Operational Results

Infrastructure development

Network expansion

MegaFon is committed to maximising the speed and reliability of communications services for its subscribers, constantly investing in infrastructure and innovative technology.

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

  • Developing the 4G/LTE mobile network coverage
  • Improving service quality by preventing network congestion across all domains and streamlining end-to-end processes
  • Improving reliability and increasing the focus on network operation
  • Developing a network of data centres
  • Improving overall efficiency.

MegaFon’s base stations
in 2017–2021, ’000

operational results

In 2021, the backhaul network development primarily focused on:

  • optimising backhaul network topology to improve reliability and reduce upgrade costs
  • reducing latencies by launching coherent DWDM1 lines
  • launching new channels for traffic transit and higher reliability
  • expanding and upgrading a fibre network
  • upgrading RRL2 and IPBH3 networks
  • replacing obsolete equipment.

In 2022, MegaFon plans to maintain the focus on its key development areas, further expanding LTE and backhaul networks and developing IT infrastructure.

4G/LTE coverage in 2017–2021, %

operational results

2G
1990s
Voice and SMS
3G
2000s
Mobile data and high-quality voice services
4G
2010s
Mobile broadband and full-scale all-IP network
5G
2016-2021
Ultrafast mobile internet, full-scale support of IoT ecosystems, and ultra-reliability

MegaFon was the first in Russia to

provide 2G services in all Russian regions

roll out a full-scale commercial 3G 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)
  • launch the VoLTE technology at the federal level (2021)
  • demonstrate a record connection speed of 2.46 Gbit/s on a smartphone in a 5G network (2019)
  • launch international 5G roaming (2020)
  • deploy wide trial zone with access to 5G services (2021)

4G/LTE networks

In 2021, we continued to expand our 4G/LTE coverage, increased the number of 4G base stations by 16.1% to 84,900, and carried on with our programme to upgrade existing base stations. At the year-end, the 4G/LTE standard became available to 87% of Russia’s population.

In the reporting year, we significantly expanded our VoLTE footprint and improved its coverage, bringing the technology to almost all Russian regions.

3G networks

At year-end 2021, the number of our 3G base stations remained virtually flat y-o-y at 50,700.

2G networks

In 2021, the number of 2G base stations stood at 68,100.

In 2021, MegaFon became the first Russian operator to launch VoLTE at the federal level: the technology is now available in almost all Russian regions.

Developing 5G networks

In 2021, MegaFon piloted a number of large 5G networks for the corporate and mass market segments, opening wide trial zone with access to 4G and 5G services:

  • A 10-km2 network was set up around Nevsky Prospekt and Expoforum in Saint Petersburg, deploying the dynamic spectrum sharing (DDS) technology. With different frequency bands combined, the maximum mobile data speed in the existing ranges reached up to 1 Gbit/s.
  • A dedicated LTE/5G LAN network at the Skalisty Mine of MMC Norilsk Nickel demonstrated its functionality in real operating conditions, including transmission of HD video with minimal latencies and operation with no line-of-sight link to a base station.
  • 5G capabilities were presented at the booth of NTV Broadcasting Company at the St Petersburg International Economic Forum, including a manipulator controlled via a 5G smartphone, live TV broadcasting, video broadcasting on VR glasses, and many more.

In 2021, MegaFon deployed wide trial zone with access to 5G services.

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 2021, MegaFon implemented several projects to develop backbone and backhaul networks, primarily:

  • Increasing the backbone network reliability by adding routes for DWDM channels in Omsk, Krasnoyarsk, Saint Petersburg, Vologda, and Volgograd
  • Replacement of obsolete DWDM equipment on the Krasnoyarsk—Kansk, Kansk—Abakan, and Kansk—Irkutsk lines with modern Apollo equipment by ECI
  • Commissioning the new Saint Petersburg—Vyborg—Finland and Chita— Zabaikalsk—China cross-border links to enable new service offerings for international operators
  • Upgrades to key IP/MPLS4 backbone routers in Aksay and Samara
  • Use of traffic engineering on the IP/MPLS backbone network at the Far East Branch to increase network reliability and streamline backbone channels
↑ 2.4%
147.1
’000 total length of MegaFon’s backbone networks

Length of backbone and backhaul FOCL network in 2017–2021, ’000 km

Backbone and backhaul networks

Network quality

MegaFon boasts an advanced, extensive infrastructure, and an advantage in spectrum availability, which allows us to provide a high-quality voice experience and record-high mobile data speeds. In 2021, MegaFon primarily focused on improving customer experience.

In the reporting period, MegaFon continued network and service optimisation and achieved improvements in voice connectivity and mobile internet in general. We have also expanded VoLTE coverage to almost all regions of Russia and improved service’s NPS6 . At the end of 2021, over 50% of calls were enabled through VoLTE.

MegaFon is the unrivalled leader by average data transfer rate in Russia for five years running.5

In 2021, MegaFon retained its leadership in the Russian market by the VST7 indicator measuring the speed of video transmission, the main service used by our digital subscribers.8

In addition, in 2021 machine learning algorithms were used to develop and deploy geodetic regions, based on continuously updated patterns of subscriber behaviour and movement, which allowed allocating resources more effectively and improve the quality of communications for customers.

In 2021, the Company continued to develop the CEM9 system by building big data models. In particular, an emphasis was placed on location-based big data in service quality management, which allowed identifying subscribers who are dissatisfied with the quality of voice services before they think about switching to another operator.

To improve the network quality, we analyse the needs of our subscribers on a regular basis. Since 2020, we have been daily surveying subscribers to assess NPS as linked to service quality in the B2C segment; in 2021, the survey was expanded to B2X customers.

Connectivity metrics
Call set-up success rate, %

operational results

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 2021, we introduced more than 170 new types of emergency reports in the GNOC and included 135 information systems and hardware and software solutions in the scope of monitoring. The monitoring system now features new service quality indicators and the TWAMP10 monitoring functionality.

Data centres

Data centres are an integral part of the MegaFon network. At the end of 2021, MegaFon’s distributed data centre network included 118 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.

operational results

IT infrastructure development

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

  • Upgrade of the third backup channel of the unified billing system and MegaFon’s first large-scale test to switch the IT load from a Moscow data centre to Siberia
  • A successful pilot of a new database management system with open-source PostgreSQL at MegaFon
  • Migration of the corporate data warehouse core to a new architecture
  • Launch of an advanced set of balancing tools for MegaFon’s business services, which meets the highest global performance and security standards
  • Launch of 15 sites to roll out virtualised network functions and new services as part of the Single Network and IT Cloud strategic project (GF cloud)

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.

operational results
  1. DWDM (Dense Wavelength Division Multiplexing) — modern technology for carrying a large number of channels on the same fibre.
  2. RRL — Radio-Relay Links.
  3. IPBH (IP Backhaul) — IP equipment installed on urban and area networks to connect base stations or broadband customers.
  4. MPLS (Multiprotocol Label Switching) — a routing technique in telecommunications networks that directs data from one node to the next based on short path labels.
  5. Speedtest by Ookla.
  6. NPS — Net Promoter Score.
  7. VST — Video Start Time.
  8. According to the VIGO crowdsourcing platform.
  9. CEM — Customer Experience Management.
  10. TWAMP (Two-Way Active Measurement Protocol) — a flexible method for measuring round-trip IP performance between any two network devices.

Developing our brand and marketing communications

The MegaFon brand is one of the strongest and most recognised in Russia. The Company’s motto, MegaFon. Starts with You, honours our customers, and everything we do starts with their insights, desires and aspirations.

According to Brand Finance, MegaFon remains the sixth strongest brand among all Russian companies for the third year running. In 2021, we were the 13th most valuable brand, having risen from No. 16, and we steadily ranked the 2nd among telecom operators.


No. 61

among the strongest Russian brands

No. 131

↑ 3 positions

by value among all Russian brands

No. 21

by value among Russian telecom brands

MegaFon

is among the top options considered by switching customers. In 2021, we achieved parity with the leader on the Brand Consideration by Switching Customers metric.


One of 2021 highlights was the brand’s expansion into outer space — MegaFon supported The Challenge, the first movie filmed in orbit. With its track record in the Russian telecom market exceeding 20 years, MegaFon has come a long way to become the unrivalled leader in mobile data. Our scale and innovative strength are the values that connect the MegaFon brand to people’s dream of conquering the stars. With this in mind, we decided to launch an advertising campaign presenting a new level of service quality to reinforce the Company’s high-tech image.

In 2021, we determined that reliability, advantage and fairness are our response to customer needs. We updated our approach to brand communication, building it around people whose passion for fairness shines the brightest — special agents in movies.

  1. According to the Brand Finance Russia 50 ranking, 2021.
operational results

By drawing on our deep insights into customer needs and leveraging our continuous improvement engine, we deliver consistent yearly increases in our brand’s loyalty score.

↑ 5 p.
1
NPS improvement

Our customer-centric approach is reflected in our engagement with employees as well as subscribers. By growing our brand’s value within the Company we also boost its strength in the market.

In 2021, we launched brand training for the first time in the Company accounting for more than 4,600 employees participated in the training, which indicates their high interest in strengthening brand knowledge.

Growing
brand’s value

  1. For January 2022 compared to January 2021.

Growing
brand’s value

Creative edge

MegaFon has already once “turned the game” by launching music-based messaging, which has become a benchmark for many brands in the telecom industry and beyond. In 2021, we decided to take it to the next level and introduce a new approach to celebrity endorsements.

We formed an unlikely duo — Bruce Willis, one of the world’s biggest movie stars, and comedian Azamat Musagaliev. Bruce’s image was created using a face generation technology based on neural network algorithms, which gave us flexibility in creating communication materials, helped us optimise production, and strengthened the brand’s innovative image.

As early as the end of the year, we saw a positive trend in unbranded recall and message delivery, and on the measure of advertising uniqueness we hit our three-year high.1 We intend to stick to this creative framework, further flesh out the special agent story, and boost spontaneous advertising awareness.

Sponsorships and partnerships

In 2021, we continued our systematic support of Russian sports and kept all existing contracts. As regards sponsorships and partnerships, we continued our efforts to engage the audience despite the highly uncertain COVID-19 situation, reaching a new level of integration between the digital and the physical. Knowledge of MegaFon’s sponsorship activities has a positive effect on the intention of potential customers to use our services increasing it by 14 p.p. It also increases brand loyalty among our current subscribers driving an 8 p.p. improvement in NPS.

Digital development

In 2021, we experimented a lot with platforms, technologies and formats, not only following trends but also creating them. We implemented over 100 marketing projects reaching more than 575 million people.

We launched the new third season of the Green Room podcast about sports marketing and topped the list of branded podcasts with 

As part of the European Championship, we created a special branded show and organised a coverage from the MegaFon TV House fan zone. The total reach of digital activation around the European Championship amounted to more than 45 million people.

During the Football World Cup, we sent a plane-full of fans to root for our national team in a game against Croatia. We also held a draw for a trip to a KHL game in Dubai.

Our special projects are always inspired by our customers. In 2021, we partnered with the artist Igor Samolet to present Moscow and its residents via a vivid art installation at the Flakon design factory, where Muscovites expressed their unlimited love for the city.

Thus, in 2021, the MegaFon brand maintained its successful presence and growth in communications, once again providing its customers with a unique engagement experience matching their preferences.

>100
marketing projects implemented
operational results
  1. According to Ipsos’ Brand Health Tracking survey, 2021.

Sale of products and services

Retail network

In 2021, MegaFon remained strongly focused on expanding and improving the efficiency of its retail network managed by its subsidiary MegaFon Retail.

In 2021, we improved the efficiency of our own retail network and reduced the average number of employees per store without compromising service quality or reducing sales.

In franchised stores, a solid growth in gross additions was driven by marketing campaigns and motivating projects for retail employees. We focused on boosting efficiency by increasing sales volumes and speeding up the delivery through various tools, such as motivation, personalised discounts for subscribers and split sales management, as well as growing the volume of integrated offerings of MegaFon products and goods. In branded stores, we focused primarily on improving customer experience (in particular, store design, availability of a product matrix and services), comparable to own retail stores.

In online sales, we maintained the focus on developing the omnichannel proposition, revising logistics processes and introducing additional tools, such as lending.

Smartphones remained the device of choice in 2021 — their share in the total sales of devices in roubles increased by 0.9 p.p. to 97.0%, and 4G smartphone sales were down 4 p.p to 93.0% of total units sold, as the demand for 5G smartphones rose and their share in smartphone sales volumes grew by 4 p.p. to 5% with revenues up by 18 p.p. to 22%. The average price of a smartphone sold through MegaFon Retail increased by 40.1% in 2021 due to a shift to more expensive models, while the average accessory price increased by 22%.

In 2021, we continued to enhance the offering of additional services in our own stores, launching new insurance products, expanding the range of money transfer subscriptions, offering commission-free loan payments, and much more.

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 the customer experience while promoting new types of digital services and goods.

In 2020, we opened a second Experience Store at Columbus Shopping Centre in Moscow. The third store was opened in 2021 in MEGA Khimki Shopping Centre in the Moscow Region.

Service quality

One of MegaFon’s priorities is to constantly improve the quality of service in its own stores.

In 2021, MegaFon started servicing WiFire1 customers in its own stores, expanding the service geography for fixed-line subscribers.

In 2021, we continued to streamline customer-facing processes. In particular, we reduced the amount of manual labour and improved the user interface of the CCM portal, speeding up a number of service operations. Throughout 2021, we also promoted remote training in service interfaces for the B2C and B2X segments.

In the reporting period, we put more emphasis on the paperless store concept and were able to offer value-added services to our customers in more than 50% of our own stores by the end of 2021:

  • Signing documents electronically via mobile devices
  • Electronic receipts via text messages
  • Digital advertising on tablets: remote control and content updates
  • Electronic customer feedback log
  • Interactive tablet game where the customer can win a discount

MegaFon Retail has built a system to process the results of customer surveys. We collect feedback from dissatisfied customers and always strive to resolve their issues completely, which ultimately strengthens their loyalty. The ongoing work with customer feedback involves employees of different levels, from area managers to branch directors.

Online sales

In the reporting period, we substantially expanded the online store capabilities and deployed a number of new solutions, the key ones being:

  • payment with VK Pay
  • eSIM sales
  • launch of MNP2 with pickup from stores
  • redesign of the tariff marketplace
  • ‘Svoim Deshevle’ (‘Cheaper for Friends’) option
  • sale of digital products
  • delivery expanded to eight new cities.
  1. The brand of MegaFon’s subsidiary NETBYNET, provider of fixed-line services for the mass market.
  2. MNP (Mobile Number Portability) — porting a mobile number from one telecom operator to another.

Customer satisfaction

MegaFon cares about customer satisfaction and strives to constantly improve customer experience, make offers that meet customer needs, continuously enhance services, and boost their convenience and stability.

MegaFon believes that customer satisfaction is closely linked to employee satisfaction, and improves the working conditions for its employees, in particular to enhance the quality of customer service. For example, a fully remote work format for Multimedia employees, launched in 2021, drove an additional influx of candidates from across Russia and helped provide highly accessible customer service.

In addition, in 2021, MegaFon merged its Customer Service and Customer Experience functions, creating a comprehensive system of product quality control at launch. A segment-based approach to the B2C subscriber base was deployed at the Customer Experience function from scratch.

We also started prioritising the most critical calls dealing with roaming, internet and telephony. As a result, we increased customer satisfaction as MegaFon’s Transactional Net Promoter Score (tNPS) showed a positive trend, with the proportion of the Query Settled status up 2 p.p. and the share of settled complex queries from corporate customers up 8 p.p.

In 2021, prompt feedback collection and data analysis helped MegaFon quickly assess changes in customer preferences and make the right decisions, driving the Company’s NPS up 9 p.p.

Customer service development priorities in 2021:

  • Merger of the Customer Service and Customer Experience functions
  • Introduction and use of customer feedback metrics — NPS and CSI
  • Segmentation of the B2C subscriber base
  • Prioritised processing of critical calls from customers

Call centres and other services

Customer service channels

In the reporting year, our results were driven by the focus on the customer, as well as by increased transparency and clarity of the Company’s products and services.

In 2021, automated robotic assistants were launched to help employees perform checks in various systems. During the year, MegaFon also started transitioning to a new platform with the ELENA virtual assistant, having optimised service scenarios to improve the focus on addressing a customer’s query.

Speech analytics

MegaFon maintained a strong focus on enhancing the speech analytics programme introduced in 2020. Scenarios were set up within the programme to determine how much a sales script is used and how useful it is, which, combined with measures to enhance the channel, drove a 50% increase in sales. Also, in 2021, we added a feature controlling the operator’s speech.

The programme proved effective in assessing the quality of service. Controlling rhetoric and tone promoted call centres’ tNPS growth and helped reduce the number of complaints about subscriber service by more than one third.

The results of using speech analytics in customer service were recognised at CX AWARDS where MegaFon won the Effective Use of Technology and Practice of Customer Analytics categories.

Telemarketing and situational sales in call centres

In 2020, we moved some of our telemarketing traffic to voice bots, so in 2021 we focused on training the bots and expanding their vocabulary; our biggest achievement was teaching them how to talk and listen at the same time — now they can be interrupted or asked to call back later. Employees, in turn, also focused on improving sales quality.

A special emphasis throughout 2021 was put on developing voice simulators, deploying speech analytics and shifting to online offers resulting in more relevant offers and higher situational sales.

operational results

MegaFon app

The MegaFon mobile app is crucial to our strategy of offering the customer the widest range of opportunities in one place. In 2021, we complemented it with the MegaFon TV service featuring movies and TV series, and now customers can manage their channel subscriptions without leaving the app.

In 2021, the app was enhanced to improve customisation and improving usability, primarily by redesigning the structure and layout. Specifically, MegaFon was the first operator in the world to allow its customers to top up their accounts using a bank card directly from a push notification.

Virtual assistant ELENA

We continued improving technological capabilities of our automated customer support as a strategic area of service. Higher quality of models that determine the meaning of the customer’s query has improved the accuracy of the classifier to 92% and helped to quadruple the number of topics covered by the virtual assistant. With the new dialogue engine in place, we launched a project to maintain the context of the dialogue. As a result, subscriber satisfaction (tNPS) with the ELENA virtual assistant increased by 15 p.p. on average.

We also use predictive analytics to maximise customer experience by anticipating queries and offering a customised set of buttons based on the user’s profile and recent actions. This reduces the risk of miscommunication between the customer and the bot, and the customer’s query is settled in seconds, driving customer satisfaction up by 10 p.p. and automation by 17 p.p.

In 2021, the MegaFon app won prizes at the Tagline Awards in the Best Mobile App Usability and Best App for a Telecom/IT/ Internet Company categories.

operational results

Social media

Social media make it easier for existing and potential customers to interact with the brand as users can write a review in real time, and the Company can quickly receive and review complaints and respond to them.

In 2021, MegaFon kept in touch with customers not only via the key Russian social networks such as VKontakte, Odnoklassniki, Mail.ru as well as YouTube, but also via online stores (Wildberries, OZON) and app stores (App Store, Google Play Store). In the reporting year, MegaFon launched 2GIS and Yandex.Maps monitoring and appeared on information and entertainment internet resources such as Pikabu and VC.

Subscriber protection from unsolicited messages and fraud

MegaFon pays close attention to customers’ security and aims to protect them from unsolicited and suspicious messages. In line with Federal Law No. 126- FZ On Communications dated 7 July 2003, and its corporate bulk messaging requirements, MegaFon as an operator has the right to block any unwanted bulk messaging using the Anti-spam nationwide system.

If a subscriber suspects fraud, they can report it to the

where they can also learn about different fraud schemes and relevant protection methods, as well download antivirus software.

In 2021, we launched commercial antifraud services with the technical and analytical capabilities provided by MegaFon’s fraud prevention unit.