Operational Results

Infrastructure

MegaFon is the unrivalled leader in Russia by number of base stations, with1
193,300
stations

2G

1990s

Voice and SMS

3G

2000s

Mobile data and high-quality voice services

MegaFon was the first in Russia to

provide 2G services in all Russian regions

roll out a full-scale commercial 3G network

4G

2010s

Mobile broadband and full-scale
all-IP network

launch the first 4G network (2012)

launch a commercial VoLTE network (2016)

demonstrate a data rate in excess of 1 Gbit/s on a commercial smartphone (2018)

5G

2016–2020

Ultrafast mobile internet, full-scale support of IoT ecosystems, and ultra-reliability

demonstrate a record connection speed of 2.46 Gbit/s on a smartphone in a 5G network (2019)

launch a 5G lab – in collaboration with Saint Petersburg State University’s Graduate School of Management (2019)

launch international 5G roaming (2020)

Network expansion

We are committed to maximising the speed and reliability of communications services for our subscribers, and are continuously investing in infrastructure and innovative technology.

MegaFon is the unrivalled leader in Russia by number of base stations, with 193,300 stations at end-2020.

MegaFon’s base stations in 2016–2020, ‘000
4G/LTE coverage in 2016–2020, %

Infrastructure development at MegaFon is primarily focused on the Company’s core business:

  • Developing the 4G/LTE mobile network
  • Expanding the existing virtualisation infrastructure and rolling out new infrastructure
  • Increasing the coverage and capacity of the backhaul network

At the same time, MegaFon continues to develop the digital ecosystem, introducing both proprietary and partner solutions. We are constantly working to improve the quality of our services and reduce the number of accidents that can affect them.

Key outcomes of MegaFon’s infrastructure development efforts in 2020:

  • Deployment of the federal IMS architecture2 for the commercial launch of VoLTE in all Russia regions – a breakthrough in promoting the new technology and making the highest quality voice communications available to subscribers
  • Signaling network upgrade, which helped improve reliability, reduce data centre costs, enable protection at international gateways, and activate new functionality for balancing and optimising signaling traffic
  • Replacement of messaging platforms (SMS, MMS, SMS/MMS anti-spam). As a result, the reliability of respective services for subscribers was increased manyfold and the risks of using obsolete platforms were eliminated
  • Construction of three new nodes and upgrade of existing nodes of the packet-switched core network, which ensured the highest quality of mobile data service, strengthened MegaFon’s leadership in terms of Internet connection speed, and increased reliability though the implementation of multilevel redundancy architecture

MegaFon’s infrastructure steadily resisted COVID-19 challenges

In 2020, MegaFon successfully coped with the increased network load during the COVID-19 surge in spring and in subsequent periods. Following a massive shift to working from home, mobile traffic grew and its geography changed dramatically. Our specialists worked online to analyse load redistribution, launched base stations as needed in places where unusual activity was identified, and expanded backhaul operations, which allowed us to keep the quality of our services as high as possible.

4G/LTE networks

In 2020, we continued to expand our 4G/LTE coverage, increased the number of 4G base stations by 20.5% to 73,100, and carried on with our programme to upgrade existing base stations. At the year-end, the 4G/LTE standard became available to 85% of Russia’s population.

In the reporting year, we expanded our VoLTE footprint and improved its coverage. The number of Russian regions where VoLTE networks were launched totalled 81 at the time of the preparation of this Report. We also continued to invest in the development of LTE Advanced, a technology that supports data rates of up to 300 Mbit/s.

In 2021, we will primarily focus our LTE network development efforts on increasing 4G coverage in low and medium frequency ranges while expanding network capacity and improving indoor coverage.

3G networks

The number of our 3G base stations remained virtually flat y-o-y at 50,600.

In the future, we plan to migrate traffic and bands from 3G to 4G, as well as to prepare for 3G phaseout in the longer term. Further development of 3G will be focused on UMTS2100 spectrum refarming to LTE-2100 networks as necessary to maintain the current service level and network capacity.

2G Networks

In 2020, the number of 2G base stations stood at 69,600. Key plans for 2021 include GSM spectrum refarming to LTE-900 networks in order to improve network coverage in rural areas and urban buildings and ensuring stable coverage for VoLTE calls.

Developing 5G networks


In 2020, MegaFon and other telecoms operators cooperated primarily on 5G network planning and joint evaluation of radio frequency spectrums to make the most informed decision regarding frequency regulation required for full-scale deployment of 5G in Russia.

Operators devoted significant efforts to the matters of spectrum allocation by the state in the 700 MHz and 3.4–3.8 GHz spectrums. Dynamic spectrum resource allocation for 5G using the DSS technology was also actively discussed3.

No decisions on the above matters were made in the reporting period, and in 2021, MegaFon, jointly with other operators, will continue the dialogue with regulators.

5G DreamLab

Throughout the year, the digital laboratory, launched in September 2019 on the campus of the Graduate School of Management at Saint Petersburg State University to develop new services based on 5G technology, continued its operation. Its first minimum viable products were presented by six teams as early as in mid-2020.

For more information, see the HR Management section

Tower infrastructure

JSC First Tower Company (FTC) is a MegaFon subsidiary set up in 2017 to provide effective management for the Company’s tower infrastructure, increase its return on CAPEX invested, and expand into the fast-growing tower lease market.

The company employs professionals with the necessary skills in telecoms, property management, IT solutions, and infrastructure construction and expansion. FTC’s resources include a shared back-office hub in Samara, regional competence centres managing land lease contracts for towers, and a call centre handling enquiries from external counterparties, suppliers and customers. Strong collaboration between all units of the company has made for significant efficiencies in customer service.

To maintain a high level of service, FTC maintains a company-wide database of assets and installed equipment which is managed by a dedicated IT platform.

Backbone and backhaul networks

Continuous expansion of its fibre-optic (FOCL) network allows MegaFon to provide a better subscriber experience, including improved mobile network capacity and increased mobile data speeds. In 2020, the total length of MegaFon’s backbone networks reached 143,600 km, up 2.3% y-o-y.

In 2020, MegaFon completed the construction of backbone coherent lines on the Voronezh–Lipetsk, Aksai–Volgograd, Kazan–Tsivilsk, Samara–Ufa– Yekaterinburg, and Novosibirsk–Kemerovo routes. The launch of the lines enabled further rollout of the ASON4 protection technology on the DWDM5 backbone network in central Russia and reduction of latency to the Far East regions.

In addition, in 2020, MegaFon implemented several other projects to develop backbone and backhaul networks, primarily:

  • Completion of the project to integrate TDR cards into DWDM equipment, which enabled operators on duty to obtain data on the distance from a MegaFon node to the point of cable fault. The solution was implemented on all the backbone lines supporting such technology
  • Migration to 100 Gbit/s interfaces in the PS Core6 segment on backhaul network equipment
  • Reorganisation of PS Core to save interfaces and simplify the scheme by reducing transit nodes in the Caucasus, Siberian and Far East branches of the Company. As a result, the scheme is flatter and requires fewer further upgrades
  • Expansion of satellite channel bandwidth in the Chukotka Autonomous Area using the subsidy provided by the state, which enabled MegaFon to launch LTE base stations in remote settlements within the area and provide fast Internet to local residents
  • Transfer of more than 2,000 LTE base stations with a 100 Mbit/s port to 1 Gbit/s interfaces, which enabled an increase in the volume of transmitted data and provision of packet data transmission services in these locations
  • Upgrade of more than 2,700 RRLs7 and installation of about 1,500 new IPBH8 nodes to increase network capacity

In 2021, we plan to launch IPv69 in the mobile segment, continue to optimise the backhaul network, dismantle obsolete equipment on area and backbone networks, as well as prepare the infrastructure for GF Cloud10 integration, and implement a number of other projects.

Length of backbone and backhaul FOCL network in 2016–2020, ‘000 km

Network quality

MegaFon boasts an advanced, extensive infrastructure, and a significant edge in spectrum availability, which allows us to provide a highquality voice experience and record-high mobile data speeds.

MegaFon is the unrivalled leader by average data transfer rate in Russia11.

In 2020, MegaFon continued network and service optimisation and achieved improvements in voice connectivity and mobile internet in general. We also significantly expanded the geography of VoLTE availability and continued to implement EVS (for more details, see the 4G/LTE Networks and Mobile Services sections).

The Company continued to implement its BCM system designed to create a single approach to business continuity to minimise reputational or financial losses in crisis situations. In 2020, we extended the system application in the Shared Services Centre, providing integration across 15 key areas. In 2021, we will focus on developing approaches to design, regularly testing emergency recovery plans at our data centres and continuously working to improve service reliability.

Connectivity metrics in 2018–2020, %

In 2020, MegaFon became the leader in the Russian market by the VST indicator12 measuring the speed of video transmission , the main service used by our digital subscribers13.

In 2020, we also continued to scale up the CEM14 system deployed in Moscow and the Moscow Region. The project was extended to Saint Petersburg, the Leningrad and Samara regions, the Krasnodar Territory, and the Republic of Adygeya, which allowed us to improve the quality of services for our customers in these regions and roll out the relevant experience throughout the network. In 2021, we plan to expand the system’s application scope to build BigData models, and ensure the efficiency of customer service processes, and network operation and development.

Our key objective for 2021 is to improve subscribers’ perception of our services assessed through NPS15 and CSI metrics at the “quality of communications” touchpoints, through customer experience improvement initiatives and introduction of new tools (development of the CEM system, Smart models, BigData, etc.). In doing so, we will continue to examine changes in our subscribers’ needs to respond to them, and we intend to maintain our leadership by VST.

Service delivery and infrastructure operation

The Company operates the Global Network Operational Centre (GNOC) providing round-the-clock monitoring of the status of the network, IT infrastructure, and all of the Company’s external and internal services across Russia, promptly responding to reports on communications failure or deterioration, and providing technical support to all MegaFon customers and employees.

In 2020, the GNOC was mainly focused on introducing new types of emergency reports regarding quality, as well as monitoring VoLTE and VoWiFi performance.

To improve the network quality, we analyse the needs of our subscribers on a regular basis. In 2020, we conducted extensive focus group research on communication quality. We actively used the research results in the operation of a new Agile team, Mobile Communications as a Product.

GNOC’s key performance metrics in 2018–2020

Number of calls made, ’000


Automation, %

GNOC’s key activities in 2020:

Improving the quality of service delivery
  • Adjustment of traffic transfer throughout the network in accordance with quality classes was carried out
Enhancing network reliability
  • 6,640 DDoS attacks with a total capacity of 55.3 Tbps were prevented
  • Fixed broadband access aggregation sites were reserved in 20 Russian regions
  • A network resilience test was run in 30 regional offices of the Company to ensure the provision of basic services to subscribers in case of major emergencies
Increasing the level of automation of tasks relating to operation, monitoring, and prompt localisation of emergencies
  • NSO system core (IP activator)16 was launched, with 15,000 network devices connected to it
  • Scale-up of the REX IP routing analysis system 17 ensuring integration of backhaul network nodes was launched, with a view to 2024
  • Methodology for assigning criticality levels based on the BCM model was implemented
Developing technical support processes for our customers and employees
  • A new process for handling requests in locations using heat maps was launched
  • The integration of technical support systems between MegaFon and NETBYNET was launched
Developing monitoring processes

235 new types of emergency reports were introduced to streamline monitoring and subsequent registration of incidents

Data centres

Data centres are an integral part of the MegaFon network. At the end of 2020, MegaFon’s distributed data centre network included 121 facilities across Russia.

In the reporting period, MegaFon continued to build and upgrade data centres, improve their operational efficiency using new architecture, and optimise the existing data centre network.

In 2020, we launched a new data centre in Bryansk and optimised data centres in Saint Petersburg.

Development of IT infrastructure and digital services

The IT infrastructure development function at MegaFon is responsible for the operation and development of technology platforms used to run services. The Company maintains platform operability round the clock, enabling timely responses to potential threats and prevention of service degradation.

During the year, a number of digital services projects were implemented, including the following key projects:

  • Migration of all B2X customers to the unified billing system
  • Launch of tariff and product offers tailored to individual customer preferences
  • Launch of joint products with Yandex, Mail.ru Group and Okko using the Microservice Factory partner integration service
  • Successful implementation of the Paperless-2020 project (for more details, see the Environment section)

Migrating all customers
to Unified Billing

In 2020, B2X customers successfully migrated to the unified billing system. Mass market subscribers had migrated to the system back in 2018. The project was implemented in partnership with Nexign.

The project to migrate all customers to the unified billing system was launched in 2015 and became one of MegaFon’s major projects. It laid the foundation for further development of billing functionality and reduction of start-up time for key business initiatives while achieving a significant improvement in operational performance compared with earlier solutions. The project completion sharpened MegaFon’s competitive edge while reducing the costs of billing solutions.

Developing our brand and marketing communications

In 2020, despite COVID-19 restrictions, the MegaFon brand was able to drive its customer satisfaction (NPS) levels through a customer-centric, focused and flexible approach.

In 2020, MegaFon ranked
second
second among Russian telecom companies18 in the following categories:
  • Advertising Visibility
  • Spontaneous Advertising Awareness
  • Brand Consideration
No. 2
by value among Russian telecoms brands
No. 6
among strongest Russian brands19
No. 16
by value among all Russian brands19

In 2020, we conducted a major strategic audit of MegaFon’s communications, brand, and product offering amid the COVID-19-driven changes in consumer behaviour and preferences. It identified key opportunities to strengthen the emotional connection between the brand and its audience, promote clear and consistent integration of the brand message and promise into communications, and gain universal and holistic customer insights.

According to Brand Finance, in 2020, MegaFon was ranked the second most valuable among all Russian telecoms brands, and sixteenth among Russian brands overall. On top of that, for the third year running MegaFon was ranked among the Top 10 strongest Russian brands at No. 6 in 2019 and 2020.

According to Mediascope and Brand Health Tracking study, in 2020, our brand health metrics were recognised as the most effective among Russian telecom operators in terms of investment performance. We ranked second in the advertising awareness ranking for the second year running. Furthermore, MegaFon became the most efficient operator in terms of value in the Brand Consideration aspect.

A strong, highly recognisable brand is MegaFon’s key differentiator.

The Company’s motto honours the customer:

MegaFon. Starts with You

Therefore, brand development and relevant communications are centred around our subscribers, and their needs and experiences, regardless of changes in the business environment. By delivering individually tailored communications and leveraging our informed insights into customer needs, the MegaFon brand successfully relates to our customers.

Creative communication

In 2020, MegaFon overhauled its creative communication framework, charting a new path for development. At year-end, we had already seen early positive dynamics across metrics such as advertising attractiveness, message delivery, and persuasiveness.

In particular, we revised our approach to delivering the message about the Fastest Mobile Data, MegaFon’s fundamental functional differentiator. To maintain and strengthen MegaFon’s leadership on this metric, we launched a series of groundbreaking ‘Abnormally Fast’ commercials delivering a customerrelevant message that evokes trust and has the potential to improve the perception of the Company.

The launch of our flagship #NoOvercharges tariff line prompted us to design a series of creative communications that became the most recognisable narrative among mobile operators20, proved the catchiest for the audience, and delivered the intended message accurately and clearly.

Digital development

2020 was the year of digital for society, and as a digital brand, MegaFon placed particular emphasis on staying in touch with customers, supporting them, and engaging them in communication. We were among the first brands to respond to pandemicrelated restrictions and offer our target audience various projects to help them navigate through this period.

In 2020, we implemented a few special projects on social media, with a total of over 2 billion impressions. These projects included MegaFon Rave 2020, MegaFon Start and many others. We continued to have a highly visible presence in eSports and gaming, and launched various new projects. We also ran a contest with prizes in TikTok to support the New Year promotion campaign of the MegaFon application, with a total reach of 1.8 billion views.

Sponsorships and partnerships

We have fully adapted our consistent policy of promoting engagement in MegaFon’s sponsorships and partnerships in response to a highly uncertain COVID-19 environment, and offered our customers a new experience of integrated communications at the intersection of digital and real life. As a result, the MegaFon brand has improved its engagement metrics as well as its NPS.

In 2020, amid persistent uncertainty, we promptly redesigned our sponsorship strategy in response to restrictions and cancellations of festivals, sporting events and concerts, and avoided financial loss while maintaining excellent relationships with key event organisers. We also moved some projects online where possible, having greatly expanded the relevant toolkit.

Sale of products and services

Retail network

In 2020, MegaFon remained strongly focused on improving the efficiency of its retail network managed by MegaFon Retail.

By the end of 2020, the total number of MegaFon Retail stores decreased by 6% y-o-y to 1,890. The number of franchised stores decreased by 10% to 1,862. The reduction in the store count was mainly due to a significant drop in footfall amid the COVID-19 pandemic, despite the fact that the stores were able to stay open in many cities during the lockdown. This also led to lower subscriber additions in the reporting period.

To boost store efficiency in 2020, we changed our approach to planogram development, expanded the display of portable devices and began to roll out an automated merchandising system. We also centralised the production and logistics process for printed products, driving cost optimisations.

The retail network’s key performance metrics in 2018–2020

MegaFon Retail stores

Number of retail stores at the end of the period

Franchised stores

Number of retail stores at the end of the period

In 2020, MegaFon Retail continued to prioritise the expansion of its in-store product and service offerings for its subscribers:

  • Subscriptions to the most popular video, gaming and music services were launched, along with sales of fitness memberships, subscriptions to online schools, various anti-spam packages, and many other services
  • Various new insurance and financial services from leading Russian providers were offered
  • Payment services were significantly expanded, including through terminals, in cooperation with dozens of leading Russian banks

Smartphones have remained the device of choice in 2020 – their share in the total sales of devices in roubles increased by 0.5 p.p. to 96.1%, and 4G smartphone sales grew by 4 p.p to 97% of total units sold. The Samsung, Xiaomi, Huawei/Honor, Apple and ZTE brands were the leaders by the number of smartphones sold.

The average price of a smartphone sold through MegaFon Retail increased by 13.5% in 2020 due to a higher proportion of expensive models in the product mix, while the average accessory price increased by 3%. The Company continued to upgrade its accessories procurement system and introduced tighter requirements for product and packaging quality in 2020.

In 2020, MegaFon Retail stores:

sold
>2 million 21
smartphones


~6 million 21
accessories


added
>5 million 21
subscribers

In 2020, MegaFon Retail continued to develop its value-added services:

Insurance

+9%

Device set-up

+88%

Terminal payments

+20%


Stores of the Future

In 2020, MegaFon Retail continued to actively upgrade its retail network by opening 273 stores in the new Standard format with improved external store design. The new format offers an expanded range of products and is focused on digital solutions and products matched by new skill profiles of store assistants, including a stronger emphasis on service mobility and speed through the use of tablets.

Experience Store

Experience Stores are new format stores with a focus on the digital customer experience. The store is divided into dedicated areas themed around cutting-edge technologies and three spaces entirely new for telecom retail: a customer service centre, a blogger studio and an express health check area.

The new format has a much bigger area than the Standard format, enabling store zoning, including a dedicated self-service area. The project is expected to enhance customer experience while promoting new types of digital services and products.

The first store in the new format was piloted in 2019 at Moscow’s Metropolis Shopping Centre and has already delivered strong results, posting average sales figures several times higher than those seen at regular mall-based stores. In 2020, we opened a second Experience Store at Columbus Shopping Centre in Moscow.

Online sales

In 2020, MegaFon continued to develop its online sales, with the number of online orders increasing by 97% to 428,000, total sales up by 104% to RUB 5.9 billion and the number of visitors up by 28% to 23.7 million.

This surge in sales was largely due to the launch of an online store on AliExpress’ Tmall marketplace at the end of 2019, with MegaFon becoming one of the platform’s biggest Russian merchants. Higher demand for delivery services amid the COVID-19 pandemic and the enhanced functionality and service also greatly contributed to the online store’s stellar performance.

In 2020, MegaFon’s online store continued to expand its fast delivery service by opening physical stores in five more regions, bringing their total count to 43 by the year-end. We also continued to deepen partnerships in logistics, launching new order delivery options by teaming up with the PickPoint automated parcel locker network and the Yandex.Delivery service. We started to offer new in-demand solutions, such as shifting the execution of all loan contracts for online store orders to a paperless (text messages) channel, launching a service for remote replacement of lost SIM cards in partnership with Russian Post’s EMS, and many others.

In 2020, MegaFon continued to focus on improving the customer experience of the online store service and piloted a number of voice analytics use cases to boost the quality and efficiency of customer communications.

In 2021, we plan to continue structural changes to the online store, focused mostly on strengthening our development and project management capabilities. Offices with their own courier delivery service will be opened in several more Russian regions, and partnerships will be deepened to expand order pickup options. Changes to the online store’s website functionality and back-office are also planned as we seek to improve user experience and conversion rates.

Many of the online store’s order processing and customer service business processes were redesigned to match the new, COVID-19 environment. All possible customer journeys were made as touchless as possible.

Customer satisfaction

MegaFon’s strategy is to provide our customers with the highest level of satisfaction. To achieve this, we are continuously developing our processes and services to make them more intuitive, convenient and stable, introducing new technologies and expanding our online presence.

At the same time, employee satisfaction also became a customer service priority in 2020. This was reflected in a rise in staff motivation, as well as in the number of initiatives aimed at creating a more comfortable working environment and providing employees with IT services best suited to their tasks.

The key highlight of 2020 was the introduction of speech analytics, which has redesigned all service processes. MegaFon is now able to analyse tens of thousands of queries in mere minutes, getting to the bottom of the customer’s concerns and quickly changing processes, based on their veiled or expressed wishes.

Another 2020 highlight was the merger of NETBYNET and MegaFon’s service processes, which led to the redesign of all processes in our fixed-line business within just a few weeks. This move improved overall efficiency and increased customer loyalty; specifically, the tNPS of NETBYNET customers on our social media service increased by 17 p.p. over this compressed period.



Key focus areas
in customer service
in 2020:



1

Increasing tNPS22 for all service channels

2

Achieving leadership in customer retention efficiency

3

Raising the quantity and quality of customer issue resolutions through our ELENA virtual assistant

4

Boosting service quality and efficiency through synergies between NETBYNET and MegaFon

Call centres and other subscriber services

In 2020, MegaFon’s call centres handled 116.9 million calls through their voice and multimedia channels, down 10% y-o-y. The decrease was primarily due to our increased customer focus, which made the Company’s products and services more transparent and user-friendly.

Over the reporting period, MegaFon’s call centre operators manually processed 35.5 million calls, while the rest were processed automatically. First-line support specialists also saw their load lifted: in the voice channel by 27% and in the multimedia channel by 17%. Set against an overall increase in service efficiency, this important indicator confirms that the Company’s approach to resource allocation is on track.

Most of the workload is shifted to ELENA, our virtual assistant, which ‘learned’ how to handle more complex customer issues this past year.

The development of MegaFon’s service channels in 2020 was fixed on one goal: to provide modern and convenient tools to two interrelated parties – the customer and the employee. We focused on automating all service processes to accelerate and improve issue resolution for our customers.

Every front-line, customer-facing employee in our customer service team has been set up with a personal account in 2020, where they can see all key metrics in real time. This allows them to stay laser focused on targets, keep track of their commission, and keep on top of their training schedule.

2020 results:

116.9
million calls
35.5
million calls
processed by support staff
>80%
FCR23

Speech analytics

The introduction of speech analytics in 2020 was a real breakthrough in our efforts to drive service quality and improve call analysis. The tool allows the user to quickly look up dialogues based on keywords, evaluate the performance of operators, and analyse customers’ requests and needs.

The biggest benefit is the speed and quality of results: in a few minutes, a fully actionable cross-section of the customer voice derived from tens of thousands of calls can be established on the selected topic. By leveraging this depth, correct, accurate and fast management decisions can be taken.

In addition to their obvious application in service quality control, MegaFon also uses voice analytics to improve products and services based on customer feedback, improve sales quality, predict churn, and improve employee training and new knowledge application. In 2021, MegaFon plans to use the new tool to test several further hypotheses from different areas of the Company’s activities.

IVR telemarketing sales

In 2020, MegaFon focused on increasing the efficiency and quality of its telemarketing by rolling out innovative tools. The biggest change came from the full-scale roll out of voice bots to drive growth from within our customer base. This area of business built up momentum along the year, contributing a solid portion of total sales by year-end.

In 2020, we paid particular attention to the quality of our voice bots’ conversations, making communication with the programme user-friendly and seamless for customers.

This has allowed our employees to focus not only on handling more complex cases but also on seeking out new and effective sales approaches. They leveraged speech analytics to mine for the best cases with potential to scale quickly.

Thanks to these bots, telemarketing employees have benefited from a new, state-of-the-art training tool in 2020. MegaFon operators are now practising their sales skills on voice simulators: the bots help them to build the right dialogue with the customer.

In 2020, the voice bot channel:

130
product offers in the portfolio
26%
month-on-month increase in coverage
34%
month-on-month sales growth
57%
+ 9 p. p.
tNPS in telemarketing in 2020

MegaFon app

The MegaFon application is the key element of our digital ecosystem. The app underwent a full transformation in early 2020: the structure and design were overhauled, the platform was updated and new features were added.

Users could view ‘stories’ set to music or featuring film clips for information or entertainment, with fun facts about the world around us and new opportunities for customers. They have clocked up more than 30 million views since launch.

The most radical changes can be seen in the most important sections for the customer: the homepage with a run-down of basic information about the number, the top-up page with an option for instant transfer via Apple Pay or Google Pay, and the interactive ‘Dlya Menya’ (‘For Me’) section that sends the user personalised gifts and offers.

These changes drove a 28% increase in the app’s monthly audience, while the number of signups to MegaFon VAS services, tariffs and partner services in this channel grew 2.5 times. With the number of visits and times games are played tripling, the ‘Dlya Menya’ section is now the second most popular section of the whole app.

The MegaFon mobile app will become the beating heart of MegaFon’s entire product ecosystem in 2021, making all digital services available to the customer at the tap of an icon.

In 2020, the MegaFon mobile app:

won two Runet Rating awards in the Best Brand App and Best Service App categories
was ranked in the
top 5
Utilities apps on the App Store

ELENA virtual assistant

The ELENA virtual assistant has traditionally played a key role in MegaFon’s customer support service.

In 2020, ELENA saw a pressing new impetus for development. First of all, we launched the service migration to micromodule architecture, which – in the context of the fast-changing technology landscape – will enable components to be quickly replaced with more advanced ones without compromising on quality and automation.

The second landmark development for ELENA was a new algorithm responsible for understanding the thrust of the customer’s question. Developed using neural networks, the algorithm enables the model to consider the customer’s question as a whole, rather than as individual words and phrases.

ELENA’s updates in 2020 helped to boost automation in our text channel to 77% and in our voice channel to 66%, while customer loyalty to bot-based customer service also saw a boost: the tNPS of the ELENA virtual assistant increased by an order of magnitude across all channels.

ELENA will become better at handling more complex and customer-specific requests in 2021, thanks to a new dialogue engine driven by software including predictive algorithms.

In-store service quality

MegaFon’s retail network is a key customer service channel.

In the spring of 2020, at the height of the COVID-19 pandemic, we launched new options for customers to remotely resolve issues that previously required a visit to a MegaFon store:

  • The ability to remotely update credentials through call centres, the mobile personal account or the Company website
  • A remote SIM card replacement service
  • Adjustments were made to the system notifying customers that their SIM card needed replacing, and that they should visit a store
  • Nationwide SIM card delivery went online at our online store

We continued to actively promote the mobile personal account in 2020, informing customers about its features. We also simplified the interfaces used for contract registration and transfer, as well as the splitting and merging of personal accounts, a move that increased convenience for employees and accelerated SIM card issuance for the B2C and B2X segments.

Offline B2C customer service interface training was converted to a video tutorial format in 2020.

Our new Standard and Experience Store formats introduced extra services:

  • Showing the customer’s receipt on a tablet, with the option to send it to the customer’s phone number and/or e-mail
  • An option for customers to electronically sign documents via mobile devices, avoiding the need to use a printed version
  • Offering customers the opportunity to leave feedback on their in-store experience by scanning a QR code on a tablet, which will be automatically sent for processing
72%
tNPS retail network in 2020
+ 10 p. p.

Social media

Social media remains a key tool in serving our customers and promoting MegaFon’s products and services, as customers are more comfortable contacting us through the apps and platforms they are used to.

In 2020, MegaFon expanded its presence in online channels. The traditional social networks of VK, Facebook, Twitter, OK, Mail.ru, Instagram and YouTube have been joined by popular online stores and online infotainment sites. We reply to customers’ questions when they leave reviews on the App Store and Google Play Store.

Subscriber protection from unsolicited messages and fraud

MegaFon pays close attention to customers’ security and aims to protect them from unsolicited and suspicious messages. MegaFon follows its corporate bulk messaging requirements and is guided by the 2014 amendments to the Federal Law No. 126-FZ On Communications dated 7 July 2003, which enable operators to block any unwanted bulk messaging. MegaFon also uses the nationwide Anti-Spam system.

In 2020, we improved the way customers can inform us that they are receiving spam by text message. The service allows customers to send a complaint by text and receive recommendations on how to avoid unwanted messages. The system automatically collates all the requests, and analyses the sources and the extent of the bulk messaging in order to prevent them in the future.

Subscribers are now able to report suspected fraud on MegaFon’s Safe Communication portal, where they can also find information about scams and ways to guard against them, and an option to download anti-virus software.

In 2020, MegaFon:

blocked
>413 million
spam text messages
identified
>49,000 websites
containing mobile malware and phishing websites
handled
>5,000 subscriber complaints
about malware
sent
>262,000 text messages
alerting subscribers to potential viruses on their mobile devices


handled
>14,000 subscriber complaints
about third-party fraud
blocked
>172,000 phone numbers
suspected of being used to commit fraud, including numbers used to register multiple accounts on social media
cancelled
~4,300 fraudulent phone number
links to social media accounts

Products and Services

Mobile Services

Mobile data remain a strategic priority for MegaFon, with efforts in this segment focused on delivering better customer experience to heavy users of mobile data.

In 2020, MegaFon won the Ookla Speedtest Awards as Russia’s fastest mobile data operator24 for the fourth year in a row.
Mobile data users
36.4 million
+ 4.6%

In 2020, the number of MegaFon’s mobile data users increased by 4.6% y-o-y to 36.4 million, and the share of mobile data users increased by 1.6 p.p. to 51.7%. The increase was driven by the launches of new MegaFon tariff lines to meet the demands of customers, including those caused by COVID-19 restrictions, as well as the general trends of traffic growth and increased usage of digital services.

In the first half of 2020, we launched our Always in Touch #NoOvercharges tariff line, which allows subscribers to roll over any unused data indefinitely, as well as our ‘Zakachaisya!’ (‘Get Downloading!’) tariff line, which offers unlimited plans for dataenabled devices, and a number of other solutions.

In addition to launching new products and services, in 2020, we set our sights on giving subscribers greater transparency and control over their communications spend by reviewing our policy on automatic rollover of unused minutes and data, adjusting voice pricing and adding a number of easily activated extension options, which subscribers can purchase to increase their allowances of voice minutes and data.

Always in Touch
#NoOvercharges
new tariff line

In May 2020, MegaFon launched a new tariff line, Always in Touch #NoOvercharges. MegaFon was the first in the Russian market to offer unlimited data rollover plans to subscribers.

For customers on the new tariff plans, WhatsApp, Viber, eMotion, Facebook messenger, TamTam and Snapchat do not count towards the customer’s data usage and are accessible even with a negative balance. Also, users of the new tariff line automatically get a free package of 50 TV channels, and watching MegaFon TV does not count towards the customer’s mobile data allowance.

Subscribers can choose one of the five basic or two premium tariffs, all with different structures, to suit their specific needs.

The launch of #NoOvercharges in 2020 ensured steady growth in Net Promoter Score (NPS) among users taking up a subscription and moving on to basic plans. In addition to higher NPS, in the second half of 2020 we increased the share of new subscribers who maintain their subscription until they become loyal consumers.

Developing VoLTE

In the reporting year, we expanded our VoLTE footprint and improved its coverage. The number of Russian regions where VoLTE networks were launched totalled 79 at the time of the preparation of this Report.

To improve voice quality on VoLTE networks, MegaFon continued to roll out EVS25, an advanced codec capable of covering the full dynamic range of the human voice to make phone calls seem as though the callers are standing right next to each other.

Developing products and services for data-enabled devices

Data services remain a priority for MegaFon, and in 2020, we continued to focus on data-enabled devices.

In April, we launched ‘Zakachaisya!’ (‘Get Downloading!’), a new tariff line that offers unlimited plans for dataenabled devices, to meet the needs of different user segments based on their consumption patterns. The tariff line became particularly popular with subscribers that work remotely with no residential broadband. These tariffs without speed restrictions provide internet connectivity comparable to a wired connection.

In July 2020, MegaFon launched Smart Watch and Smart Watch for a Year, new tariff plans targeting subscribers using SIMs in 4G-enabled children’s and smart watches with increased data usage.

In 2020, we also expanded the reach of our Create Wi-Fi project, enabling subscribers to lease or buy a router that can use a MegaFon SIM card to provide access to unlimited mobile data instead of using residential broadband, not only in Moscow, the Moscow Region, Saint Petersburg and the Leningrad Region, but also in other regional offices as well.

Roaming services

As at the end of 2020, MegaFon provided international roaming in 230 countries (including respective territories) through 609 roaming partners, including 89 double partner countries, meaning they have at least two partner networks available to offer a full range of services to our roaming customers. Our global roaming footprint increased over the year, with three new countries added for GPRS roaming, three countries for CAMEL roaming, and three countries for LTE roaming.

In February 2020, MegaFon was the first Russian operator to introduce international 5G roaming , available to our travelling customers
in17 countries by the end of 2020.

In 2020, communication services for the price of a cup of coffee (on the domestic plan terms) were available to MegaFon subscribers in most countries of the world (the list was expanded to 158 countries and territories over the year). Calls to Russia, incoming calls and mobile data are all priced as in domestic plans. Roaming fees are charged only for the days when the subscriber actually uses the mobile services, while the amount charged and the volume of services priced under the domestic plan depend on the country visited.

Starting from May 2020, subscribers on the premium plans of the new Always in Touch #NoOvercharges tariff line can benefit from our free voice roaming services. For each month on the plan, customers on the VIP tariff get one day of free voice roaming, while subscribers to the Premium tariff get two days.

Also, during the period of initial COVID-19 restrictions, MegaFon waived charges for roaming calls to the Russian Ministry of Foreign Affairs, helplines for Russian citizens abroad, and a number of airlines and other organizations to help facilitate their return home.

In 2021, we plan to continue the development of our roaming services based on the double partner principle, accelerate the rollout of 5G roaming, and launch and develop VoLTE roaming.

Fixed-Line Services

MegaFon provides its fixed-line services for the mass market through its subsidiary NETBYNET26 (under the WiFire brand). Our customers are offered highspeed broadband, digital TV and local telephony, as well as virtual private network (VPN) connectivity and line leases. The 2019 rebranding of WiFire facilitated the integration of WiFire’s business into the MegaFon brand during 2020. We are now focused on promoting services across the entire mix of MegaFon-branded channels, and planning to add new in-demand solutions to our fixed connectivity portfolio in 2021.

Our 2020 key focus areas in fixed connectivity included the development of networks through FVNO27 partnerships in cities outside NETBYNET’s footprint, as well as targeted expansion of coverage in our key cities and growing the number of private properties connected to fixed lines. The biggest growth was seen in spring and summer 2020, when the COVID-19 lockdown was in place.

Fixed-line communications for the mass market

We continued to develop ‘Obyedinyai!’ (‘Combine!’), the new converged product launched by MegaFon and NETBYNET in 2019 and combining mobile, residential broadband and TV services. In 2020, new tariff plans, ‘Combine! Two Data Plans’ and ‘Combine! Everywhere’, were launched to tap unmet consumer needs.

For customers wishing to stay on their current mobile plans while at the same time taking up the attractively priced, hassle-free residential access service, we launched the #ForHome tariff line allowing them to purchase and activate the service using their mobile personal client account. New customers not yet using our services can also subscribe to our MegaFon residential access service, while existing subscribers are offered a significant discount off the access service price.

‘Combine!
Two Data Plans’

This new tariff bundles unlimited residential and mobile data services. A subscriber can also rent a Wi-Fi router if needed, to start using the services immediately.

Converged bundles are cheaper for customers than using the services of different operators and target customers who do not use TV services. By adding the new tariff to the tariff line, we captured the rapid growth in demand for data services driven by changes in customer habits as they shifted to work from home and tried to keep in touch with family and loved ones while isolating.

‘Combine!
Everywhere’

This new tariff plan enables higher uptake for the service that expands NETBYNET network coverage by converging it with the MegaFon network.

The tariff offers mobile connectivity via a fixed router with a booster antenna enabling speeds of up to 150 Mbit/s, comparable to a wired connection. In addition to fixed access, the tariff also offers a separate SIM card with a bundle of voice, unlimited mobile data, and access to TV channels.

MegaFon’s 2020 plans to develop converged connectivity included improving the customer experience of taking up and using the products. During the year, we implemented all necessary upgrades, cutting the turnaround time for delivering the service by half, which helped us achieve record sales even during the challenging COVID-19 period. MegaFon’s traditionally high NPS score on willingness to recommend was further doubled among users of the ‘Obyedinyai!’ (‘Combine!’) tariff line. More customers started pointing out convenient payment and the attractive price of our converged bundles. The number of customers saying they are very satisfied with the subscription has increased from 76% to 89%.

Our efforts to develop NETBYNET in 2021 will mostly be focused on expanding the footprint of ‘Obyedinyai!’ (‘Combine!’) by engaging partner networks, and federal and regional broadband operators within our FVNO project. Also in 2021, MegaFon will continue to develop its Ecosystem of Services for Households by expanding its range of equipment and bringing more affordable models to the market.

Fixed-line communications for business

The NETBYNET corporate segment within MegaFon Group offers a wide range of telecom services to corporate customers, with its product portfolio’s mix of basic communication features enhanced by a number of cloud solutions: Virtual PBX, Wi-Fi with Authorisation, Wi-Fi Radar, digital TV for business, cloud video surveillance and others.

In addition to traditional communication services, NETBYNET has an extensive track record in implementing integrated telecom solutions and varied scale integration projects.

During the lockdown period, we developed a range of measures to offset a revenue shortfall from existing corporate customers and maintain our sales volumes. These efforts have mitigated the negative impact of COVID-19.

In 2020, the B2X commercial teams of NETBYNET and MegaFon deepened their successful collaboration, with NETBYNET’s sales force promoting MegaFon’s cloud and mobile services by inviting customers to subscribe to a full bundle of MegaFon Group’s advanced communication services. This successful collaboration between the two teams enabled a range of special deals for customers taking up simultaneously fixed-line, corporate mobile and cloud services.

In 2021, we will continue stepping up joint activities to increase MegaFon’s service penetration, and maintain and scale up NETBYNET’s capabilities in connecting and serving fixed customers.

Innovative Products and VAS

MegaFon seeks to lead the telecoms industry on digital transformation and build an ecosystem of customisable, versatile and user-friendly digital products. To this end, we are continuously expanding our service offering and further improving existing products.

B2C services

In 2020, the Company paid special attention to the most promising B2C products, and allocated significant resources to unlock their potential. In addition, we improved the process of launching new services, prioritising those that best meet the needs of MegaFon customers and enable us to build up a loyal subscriber base. When making a decision on adding another product to the portfolio, we also pay close attention to the growth potential of the relevant market segment.

In 2020, amid COVID-19 restrictions, MegaFon provided a whole range of retail services free of charge. MegaFon TV and Digital Shelf products accounted for the bulk of free services, causing a noticeable increase in the number of promotional connections.

For more details, see the Our COVID-19 Response section

AntiSpam services
I Know Who’s Calling
    • NPS up to 49% in 2020
    • Testing of new pricing methods
    • Launch of the zkz.megafon.ru portal, where customers can share information about unsolicited and spam calls
SMS Filter 2.0

MegaFon StopAd

MegaFon Protection
Financial services
Direct Carrier Billing (DCB)28
    • NPS up to 44% in 2020
    • 17% increase in payments using DCB
    • Huawei AppGallery application store was added
Bank Card

Mobile commerce
Cloud services
MegaDisk
    • NPS up to 59% in 2020
    • The service became available to subscribers of all Russian operators
    • Integration of photo upload and contacts backup functions into the MegaFon mobile client account
    • In 2020, the service’s active audience grew ninefold
Media
MegaFon TV
    • In 2020, the service’s active audience grew by 18% % to 2 million subscribers
    • NPS rose to 45% in 2020
    • The share of the service by revenue amounted to 5% of the total Russian Pay-TV market29
    • In 2020, MegaFon TV’s audience using the #ForHome tariff line grew sixfold
    • Launch of Yota TV using the MegaFon TV technological base
Partnerships
Digital Shelf
    • Launch of new value propositions in partnership with Deezer, Tinder, Activision Blizzard, Loudplay, and Mybook
    • Launch of new partnerships with video services such as Okko and START
    • Launch of a digital marketplace in the mobile client account
    • The service’s revenue was up 31% in 2020
E-сommerce
#Spetsii

MegaFon Travel

Education
MegaFon Education

Identification
Mobile ID

В2X services30

In 2020, MegaFon continued to strengthen key business areas in the corporate segment. Priorities for 2020 included the development of B2X products in areas such as cloud solutions, information security, big data, customer communications, and the Internet of Things.

During the COVID-19 pandemic, MegaFon launched a special portal dedicated to business continuity in the new environment . It featured analytics, training courses and special offers on popular cloud services, virtual PBX, and mobile internet bundles. In addition, amid tough restrictions, MegaFon provided businesses with free access to video conferencing and webinar services .

Smart Call Processing
Smart Call Processing

NEW

The integration solution for telemarketing units of corporate customers makes it possible to search for customers who show an interest in a product or service. The service includes call automation based on a cloud solution using machine learning and neural network algorithms.

Omnichannel Communications

NEW

A tool to build a single ecosystem for communication, service and sales, which helps integrate all communication channels with customers and partners without information loss.

Starred Number

NEW

A virtual number consisting of an asterisk (*) and a few digits that is easy to remember and dial from a mobile phone.

8 800

FMC Partner

Webinars

Video conferences

Virtual PBX

Hotline

Smart Call Processing

Short dial codes

MultiFon SIP Trunk

MultiFon Business

Quick dial codes (FMC)

Analytical and advertising services
Urban Environment Analytics

NEW

An analytical service to estimate the essential parameters and characteristics of people’s movement in a city or region within two main scenarios:

    • Transport – analysis of the dynamics and volume of traffic between transport regions within the area
    • City – analysis of the size and structure of the area’s population
Smart Profile

NEW

An analytical service for estimating relevant audience parameters within two scenarios:

    • Locations – analysis of the characteristics of visitor flows in places of public interest
    • Own base – analysis of the characteristics of the client base specified by the customer
Geo-analytics

Customer Analytics

Lead Generation

MegaFon Target

Mobile ID

In partnership with United Credit Bureau


Smart Index

Smart Machine

Social Scoring

Insurer and Bank Scoring

Digital Tourism

Online and partner services
An automated recruitment system (enterprise)

NEW

A customisable Skillaz-based enterprise HR automation solution.

Client Account B2X 2.0

MegaAcademy: Education for Business

MegaFon Rekrutika

Update media portal

Mobile eSignature (MeS)

MegaFon Business

Single Corporate Website

Digital Line Personnel Recruitment

Online Cash Registers

Digital Lawyer

Electronic Document Management for B2X

Internet of Things and ICT
MegaFon Video Analytics

NEW

A service that enables analysing data from surveillance cameras without direct human intervention. Available as a cloud solution or to be installed on the user’s server.

The solution includes 20 video analytics modules, such as face recognition and license plate recognition, queue counting, helmet, mask, smoke, fire and other detectors, and perimeter security.

Online Water Monitoring


NEW

A solution for water utilities and water filtering and treatment facilities to automate energy monitoring processes and assess water quality and infrastructure operation online.

Safe Access

IoT Solutions for Business

Car Fleet Monitoring

Freight Monitoring

Employee Monitoring

M2M Monitoring

MegaFon Trunking

MegaFon Environment

Online Water Monitoring

Smart Utilities

Digital Utility Operator

IoT Last Mile

Cloud-based platforms and digital solutions
MegaFon Cloud

NEW

A service of providing computing capacities for rent at two geo-distributed data centres. It is the most technologically advanced and efficient solution in the Russian virtualisation market, ensuring the highest level of security required by government regulators, including for hosting PDISs31 and SISs32. Promotes import substitution through the use of Russian YADRO equipment.

Anti-fraud services

NEW

A service to counteract mobile fraud launched jointly with Russia’s major banks.

In 2020, more than half of the Top 10 banks used or piloted the service

Pentests / Security Analysi

NEW

A service to check the security of customers’ infrastructure and IT systems for vulnerabilities, and audit customers for compliance with cybersecurity regulations.

MegaFon WAF

NEW

A MegaFon Cloud-based service to protect customers’ websites from hacker attacks and data leakage.

Anti-Hack Business

Business TV

Virtual Data Centre

Business Cloud

Database Protection

DDoS Protection

Internet Under Control

Confidential Mobile Services

Data Encryption

MegaFon DLP(MegaFon Data Leak Prevention)

MegaFon MDM(MegaFon Mobile Device Management)

Turnkey Online Cash Register

Portable Base Station

Platform for Business

Data Centre

Private LTE Network

OutSORMing

CDN 2.0

Wi-Fi with Authorisation

  1. According to Roscomnadzor as of 19 March 2020.
  2. IMS (IP Multimedia Subsystem) is an architectural framework for delivering internet protocol multimedia.
  3. DSS stamds for Dynamic Spectrum Sharing.
  4. ASON (Automatic Switched Optical Network) – technology for automatic switching of optic lines in DWDM networks.
  5. DWDM (Dense Wavelength Division Multiplexing) – modern technology for carrying a large number of channels on the same fibre.
  6. PS Core (Packet Switched Core) is a mobile packet-switched core network.
  7. RRL stands for Radio-Relay Link.
  8. IPBH (IP Backhaul) is IP equipment installed on urban and area networks to connect base stations or broadband customers.
  9. IPv6 (Internet Protocol version 6) is a new version of the internet protocol.
  10. IPv6 (Internet Protocol version 6) – новая версия интернет-протокола IP.
  11. GF Cloud (Green Field Cloud) is a cloud-based virtualisation infrastructure where network functions are planned to be deployed.
  12. Speedtest by Ookla.
  13. BCM stands for Business Continuity Management.
  14. VST stands for Video Start Time.
  15. According to the VIGO crowdsourcing platform.
  16. CEM stands Customer Experience Management.
  17. NPS stands for Net Promoter Score.
  18. NSO (Network Services Orchestrator) is a hardware and software solution for automating communication network configuration.
  19. REX (Route Explorer) is a solution for monitoring, predicting and optimising routing in packet backhaul networks.
  20. According to Ipsos’ Brand Health Tracking survey, 2020.
  21. According to the Brand Finance Russia 50 ranking, 2020.
  22. According to Ipsos’ Brand Health Tracking survey, 2020.
  23. Including online store sales.
  24. tNPS stands for Transactional Net Promoter Score.
  25. FCR stands for First Call Resolution.
  26. According to Ookla®, MegaFon provides the fastest mobile internet in Russia: the average download speed exceeded 32.79 Mbit/s and the average upload speed was 13.22 Mbit/s. Ookla® runs its independent survey globally on an annual basis: the results are based on over 2.9 million speed tests run in the first half of 2020 via the Speedtest app on mobile devices owned by Russian users. MegaFon has been topping Ookla’s ranking since 2017.
  27. Enhanced Voice Services.
  28. LLC NetByNet Holding, a wholly-owned subsidiary of PJSC MegaFon.
  29. FVNO stands for Fixed Virtual Network Operator.
  30. Payment in application stores using the linked MegaFon client account.
  31. According to J’son & Partners Consulting report.
  32. The B2X MegaFon service line includes B2B (business-to-business), B2G (business-to-government) and B2O (business-to-operators) services.
  33. PDIS stands for Personal Data Information System.
  34. SIS stands for State Information System.
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