Mikhail Gerchuk: Internet steps up

Exclusive interview of Chief Commercial Officer of VimpelCom Group, Acting Vice President for CIS Business Unit Mikhail Gerchuk to Mediamax

- As of the data of the third quarter of 2014, ArmenTel registered growth by the key financial indices. What factors were the main drivers of growth?

- First of all, we continue investing in enhancement of quality mobile and landline network, improvement of 3G-network coverage and modernization of broadband internet infrastructure.

Our orientation to customer experience enhancement is the second key factor. Considerable decline in churn rate and inflow of new customers are the main result of our investments in network quality improvement. The subscriber base growth is a serious growth driver. In the third quarter of 2014, our subscriber base in Armenia grew by 9% as compared to the same period of 2013 and the churn reduced by 10% and it directly results from service quality improvement.

Naturally, the investments in service quality ensure the increase in financial indices. In particular, our revenues from mobile internet as of the year grew by 30%.

- What is VimpelCom planning to do on the Armenian market? What should subscribers expect in 2015?

- In Armenia as well as in other countries, we are observing a positive dynamic in the mobile and broadband internet segments. Growth in voice services has almost stopped while the internet is growing at a rapid speed and becomes the key factor of further development and in its turn, it requires investments.

The internet becomes more important for the customers, voice services have almost become “applications” to the internet. So, the subscriber first of all purchases this or that tariff plan for the internet getting a set of voice, SMS and other services as a supplement. We started actively promoting package solutions in Armenia.

- Can we say that your landline network in Armenia will be mostly used not to provide voice services but as an internet provision channel?

- As long as people need traditional (landline) services we will undoubtedly be providing them. It’s especially critical for remote settlements.

However, mobile internet will be developing at a faster rate than the landline as it’s faster and more convenient. Not only voice services but game consoles and TV “move” to the internet. For instance, I personally watch only football on TV and get the remaining TV content via internet through video on demand technology.

- This year, mobile number portability system (MNP) which didn’t entail any tangible changes on the market was introduced in Armenia. In your opinion, how justified were the operators’ investments in its introduction?

- MNP gives customers an extra option of freedom of choice and it’s good. As for investments, Armenia has introduced the MNP in a rather economical and efficient mode as compared to other countries.

In fact, we observe very moderate interest in MNP: less than 0.5% of the country’s people used the service. Consequently, it didn’t lead to any shifts on the market. At the same time, Beeline is a leader in Armenia in terms of requests to shift to our network: much more people moved to our network than moved from it to other operators. We know that customers currently stay with us as they are not afraid to lose their number, rather, they consciously opt for Beeline services.

- How do you assess the competition on the Armenian telecommunication market?

- There is rather aggressive competition in Armenia and as a result, the prices are low. It’s good for customers but operators should have the chance to make investments. Sometimes it may seem that the margin of telecommunication operators is high but we should consider that the major share of revenues is invested in development of networks.

- 10-15 years ago, people strived to get as much information as possible. But nowadays, the volume of the content has grown so much that people don’t cope with the “avalanches” of information, however, not being able to overcome internet addiction. Do you think it’s possible to find some golden mean to remain a modern man without becoming a slave to the unlimited options provided by up-to-date technologies?

 - I think the abundance of information gives people a freedom of choice which is critical. However, people should know how to use this freedom. We observe a shift in consumer behavior: people formerly consumed without being selective while now they start picking up what is really interesting for them. And as an operator, our objective is to ensure the necessary quality and infrastructure.

- We have heard that you are an Armenian descendent. Please, tell us about it in more detail.

- Yes, my grandfather (mother’s father) is Armenian. His name was Khristofor Cherchepyants. Unfortunately, he passed away long time ago but I remember him very well. He went through the whole Great Patriotic War:  he joined the army as a solider and came back as a Major. He used to tell me stories about the war and I recall them very well. He was a very lively person, adored big gatherings, played various musical instruments. Undoubtedly, visiting Armenia, I sense it’s a land of my ancestors and it’s a very pleasant feeling.

Ara Tadevosyan talked to Mikhail Gerchuk