With revenues of $9.8 billion and a subscriber base 102 million strong, OAO Mobile Telesystems, or MTS, is Russia’s largest mobile operator—and it’s about to get much bigger. CEO Mikhail Shamolin has been steering the firm, which is also a leading provider in the Commonwealth of Independent States (Ukraine, Belarus, Uzbekistan, Turkmenistan and Armenia), through a merger with Comstar, a major supplier of integrated telecom solutions in Russia and the CIS.
For Shamolin, who served as McKinsey consultant and a metals industry executive before taking the CEO post at MTS in 2008, the goal is to get more value out of its existing customers. “Our biggest opportunity—and at the same time our biggest challenge—is the explosion in demand for data traffic,” he explains. “We believe that demand may increase not two, five or even ten times, but hundredfold over the next two to three years.”
Shamolin is readying MTS to meet that emerging market. The Comstar merger, which will bring 4.3 million Moscow phone lines as well cable TV networks into the MTS fold, is a big piece of that puzzle. But MTS is also investing in content services, including a new offering called Omlette, a Russian version of iTunes. “iTunes does not really work in Russia, and that’s not a high priority for Apple at this point,” says Shamolin. “So we’re filling that void by building a similar engine.”
“The biggest question for us and for our industry right now is how to create additional value on top of this utility revenue based purely on providing access to infrastructure,” he explains. “Our answer idea is to be the telcom who deals in operations infrastructure but is also an entertainment provider, selling TV and local on-demand content through our interfaces.”