2009 Hungary - Telecoms, Mobile, Broadband and Forecasts

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

Building on the success of past economic reforms, Hungary joined the European Union focused on raising living standards. In the process Hungary built up a high level of public and private debt, much of which was denominated in foreign currencies. The global financial crisis impacted Hungary significantly with the Hungarian forint devaluing considerably before later stabilising, in part due to Central Bank’s decision to set relatively high interest rates. The country’s economic woes led to the International Monetary Fund, the EU and World Bank extending emergency loans in October 2008, with the government required to implement unpopular measures such as lifting taxes and reining in spending. Real GDP growth is expected to turn negative during 2009 and 2010. Inflation is expected to ease due to softening consumer demand.

Despite the slowdown in spending, the telecom market will fare relatively well given the essential nature of most telecom services although competition may increase as mass market and business customers increasingly look for value. Hungary’s fixed telephony market is served by a number of regional incumbents as well as well-established cable TV operators.

Internet usage is high and broadband the preferred Internet access platform. DSL is the most popular form of broadband access, although the reach of cable TV networks means that cable is widely available and the second most popular platform. The demand for bandwidth is driving deployment of higher speed platforms, such as FTTx and EuroDOCSIS 3.0 for existing cable TV networks. Catering for the large Internet user base are useful online services and applications, fostering the development of an Internet society, a trend recognised and encouraged by the government through investment and policy. It is hoped that Internet society development will increase productivity and improve the standard of living.

Hungary’s broadcasting market is evolving due to media convergence trends and competition. Standard definition and high definition digital TV is available via terrestrial TV, cable TV networks, satellite and IPTV. Competition has intensified due to the increased number of service providers and introduction of packaged offerings such as triple play. Legislative changes have paved the way for consolidation within the cable market, one of the most fragmented in the EU.

Hungary’s mobile market, like that of its Central European counterparts, has matured with penetration rates surpassing 100%. Services are offered by three mobile network operators, all of which are majority or wholly-owned by Western European operators. With mobile SIM card penetration at saturation levels, the mobile network operators have shifted focus to increasing ARPU levels, encouraging prepaid users to take up postpaid services as well as encouraging spending and uptake in the underdeveloped mobile broadband and content market. 3G/HSDPA networks have been deployed to support delivery of mobile broadband services; competing network deployments have led to increased transfer speeds.

Key highlights:

·         Approximately 40% of households enjoy fixed broadband access. DSL and cable alone represent nearly 95% of all fixed broadband connections. The incumbent announced plans in late 2008 to invest in FTTx infrastructure during 2009-2013 reaching 780,000 households, as well as upgrade existing cable networks with EuroDOCSIS 3.0 technology to 380,000 households.

·         Encouraging business usage of e-government services is evident, with up to 56% of businesses using e-government services to obtain information, forms and return forms online. Recognising the potential market, the incumbent launched a project to introduce and demonstrate Internet society applications related to the health care, education, public administration, tourism and culture.

·         A healthy digital TV market is evident; digital terrestrial TV broadcasts based on DVB-T and DVB-H technology commenced in December 2008 and a total of five satellite-based digital TV platforms are in service. Cable TV is widely available, with approximately 80% of households able to access CATV networks. The incumbent introduced a wholesale IPTV offering in June 2009; a number of alternative operators have taken up the wholesale offer and commenced offering competing IPTV services.

·         Mobile broadband is the next growth opportunity for mobile network operators, as mobile broadband penetration is currently at 3-5%. Mobile TV is also a potential growth area following the launch of mobile broadcasting based on DVB-H in December 2008.

Hungary – 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.