Hungary Mobile Network Operator Subscriber Data 2007-2011

Table & Charts

Table 1: Hungary Mobile Market & % Quarterly Performance 2Q 2011 Table 4: Hungary Mobile Subscribers % Quarterly Change 2Q 2009 - 2Q 2011

Table 2: Hungary Key telecom parameters – 2010; 2012

Table 3: Hungary Mobile Subscribers & Mobile Penetration 2Q 2009 - 2Q 2011: Vodafone, Pannon, T-Mobile

Hungary enjoyed modest growth in mobile subscriber numbers till the fourth quarter of 2008, after which it has seen an equally modest decline.

Hungary's relatively underdeveloped market was fully liberalised in early 2002: it soon attracted interest from a number of international players, including Deutsche Telekom, Telenor, Vodafone, Tele Danmark and UPC, which have considerably improved telecom infrastructure, provided effective competition and expanded the range and quality of services offered. The market has developed a greater dynamism since Hungary joined the EU in 2004, alongside nine other countries which had completed the accession requirements in their telecom markets and harmonised their regulatory systems in accordance with EU laws. Hungary has since received considerable EU structural funding designed to improve economic development: a total of €25.3 billion has been allocated to 2013. In addition, the country has been the recipient of almost US$ 23 billion in loans from the IMF, EU Central Bank and World Bank as is struggles to recover from liquidity issues following the economic malaise of the last three years.

Although there are numerous active players, the broadband, mobile and fixed-line sectors are dominated by a few key operators including Magyar Telekom, Vodafone, Telenor and UPC.

Source: The Worldwide Directory of Mobile Network Operators 2011 Copyright: TelecomsMarketResearch.com 2011

Hungary enjoys high broadband usage compared to other Central and Eastern European countries. DSL and cable are the dominant platforms though FttX is emerging as a key focus for future growth, with some 240,000 subscribers by mid-2011. Consumer demand for bundled services is a driver for more capable bandwidth, which has also encouraged the main cablecos to upgrade their networks with DOCSIS3.0 technology.

According to Hungary - Telecoms, IP Networks, Digital Media and Forecasts the dynamic mobile market, served by three MNOs, has seen a decline in the subscriber base in recent quarters as operators shed dormant SIM cards from their databases. With fewer opportunities for revenue growth through new subscriber additions, revenue growth has focused on lifting ARPU from mobile data services and from migrating subscribers from prepaid to contract plans. HSPA+ has been rolled out extensively, while LTE trials and LTE Overall, revenue has fallen during the last few years in response to competition and to regulatory-mandated tariff reductions affecting termination rates as well as voice and data roaming. The nascent mobile broadband market is a key growth area in the medium term, given the currently low penetration levels and increasingly affordability of multimedia capable handsets.

As for the overall economic state of the country, there have been significant stresses on the Hungarian economy and financial markets over the past three years. A run of poor governmental monetary and fiscal policies resulted in a state budget deficit running at 10% of GDP by 2006. This was then tackled by the introduction of a range of austerity measures which reduced state spending, increased taxes and kept interest rates relatively high. These in turn caused lower economic growth (GDP fell 6.7% in 2009) and large current account and budget deficits which contributed to a fall in the value of the currency. Consequently Hungarian businesses and consumers have significantly reduced their investments and spending, in turn further retarding economic growth: GDP fell 4.4% in the fourth quarter of 2009 (year-on-year) but has since recovered somewhat, reaching 1.7% growth in the fourth quarter of 2010 (year-on-year).

In late 2010 the government introduced a 'crisis tax' levied on the energy, retail and telecom sectors for three years. With an overall target of at least HUF161 billion in revenue annually, the telco tax alone may generate HUF 61 billion (USD 269.6 million) annually for 2010-12. The European Commission (EC) investigated the legality of the tax, given that extraordinary taxes can only be used to cover the cost of regulating the industry. The EC initiated proceedings against France and Spain for imposing similar taxes on telcos.

Although the tax has affected telco revenue and impeded operators' investment programmes, the anticipated economic recovery in coming years will positively affect consumer confidence and promote higher spending on services. Operators themselves are committed to upgrading their fixed-line and mobile networks to provide higher-bandwidth capabilities, and so exploit growing consumer demand for bundled services and high-end mobile data applications.

Table 2: Hungary Key telecom parameters – 2010; 2012

Sector	2010	2012 (e)
Subscribers by sector (million):
Fixed broadband subscribers	1.90	2.12
Mobile broadband	1.0	2.1
Mobile phone	11.05	11.0
Fixed-line telephony	2.95	2.98
Penetration by sector:
Fixed broadband	20%	24%
Mobile	120%	119%
Fixed-line	31%	31%

Source: Hungary - Telecoms, IP Networks, Digital Media and Forecasts

Market Highlights

• The anticipated award of a fourth 15-year mobile licence in the 900MHz band will introduce a new market entrant to compete against the triopoly of T-Mobile, Telenor and Vodafone. The licensee can also bid for frequencies in the 1800MHz and 2100MHz bands. Given that the licences are technology-neutral, the release of additional spectrum will considerably advance the countries LTE capabilities in coming years.
• The regulator initially earmarked LTE to be deployed using the 2.7GHz band despite the poor propagation characteristics of the higher frequencies. However, other bands have now been permitted for 4G which will better serve rural communities hampered by poor fixed-line infrastructure. All three MNOs have trialled LTE with a view to commercial launches in 2012 and 2013.
• The government’s National Broadband Strategy envisions full broadband access by the end of 2011, with a focus on improving digital literacy. Initiatives to bridge the ‘digital divide’ include installing publicly accessible internet access points in towns with fewer than 5,000 people. The regulator has played a significant part in encouraging broadband growth by establishing regulatory wholesale market price controls, extending wholesale access to cable and fibre networks.
• DTTV services are available to 95% of the population. Although legislation initially set ASO for the end of 2011, with the process undertaken regionally, the government has delayed it to the end of 2014 depending on related amendments to the New Media Act. Both Romania and Bulgaria have also put back their ASO dates.

In the previous update BMI's Hungary Telecommunications Report Q4 2011 reported that the government’s announcement that the crisis tax impacting telecoms operators would be abolished after 2012 introduced certainty and therefore reduced the negative impact on the development of the market. Further, there has been little impact on the levels of investment by operators, reinforcing BMI’s view that the tax had a limited impact on the development trajectory of the wider market. However, in financial terms it continues to affect operator performance. Magyar Telekom, as the incumbent and wealthiest operator, is expected to account for nearly half the additional HUF61bn between 2010 and 2012.

The Hungarian mobile market experienced a mixed H111, with declining subscriber numbers, but an improving subscriber mix. The market leader T-Mobile reported a subscriber loss of 431,000 in Q111, with the majority of the losses occurring in the postpaid segment. The higher value of the postpaid segment makes this particularly damaging for the operator. However, T-Mobile’s parent company says in its results that the loss is related to a restating of figures and this time excludes business customers. This explains the postpaid losses.

Table 3:
     
Source: The MNO Directory 2011 Copyright: TelecomsMarketResearch.com 2011
Table 4:

Source: The MNO Directory 2011 Copyright: TelecomsMarketResearch.com 2011