2023-09-26 13:20:56
The Federal Antimonopoly Service (FAS) has opened an antimonopoly case against the mobile operator “Megaphone“due to an unreasonable increase in tariffs in 2023 by 10.24%, according to the press service of the department on September 25, 2023. The changes affected more than 8.2 million subscribers.
FAS stated that “Megaphone“explained the price increase by rising costs, but the operator’s financial statements indicate a significant reduction in the company’s expenses and an increase in net profit. “In this regard, the FAS Russia came to the conclusion that Megafon PJSC has no grounds for increasing tariffs. The company’s actions may lead to infringement of the interests of consumers,” the statement says.
In January–June 2023, Megafon’s net profit increased by 133.9% to RUB 26.9 billion compared to the same period in 2022, and revenue increased by 13% to RUB 209.9 billion. The CAPEX (capital expenditure) indicator for the reporting period increased by 99.4% to RUB 71 billion, but its growth was mainly influenced by the deal to acquire the Yota trademark in December 2022 for RUB 27 billion.
A Megafon representative told Vedomosti that the company has not yet received an official document from the FAS, but explained that the department’s initiation of the case is related to the increase in the cost of archive tariffs in January 2023.
“Then we actually adjusted the cost of a number of archival tariffs, the prices of which had not changed for two to four years. Their previous cost does not correspond to the current costs of maintaining and modernizing the communication infrastructure,” said a representative of the operator. “We provided detailed documentation to the department in advance justifying the January changes in tariffs.”
According to the interlocutor, the cumulative increase in the cost of operator services for the entire subscriber base in 2023 amounted to 2.8%, “which is not only significantly lower than the inflation rate, but also does not compensate for half the increase in costs” for the provision of communication services.
Currently, price indexation for communication services is not regulated. In April 2022, the FAS, with the participation of the Ministry of Digital Development, developed recommendations for operators to increase prices by no more than the inflation accumulated since the beginning of the year, notifying the service two weeks in advance. The mechanism was in effect until the end of 2022. The government did not announce the extension of the document.
The Antimonopoly Service opened a case against the cellular company on grounds of violation of paragraph 1 of Part 1 of Art. 10 of the law on the protection of competition (establishing and maintaining a monopolistically high or monopolistically low price for a product). If the company’s guilt is proven, the operator may face a fine of up to 1 million rubles. (Part 1 of Article 14.31 of the Code of Administrative Offenses of the Russian Federation).
Since Megafon’s actions to increase prices only lead to infringement of the interests of consumer subscribers, the fine will not exceed 1 million rubles. (Part 1 of Article 14.31 of the Administrative Code), says Elena Kuznetsova, head of the antimonopoly practice of the law firm Rustam Kurmaev and Partners. “If during the consideration of a case of violation of antimonopoly legislation”Megaphone“does not reduce tariffs, then with a high degree of probability the FAS of Russia will issue an order aimed at restoring the state of competition, to take certain actions in order to stop violating antimonopoly legislation,” Kuznetsova noted.
In December 2022, the service already issued an order to Megafon to reduce tariffs, but to date the FAS order remains unfulfilled and is being appealed by the operator in court.
Current and future expenses of operators are associated with the need to switch to domestic equipment, says Denis Kuskov, CEO of Telecom Daily. In addition, the increase in tariffs may be due to the departure of foreign vendors from Russia, the depreciation of the ruble, the lack of specialists, as well as growing government requirements, in particular, for the operation of SORM systems and providing coverage where it is unprofitable, adds the author of the Telegram channel ABloud62 analyst Alexey Boyko.
“Subscription fees remain one of the main sources of income for operator companies, so the natural option for operators in the current conditions is to increase tariffs. Moreover, the Ministry of Digital Development most likely supports them, as can be judged based on the text of the industry development strategy until 2035,” notes Boyko.
Earlier, Vedomosti, citing sources, reported that the FAS also criticized the communication development strategy until 2035 presented by the Ministry of Digital Development, which proposed allowing telecom operators to index tariffs to a level “not less than the consumer price index”, as well as transfer part of the operators’ maintenance costs infrastructure for content providers – the largest Internet companies and online cinemas.
Then a representative of the ministry said that they would soon discuss their review with the FAS and work out “a mechanism for operators to protect their investment costs in conditions when the costs of upgrading networks are growing.”
The main thing is that FAS does not play a PR strategy, but looks at the real state of affairs: raising prices goes to improve the quality of communications, and not to increase the profitability of companies, Kuskov added.
“The FAS quite regularly initiates cases against telecom operators and tariffs for communication services. Reasons [для увеличения тарифов] there are many, they are justified and operators will continue to raise tariffs – this is an inevitable process,” added iKS-Consulting analyst Maxim Savvatin.
It is quite possible that similar checks will be carried out in relation to other telecom operators, Boyko believes. “In September, the FAS already became interested in the situation when MTS received messages about a planned increase in the monthly payment in a number of tariffs by 59 rubles from September 28. It is likely that when trying to increase tariffs according to the formula “inflation + 5%,” other operators may encounter interest or investigations from the FAS even before the end of 2023,” the expert suggests.
By the end of the year, other operators will carry out local price increases, and the FAS will closely monitor all major market players, Kuskov concluded.
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