Due to saturation in the mobile market opportunities for operators are primarily in encouraging subscribers to upgrade their handsets or move to higher capacity data services to generate additional revenues. There is also additional pressure on traditional services as smartphone users substitute voice and messaging usage to IP alternatives. Meanwhile, wireline operators face similar challenges, for instance staving off the trend of fixed-to-mobile substitution and competition from VoIP. However there is a significant opportunity for wireline service providers in migrating subscriptions to higher speed services such as cable over DOCSIS3.0 and FTTx, 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 up 0.4% y-o-y to 10.741mn at the end of Q313.
- In contrast, the mobile internet market is booming. NMHH reported a total of 2.899mn active mobile internet subscriptions at the end of September 2013, up 33.7% y-o-y, making it the outperforming growth segment of Hungary's telecoms market.
Key Trends And Developments
The development of high capacity wireless data services has been the major change in the mobile market in 2013, and investment will continue into 2014. In November 2013 T-Mobile stated it planned to double the population coverage level of its 4G LTE mobile network from 40% in Q413 to 80% by 2015. T-Mobile has also expanded the range of LTE enabled devices, with 30 models of phones and tablets available since Q413. Meanwhile second largest operator Telenor announced in October 2013 that it had modernised its LTE network to provide maximum download speeds of 150Mbps, as well as making its 4G LTE service available for smartphone and tablet users, around a year after it was initially launched for dedicated data subscriptions. BMI believes operator investments in network infrastructure, along with the greater availability of devices, will drive LTE subscription growth in 2014.
Sector-specific taxation has been a contentious issue in Hungary in recent years, but there was a conciliatory tone from Prime Minister Viktor Orban in November 2013, when he suggested the government could reduce the level of the crisis tax on the telecoms industry in an effort to attract additional investment. The Hungarian Parliament had enforced a new tax from January 1 2013 under which all utility network owners - telecoms included - charged for their ducts. A usage-based tax (on voice calls and SMS) also came 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. No further action had been taken by the government to ease taxes, but the statement by the prime minister signals a positive intention for when the fiscal burden eases.