Hungary - Telecoms, IP Networks, Digital Media and Forecasts

Abstract

Overview

This report provides a comprehensive overview of trends and developments in Hungary' s telecommunications market. The report analyses the mobile, internet, broadband, digital TV and converging media sectors.

Subjects include:

• Market and industry analyses, trends and developments;
• Facts, figures and statistics;
• Industry and regulatory issues;
• Infrastructure;
• Major Players, Revenues, Subscribers, ARPU, MoU;
• Internet, VoIP, IPTV;
• Mobile Voice and Data Markets;
• Broadband (FttH, DSL, cable TV, wireless);
• Convergence and Digital Media;
• 3G subscriber and mobile ARPU forecasts to 2015;
• Broadband market forecasts for selective years to 2020.

Key developments:

Average mobile data traffic per subscriber falls to 1.09GB; FttX subscriber base reaches 240,000; Maygar Telecom steps up e-health initiatives; DTTV available to 95% of population yet ASO completion put off to end-2014; UPC cable dominance following purchase of FiberNet; New Media Law causing EC concerns; Telecoms tax cuts into operator profits and CAPEX; operators report lower revenue in 2011; new access regulations incorporate fibre and cable infrastructure sharing; National Media and Infocommunication Authority inaugurated to oversee telecoms sector; New spectrum block in the 900MHz band auctioned; M2M sector gaining traction; T-Mobile Hungary expands HSPA+ network; mobile subscribers base falls in H1 2011; regulator' s market data for 2010 and market updates to June 2011; operator data to June 2011.

Companies covered in this report include:

UPC Hungary, Maygar Telecom, Hungarotel, GTS Datanet, FiberNet, Antenna Hungaria, Maygar Televizio, TV2, Invitel, Antenna Hungaria, T-Mobile, Telenor, Vodafone Hungary.

Executive Summary

Utilities spearheading FttH growth to meet ambitious broadband targets

BuddeComm' s bi-annual 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 mid-2011 as well as operator data to June 2011.

Hungary' s relatively underdeveloped market was fully liberalised in early 2002: it soon attracted interest from a number of international players, including Deutsche Telekom, Telenor, Vodafone, Tele Danmark and UPC, which have considerably improved telecom infrastructure, provided effective competition and expanded the range and quality of services offered. The market has developed a greater dynamism since Hungary joined the EU in 2004, alongside nine other countries which had completed the accession requirements in their telecom markets and harmonised their regulatory systems in accordance with EU laws. Hungary has since received considerable EU structural funding designed to improve economic development: a total of € 25.3 billion has been allocated to 2013. In addition, the country has been the recipient of almost US$ 23 billion in loans from the IMF, EU Central Bank and World Bank as is struggles to recover from liquidity issues following the economic malaise of the last three years.

Although there are numerous active players, the broadband, mobile and fixed-line sectors are dominated by a few key operators including Magyar Telekom, Vodafone, Telenor and UPC.

Hungary enjoys high broadband usage compared to other Central and Eastern European countries. DSL and cable are the dominant platforms though FttX is emerging as a key focus for future growth, with some 240,000 subscribers by mid-2011. Consumer demand for bundled services is a driver for more capable bandwidth, which has also encouraged the main cablecos to upgrade their networks with DOCSIS3.0 technology.

The dynamic mobile market, served by three MNOs, has seen a decline in the subscriber base in recent quarters as operators shed dormant SIM cards from their databases. With fewer opportunities for revenue growth through new subscriber additions, revenue growth has focused on lifting ARPU from mobile data services and from migrating subscribers from prepaid to contract plans. HSPA+ has been rolled out extensively, while LTE trials and LTE Overall, revenue has fallen during the last few years in response to competition and to regulatory-mandated tariff reductions affecting termination rates as well as voice and data roaming. The nascent mobile broadband market is a key growth area in the medium term, given the currently low penetration levels and increasingly affordability of multimedia capable handsets.

As for the overall economic state of the country, there have been significant stresses on the Hungarian economy and financial markets over the past three years. A run of poor governmental monetary and fiscal policies resulted in a state budget deficit running at 10% of GDP by 2006. This was then tackled by the introduction of a range of austerity measures which reduced state spending, increased taxes and kept interest rates relatively high. These in turn caused lower economic growth (GDP fell 6.7% in 2009) and large current account and budget deficits which contributed to a fall in the value of the currency. Consequently Hungarian businesses and consumers have significantly reduced their investments and spending, in turn further retarding economic growth: GDP fell 4.4% in the fourth quarter of 2009 (year-on-year) but has since recovered somewhat, reaching 1.7% growth in the fourth quarter of 2010 (year-on-year).

In late 2010 the government introduced a ‘crisis tax’ levied on the energy, retail and telecom sectors for three years. With an overall target of at least HUF161 billion in revenue annually, the telco tax alone may generate HUF61 billion (€ 221.3 million) annually for 2010-12. The European Commission (EC) investigated the legality of the tax, given that extraordinary taxes can only be used to cover the cost of regulating the industry. The EC initiated proceedings against France and Spain for imposing similar taxes on telcos.

Although the tax has affected telco revenue and impeded operators' investment programmes, the anticipated economic recovery in coming years will positively affect consumer confidence and promote higher spending on services. Operators themselves are committed to upgrading their fixed-line and mobile networks to provide higher-bandwidth capabilities, and so exploit growing consumer demand for bundled services and high-end mobile data applications.

Market Highlights

• The anticipated award of a fourth 15-year mobile licence in the 900MHz band will introduce a new market entrant to compete against the triopoly of T-Mobile, Telenor and Vodafone. The licensee can also bid for frequencies in the 1800MHz and 2100MHz bands. Given that the licences are technology-neutral, the release of additional spectrum will considerably advance the countries LTE capabilities in coming years.
• The regulator initially earmarked LTE to be deployed using the 2.7GHz band despite the poor propagation characteristics of the higher frequencies. However, other bands have now been permitted for 4G which will better serve rural communities hampered by poor fixed-line infrastructure. All three MNOs have trialled LTE with a view to commercial launches in 2012 and 2013.
• The government' s National Broadband Strategy envisions full broadband access by the end of 2011, with a focus on improving digital literacy. Initiatives to bridge the ‘digital divide’ include installing publicly accessible internet access points in towns with fewer than 5,000 people. The regulator has played a significant part in encouraging broadband growth by establishing regulatory wholesale market price controls, extending wholesale access to cable and fibre networks.
• 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.

Table of Contents

1. Key Statistics

2. Telecommunications Market

• 2.1. Overview of Hungary' s telecom market

3. Regulatory Environment

• 3.1. Background
  • 3.1.1. Unified Telecommunications Act 2001
  • 3.1.2. Electronic Communications Act 2003
  • 3.1.3. EU Regulatory Framework
  • 3.1.4. Revised NFR
• 3.2. Regulatory authority
  • 3.2.1. Nemzeti Hirkozlesi Hatosag (NHH)
• 3.3. Telecom sector liberalisation in Hungary
  • 3.3.1. Privatisation
  • 3.3.2. Interconnect
  • 3.3.3. Access
  • 3.3.4. Number Portability (NP)
  • 3.3.5. Carrier selection (CS) and carrier preselection (CPS)

4. Fixed Network Operators

• 4.1. Market overview
• 4.2. Magyar Telekom
  • 4.2.1. International expansion
• 4.3. Invitel
• 4.4. Monor
• 4.5. GTS-Datanet
• 4.6. Antenna Hungaria

5. Telecommunications Infrastructure

• 5.1. National telecom network
  • 5.1.1. Magyar Telekom
  • 5.1.2. Alternative operators
• 5.2. International infrastructure
• 5.3. Wholesaling Overview

6. Internet Market

• 6.1. Hungary' s emerging internet society
  • 6.1.1. Legislation
  • 6.1.2. E-commerce
  • 6.1.3. E-government
  • 6.1.4. E-health
  • 6.1.5. E-education

7. Broadband Market

• 7.1. Fixed broadband market
  • 7.1.1. Overview
  • 7.1.2. Fixed broadband statistics
  • 7.1.3. Cable modems
  • 7.1.4. Asymmetrical Digital Subscriber Line (ADSL)
• 7.2. Wireless broadband
  • 7.2.1. WiFi
• 7.3. Mobile broadband

8. Digital Media

• 8.1. Overview of digital media market
• 8.2. Bundled services
• 8.3. Regulatory developments 2011
• 8.4. Free-to-Air (FTA) TV
  • 8.4.1. Magyar Televizio (MTV)
  • 8.4.2. TV2
  • 8.4.3. RTL Klub
• 8.5. Digital TV (DTV)
  • 8.5.1. Broadband TV (IPTV)
  • 8.5.2. Cable TV (CATV)
  • 8.5.3. Satellite-based pay TV developments
  • 8.5.4. Digital Terrestrial TV (DTTV)

9. Mobile Communications

• 9.1. Overview of Hungary' s mobile market
  • 9.1.1. Mobile statistics
• 9.2. Regulatory issues
  • 9.2.1. GSM licences
  • 9.2.2. 3G licence awards
  • 9.2.3. 900MHz spectrum
  • 9.2.4. Mobile Termination Rates (MTR)
  • 9.2.5. Mobile Number Portability (MNP)
• 9.3. Mobile technologies
  • 9.3.1. Digital
  • 9.3.2. Third Generation mobile
• 9.4. Major mobile operators
  • 9.4.1. T-Mobile
  • 9.4.2. Telenor
  • 9.4.3. Vodafone Hungary
• 9.5. Mobile voice services
  • 9.5.1. Prepaid cards
• 9.6. Mobile data services
  • 9.6.1. Short Message Service (SMS)/Multimedia Messaging Service (MMS)
  • 9.6.2. General Packet Radio Service (GPRS)
  • 9.6.3. Push-to-talk (PTT)
  • 9.6.4. Enhanced Data for GSM Evolution (EDGE)
  • 9.6.5. High Speed Packet Access (HSPA)
  • 9.6.6. Long-term Evolution (LTE)
  • 9.6.7. Mobile TV
• 9.7. Mobile content and applications
  • 9.7.1. T-Mobile
  • 9.7.2. Vodafone Hungary
  • 9.7.3. Telenor
  • 9.7.4. M-commerce (micropayments)
• 9.8. Mobile marketing
  • 9.8.1. QR code readers
  • 9.8.2. Vodafone 360

10. Forecasts

• 10.1. Forecasts - fixed broadband subscribers - 2010 - 2013; 2020
  • 10.1.1. Scenario 1 - higher broadband subscriber growth
  • 10.1.2. Scenario 2 - lower broadband subscriber growth
• 10.2. Notes on scenario forecasts

11. Glossary of Abbreviations

LIST OF TABLES:

• Table 1 - Country statistics - 2011 (e)
• Table 2 - Telephone network statistics - July 2011
• Table 3 - Internet user statistics - June 2011
• Table 4 - Broadband statistics - June 2011
• Table 5 - Mobile statistics - July 2011
• Table 6 - National telecommunications authority
• Table 7 - Magyar Telekom interconnection rates - 2006 - 2009
• Table 8 - VoIP and cable broadband voice channels - 2008 - 2011
• Table 9 - Fixed-voice market share by operator - July 2011
• Table 10 - Magyar Telekom Group financial data - 2008 - 2011
• Table 11 - Magyar Telekom residential, business and payphones in service - 2008 - 2011
• Table 12 - Invitel financial data - 2009 - 2011
• Table 13 - Invitel subscribers - 2010 - 2011
• Table 14 - Fixed lines in service and teledensity - 2000 - 2012
• Table 15 - Total international Internet bandwidth - 2000 - 2012
• Table 16 - Cost of local loop unbundling and shared access - 2006 - 2009
• Table 17 - Online purchases by individuals - 2005 - 2010
• Table 18 - Electronic sales as percentage of total non-VAT turnover for non-financial sector businesses with 10 or more employees - 2009
• Table 19 - Take up of e-government services by businesses - 2004 - 2010
• Table 20 - Take up of e-government services by individuals - 2004 - 2010
• Table 21 - E-education usage by individuals - 2007 - 2010
• Table 22 - E-education usage by businesses - 2007 - 2010
• Table 23 - Internet users and penetration rates - 1999 - 2011
• Table 24 - Fixed broadband subscribers and penetration rate - 2000 - 2012
• Table 25 - Fixed broadband market share by operator - July 2011
• Table 26 - Cable broadband subscribers - 2006 - 2011
• Table 27 - UPC cable broadband subscribers - 2003 - 2011
• Table 28 - T-Home broadband subscribers - 2004 - 2011
• Table 29 - DSL broadband subscribers - 2007 - 2011
• Table 30 - Magyar Telekom retail ADSL subscribers - 2009 - 2011
• Table 31 - FttX broadband subscribers - 2010 - 2011
• Table 32 - Wireless broadband subscribers - 2006 - 2012
• Table 33 - Mobile broadband subscribers per operator - 2009 - 2011
• Table 34 - Mobile data traffic by operator per operator - 2009 - 2011
• Table 35 - TV market share per operator - 2009 - 2011
• Table 36 - TV subscribers by reception - 2009 - 2011
• Table 37 - Analogue and digital TV subscribers - 2009 - 2011
• Table 38 - Magyar Telekom IPTV subscribers - 2007 - 2011
• Table 39 - Magyar Telekom cable TV subscribers - 2006 - 2011
• Table 40 - UPC - homes passed - 2003 - 2010
• Table 41 - UPC - Subscribers by service type - 2003 - 2011
• Table 42 - UPC financial data - 2006 - 2009
• Table 43 - T-Kabel cable subscribers - 2002 - 2011
• Table 44 - Satellite subscribers - 2009 - 2011
• Table 45 - T-Home satellite TV subscribers - 2008 - 2011
• Table 46 - Mobile subscribers and penetration rate - 1998 - 2012
• Table 47 - Mobile voice market share by SIM cards - 2006 - 2011
• Table 48 - T-Mobile subscribers - 2008 - 2011
• Table 49 - T-Mobile financial and operational data - 2004 - 2011
• Table 50 - T-Mobile ARPU - 2004 - 2011
• Table 51 - Telenor subscribers - 2004 - 2011
• Table 52 - Telenor financial data - 2006 - 2011
• Table 53 - Telenor Monthly ARPU - 2006 - 2011
• Table 54 - Vodafone subscribers - 2007 - 2011
• Table 55 - Ratio of prepaid to postpaid subscribers - 2007 - 2011
• Table 56 - Total SMS and MMS messages sent - 2002 - 2010
• Table 57 - Forecast fixed broadband subscribers - higher growth scenario - 2010 - 2013; 2020
• Table 58 - Forecast fixed broadband subscribers - lower growth scenario - 2010 - 2013; 2020

LIST OF CHARTS:

• Chart 1 - Magyar Telekom Group financial data - 2008 - 2011
• Chart 2 - Invitel subscribers - 2010 - 2011
• Chart 3 - Fixed broadband subscribers and penetration rate - 2000 - 2012
• Chart 4 - Mobile broadband subscribers per operator - 2009 - 2011
• Chart 5 - TV subscribers by reception - 2009 - 2011
• Chart 6 - Analogue and digital TV subscribers - 2009 - 2011
• Chart 7 - UPC - Subscribers by service type - 2003 - 2011
• Chart 8 - Mobile subscribers and penetration rate - 1998 - 2012
• Chart 9 - Telenor financial data - 2006 - 2011
• Chart 10 - Telenor Monthly ARPU - 2006 - 2011
• Chart 11 - Ratio of prepaid to postpaid subscribers - 2007 - 2011

LIST OF EXHIBITS:

• Exhibit 1 - The EU regulatory framework for communications
• Exhibit 2 - Access, the local loop and unbundling - an overview
• Exhibit 3 - Number portability defined
• Exhibit 4 - Carrier selection and carrier preselection overview
• Exhibit 5 - The Economist Intelligence Unit (EIU) annual E-readiness criteria
• Exhibit 6 - 2G spectrum awarded