Industry trends and competition

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The business performance of the Telekom Austria Group is significantly influenced by a number of external factors. In 2014, the market environment in both the fixed-line and mobile communications markets again proved to be highly competitive, particularly in the mature markets. This led to sustained pressure on prices, although moderate price adjustments were possible during the course of 2014. Regulatory provisions continued to have a negative effect on revenues and earnings. This applies in particular to termination rates and roaming charges in mobile communications. Meanwhile, the uncertain political and economic situation in the CEE region affected consumer behaviour in many countries. The Telekom Austria Group counters these factors through the systematic implementation of its convergence strategy, a clear focus on high-value customers, innovative products and services as well as strict cost management.

In Austria, the Telekom Austria Group offers a comprehensive and convergent product portfolio comprising both fixed-line and mobile communications solutions under its A1 brand. The latest market report issued by the regulatory authority, which tracked the most recent market data in Austria up to the second quarter of 2014, underlines the high degree of maturity of the Austrian market and describes the following average trends across all operators:

Average revenues generated per mobile customer increased slightly year-on-year from EUR 13.9 to EUR 14.3, while end customer revenues also rose marginally. Including wholesale revenues—which include termination rates and roaming charges—revenues in this segment declined by 7% compared with 2013.2) While the number of voice minutes fell slightly compared with the second quarter of 2013 (–5%) and the number of text messages saw a further significant downturn (–26%), the data volume enjoyed significant growth once again, rising by 45%. As previously, the strongest stimulus for this trend came from smartphone tariffs, which rose by 10% to more than 3.42 million.

In the Austrian fixed-line market, the trend of fixed-to-mobile substitution continued in the year under review. The number of fixed access lines in households (and the total number of fixed access lines) again declined slightly as against the previous year, whereas the figure for business customers increased slightly (+3%). The share of total voice minutes attributable to fixed lines also fell slightly year-on-year. While 14.5% of all voice minutes were on fixed lines in the second quarter of 2013, this figure amounted to just 14.0% in the same period of 2014. Average telephony revenues per month in the fixed-line segment also remained on a downward trend, declining by 9% for private customers and 7% for business customers. The strong demand for broadband solutions continued in 2014 and resulted in an overall rise of 5% to just over 7.8 million broadband connections. Fixed-line broadband grew by 5%, while mobile broadband (data tariffs and prepaid cards) declined by 2%.

According to Statistik Austria, the share of Austrian households with internet access of any kind remained stable between 2013 and 2014 at 81%. Household broadband lines remained largely unchanged at 79% (compared with 80% in the previous year), while business broadband lines increased further from 93% to 96%.3) While the above indicators collectively suggest increased use of telecommunications solutions, telecom spending as a percentage of users’ average income is generally declining at the same time. This is confirmed by the information and communications technology (ICT) price basket, which is published regularly by the International Telecommunication Union (ITU). It calculates spending on the basis of a defined basket of products comprising fixed-line telephony, mobile telephony and fixed broadband services as a percentage of average gross national income per capita. The index value for Austria declined from 1.1% in 2008 to 0.5% in 2013, the year of the most recent report.4)

In Bulgaria, the high level of competitive intensity and the difficult market environment continued to have a huge influence on pricing for mobile communications services as well as convergent product packages in the year under review. The internet penetration rate across all households increased from 53.7% in the previous year to 56.7% in 2014, with mobile broadband currently being used by 24.8% of all users.5)

The Croatian ICT market was also characterised by high competitive intensity and a strained general economic situation in the year under review. This led to a general reduction in the number of mobile customers in the third quarter of 2014, with the share of prepaid customers increasing within this. By contrast, there was a slight upturn in the number of broadband connections. Total mobile revenues declined significantly between 2013 and 20146),not least due to the heightened regulation that accompanied Croatia’s accession to the EU in July 2013. The Croatian government also imposed a substantial increase in frequency fees in July 2014, thereby further significantly impacting operator profitability.

In Belarus, the ICT market has developed strongly in recent years, which has led to a steady increase in the number of internet customers and the number of mobile telephone users.7)

In the Additional Markets segment of the Telekom Austria Group, Slovenia has the most developed ICT market. According to official statistics, there was further growth in user behaviour among mobile communications customers in Slovenia in the year under review, while fixed-line usage declined significantly. Mobile voice minutes increased by 3.6% year-on-year in the first nine months of 2014, with the number of text messages sent rising by 12.4%. By contrast, the number of fixed-line voice minutes fell by 10.6% year-on-year in the first three quarters. The number of mobile users increased compared with the previous year, with contract customers seeing considerably stronger growth (+3.9%) than prepaid customers (+0.9%).8)

In the Republic of Serbia, the catch-up process in mobile broadband, starting from a far lower level than in the other markets of Telekom Austria Group, continued in 2014. This development was supported by the general expansion in the network infrastructure. 90.6% of all Serbian households now own a mobile phone compared with the figure of 82.0% in 2010.9)

The ICT market in the Republic of Macedonia is only slowly approaching the standards of Western Europe in terms of user behaviour; both broadband penetration and average revenues are at significantly lower levels. According to the Statistical Office of the Republic of Macedonia, 68.3% of all Macedonian households had internet access in the first quarter of 2014, with broadband connections accounting for 99.1% of this figure. 55.2% of people with internet access used a mobile device to access the web.10)

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ICT spending In Telekom Austria Group markets

in % of gross national income per capita

 

2012

2013

Austria

0.7

0.5

Bulgaria

3.5

3.2

Croatia

1.5

1.5

Belarus

1.5

1.0

Slovenia

1.4

1.2

Republic of Serbia

2.9

2.8

Republic of Macedonia

3.0

2.7

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