Rostelecom and Tele2 Are Monetising the Internet of Things with Nexign

CUSTOMER SUCCESS STORY

Country: Russia Rostelecom and Tele2 Nexign solution: Nexign are Monetising the Internet IoT Platform Year of deployment: Rostelecom Tele2 of Things with Nexign 2018-2019

Summary Customer pro ile

PJSC Rostelecom has adopted a strategy geared PJSC Rostelecom is Russia’s largest integrated Rostelecom’s wholly owned subsidiary Tele2 Russia towards increasing the share of digital products in provider of digital services and solutions, with is a major player on the mobile communications its revenue and monetising rapidly developing IoT presence in all market segments and covering market with over 44 million subscribers. The (Internet of Things) segment. This required imple- millions of households, governmental and private company’s B2B coverage is growing extensively: its menting a platform that would satisfy both the organizations across all regions of Russia. The subscriber base grew by 16% in Q2 2020, with needs of the company and its customers. Rostele- Company maintains leading positions in the market quarterly revenue growth reaching 36% compared com’s plans matched the aspiration of its subsidi- of high-speed Internet access and PayTV services to Q2 2019. The inal consolidation of Tele2 Russia ary Tele2 Russia to improve its B2B market share with over 13.4 million broadband subscribers and in 2020 has been the landmark deal that helped by developing IoT services. They decided to adopt 10.7 million Rostelecom PayTV subscribers, of establish the largest integrated digital service a uni ied IoT platform. The Group of companies which over 5.8 million subscribers are connected to provider in Russia. The merger enhanced Rostele- chose Nexign IoT Platform, which allowed to the Interactive TV services. com’s unique business portfolio and has aorded achieve seamless integration with the existing BSS ample opportunity for developing and providing systems that enable billing for both the telecom new digital services and solutions. operator and the mobile virtual network operator, as well as launch new highly competitive M2M The Group of companies’ revenue for Q1 2020 (machine-to-machine) solutions. As a result, Nexign totaled RUB 248.9 billion with OIBDA reaching RUB helped these companies realise a unique tripartite 95.9 billion (or 38.5% of the total revenue) and net project, while slashing costs and boosting resource pro it of RUB 15.4 billion. The Group’s data traic utilization. (MVNO included) for Q2 2020 reached 1,216 gigabyte, up 66% year-on-year and up 13% quarter-over-quarter.

According to J’son & Partners Consulting, the the platform would enable customers to develop Tele2 took another route to considering the IoT amount of connected IoT (Internet of Things) their own digital infrastructure with an easy and business. Previously, the operator’s share in B2B devices in Russia will reach 56 million by 2025 – prompt management of devices and SIM cards, segment was insigni icant. However, shift in brand twice as many as by the end of 2019. The market while Rostelecom will be able to provide linear positioning strategy and focus on digital projects volume reached RUB 64 billion in 2019, and is tari plans with dierent tari options. in luenced the company’s ambitions on the corpo- expected to be around RUB 86 billion by the end of rate market – with the IoT taking a central stage. 2020 (CAGR 5%). That said, telecommunications companies aiming to increase their B2B market share and augment their digital oerings ind IoT Rostelecom has extensive expertise and market especially attractive. Rostelecom has market share in working with corporate and Traditionally, Tele2 provided B2B customers already gone beyond providing classic telecom customers. When we entered the mobile with di erent data plans tailored to their services and has turned into the largest integrated business, we realized that there is a rich needs and objectives. We have been provider of digital services and solutions in Russia. variety of opportunities to work with the developing this classic model for a long For 2018-2022, the company has adopted a strate- existing customers and attracting the new time, but eventually customers started gy geared towards building an ecosystem of digital ones, especially in the mobile segment. lacking extra services, such as ability to products that will help customers develop their While working with the customers, we manage their data plans, alerting and report- businesses eiciently. Moreover, Rostelecom is witnessed an acute market need for the IoT ing. Due to evolved customer requirements, planning to modernise and centralise its IT and M2M solutions in both corporate and it was impossible to grow in the B2B segment systems. governmental segment. This triggered the without changing the model. To ensure launch of our new project aiming to develop continuous growth and even reach new With the IoT being among the most promising a platform for realizing M2M solutions. audience segments, Tele2 needed a new areas of the digitalization, Rostelecom considered product based on the M2M platform. Given to leverage this technology and become the leader Denis Ryabchenkov, that our plans matched with Rostelecom’s, in the IoT and IIoT (Industrial Internet of Things) Director of Product Management at the corporate and state segment at PJSC Rostelecom we started looking for a uniied platform segments in Russia. To ensure successful monetisa- that will meet the goals of both operators. tion of the company’s IoT oerings, Rostelecom

required eicient and easy-to-use platform that Maria Chinkova, won’t require any involvement of third-party Head of B2B at Tele2 vendors or suppliers. With that in mind, the company decided to adopt an IoT platform integrated with its existing BSS system. It was required that

As a result of a tender, Rostelecom chose Nexign The platform’s deployment was divided into several IoT Platform. A signi icant factor that in luenced stages. Initially, Nexign IoT Platform has been set Rostecom’s decision was rich feature set of up and running at Rostelecom for the commercial Our team had to face a serious challenge of Nexign’s solution, with the focus on connectivity operation, and following the course of the project it integrating di erent billing systems. During services, noti ications and alerting. was further expanded for Tele2. Thus, at the the course of the project, it turned out that moment when Rostelecom was already at the stage Rostelecom’s macro regions are using of commercial use of Nexign’s solution, the di erent versions of the billing, while the platform was also integrated with Tele2 billing in billing at Tele2 was from a completely di er- parallel. ent vendor. All this required us to come up The ability to build a wide range of reports with creative, non-trivial solutions. Ultimately, that provide our customers with actionable The key challenge was to correctly integrate the we coped with all risks and ensured success- data to make better business decisions was platform with two billing systems, as each of them ful integration. the signiicant competitive advantage of adhered to dierent business logic and contained Nexign IoT Platform. certain technical and architectural nuances. The Andrey Gulidin, Chief Commercial O icer at Nexign Maria Chinkova, operators’ representatives estimated that the most Head of B2B at Tele2 cumbersome stage had been integration testing and system con iguration – such a tripartite project was being implemented for the irst time, so the Another problematic area was that there were project teams did not have similar experience. principal dierences in creating tari plans in Rostelecom and Tele2. To solve this issue, it was required to adopt uni ied tari guidelines for both We expected the new IoT solution to bring us companies. Obviously, these advancements closer to digital transformation of our busi- required redesigning operational processes in both ness. With the Nexign’s platform, we were companies and Nexign experts consulted them to planning to provide our business customers ensure smooth transition. with the instrument for controlling and managing their IoT devices.

Denis Ryabchenkov, Director of Product Management at the corporate and state segment at PJSC Rostelecom

Slashed costs for purchasing, company’s own digital projects. Moreover, it Rostelecom and Tele2 gained adopting and managing can be seamlessly integrated with the part- signiicant competitive advantage ners’ platforms, including publicly-owned the IoT platform The platform by Nexign enables the end users operators, while keeping everything running in The project was carried out in alignment with to generate reports based on dierent criteria, the irst line of support. the current trend for the infrastructure sharing thus, improving accuracy of business deci- and economies of scale. sions, which positively aects the overall Now Rostelecom actively works business performance. on multiple large IoT projects Reached unique synergistic eect These projects cover transport, agriculture, While developing and integrating the platform, urban economy and energy sectors. Rostele- Created easy-to-use instrument that facili- Nexign team took into account expertise of com also plans to start projects in the ields of tates development for the the two operators that work in dierent seg- IIoT, Industry 4.0 and Smart City. business of both Rostelecom ments. This synergy of expertise allows to and Tele2 customers develop a unique and eicient strategy, create The companies launched a platform of a product that meets the demands of dierent Tele2 increased its customer base self-service, which allows customers to track audience segments and optimise operational in B2B segment status and location of IoT devices, get relevant costs. by attracting new customers from small and information on the consumed traic and medium businesses, as well as winning back expenses, replace SIM cards, attach a precise Created the basis for developing former customers that left to ind an easier location to the device, as well as ensure secu- rity of the customers’ money by tracking the and monetising IoT oerings way to manage their M2M devices. fact of the device change. in Rostelecom and Tele2 Both companies managed to launch new Provided maximum manageability products to attract new subscriber segments of the IoT segment and increase their share in M2M market. The group of companies received eective instruments for administering their services Rostelecom received a lexible with a broad and scalable range of solution covering multiple needs functionalities. Nexign IoT Platform is used to implement the