NEW YORK-Although 2002 “was a very difficult year” because new landline competition squeezed profits, Matav, Hungary’s incumbent carrier, rode the country’s rising tide of wireless penetration and gained significantly in terms of mobile customers and associated revenue growth, said Elek Straub, chief executive officer (CEO).
Nationwide, the number of mobile subscribers last year totaled 6.8 million, for a penetration rate of 67.2 percent, up 17.8 percent from 2001. This year, however, Straub said he expects total net new customer additions for all three mobile operators to reach 600,000 to 700,000, compared with approximately 2 million last year, and penetration to peak at about 75 percent.
“We will see more growth in 2003, after which penetration growth will flatten out,” he said 24 February at the Merrill Lynch & Company “Global Communications Investor Conference.”
Matav’s Hungarian mobile unit, Westel Mobile Telecommunications, closed 2002 with 3.4 million subscribers, 75 percent of them prepaid, after adding 850,000 new customers. Its competitors, Pannon and Vodafone Hungary, garnered 630,000 and 300,000, respectively.
“Vodafone has slightly more than 1 million customers, not enough to be profitable, but it’s a serious competitor, and it’s taking realistic steps,” Straub said.
“Pannon has been profitable, and it’s mainly competing with us on tariffs and less on handset subsidies. We lost a percentage point of market share last year, mainly to Vodafone, which took more from Pannon.”
Straub said the company is hoping to change restrictions that bar it from selling bundled wireless and wireline services. In the meantime, however, the landline and wireless sales teams approach large corporate customers together, “but they can’t bundle the offering officially,” he said.
Westel, whose network is entirely General Packet Radio Service (GPRS) enabled, has experienced a slowing growth in customer-to-customer short message service (SMS). However, Straub said he expects “other interesting applications, like voting,” to put a new bounce into SMS. Multimedia messaging service (MMS) and Wireless Application Protocol (WAP) services also are growing significantly for the carrier, which garnered 10 percent of its 2002 revenues from data.
Last week Westel introduced streaming video services from Siemens Information and Communication Mobile Group and PacketVideo that allow participating customers to receive short MPEG-4 video clips and external video content, like movie trailers, using WAP technology.
Matav, which paid nearly $1.1 billion to acquire a controlling interest in Westel, was able to pay down about US$300 million in outstanding debt last year. However, it owes its majority stakeholder, Deutsche Telekom (DT), US$742 million for the Westel purchase. That loan comes due in August, and Matav is exploring ways to raise the US$591 million it will need for repayment.
Investment banks and DT itself are other possible funding sources.
Matav’s other mobile property is its majority stake in Macedonia’s MakTel. Its GSM network operator, MobiMak, closed out 2002 with 366,348 customers, up from 221,336 in 2001.
“We had very impressive growth in MobiMak last year. Driven by the fact that a new company will enter the market in 2003, we wanted to get as many subscribers as possible as fast as possible,” Straub said.
In January, MobiMak offered an interconnection agreement to MTS, which is owned by OTE of Greece, and that paved the way for this new operator to enter the Macedonian market this year.
Meanwhile, MobiMak is working to improve its offering. In February, it contracted with Ericsson to deliver a GPRS/WAP system, scheduled to commence commercial service at the end of June. The introduction of MMS services is targeted for mid-August. GW
