2011 Hungary - Telecoms, IP Networks, Digital Media and Forecasts

Telecoms tax burdens telcos’ revenue

BuddeComm’s half-yearly publication, Hungary - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of central Europe’s key telecom markets. The report includes the regulator’s market data to April 2012, telcos’ financial and operating data to March 2012, and market developments into mid-2012.

Economic background

Poorly executed fiscal policies since the beginning of the century resulted in a high state budget deficit which successive governments have tackled through introducing austerity measures, lower state spending and increased taxes. Significant loans were secured from the IMF and ECB in 2008. A two-year ‘crisis tax’ was levied on the telecom sector in 2010, which may be supplemented in mid-2012 with an additional tax on telecom usage. These and other legislative measures, challenged by the EC, may jeopardize additional further loans of up to €20 billion sought by the government. Economic conditions have lowered telecom revenue and stalled investment.

Telecom market overview

Hungary’s telecom sector is dominated by international players including Telekom Deutschland, Telenor, UPC and Vodafone, each attracted by the relatively underdeveloped market sectors. The overall market, particularly the mobile and broadband sectors, became more dynamic after Hungary joined the EU in 2004. Membership saw an injection of funding as well as regulatory oversight. Although liberalisation has meant that there are numerous active players, the various sectors are served by a few key operators.

Broadband market

Hungary enjoys high broadband usage compared to other Central and Eastern European countries. DSL and cable remain the dominant access platforms though FttX has emerged as a key focus for future growth, while the 60% growth in the mobile broadband subscriber base illustrates the potential for services and revenue from that sector in coming years. Cable networks are being rapidly upgraded with DOCSIS3.0 technology, so enabling players to offer bundle services.

Mobile market

The dynamic mobile market is served by three MNOs which have focussed on upgrading networks with HSPA and LTE technologies to satisfy customer demand for high-end data services. This should be a vehicle to revive flagging ARPU in coming years. Overall revenue continues to fall in response to competition and regulatory measures affecting MTRs and roaming charges. The country’s first commercial LTE services were launched in early 2012.

Key telecom parameters – 2010; 2013

(Source: BuddeComm)

Market Highlights

• The early-2012 auction for spectrum in the 900MHz band generated HUH43.9 billion for the government. A part-government owned consortium introduced a new market entrant to compete against the triopoly of T-Mobile, Telenor and Vodafone.
• LTE services launched by T-Mobile in 2012 augur well for mobile broadband developments during the coming years, particularly with deployment in the 900MHz band which will be effective in rural areas hampered by poor fixed-line infrastructure. The remaining MNOs plan to launch services later in 2012 and 2013.
• DTTV services are available to 95% of the population. Although legislation initially set ASO for the end of 2011, with the process undertaken regionally, the government has delayed it to the end of 2014 depending on related amendments to the New Media Act. Both Romania and Bulgaria have also put back their ASO dates.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Hungary. It provides further information on:

• Market liberalisation and regulatory issues;
• The impact of the global economic crisis;
• Telecoms operators – privatisation, acquisitions, new licences;
• Mobile data market developments in coming years in light of spectrum auctions and new license awards;
• 3G developments, regulatory issues and technologies including HSPA and LTE;
• Broadband migration to an FttH architecture;
• Historical and current subscriber statistics and forecasts;
• ARPU statistics and forecasts.

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