Environment and market consolidation


Challenging environment

Besides the intense competition, the greatest challenges in CEE emerge from macroeconomic and regulatory conditions. In addition to the mostly weak economic momentum and much lower purchasing power compared to Western Europe, the alignment of regulatory conditions to EU standards plays a particularly important role. While economic and regulatory effects have negatively impacted results most recently in Bulgaria, Croatia and the Republic of Macedonia in particular, the Belarusian market is dominated by high inflation and dramatic exchange rate fluctuations. The situation is similar for the business in the Republic of Serbia, albeit to a lesser extent.

Western Europe/CEE Purchasing power comparison

GDP 2013 per capita based on purchasing power parity in USD1)

Western Europe/CEE Purchasing power comparison (bar chart)

Market consolidation, convergence and growth

In light of these macroeconomic and regulatory challenges, the exploitation of growth opportunities is the main operating goal of the Telekom Austria Group in the CEE region. In the more mature markets Bulgaria and Croatia, the Group is also applying convergence and targeted up-and cross-selling. After the acquisition of the cable operator blizoo Macedonia in June 2014, the Telekom Austria Group now offers convergent products in four markets. In its mobile-only markets, it is primarily striving to make the best use of growth opportunities. In those of its markets with a high proportion of prepaid customers, the Telekom Austria Group is pursuing the goal of migrating these customers into contract tariffs. As well as optimising the core business and convergence, the Group is also relying on strict cost management in order to mitigate negative influences on the results of individual subsidiaries.

The Telekom Austria Group is also investing consistently in improving its infrastructure in Central and Eastern European countries. For example, LTE networks are being expanded in order to offer customers the best possible network quality. In addition to Austria, the Group can therefore now offer LTE services in Croatia, Slovenia and the Republic of Macedonia, currently achieving coverage of more than 27%, 75% and 42% respectively. This puts the Telekom Austria Group in a good position to tap into the region’s growth potential in the medium to long term. Thanks to the successful capital increase of EUR 1 bn in November 2014, the Group is also well equipped financially for potential further acquisitions in the CEE region.


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