Czech Republic Telecommunications Report Q3 2009 (Business Monitor International)

Czech Republic’s broadband sector grew by over 14% during 2008, taking the country’s broadband subscriber base to just over 1.5 million but with penetration still under 15%. In our Q309 Telecommunications Report for the Czech Republic, we have expanded our fixed-line and internet market data analyses sections while leaving the mobile market data analysis section stagnant, to be updated in the subsequent quarter.

The Czech Republic has one of the most developed telecommunications markets in the Central and Eastern European region. Growth in the mobile sector slumped to 4% in 2008, down from a disappointing 5.9% in 2007. The mobile sector is approaching saturation, and we have forecast muted growth prospects over the remainder of our forecast period as mobile penetration had reached 131.1% by the end of 2008.

As subscriber growth opportunities dry up, market leader T-Mobile Czech Republic and the second largest operator Telefónica O2 Czech Republic have been pursuing higher value customers, concentrating on improving their subscriber mixes and encouraging users to use mobile data services.

Vodafone, the smallest GSM operator, has been growing both its prepaid and postpaid subscriber bases in an effort to prop up its market share, which stood at 21.3% at the end of 2008, up from 20.4% at the end of 2007. However, going forward, we are expecting the focus of all three operators to increasingly turn to postpaid and mobile data customers. Growth in the 3G sector has been muted to date, but demand for mobile internet does appear to be growing as demonstrated by Vodafone signing up over 400,000 subscribers to a free mobile internet promotion in less than one quarter.

In our mobile content section, we explore the mobile value-added service (VAS) offered by the country’s mobile operators. Free mobile internet promotions and innovative new multimedia content and VAS such as Vodafone’s M-Wallet are being used to help drive up demand for mobile data services. However, the promotions and prices cuts are expected to eat into operator ARPU, despite the expected growth in mobile data usage.

The Czech Republic’s fixed-line sector is in decline, falling by an estimated 6% during 2008 to a penetration of 21.8%. However, this represented a slowdown in the rate of fixed-line decline, which incumbent Telefónica O2 attributed, in part, to the marketing of double- and triple-play packages offering fixed lines, broadband and TV or mobile. Nevertheless, the market is still expected to continue its decline, albeit at a slowing rate, as customers to continue to drop their fixed lines in favour of the more expedient mobile and the cheaper VoIP services. Owing to the intense competition in a declining sector, a number of alternative operators have revealed plans to concentrate on the more lucrative corporate segment.

The Czech Republic’s broadband sector grew by over 14% during 2008, taking the country’s broadband subscriber base to just over 1.5mn but with penetration still under 15%. Telefónica O2 is dominant in the broadband sector with its ADSL offering, although competition is increasing from alternative operators and different technologies. Cable operator UPC Czech Republic had an estimated more than 20% market share at the end of 2008 after reporting solid growth during the year, both in its broadband and bundled service lines. To combat cable, Telefónica O2 offers an IPTV service called O2 TV, which grew over 56% during 2008 to reach 114,500 subscribers.