Smartphone proliferation will be the critical factor in the CEE market’s growth trajectory
While much of the smartphone buzz has been generated by the developed markets of Western Europe to date, we see a growing number of operators launching a range of own-branded smart devices across CEE as a way of meeting the pent-up demand and engendering greater loyalty and reducing churn within their customer bases. Operator examples of this trend include Vodafone Group plc (NYSE: VOD) across its footprint, the introduction of Orange-branded tablets in Poland and MTS’ own branded device portfolio in Russia. We expect smart device proliferation to explode through 2012 and beyond in the region, and as a result we forecast greater data and application uptake to ensue and for this segment to command a greater percentage of total mobile revenues as a result. To quantify this, we forecast that approximately 90 percent of the growth in total mobile revenues of $59.6bn in the region in 2012 will come from increased expenditure on data services.
NFC will show its commercial potential
2012 has long been pinpointed by both operators and vendors as the year for NFC, involving Deutsche Telekom AG (NYSE: DT), Telekom Austria AG (NYSE: TKA; Vienna: TKA), Salt SA , Telecom Italia (TIM) , Telefónica SA (NYSE: TEF), Vodafone, Telenor Group (Nasdaq: TELN), Nokia Corp. (NYSE: NOK) and BlackBerry to name just a few. With the ecosystem of device and POS equipment manufacturers, operators, payment solution providers and end users now taking shape, we also expect the NFC dream to become a reality in the CEE region. As the largest market in the region, we look to Russia in particular for confirmation of this outlook, and we are reassured by the operators’ commitment to testing and the commercial launches that have taken place in the country to date. We expect that MegaFon ’s commercial launch of an NFC-enabled payment facility for St. Petersburg’s public transport system in the fourth quarter of 2011 to be just the start of a wave of commercial deployments across the country. Mobile penetration is forecast to reach 173 percent in 2012, and mobile data users are expected to reach 131 percent penetration of the population. We foresee the largest MNO in the country, Mobile TeleSystems OJSC (MTS) (NYSE: MBT), building upon its recent commercial NFC agreement with gas station chain Lukoil, and VimpelCom Ltd. (NYSE: VIP) further driving adoption of this burgeoning technology. All told, 2012 is shaping up to be a pivotal year in the evolution of payment services in Russia.
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