Yes, the eight Eastern European countries that joined the European Union last May will eventually prosper, but they're off to a miserably slow start, according to the latest Light Reading Insider report (see LR Insider Analyzes Eastern European Telecom Market).
The report, entitled "Telecom Opportunities in the Elite EU8" says accession to the EU will probably accelerate telecom developments in the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia. It also notes that these countries have the right conditions to fuel a boom -- stable democracies, nascent demand for telecom services, and under-developed infrastructures.
Right now, however, incumbent carriers in those countries still call most of the shots, and a lot of them have been forced to significantly cut back on capital expenditure.
To illustrate this point, the report lists selected financial information about the bigger carriers in the region -- the Czech Republic, Hungary, Poland, Slovakia, and Slovenia (see table below). Of the eight surveyed, five had cut capex in 2003, in one case -- Aliatel a.s. -- by a thumping great 75.5 percent. The other Czech Republic carrier listed -- Cesky Telecom a.s. -- cut capex by 38 percent in 2003 and was planning further cuts this year, according to the report.
Table 1: Eastern European Carrier Snapshot 2003
|Czech Republic||Aliatel a.s.||$976M, up 38%||($15M)||$8.6M, down 75.5%|
|Czech Republic||Cesky Telecom a.s.||$2.1B, down 3%||($69.5M)||$273M, down 38%|
|Hungary||Hungarian Telephone and Cable Corp. (AMEX: HTC)||$59.6M, up 14.2%||$12.5M, up 54.2%||$205M, flat|
|Hungary||Mat�v Group||$2.9B, up 3.2%||$318M, down 15.4%||$442.3M, down 17.5%|
|Poland||Netia Holdings SA||$188.4M, up 14.9%||($194.9M)||$39.5M, down 45%|
|Slovakia||Slovak Telecom||$540.7M, down 5.6%||$114.2M, up 8.1%||$157.6M, flat|
|Slovenia||Telekom Slovenia||$406.3M, down 2.3%||$52.7M, up 53.7%||$51.6M, flat|
|Poland||Telekomunikacja Polska SA||$5.1B, up 19.6%||$266.M, down 3%||$268.7M, down 3.9%|
|Source: Light Reading Insider, "Telecom Opportunities in the Elite EU8"|
A number of other Eastern European carriers are profiled in the report. These include:
- An alliance of operators called 4cE
- The Czech Republic's Contactel s.r.o.
- Ireland's eTel Group, which provides services in Austria, the Czech Republic, Hungary, Poland, and Slovakia
- European operator Interoute Telecommunications, which acquired a central European operator, Cecom, in May (see Interoute Buys Euro Network)
- Hungary's Invitel Telecommunications Services
- Linx Telecom, a wholesale operator offering services in 12 countries including the Baltic States, Poland, and Russia
- Hungary's PanTel Telecommunications and Communications Co.
- Sweden's Tele2 AB (Nasdaq: TLTO), an operator whose network extends into 24 European countries including the Baltic States, the Czech Republic, Poland, and Russia
- Estonia's Eesti Telekom AS (London: EETD)
- Latvia's Lattelekom SIA
- Lithuania's Lietuvos Telekomas AB (Lithuania: LTEL)
For more information on "Telecom Opportunities in the Elite EU8," click here.