Czech Republic Telecommunications Report Q2 2012

The Q212 update to the Czech Republic Telecoms market report contains BMI’s forecasts for the mobile, ARPU, fixed-line and internet sectors through to the end of 2016. It also contains analysis of new developments in the country’s telecoms industry. Our analysis and forecasts are based on market data for Q311 provided by fixed-line incumbent and mobile operator Telefónica O2, Deutsche Telekom-owned T-Mobile Czech Republic, Vodafone Czech Republic and cable operator UPC Czech Republic. We also incorporate latest data from the ITU for the fixed-line and internet markets relating to the end of December 2010.

The Czech mobile market continued positive growth in Q211 and Q311 with 0.4% q-o-q growth in each quarter and net additions of 118,000. This took total subscriptions to 13.731mn and a penetration rate of 130.3%. Vodafone has been the primary source of growth, while T-Mobile has continued to report subscriber losses in 9M11. However, we do not believe this six month market performance signals a return to growth for the market, with penetration still above 130% and operators increasingly focused on the migration of subscribers from prepaid to postpaid subscriptions, we expect medium-term growth to be sluggish, with periods of growth and net subscriber losses. Mobile penetration in the Czech Republic has largely remained flat during the past two years and is not expect to change significantly in the next five years. BMI forecast an average annual growth rate of 0.5% over the next five years, bringing the mobile subscriber base to just under 14.123mn in 2016, a penetration rate of almost 132.5%.

There are however risks to this outlook. First is the Q411 announcement by the fourth largest operator U:fon that it had entered voluntary insolvency due to the high burden of its historic debt. It stated that it will continue to deliver services while undergoing debt restructuring. However, with its growth rate extremely slow, limited regional presence and the constraints of its CDMA network, BMI considers its growth outlook to be limited in the medium term, which may affect creditor negotiations. In addition to the potential of competition being affected by the loss of an operator, we note the potential negative effect of the ongoing eurozone crisis on all the country’s telecoms markets. While the eurozone crisis is already factored into our forecasts and analysis, there is downside risk from our current core scenario of a disorderly break up or exit of particular states, from the eurozone.

There are also positive trends in Czech Republic’s mobile market, stemming from our forecast of growth in 3G services. Operator investm
ents have been accelerated in H211 and 2012, with all three operators extending coverage and capacity. 2012 will see the launch of commercial HSPA+ 42Mbps services, which should boost subscriber growth and which has, until now, been limited relative to other markets in the region. With this operator investment, we expect one of the major trends across the Czech Republic’s telecoms markets to be the drive by operator to upgrade customers to higher value services as well as developing VAS revenue. With the saturation of the mobile voice segment, BMI expects operators to increase their focus on mobile broadband services and postpaid subscriptions to drive revenue growth. We expect such higher value services to have a positive effect on operators’ ARPU.

In the fixed-line, internet and broadband sector, operators have to migrate customers to higher value services, although growth in terms of subscriber acquisitions has slowed. However, in the past few quarters this pace of upgrade has slowed due to economic headwinds and a diminishing addressable market. For instance, in 2010 and 2011 cable operator UPC has reported strong growth in digital pay-TV services, while analogue subscriptions have declined. However, in Q311 digital subscriptions actually declined for the first time, which we believe is the result of the small number of analogue customers left to migrate. With this in mind and the macroeconomic environment, BMI believes wireline operators looking to attract high-value subscribers will face a tougher environment than it has in recent years.

Furthermore, with LTE services set to launched following a frequency auction in 2012, the operators will face an additional threat from high-speed mobile broadband. However, for the time being fixed broadband growth has remained robust, with growth rates of 7.4% and 6.1% y-o-y respectively for Telefónica and UPC to Q311. This is the result of network investment on the part of operators. In April 2011, UPC established its first datacentre in telehouse TTC Telekomunikace in Prague. The new facility has a capacity of 350m2, which can be extended further and uses a node with n x 10GB capacity to connect to the optical backbone route. Customers can choose from a wide variety of services provided at the datacentre, including server hosting, web hosting, managed servers, rack housing, cloud services, virtual servers and others. To counter the strong growth of UPC, , the Telefónica O2 backed incumbent launched its VDSL network to offer high-speed broadband services earlier in 2011. These investments will boost the sector in the short-to-medium term. However, over the longer term we expect LTE to present significant challenges to growth. In this respect Telefónica is better positioned due to its exposure to the wireless broadband market in addition to its fixed operations.

Business Monitor International's Czech Republic Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Czech Republic's telecommunications industry. SHOW LESS READ MORE >

Executive Summary
SWOT Analysis
Czech Republic Mobile Sector SWOT
Czech Republic Fixed-Line Sector SWOT
Czech Republic Internet Sector SWOT
Czech Republic Political SWOT
Czech Republic Economic SWOT
Business Environment
Central And Eastern Europe
Table: Central And Eastern Europe Risk/Reward Ratings, Q212
Czech Republic
Industry Forecast Scenario
Mobile
Table: Telecoms Sector – Mobile – Historical Data And Forecasts, 2009-2016
Mobile ARPU
Table: Telecoms Sector – Monthly Blended Mobile ARPU (CZK) – Historical Data And Forecasts, 2009-2016
Fixed Line
Table: Telecoms Sector – Fixed Line – Historical Data And Forecasts, 2009-2016
Internet
Table: Telecoms Sector – Internet – Historical Data And Forecasts, 2009-2016
Market Data Analysis
Mobile
Market Share
Table: Czech Mobile Market, Q311
Subscriber Mix
3G Network Development
Mobile Contract Wins
Table – Mobile Contract Wins
Mobile Operator Data
Table: Market
Table: Telefónica O2 Cz
Table: T-Mobile
Table: Vodafone Cz
Mobile Content
Regional Outlook
Table: Mobile Broadband Subscriptions By Operator
Table: Top 10 Sites by Visits On Opera Mini-browser, Select Countries in CEE
Country Outlook
Value-Added Services Timeline
Table: Selected VAS Service Developments
Fixed Line
Table: Telefónica O2 Outbound Traffic, 2010 – 2011
Table: Telefónica O2 Inbound Traffic
Internet
WiMAX
IPTV
Cable
Wholesale
Wireline (Fixed-Line And Broadband) Developments
Table: Wireline Developments (2008-2011)
Regulatory Environment
Table: Czech Republic: Electronic Communications Regulatory Bodies And Their Responsibilities
Legislation
Interconnection And Access
Industry Developments
Competitive Landscape
Market Overview
Competitor Analysis
Table: Key Players: Czech Republic Telecoms Sector
Table: Selected Operators’ Financial Results
Company Monitor
Table: Nokia Siemens Networks - Net Sales By Geographic Area, 2010-2011
Nokia Siemens Networks: Key Contracts In CEE Region, 2011-2012
Company Profiles
Telefónica O2 Czech Republic
T-Mobile Czech Republic
Vodafone Czech Republic
Regional Telecommunications Penetration Overview
Fixed Line
Table: Regional Fixed-Line Penetration Overview
Broadband
Table: Regional Broadband Penetration Overview
Mobile
Table: Regional Mobile Penetration Overview
Country Snapshot: Czech Republic Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2012
Glossary Of Terms
Table: Glossary Of Terms
BMI Methodology
How We Generate Our Industry Forecasts
Table: Key Indicators For Telecommunications Industry Forecasts
Telecoms Business Environment Ratings
Risk/Reward Ratings Methodology
Ratings System
Indicators
Table: Ratings Indicators
Weighting
Table: Weighting Of Indicators
Sources

- Telefónica O Czech Republic
- T-Mobile Czech Republic
- Vodafone Czech Republic