March 10, 2009
The Hungarian National Communications Authority (NHH) is supposed to announce the outcome of its mobile tender by March 23, 2009. The winner had been due to be selected by the end of January 2009, but the selection process was delayed because the NHH required further information, including the pace at which the applicants can expand coverage and the cities that they will target.
On October 22, 2008, NHH announced tenders for the following:
- Mobile (GSM/UMTS) services
- Wireless (450GHz) services
- Microwave interconnection (26GHz) services
According to Daniel Pataki, the head of the NHH, the purpose is to boost competition in the mobile services market and to expand broadband Internet coverage. The most contentious issue is the so-called bundle A, a 15-year mobile license in the 900/1800/2100MHz bands that will add a fourth GSM/UMTS service provider. Offers were submitted by four operators: Digi, Dream Com, Invitel and Mobinet Tavkozlesi Projekt. Besides paying a one-off fee of Ft100m (about US$$0.4m), the new player will also have to pay at least 0.75% of its annual net revenue; Dream Com has tempted the NHH with promises that it will hand over a higher percentage than its opponents.
The main question is how the fourth mobile operator will fit into the mature Hungarian mobile landscape. Having crossed the 100% mark in 2007, the mobile penetration rate in Hungary reached 113% at year-end 2008, and according to our estimates it will reach 123% by 2013. There are currently three mobile players: T-Mobile Hungary (owned by Deutsche Telekom), Pannon (owned by Telenor) and Vodafone Hungary. They have already established their market positions and lure customers with value-added services, concentrating their effort on 3G and mobile broadband provisioning. Considering all this, it is a bit surprising that the NHH felt the need to launch the tender in the first place.
Exhibit: Mobile subscriptions and penetration in Hungary
Source: Hungary Country Intelligence Report, March 2009
In such a saturated market it would make more sense for a mobile virtual network operator (MVNO) rather than a brand new MNO to enter the market. Within Central and Eastern Europe, MVNOs are widespread in Poland, although individually they never manage to gain a substantial market share, with the exception of Virgin Mobile. This is because MVNOs focus on niche markets, targeting particular segments of society, often at the lower end of the income scale. Chances are Hungary will see MVNOs enter the market before too long.
Having said that, the new Hungarian network operator is likely to follow in the footsteps of Telefónica 02. With a pricing strategy of very low prepaid tariffs and a flexible postpaid plan, and no minimum contract term, Telefónica O2 won an impressive 110,000 customers within just 12 days, and by year-end 2007 it had gained 9.7% of the market. One hiccup in its strategy was that it had to disconnect a vast amount of inactive SIM cards.
— Sylwia Boguszewska, Senior Analyst
Communications Markets in Hungary
Country Intelligence Report published March 2009
Although we estimate Hungary's telecom market to be worth US$5.2bn in 2008, the fifth largest in the CEE, we expect growth to slow to the lowest levels of the region over the next five years. Mobile voice is currently the largest revenue segment and is expected to remain so through 2013. One or two mobile operators may enter the Hungarian market as a result of tenders announced by the regulator. This Country Intelligence Report analyzes Hungary's communications, media and technology industries, including key trends, regulatory pressures and the competitive landscape, making it an excellent complement to our Forecast products.
Hungary Mobile Operator KPI Forecast, Q4 2008
Forecasts published December 2008
Updated on a quarterly basis, our Mobile Operator Key Performance Indicators Forecast products provide complete pictures of wireline voice and data communications in each of 10 Central and Eastern European markets. The Excel output includes five years of historical data and five years of market projections for metrics such as subscription totals, market shares, net and gross additions, prepaid and postpaid subscriptions, business subscriptions, data ARPS, aggregate ARPS, prepaid and postpaid MOU, churn and total service revenue — all broken down for the mobile operators in the respective markets. We believe our Mobile Operator KPIForecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets.
Central & Eastern Europe Mobile Demand Forecast, Q2 2008
Forecasts published December 2008
Updated on a quarterly basis, our Mobile Demand Forecast products provide complete pictures of demand trends for 20 geographical markets in Central & Eastern Europe. The Excel output includes five years of historical data and five years of market projections for metrics such as GDP, mobile penetration, subscriptions (by operator, type of package, technology), ARPS and total mobile service revenue (data and voice). The Forecasts are based on extensive field research and use a consistent methodology across all markets, aiming to capture the total spending, from an end-user perspective, on mobile communication services in each market.
HTCC Needs a Mobile Arm or Partner to Compete with Magyar Telekom
Regional Perspective published June 2008
Since its founding in 1993, HTCC has acquired five telecom players, and while its most recent two acquisitions in 2007 narrowed the gap between it and its main rival, incumbent T-Com, the telecom market in Hungary remains fundamentally unchanged. Without a mobile arm, HTCC’s growth potential and its ability to compete with T-Com remain in question. This Perspective looks at the Hungarian market and outlines what to expect in terms of future acquisition and partnership opportunities.