Czech Republic: NGNs and MVNO Initiative by Telecom Regulator Heat Up Operator Competition

Summary The Czech Republic is the third largest telecom market in the CEE in terms of service revenue, and we expect it to grow at a dollar-denominated CAGR of 2.3% over the next five years. The fastest-growing segment will be pay-TV services, driven by the uptake of DTH services. Fixed and mobile network upgrades will play a vital role in the expansion of data services, as will the looming LTE license auction. The launch of a new mobile operator is expected as a condition of the auction. Key Findings In 2013, the Czech Republic's telecom market will generate Kc98.2bn ($5.0bn) in service revenue, a 1.7% year-on-year decline in koruna-denominated currency. Over the next five years, we expect the Czech market to exhibit rather slow growth, at a local currency denominated CAGR of 0.5%. Fixed and mobile network upgrades, as well as the expected LTE license auction, will continue to support growing demand for data services. Revenue from data (fixed and mobile) will be the major source of growth in the Czech market in the forecast period, increasing from Kc32.7bn ($1.7bn) in 2013 to Kc39.2bn ($2.2bn) in 2018, a CAGR of 3.7% in local terms. The incumbent operator, Telefónica CR, already offers LTE services over its 1800MHz license in a number of districts in the capital (Prague), and the operator plans to expand to Brno by October 2013. The weaker consumer spending power and the decline of the voice segment as a result of lower termination rates and fixed to mobile substitution are responsible for the slow growth during 2012. Pyramid Research forecasts fixed and mobile voice revenue to contract by 12% between 2013 and 2018, from Kc58.9bn ($3.0bn) to Kc52.0bn ($2.9bn), respectively. Synopsis NA