Russian Mobile Content News
Newsletter, December 2007

Vimpelcom run its first mobile advertisement project
Vimpelcom (Beeline brand) has placed advertisement in its communication channels for the first time. A mobile ad campaign has been organized in partnership with the Brand Mobile agency for the Fanta and Burn brands of Coca-Cola. Ad placements have appeared at the wap.beeline.ru WAP portal and at the Chameleon ICB service. According to Vimpelcom, an aggregated reach of the channels has been over 19 mln of Beeline subscribers. The Fanta mobile ad campaign was supporting a current promo action of the brand. The campaign goal was to inform potential customers about the promo. A wap.fanta.ru WAP site developed by Brand Mobile offered the action rules, prize descriptions and free branded content. A campaign for the Burn brand was timed to the Halloween, advising how to celebrate the holiday and offering free content in the Burn style. Duration of the Fanta campaign was 10 days and five days for the Burn campaign. Banners of the brands were placed on the home page of the Beeline portal linking to the promo WAP sites. CTR has reached 5%. 25% of the Fanta WAP site users (and almost 50% for the Burn brand) have downloaded branded wallpapers.

Content provider ratings in Ukraine
CForum has published ratings of content providers working with three leading Ukrainian cellular operators. The three lists cannot be compared as the data is given for different time periods and based on different revenue calculations.

Kyivstar (3Q07, based on gross sales, both branded and non-branded services):
1. Inform-Mobil
2. Irikom
3. JUMP
4. Polygon
5. M-Otvet
6. Point Com
7. i-Free
8. Playfon
9. I-System
10. Euroinform

MTS Ukraina (1H07, based on non-branded service sales):
1. Jump Ukraine
2. i-FRee
3. Irikom
4. TV Com
5. INFON
6. Point Com
7. Euroinform
8. VIA Teleport
9. M-Otvet
10. Inform-Mobil

Life:) (2Q07-3Q07, gross sales):
1. i-Free
2. HitOn (Poligon International)
3. Tikle.

Four Russian online game companies merged...
Nival Online, IT Territory, TimeZero and NIKITA.Online have announced they are joining into a holding, Astrum Online Entertainment. "Creation of Astrum is the first large consolidation in the Russian gaming sphere," remarked Sergey Orlovskiy, Nival Online's president. "Currently the combined companies' market share in Russia is 45%, which makes Astrum the leader of this sector by any measure." Vladimir Nikolskiy, General Director of IT Territory, said: "This union allows us to use our partners' combined infrastructure and technical solutions, while focusing our strength on our main activities." According to iKS-Consulting, the Russian market of domestically developed online games will reach $55 mln in 2007, where Astrum's combined revenue is $25 mln. According to some market players, Nival Online, IT Territory, TimeZero and NIKITA.Online have recently received investments from the Digital Sky Technologies fund which is also controlling the Astrum Online Entertainment holding.

.. persuading a merger among Russian mobile content providers
In the summer of 2007 Marshall Capital Partners (MCP) has acquired control stakes in Russian mobile content providers Solvo International and Nikita Mobile, and in Ukrainian provider Jump. Marshall Capital Partners was founded in 2005 by Konstantin Malofeev, a former top manager of MDM Bank. According to Malofeev, MCP is a direct investment fund managing assets of Russian and foreign investors (over USD one billion in assets). The fund invests in hotel business, telecommunications, food industry and retail. MCP aimed to merge the three companies to create the largest in the CIS mobile content provider. According to Comnews Research, Jump had 15% market share in Ukraine, Solvo International and Nikita Mobile were among top-10 Russian content providers. Oksana Pankratova, a partner at Comnews Research, estimated a purchase deal of Jump and Solvo together in $45 mln (a combined annual turnover of the two companies plus a premium of 50%) and a purchase of Nikita Mobile in $15 mln (about $20 mln revenues in 2006). Kirill Petrov, a managing director of i-Free, estimated Nikita's acquisition in $30-40 mln. MCP and the companies invested did not disclose the deal amounts.

Vimpelcom's top-10 content partners in October 2007
Vimpelcom has published top-10 content providers - participants of its CPA (content provider access) program in Russia for October 2007:
1. i-Free
2. INFON 3. Souyztelecom/SMS Media Solutions
4. Playfon
5. A1
6. Nikita Mobile
7. Forte-IT
8. MGTS
9. Irikom
10. Plastic Media.
The first six positions has remained the same since September.

MegaFon's top-10 content partners in August 2007
MegaFon has published top-20 of its CPA partners for August. Here's the first 10 rating:
1. INFON
2. i-Free
3. InCor
4. Souyztelecom
5. Forte-IT
6. Telemarket
7. A1
8. Mobilnye Otvety
9. Playfon
10. Plastic Media.

Russian mobile content market will reach $475-580 mln in 2007
Analysts predict that the Russian mobile content market will reach $475-580 mln by the end of 2007. That is 14% of the total cellular revenues, comparing to 13.5% in 2006 (according to ComNews Research). The key revenue drivers are mobile Internet and Ring Back Tones. VAS revenue structure in 3Q2007 was the following: messaging - 56%, mobile Internet - 20%, content - 17%, basic services - 7%. MTS share in the content revenues was 40%, Vimpelcom - 28%, MegaFon - 25%, others - 7%.

VAS market in Ukraine in 2007
According to a presentation of ComNews Research at the IV Mobile VAS Conference hold in mid-November, the Ukrainian VAS market has reached $214 mln in the first half of 2007 (12% of the total cellular revenues in the country). Mobile content has brought $32 mln to local mobile carriers (excluding revenues from WAP traffic). By the end of 2007 the mobile content market could show 27% growth rate up to $80 mln ($63 mln in 2006). Messaging will bring 52% of the VAS revenues, mobile Internet - 24%, mobile content - 15%, basic services - 9%.

VAS in Kazakhstan in 2007
According to iKS-Consulting, revenues from mobile value added services in Kazakhstan will grow by 55.8% in 2007 and will reach $120 mln (8.5% of the total cellular operator revenues). Beeline carrier has 48% in the VAS market. The market segmentation by revenue type: messaging - 67%, content services - 18%, mobile Internet - 9%, basic services - 6%. In 2008 the following factors will prevent the VAS market from a fast growth: 1) steadily high rates for basic voice services not stimulating carriers looking for alternative revenue sources; 2) low consumption of expensive services (Internet access and mobile data transfer); 3) lack of clear relation strategies between carriers and content providers.

Top-10 content providers in Belarus
ComNews Research proposed a list of 10 leading mobile content providers in Belarus in 2007:
1. Streamline
2. Goodok
3. Mobikom
4. Belinformmobil
5. SPN Digital
6. Mobil2Bel
7. Prime-Telecom
8. Pervy Muzukalny
9. Mobido
10. Nikita.

Blackberry coming to Russia
MTS and Vimpelcom have announced that two-year negotiations with a Canadian company Research In Motion (RIM) and with the FSB (the former KGB) have been successfully completed. The bottleneck was e-mail encryption and the FSB. The FSB was requesting access to the Blackberry e-mail encryption code. RIM was declining to provide code for decryption. Finally a compromise was found: a Blackberry server will be installed not on a client side as anywhere in the rest of the world, but at a mobile carrier side. And Russian enforcement agencies will have an access to monitor the traffic. (All Russian telecom companies are required by law to have a so-called SORM system to provide enforcement bodies access to monitoring voice and data traffic.) MTS has got a permission to import into Russia 300 items of Blackberry 8800, 300 items of Blackberry 7290, 480 items Blackberry 8700g as well as a software solution Blackberry Enterprise Server v4.1. Vimpelcom has received a similar permission. The third largest Russian cellular operator, MegaFon, has announced a competing to the Blackberry service called MegaSync. It also allows to receive e-mail on mobile device with online data encryption. The service is based on Nokia Intellisync technology. But in contrast to Blackberry, MegaSync does not require a special user device. Currently it's available on seven models of Nokia mobile business phones and soon will be available on over 100 models of PDA and mobile phones of different manufacturers.

i-Free becomes exclusive partner of Sony BMG in Ukraine
i-Free has been chosen by Sony BMG to be its exclusive partner in Ukraine. The deal gives i-Free-Ukraine access to music from the Sony BMG catalogue to be used in mobile content. "We've known i-Free for years, and have worked successfully with that company in Russia. So we have decided to let i-Free promote our music catalogue in Ukraine," said Leonid Agronov, Director of Digital Sales at Sony BMG. Meanwhile in Russia i-Free promoted a new album of a popular Russian singer MakSim and launched exclusive mobile content from Dima Bilan, another top Russian pop-singer.

Golden WAP Awards winners announced
On December 06 winners of a new contest, the Golden WAP Awards, have been announced. A jury of the annual Golden Site contest (8th in 2007) evaluated Russian WAP site entries as well. The Golden WAP Awards contest was initiated by Promo Interactive company (Next Media Group holding) this year. Nominations and winner of the Golden WAP Awards 2007 are: Grand Prix (MTS); information site (Timeout); service site (wap.photoshare.ru); specialized site (wap.kmx.ru); communications and dating (LiveJournal Russia); media (Lenta.ru); entertainment site (dreamwar.ru); corporate site (M-Video) and promo site (wap.lovivolnu.ru).

A technology venture fund has died before delivery
European Bank for Reconstruction & Development (EBRD), an Israeli Tamir Fishman group and a federal state fund Russian Venture Company (RVC) have announced that the Tamir Fishan Russian venture fund will not be established. The fund with 2 billion ruble assets ($80 mln) was supposed to invest in Russian high-tech projects. RVC intended to provide 980 mln rubles ($39.2 mln) to the fund. FinansTrust, founded by Oleg Shvartsman, supposed to be a management company of the fund. According to a press release the fund activities has been suspended "due to material disagreements between Tamir Fishman – a major shareholder - and minority shareholders in the management company of the fund." The sides has decided to suspend the fund after an interview of Oleg Shvartsman to the Kommersant newspaper where he confessed in "unofficial" purchase of a database of innovation projects from the Ministry of Education & Science and in participation in unfriendly acquisitions ("re-privatization") leaded by the FSB veterans.

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