High Mobile Penetration Means Stiff Competition in Central and Eastern Europe

Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia IDC: Demand for mobile services remained hot in Central and Eastern Europe in 2004. Study of 11 countries in the region (Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia), the total number of subscriptions surged by 24.8% to more than 72.5 million and penetration levels rose 13 points across the region, reaching just over two-thirds at the end of the year. By the end of 2009, the average penetration level to surpass 94% in the 11 countries studied. Total network traffic will grow along with the market. Nevertheless, as new customers are primarily coming from groups with lower purchasing power, average spending per user has already started leveling off. This will be partially offset by an increase in the use of data, which will grow faster than voice usage. As a result, voice (including subscription fees) to drop from 85.5% of mobile services spending at the end of 2004 to just over 74% by the end of 2009.

The CEE mobile markets are going through turbulent times,. The rivalry between market players is escalating; the number of mobile subscriptions is nearing the countries' total population, while revenue growth rates are falling from quarter to quarter. To get the most out of the opportunities that await, operators in this region need to promptly reevaluate their strategies and adapt them to the new market conditions.

This will be particularly true in countries where penetration levels are already high, such as the Czech Republic, which had more subscriptions than people at the end of 2004. Penetration was also high in Slovenia (99%), Lithuania (95%), and Estonia (92%).

This doesn't mean mobile service providers in the other countries are off the hook. Uptake is exploding in places like Poland and Romania, the two countries with the lowest penetration levels. Operators in these markets can't afford to focus exclusively on signing new users at the expense of developing a strategy to deal with the inevitable saturation. The nice thing for operators in the less developed markets is that they have a real chance to learn from the successes and setbacks of operators elsewhere in the region.

The size of the individual country markets reflected total population at year-end 2004. With the largest population among the countries included in the study, Poland had the highest number of activated mobile subscriptions (22.6 million) while Estonia had the lowest (1.3 million). The one exception was Romania, which has a population twice that of the Czech Republic but has only half the number of mobile subscriptions. This will of course change, Romania to have nearly 18 million subscribers by 2009.

Central and Eastern European Mobile Communications 2005–2009 Forecast Publ 20050524