OREANDA-NEWS. March 03, 2010. TNS-Gallup has released its Russian internet audience estimates for January, reported the press-centre of VTB Capital.

The numbers bode well for our bullish view on RBC (BUY, TP USD 2.6), Russia’s only public stock with exposure to the rapidly growing domestic internet ad market. The internet numbers underpin the rapid expansion of RBC’s internet audience, currently driven by the company’s enhanced focus on operating activity (that had mainly been sidetracked by the company’s efforts to resolve its internal debt-related problems, as was the case in 2H08-1H09).

According to the numbers, RBC.ru’s (flagship business web-site of RBC) monthly audience increased 8% MoM vs. the top eight largest Russian business web-sites’ decreases of 11% to 36% MoM (Figure 2). Taken together, the combined audiences of RBC.ru and RBC-Daily (6.1mn and 1.4mn, respectively) outperformed all the key Russian business news websites like Vedomosti, Kommersant and Slon. Moreover, RBC’s non-business web-sites also have posted robust performances (Figure 4).

The combined monthly internet audience of RBC’s 22 websites gained 24% over the past six month reaching almost 39% of Russia’s internet audience, having outperformed the domestic internet audience expansion (+12%).

Russia’s overall internet audience increased to 31.5 million in January (up 19% YoY), while the monthly internet audience share of viewers aged 12-54 saw a 52% share (1pp MoM) increase, despite traditionally weaker January seasonality vs. December.

We note that the Russian internet ad market remains small at RUB 18.9bn (USD 600mn) in 2009, it accounted for just 9% of total ad spending. However, in our view, it will expand six-fold over the next five years on the back of Russian broadband penetration surging from the current 23% to over 60% by 2014.

Yandex.ru and Mail.ru remain the largest websites for Russian internet market growth, accounting for 44% and 43% of the audience share, respectively (a solid improvement from the 34% for both seen a year ago). The market position of their closest peer, Rambler.ru, has deteriorated to 17.5% (from last year’s 17.9%).