2009 Czech Republic - Telecoms, Mobile, Broadband and Forecasts

BuddeComm’s annual publication, Czech Republic - Telecoms, Mobile, Broadband and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in the Czech Republic.

An open, export-driven economy with Germany as its main trading partner, the Czech Republic grew by over 6% annually from 2005 until 2008 when the global financial crisis and the resulting drop in demand for Czech exports in Western Europe saw export growth turn negative followed by real GDP growth during 2009. To its credit, domestic financial markets are relatively healthy, with low exposure to sub-prime securities and structured financial products and falling interest rates in response to lower inflation expectations for 2009.

Despite the difficult conditions the telecoms market is expected to fare well given the essential nature of most telecom services although it may accelerate ongoing trends such as fixed mobile substitution, evident by the ongoing annual decrease in fixed lines in service.

Healthy infrastructure-based competition in the fixed broadband market is evident as xDSL accounts for 40% of fixed broadband connections; fixed wireless and cable are the second and third most popular fixed broadband access methods respectively. Fibre-to-the-Home maintains only a foothold in the market although increasing availability and consumption of higher bandwidth content such as HD web TV and IPTV is creating evident demand for faster broadband connections.

Like its EU neighbours the Czech Republic has taken steps to develop an Internet society, with the aim of applying ICT to improve both social and economic development, primarily through capturing efficiencies by migrating existing physical processes online. The most visible example is the provision of e-government services. Recent developments such as mandated e-government usage by all businesses and legal entities by 2010 will undoubtedly increase usage of online services and have spill over effects as awareness and familiarity with such services increase among the public.

As in much of Europe, mobile subscriber penetration is at saturation levels; SIM card penetration has surpassed 100% with GSM/CDMA/WCDMA services available via several mobile networks from four mobile network operators. Future revenue growth is based on increasing usage and hence revenue per subscriber, mainly in the form of minutes of use and marketing of HSDPA-based mobile broadband services. The latter holds much promise given the current low mobile broadband penetration levels and hence strong annual growth rates of mobile broadband take up.

Key highlights:

·         Broadband accounts for majority of all fixed Internet subscriptions. Narrowband subscriptions are decreasing as users migrate to broadband services. The nature of broadband services is changing; fixed broadband growth slowed during 2008, with mobile broadband subscriber numbers growing rapidly during the same period.

·         Encouraging business usage of e-government services is evident, with up to 70% of businesses using e-government services to obtain information, forms and return forms online. New legislation mandates businesses utilise e-government services. Private uptake of e-government lags that of businesses but is expected to grow on the back of increased awareness and recognition of its benefits. Similar initiatives extend to the health and education sectors, with the scope of such initiatives expected to broaden due to EU commitments to online services.

·         Despite the launch of numerous IPTV offerings, it continues to represent only a small portion of total digital TV subscribers; cable and satellite remain the most popular digital TV platforms. The push by cable TV operators such as UPC into complementary services such as broadband access and telephony is paying off, with non-video service subscriptions representing 40% of UPC’s total service subscriptions, with this figure increasing annually.

·         Mobile broadband is the next growth opportunity for mobile network operators, with take up of CDMA/HSDPA-based mobile broadband penetration at only 13%; take up has been boosted by the introduction of mobile plans with generous data allowances. The market for mobile broadband is potentially larger than that of fixed broadband, given the individual subscription-based nature of mobile broadband services.

Czech Republic key telecom parameters – 2006; 2009

(Source: BuddeComm based on industry data)

Data in this report is the latest available at the time of preparation and may not be for the current year.

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.