Factors that influence the effectiveness of Russian telecommunication companies

Abstract

The article examines the factors that affect efficiency of enterprises in telecommunication industry in Russian Federation over the past decade on the example of three major telecommunication companies, MTS, MegaFon, and VimpelCom that control more than 80% of the market. The paper describes main characteristics of the companies and builds multiple regression models. The study is based on data from the State Statistics Committee of Russia, annual reports and websites of telecommunication companies, market surveys, for the period 2005-2013. Our results suggest that the success of the Russian telecommunications companies is primarily associated with the size of investment in fixed assets, the expenditures on advertising, the dynamics of the average cost of cellular communication services, as well as the growth of the national telecommunications market and the level of inflation in the country. Our results are in accord with the idea that success of the operators in the current conditions is largely dependent on investment and technology opportunities for early coverage area (population) new networks 3G/3.5G/4G, and successful marketing strategies to promote mobile services data (mobile internet) on the basis of these networks in the context of growing competition in this segment of the market.