Russia's MTS starts a war with Uber, is this a Didi sequel?

(Bick Bhangoo) #1

In July 2017, Uber landed in Russia and launched a partnership with Yandex NV, Russia's largest internet service provider (ISP), only to merger their operations under the Yandex flag and invest $225 million for 36.6% of the new company. The new merger was approved in November by the Russian Federal Antimonopoly Service and will be finalized in January 2018.

Yandex's main rival, of which there are only two, is MTS. MTS is Russia's largest mobile operator with over 102.4 million subscribers. MTS head of marketing, Vyacheslav Nikolaev stated that they are now starting to enter the rideshare and taxi service gig scene, backing up his statement with the fact that prices are rising due to Uber's ceding from the scene, and that by offering an extra service to their subscribers they can increase income as well as provide a better service.

This might sound like a solid business acumen, but in fact, all global carrier services are struggling to produce profits and are constantly seeking new ways to increase their revenue from technology-related sources. MTS is no exception, and they already offer 20 different mobile apps that include the standard music, TV, and Video as well as online wallets.

Now, MTS has partnered with City Mobil, a Moscow and St Petersburg based taxi service, providing a rideshare app for their subscribers as well as opening up a place for rideshare focused subscribers. MTS has also connected with over 100 retail partners, and they offer a phone account credit system for every purchase made through their app. When considering the purchasing power profit versus the wireless tariffs, it is possible that passengers and online shoppers will be able to build up enough credit that will provide them with free monthly WIFI.

MTS is starting to streamline its mortar and brick presence by reducing retail outlet numbers from 5,700 to 2,500, which is a logistically acceptable number of sites. Another upside is the slow progression out of the two decades of the recession that Russia is now emerging from. MTS, Veon Ltd., and MegaFon PJSC, Russia's top three major mobile carriers are all showing domestic growth. All three companies are reporting drops in their share prices, but all three agree that there is no price war. According to MTS, there is an economic recovery, and the market will remain unstable as we see companies merge and grow.

MTS's incursion into the rideshare scene is an obvious step for them since ridesharing is, in fact, an app operated system, and they already have the human and technological infrastructure to succeed in applying their resources to building a Rideshare and taxi app service. With so many subscribers, it will be interesting to see how MTS and Yandex vie for their respective market shares in Moscow and eventually in all of the CIS.