile communication is about $99. This is like 30 percent less than an average in the emerging markets and like five times less than in developed markets, so we expect that consumption will grow," Melamed said.

"MOU (minutes of use) is still significantly less than in other countries and in the prepaid segment significantly less than in the post-paid.

"So we understand that the normal consumption behavior of the Russians will drive them to increase usage. And parallel to growth in disposable incomes, we'll see growth in ARPU (average monthly revenue per user)," he said.

Melamed said MTS was making progress on a project with fixed-line operator Comstar (CMSTq.L: Quote, Profile, Research, Stock Buzz) to bundle mobile minutes and megabytes of information, which was based on the success of this model in other markets.

This service, which would mean a single bill for customers, would be launched around the first of the year, he added, declining to detail revenue predictions or how the revenue would be shared between the companies.

"Both companies will benefit on their top-line side," he said.

Melamed said problems in clearing frequencies meant 3G, or high-speed wireless, services would not be available until the first half of 2008, with service in Moscow particularly difficult to establish.

"We believe that in the first half of the next year all three operators will start the commercial use of 3G operations in the biggest consumption centers. I have to agree the most problematic area for us now is Moscow."

(For more news from the Reuters Russia Investment Summit, click here)