The demand for eSIM technology for the development of the Internet of things (IoT) in Russia will grow in the coming years, although in the consumer segment, on the contrary, it will be limited by the penetration of devices. The need to switch to Russian platforms may also put pressure on the market. Foreign eSIM solution providers, including Gemalto, Giesecke + Devrient, Idemia and GigSky have stopped sales in Russia. They have kept localized systems operational, but market participants are talking about the risks of shutdown, reports Kommersant. russia esim market

Kommersant got acquainted with the forecast of MTS for the growth of the Internet of things market until 2025. It follows from it that by 2025 25% of all IoT devices in the Russian Federation will be connected via virtual SIM cards – eSIM. But by the end of 2022, this share will be only 7%. At the end of 2021, the volume of the IoT market in Russia reached 148.5 billion rubles, according to the forecast of MTS, its average annual growth rate will be 12%, and the market itself can grow to 208.5 billion rubles. by 2026. According to the operator, most of the devices with eSIM will be on “smart” meters and devices, connected cars. MTS emphasizes that eSIM “speeds up the connection of devices, reduces the cost of logistics and maintenance.”

But in the consumer segment, the prospect of eSIM is limited, explains the interlocutor of Kommersant in one of the major operators, “subscribers who use smartphones with eSIM support have already exchanged a regular SIM card for a virtual one, then only the replacement of old devices can contribute to the penetration of eSIM in the consumer sector , which is not going fast. He confirmed that operators are betting on the development of eSIM in the corporate sector for IoT.

The situation may be complicated by the consequences of Russia’s military actions in Ukraine. Prior to their start, operators often used solutions from foreign vendors to download and store eSIM subscriber profiles (gemalto, Giesecke + Devrient, GigSky, Idemia, HPE). But since February, the latter have left the Russian Federation, two sources told Kommersant in the market. Some operators continue to use Western solutions as they are localized in Russian data centers. But, one of Kommersant’s interlocutors explains, “the risk of revoking the root certificate, without which the platform will not work,” remains. A Kommersant source in the government assures that there are risks only if the telecom operator uses a foreign cloud solution.

MTS told Kommersant that they are cooperating “with one of the leading Russian suppliers”, and subscriber profiles are stored in the Russian Federation. Tele2 has its own platform for generating profiles for eSIM – “all virtual card profiles are stored in the perimeter of the Tele2 infrastructure.” VimpelCom works with A1 Systems. With the simplification of methods for remote conclusion of an agreement on eSIM, the technology is promising for the consumer segment, the operator believes. MegaFon noted that the technology is in demand both in the consumer and business segments, “but the departure of foreign suppliers from the market is expected to slow down its development in Russia.”

Dmitry Galanin, commercial director of A1 Systems, noted that against the background of the departure of foreign suppliers, the company is seeing an increase in interest in its solution. “In the first half of the year, we installed four times as many profiles as in the same period last year,” he says. According to him, the main risk of using a foreign platform is the sudden termination of the contract. For M2M / IoT, the top manager specifies, this is the loss of the ability to manage profiles, although the device will not be disconnected from the network; for the consumer sector, the problem may turn out to be that this distribution channel will stop working for a while. It will take time to connect to an alternative supplier, reconfigure business processes, Dmitry Galanin adds. “If vouchers with profile QR codes were distributed in retail, they will have to be withdrawn and replaced with new ones,” he notes. russia esim market