The telecoms markets in Hungary have a mixed outlook due to the high penetration rates for services. In the mobile market opportunities for growth are concentrated in encouraging subscribers to upgrade their handsets or move to faster data services - with total subscription numbers stagnating in recent years. Meanwhile, wireline operators face similar challenges, for instance staving off the trend of fixed-to-mobile substitution. However there is a significant opportunity for wireline service providers in migrating subscriptions to higher speed services, thereby raising ARPU. The medium term outlook is therefore mixed, with operators that position their product to capture growth from customers upgrading services likely to outperform.
- The mobile market has stagnated in terms of total subscription growth, with mobile subscriptions down 0.2% y-o-y to 10.693mn at the end of Q213.
- In contrast, the mobile internet market is booming. NMHH reported a total of 2.66mn active mobile internet subscriptions at the end of June 2013, up 36.2% y-o-y, making it the outperforming growth segment of Hungary's telecoms market.
- Despite growth, mobile internet operators continue to report declines in ARPU in the mobile market as operators remain under pressure from cuts to termination rates, MVNOs and the rising threat of IP substitution.
Key Trends And Developments
Operators continue to focus on wireless data services as important drivers of financial performance by investing in expansion of 4G LTE networks. In July 2013, market leader T-Mobile expanded its 4G LTE internet service to seven new locations across the country, increasing coverage to over 37% of the population. Meanwhile, Telenor announced, in October 2013, that it had modernised its LTE network to provide maximum download speeds of 150Mbps. It also announced, in September 2013, that it had made its 4G LTE service available for smartphone and tablet users, around a year after it was initially launched for dedicated data subscriptions. Telenor is marketing the service aggressively, with free trials for all its postpaid voice and data subscriptions, indicating the importance for future performance.
Sector-specific taxation has been a contentious issue in Hungary in recent years, and the issue resurfaced in 2013. The Hungarian Parliament enforced a new tax from January 1 2013, which sees all utility network owners - telecoms included - charged for their ducts. A usage-based tax (on voice calls and SMS) is due to come into effect from August 1 2013, and operators are prohibited from passing the tax onto subscribers. Operators have argued strongly against the taxes on the grounds they will reduce investment levels, and hoped the European Commission (EC) would support them in the fight. However in July 2013 the EC dropped plans to take legal action against the crisis taxes after losing a comparable case it had brought against France.