February 24, 2011
The polka is the name of a well-known dance and music genre, whose popularity has spread from its Central European origins to locations as far flung as the Americas. Its appeal is largely derived from its energetic nature, with an upbeat 1-2-3 tempo, frenetic rotations and lively movements. The latest variation of this dance can now be seen in the Polish telecom space.
We are referring, of course, to the “Polkomtel dance,” which is now in full swing, following the submission of first round indicative bids from a reported 10 partners that all want to take Polkomtel’s hand on the mobile communication’s dance floor. Like the dance, we should expect to see frenetic activity over the next few weeks as the list of interested parties is whittled down to a short list, which is likely to include a mix of both strategic and financial buyers. Geographically, potential buyers reflect interest from the Americas (Carlos Slim’s America Móvil and KKR), AME (Zain) and a host of European and domestic parties, highlighting an almost global level of interest.
The reasons for this interest are evident at both a market- and country-specific level, with the Polkomtel sale representing an opportunity to buy into a growth segment. Analysis from Pyramid Research’s Q3 forecasts estimated that the Polish telecom market generated US$12bn (Zl 37.5bn) in revenue in 2010, making it the second largest in Central and Eastern Europe, after Russia. We expect the Polish market to grow at a CAGR of 1.7% in local currency terms in the forecast period, reaching $14.7bn by 2015. This growth is driven by the proliferation of fixed broadband and broadband-based services, as well as mobile data, bundled with smartphones and computing devices.
Although Polkomtel, operating under the Plus brand, currently addresses only the mobile segment of the Polish market, Pyramid Research maintains that the company accounted for 19% of total Polish telecom service revenues generated in 2010 ($12bn). Through its investment in a CDMA 2000 deployment in 2010 and its strategy of migrating its customer base toward greater value-added and higher ARPU services — including its hugely successful Muzodajnia (online music store) with 1.7m tracks — we expect Polkomtel to maintain its share of total revenue generated throughout the forecast period, an impressive feat given its present focus on solely mobile communications.
Exhibit: Poland’s telecom market by revenue share, 2010, 2015
Source: Pyramid Research, Operators
Sylwia Boguszewska contributed to this Pyramid Point.
— Julian Morrison, Research Manager
Poland: As Mobile Data Usage Grows, LTE Looms on the Horizon
Country Intelligence Report published October 2010
We forecast that the Polish market will grow at a local currency denominated CAGR of 1.7% over the next five years, reaching $14.7bn (Zl 41bn) in 2015, representing a cumulative service revenue opportunity of $67bn (Zl 232bn) during the 2010-2015 period.
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