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Pyramid: Mobile Data Drives Czech Revival

What would operators do without mobile data?

Just as in other markets in Central and Eastern Europe, non-voice mobile services look set to spearhead telecom market growth in the Czech Republic following the slump of 2009, according to a new report from Pyramid Research . (See Romania Returns From Wilderness Year and Pyramid: 3G Key to Slovakian Growth.)

The report, "Czech Republic: Data Service Growth to Offset Loss of Mobile Voice Revenue," predicts that mobile data revenue will grow from the 2009 figure of 18.1 billion Czech koruny (US$868 million) to Kc26.2 billion ($1.2 billion) in 2014.

Mobile data cards are tipped to be the key driver of increased mobile penetration in the country, pushing subscriptions to 14.9 million by 2014, up from 13.5 million in 2009. This will represent a mobile penetration rate of 146.6 percent.

A high level of fixed-to-mobile substitution means an accelerating decline in fixed-line subscribers and an accompanying slump in fixed circuit-switched voice revenue. Fixed-line penetration had already fallen from 20.2 percent in 2008 to 17.8 percent in 2009, and the continuing downward trend will see this figure hit 8.8 percent in 2014, according to the report’s author, Stela Bokun.

But it’s not all doom and gloom for the Czech Republic’s fixed-line sector. Driven by a strong projected adoption of broadband-based services, the fixed market looks set to actually grow in value throughout the forecast period, reaching Kc38.9 billion ($1.85 billion) in 2014, up from Kc38.2 billion ($1.82 billion) in 2009, according to Bokun's forecasts.

In subscriber terms, this means fixed-broadband access penetration will rise from 2009’s figure of 19.8 percent to 27 percent in 2014 -– a CAGR of 6.4 percent. The report predicts that operators’ special deals will help drive this trend. For example, in 2009, Telefónica O2 Czech Republic a.s. launched its O2 Home fixed-broadband service, which did not require a fixed-telephony subscription.

In the mobile market, 3G is where it’s at for Czech mobile operators at the moment, as they ready themselves to be able to exploit the anticipated surge in demand for mobile broadband.

Last year, Telefónica O2 increased its 3G network coverage in population percentage terms from 16.5 to 26.6 percent. T-Mobile Czech Republic a.s. is continuing to roll out its 3G HSPA network upgrade across the country, targeting, not surprisingly, the densely populated cities. And Vodafone Czech Republic a.s. is also getting in on the act, having launched a 3G network in March, bringing 70 percent coverage to the capital, Prague, and 100 percent coverage to Brno, the country’s second city. (See NSN Upgrades Czech T-Mobile and Huawei Wins Vodafone 3G Deal.)

The Czech Republic is also likely to feature as one of the test sites in major LTE trials being proposed by Telefónica. (See Telefónica Kicks Off LTE Trials.)

But there is investment on the fixed front, too, with UPC Česká republika a.s. -- which only offers cable, but no mobile, services -- upgrading its network to Docsis 3.0, allowing it to offer broadband speeds of up to 100 Mbit/s. (See UPC Picks Moto Wideband EMTAs.)

FTTH is making its presence felt as well, according to the report, with T-Mobile introducing the ViaGia FTTH-based service in Prague, which also offers 100 Mbit/s speeds, and Smart Comp. a.s. providing a fiber-based service called Netbox in Brno. Telefónica O2, for its part, has been testing VDSL service in 2009 and is hoping to launch VDSL2-based services this year.

Amid all this ongoing activity, the report tips Telefónica O2 to maintain pole position in the Czech market through to 2014, though its market share is predicted to fall from 38 percent to 35 percent as circuit-switched voice declines and competition hots up in the fixed-broadband sector.

— Paul Rainford, freelance editor, special to Light Reading

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