Page 112 - RusRPTDec20

9.1.7​ TMT sector news
Russia accounts for only 3% of all tech companies in the developing markets since 2014​, ​Kommersant d​ aily reported on November 17 citing a report by the Boston Consulting Group (BCG). The tech top-100 EM list compiled by the BCG includes six Russian tech majors: Yandex and Mail.ru Group internet majors, Wildberries online retailer, Playrix game developer, 1C software developer and online bank Tinkoff (TCS Group). Russian tech companies are more oriented towards the developing and the domestic markets, according to the study, with the average valuation of $5.2bn, which is less than the developing market average.
On November 19, lawmakers drafted legislation that would allow Russia’s authorities to block any website for removing “publicly significant information”​ (or for “restricting the rights of [Russian] citizens to freely seek, receive, transmit, produce, and distribute” such information). The law could affect both Russian and foreign sites — the draft law’s explanatory note mentions the American Internet giants Twitter, Facebook, and YouTube specifically. According to the authors of the draft law, these websites have committed these types of violations in the past — for example, censoring Russian state media outlets like Russia Today, RIA Novosti, and Krym 24.
The decline of Russia's media market continued to slow in 3Q20, with total ad revenues falling 5% y/y to about RUB110bn, according to the data from AKAR​.​ ​The market was also down 8% y/y to RUB316bn in 9mo20. Online advertising moved into positive territory in 3Q20, with the respective revenues rising 2% y/y to RUB61.5bn, while the 9mo20 online ad revenues were flat y/y at RUB170bn. Yandex (BUY; 12-mo TP $75; ETR 22%) and Mail.ru​ (​ Buy; 12-mo TP $35; ETR 21%) continued to increase their shares of the Russian advertising market, bringing them to 28% (+2pp y/y) and 8% (+1pp y/y) as of 9mo20, respectively. We remain positive on both names, with our projected recovery of the advertising market in 2021 boding well for their growth and profitability. Based on the reported revenues, Yandex accounted for 52% of total online advertising in 9mo20 (up 0.4pp y/y), while the share of Mail.ru​ stood at 15% (up 0.5pp y/y). Online advertising made up about 54% of the total advertising market during the period. We expect online advertising to continue outperforming the broader media market. Having fine-tuned our ad market forecasts to take into account the 9mo20 data, we project that the total ad market will increase at a 2019-24F CAGR of 7%, while online advertising will see a 2019-24F CAGR of 11%, with its share rising from 49% in 2019 to 54% in 2020F and then 61% in 2024F.
The Russian government is to consider another package of support measures for the IT industry. ​The newspaper mentions that the proposals include applying reduced social contributions and income tax rates to
112 ​RUSSIA Country Report​ December 2020 www.intellinews.com