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Czech Republic Telecommunications Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: September 2009 Product Code: R302-8141 Description Our Q409 Telecommunications Report for the Czech Republic sees some significant changes to themobile forecast and mobile market data analysis sections as Telefónica O2 Czech Republic has changedthe method it uses to measure SIM inactivity. This has resulted in Telefónica O2 having over 400,000fewer mobile subscribers in Q108 than previously thought.At the end of 2008, mobile market penetration had reached 127.7%, and this fell to 127.3% at the end ofQ109. The sector is fast approaching saturation, and we have forecast limited growth prospects over theremainder of our five-year forecast period. The drying up of fresh subscriber growth opportunities haspushed the operators to increasingly focus on higher value customers in their efforts to maintain revenuestreams. Mobile market leader T-Mobile Czech Republic and second-placed Telefónica O2 are the twooperators leading the pursuit of higher value customers and have been concentrating on migrating prepaidcustomers to postpaid contracts. Third-ranked operator Vodafone Czech Republic had historically beenthe operator with the highest proportion of postpaid customers in its subscriber mix, but, in the thirdquarter of 2008, Telefónica O2 wrested this mantle from Vodafone. Both Telefónica O2 and Vodafonehad more than half of their customer bases on postpaid subscriptions at the end of Q109, and T-Mobile isfast approaching the 50% mark. The country’s smallest operator U:fon, a CDMA-based operator, saw itsmarket share grow to almost 1% by the end of the first quarter of 2009, and while we are not expecting itto threaten Vodafone for third place in the market, the operator should aid competition, particularly in themobile internet segment. The mobile operators have been rolling out a number of mobile internet promotions along with innovativenew multimedia content in an effort to drive up demand for mobile data services. While demand doesappear to be increasing, consumer willingness to pay for such services is apparently muted. The increaseddata usage has yet to filter through to ARPU rates, and the continued promotions and tariff improvementsare expected to hold back operator ARPU in future. The country’s fixed-line sector continues to fall, having witnessed a decline of 5.2% in 2008. However,this was a significant improvement on the 16.8% decline seen in 2007. This is in part due to theslowdown seen in the mobile subscriber growth, which is impacting fixed-to-mobile substitution, but themain factor appears to be the greatly improved fixed-line tariffs along with the bundling of fixed lineswith services such as broadband, IPTV and mobile telephony. Subscriber growth in the broadband sector came to 17.6% in 2008, almost half the rate seen in 2007 butstill robust given the Czech market’s maturity relative to some of its peers in the region. The CzechRepublic has one of the most competitive broadband markets in Central and Eastern Europe, with theincumbent, Telefónica O2, holding around a third of the market. Competition from alternative operatorswith their own network infrastructure such as UPC Czech Republic and GTS Novera is constantlygrowing, resulting in falling prices and improved services. In contrast to much of the rest of the region,Telefónica O2’s wholesale and unbundling (LLU) business is beginning to stumble as alternativeoperators increasingly use their own network infrastructure. Going forward, further improvements toservice quality and download speeds as well as the launch of advanced services such as Telefónica O2’sIPTV service, O2 TV, are expected to be at the forefront of the broadband sector’s development. Table of Contents
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