Convergence and in-market consolidation

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Telekom Austria Group will continue to leverage the potential for added-value in its core business through a focus on convergence and in-market consolidation. While its primary targets are revenue market share and profitability, the heterogeneity of the Group footprint requires a strategic approach tailored to each market. Each approach must take account of respective maturities, the macro-economic and regulatory environments as well as the level of competition prevalent in each market.

In its home market Austria Telekom Austria Group has traditionally suffered from mobile price erosion, which it has addressed through a clear focus on high-value customers, while at the same time optimising the no-frills segment. Moreover, convergence has been key to stabilising the Austrian fixed business, which was in decline as a result of the fixed-to-mobile substitution. Not only is the average monthly revenue higher and the churn potential considerably lower for a customer subscribing to multiplay products, but convergence also results in the best overall customer experience. Customers can switch content between devices sourced through a single provider. As the demand for high bandwidths continues to rise, the planned investment of an additional EUR 400 mn into the smart-fibre expansion in Austria from 2015 to 2018 will create opportunities to monetise this data demand going forward.

Convergence offers first-rate customer experience

Convergence offers first-rate customer experience (graphic)

Telekom Austria Group also believes that convergence offers potential benefits across all its markets. In its mature markets Bulgaria and Croatia Telekom Austria Group has been offering convergent products since 2011. Mobiltel in Bulgaria is leveraging its position as the mobile market leader, especially in the area of mobile data. It aims to further grow its fixed-line business via attractive convergent products. In Croatia the growth in fixed-line is helping to stem competitive pressures facing Vipnet in mobile, with new tariffs as well as through up- and cross-selling tactics.

In the Republic of Macedonia Telekom Austria Group bought cable asset blizoo Macedonia in June 2014, and is now able to offer fixed voice, broadband and TV. By merging Vip operator and number three operator One, as planned, the company hopes to achieve synergies through in-market consolidation. In addition, the merger of mobilkom liechtenstein and Telecom Liechtenstein, the combined entity of which Telekom Austria Group now holds 24.9%, also created an operator with a convergent offering, which has so far been very well received.

In those of its markets which are currently mobile-only Telekom Austria Group will continue to focus on generating growth. In addition, the company will continuously evaluate opportunities to develop its mobile-only markets into convergent operations.

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