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Hungary Telecommunications Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: July 2009 Product Code: R302-6993 Description In our Q309 Hungary Telecommunications Report we have left our mobile market data analysis sectionunchanged (to be updated in the next quarter) while expanding the fixed-line and internet market dataanalysis sections.Hungary has one of the most developed telecommunications markets in the Central and East Europeanregion, exemplified by its regulator the National Communications Authority (NHH), which has taken aproactive approach to liberalising the telecoms markets and encouraging investment. A number of theregion’s top players are present, including Deutsche Telekom, TDC, Vodafone, Liberty Global andTelenor. Competition between the operators has resulted in broad coverage of advanced technologiessuch as HSDPA, digital cable and IPTV and the development of next generation networks includingfibre-to-the-home (FTTH) and DOCSIS3.0. At the end of 2008 there were 11.667mn mobile subscribers in Hungary, giving a penetration rate of117%. After full-year growth of 10.8% in 2008, the mobile sector shrank in the first quarter of 2009 assubscribers ceased using multiple SIMs and the operators discounted inactive SIMs. BMI expects this tobe a blip rather than a new trend and we believe growth will return in subsequent quarters, albeit at aslower pace. As well as coping with the tough economic situation, the operators have been increasinglyfocusing on the postpaid segment and encouraging mobile data usage in an effort to bolster their ARPUrates, although in Q408 the majority of net additions came from the prepaid segment. In March 2009 the NHH revealed that it had cancelled the fourth mobile network licence tender, whichwould have seen a new GSM/UMTS operator enter the market. Four companies had bid for the licence:Digi, DreamCom, Invitel (HTCC) and Mobinet Tavkozlesi Projekt. The NHH was pessimistic aboutthe prospective new entrant having the desired impact on the mobile sector. Although the decision wasappealed against, at the time of writing it still stood after the appeal was rejected. BMI remains optimisticthat the tender could be relaunched at a future data when the country’s economy and financial marketshave settled down. With the existing operators expected to concentrate on the postpaid segment and highvaluedata users, we do believe that there is room for a new operator to target the prepaid sector. Hungary’s fixed-line subscriber base continued to decline in 2008, falling to 3.094mn subscribers and apenetration rate of 30.9%. The decline is being driven by fixed-to-mobile substitution as well ascustomers dropping their fixed lines in favour of VoIP and VoCable services. Incumbent MagyarTelekom now reports voice customers, which includes traditional copper fixed-line, VoIP and VoCableand has seen the overall number continue to decline during the first quarter of 2009. To help stem thisdecline, operators are turning to double- and triple-play bundles, packaging fixed lines with broadbandand pay TV services. While this should mitigate the situation to some extent, we still expect the fixed-linesector to continue declining. Cable broadband accounted for the majority of the fixed broadband sector’s growth in 2008 and it seemslikely that by the end of 2009 cable broadband will account for more fixed broadband connections thanADSL. There are four main cable operators in Hungary, UPC Hungary, Fibernet, Digi and MagyarTelekom’s cable arm T-Kabel. Between them they control around 70-75% of the cable broadbandmarket. Magyar Telekom is the dominant force in the broadband sector, with an estimated 54% of theretail ADSL market and 18% share of the cable broadband market at the end of Q109. Hungary’sbroadband market is increasingly moving in the direction of double- and triple-play packages and theoperators have been developing their pay-TV products, offering digital cable, IPTV and DTH services inan effort to woo customers. In May of this year, the NHH issued two WiMAX licences to MagyarTelekom and Antenna Hungaria with a view to boosting broadband coverage in previously underservedrural areas of the country. Table of Contents
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