2007 Eastern European Mobile Communications and Mobile Data Markets

Probably the most dynamic telecoms sector across the whole Eastern European region, the mobile industry continues to grow despite maturing markets in some countries. In saturated markets the good times of high growth will become to harder to imitate during 2008, with revenue growth to be centred on encouraging migration to postpaid plans and 3G/HSDPA services to offer desirable mobile data and content. Operators have their work cut out for them in the mobile data and contents market as SMS and MMS continues to account for the majority of non-voice revenue, although the faster 3G/HSDPA network speeds available coupled with the falling cost of smart phones should be encouraging for operators as it allows delivery of more desirable high-bandwidth content.

This Eastern European annual report offers extensive coverage of the region’s mobile market, highlighting regulatory and market developments, introducing the major players and the services on offer, as well as providing a wealth of insightful statistics, no doubt making essential reading for anyone holding an interest in the region’s mobile sector.

Key highlights:

Central Eastern Europe (CEE)

• Saturated mobile markets in the region have not discouraged new market entrants, with new mobile network operators deploying networks and launching services in the Czech Republic and Slovakia.
• As mobile penetration in all five countries is at or near saturation, established operators are looking to improve ARPU levels by encouraging prepaid users to migrate to postpaid plans and focusing on mobile data uptake.
• 3G/HSDPA services are available in all five countries while increasing mobile data market, competition has reduced tariffs and led to the introduction of unlimited mobile Internet access services.
• The growing potential of the mobile data market is evident as a new Czech mobile network operator initially focused on mobile data services when it first launched services.

Baltic

• Mobile subscriber growth in all three countries, despite saturated markets, suggests multiple SIM card ownership. Mobile operators acknowledge there is little room left to grow through new subscriber additions and have been focusing on encouraging postpaid take up among prepaid users as a way to increase ARPU levels. Numerous MVNOs offer services in each country although so far they have made little impact due to the short time they have been offering services.
• Mobile data and content is also being sought to create new revenue growth opportunities. 3G/ HSDPA services are widely available in each country although widespread usage will be limited for the next two to three years until 3G-capable handsets become more widespread.
• Relatively affordable mobile broadband access services are available from a number of operators, with take up expected to continue in 2008 and beyond as competition further improves offerings.

Balkans

• New mobile network operators launched services during 2007 in Serbia, Macedonia and Montenegro; two of which are subsidiaries of Telekom Austria.
• Mobile markets across the region continue to post solid growth rates although with numerous markets approaching maturity, operators are attempting to maintain revenue growth momentum through increasing ARPU levels. Strategies used include encouraging migration to postpaid plans, differentiated tariff plans and encouraging mobile data and content usage.
• 3G/HSDPA will become increasingly important in 2008 as the focus shifts to mobile data and content usage. However widespread uptake will be challenged in the short/medium term by the lack of desirable mobile content, lack of awareness/familiarity with mobile content services and penetration of 3G-capable handsets.
• 3G or HSDPA services are available in Bulgaria, Croatia, Cyprus, Greece, Montenegro, Romania and Serbia.

CIS

• 3G licences have been awarded to the three major mobile network operators in Russia, Europe’s largest mobile market by subscriber levels. However all three have expressed reservations about the commercial viability of 3G services given the existing potential of the mobile voice market. Mobile data is not expected to be the main revenue growth driver until 2010.
• Russia’s mobile market is being boosted by the removal of cross-subsidises for fixed-line local calls, resulting in increasing fixed-line charges to 2009, which is expected to further drive voice traffic from fixed lines to mobile.
• Ukraine’s fixed-line incumbent has launched commercial WCDMA services, although 3G services are also available from the country’s CDMA operators.
• Testing of mobile broadcasting technology DVB-H has been conducted in Russia, with plans to launch commercial services by 2009.
• Belarus has slightly relaxed its majority state ownership of the country’s mobile network operators, selling a 70% stake in an operator to Telekom Austria in October 2007.
• A third GSM licence has been awarded in Moldova, a positive development for consumers given the country’s existing duopoly and rising penetration levels.