Page 110 - RusRPTNov19

9.1.7 TMT sector news
The Russian government has softened the terms of the proposed law on foreign ownership in IT companies to the relief of investors, but more clarity needed say analysts. According to RBC, the government has proposed to amend the draft law on limiting foreign ownership in "significant" IT companies. In particular, the government wants to increase the proposed cap on foreign voting power in such companies from 20% to 50% minus one share. The government also wants the draft law to set clear criteria for determining such "significant" IT companies.
The value of foreign venture capital deals with Russian participation in 1H19 doubled to $860mn as compared to $418mn in 1H18. 99% of the investment went into foreign IT projects and start-ups, with the average deal with Russian participation also doubling from $11mn to $24mn. The investment abroad beat the domestic investment of $248mn in the reporting period 3.5-fold.
Russian taxi market is expected to grow by 5.6% to RUB709bn ($11bn) in 2019, RBC business portal reported on October 8 citing the governmental AnalyticCentre.Asreportedby bneIntelliNews, thecompetitioninthedigital transportation solutions market toughened as Russia's largest bank Sberbank recently set up a joint venture with Yandex’s largest rival Mail.ru . Yandex.Taxi is still a market leader and is reportedly preparing for an IPO and strengthening its foodtech services . But the sharp growth phase that was provoked by the entry of taxi aggregators through lower prices and more passengers is waning, the study warns. The growth pace of the market is seen declining from 8.6% in 2018 to 3.7%-4% next year, stabilising in the longer term at about 2%. The study also estimates that the value of illegal taxi drivers stands at about RUB100bn, up by 6.3% as compared to 2018. In some regions up to 50% of all paid rides are delivered by unlicensed drivers. Obtaining a licence to drive a taxi is not mandatory, but the police are increasingly fining drivers without licenses. In 2019 taxi aggregators are seen taking about 60% of the taxi market, with Yandex.Taxi being the market leader with 27% share. Vezet, recently acquired by Yandex , takes another 12%. Maksim taxi accounts for 9%, Gett for 5% and 1% for Citimobil.
The Russian smartphone market continued to expand in Q3 2019,
although growth decelerated further to around 3.4% y/y in monetary terms, reaching RUB130bn, according to MTS estimates. At the same time, unit volumes declined for the first time in three years, notching around 2% downward from the year-ago quarter to about 8mn devices. In the first nine months of the year, MTS saw approximately 5% growth in smartphone sales year-over-year in monetary terms. Combined, these dynamics indicate a continued increase in the average smartphone ticket price in Russia, which we have tracked as having grown by more than a third over the past three years from roughly RUB11,600 to RUB15,900.
The development of 5G network solutions in Russia could have to rely on domestically produced servers only , RBC business daily reported on October 3 citing the roadmap drafted by state technology agency Rostec for the Digital Economy National Programme. Such solutions do not currently exist in Russia, and the possible push to use domestic servers supports the view that Kremlin chose unpopular frequencies for 5G roll-out to force home-made infrastructure development. Reportedly, the roadmap sees 5G roll-out in at least five cities with over 1mn people population by 2021 and in 10 cities by 2024. Government officials previously estimated that the roll-out could cost RUB650bn ($10bn) state funding, wanting to see the money spent in Russia, RBC reminds. Still, the document admits that most of the necessary equipment is not produced in Russia and name Huawei, ZTE, Nokia, Cisco, Qualcomm, Verizon, and other foreign majors as potential technology partners.
110 RUSSIA Country Report November 2019 www.intellinews.o