Mobile market leader T-Mobile 's parent is considering an exit from the Czech telecoms market, according to reports. The move is part of a wider regional rethink from parent Deutsche Telekom (DT) , looking at profitable markets and new opportunities. As one of the region's key investors, BMI believes the evaluation of its position in key Central and Eastern European (CEE) markets will be followed closely by its rivals. BMI considers the factors that may affect DT's decision to stay or go from the Czech telecoms market.
T-Mobile's dominance of the market remains unchanged, despite competition from fellow regional investors Vodafone and Telefónica . However, T-Mobile maintains the market's weakest ARPU rate and postpaid proportion of subscribers with the former continuing to fall. BMI forecasts show that the outlook for mobile ARPU in the Czech Repub lic remains weak, with low consumer spe nding set to force down ARPU in the medium term. BMI does not forecast an improvement in local currency ARPU over our five-year forecast period, although there is likely to be some improvement in US dollar terms. A planned fourth operator for the mobile market will do little to improve ARPUs and with limited growth potential, is likely to cut into the subscriber bases of the existing operators.
|DT To Seek Opportunities Elsewhere?|
|Czech Republic Vs. CEE Growth (%)|
The watchword for telecoms operators across CEE markets is convergence, allowing companies to combine wireless and wireline operations to make cost savings and create new products that derive greater revenue and higher customer loyalty. While there is little opportunity in the fixed voice market, broadband still offers growth potential, and T-Mobile is well placed to cater to this. BMI still sees opportunities for DT in the Czech market given its well-known brand and extensive infrastructure.
DT is considering the sale of its Czech unit as it is one of the few non-core assets held by the company. DT owns 60.77% of T-Mobile Czech Republic, a stark contrast to its usual full ownership of subsidiaries. The unit's remaining share is held by regional telecoms private investor Mid Europa Partners, which put its share in the operator up for sale on August 28. DT may decide to bring its ownership of its Czech operations in line with its others, further committing itself to the market.
While there are pressures on operators in the Czech telecoms market, BMI does not consider these to be any stronger in the Czech Republic than elsewhere in the region. The strong position of T-Mobile in the wireless market and the addition of its wireline assets means the asset should attract several suitors if it is put up for sale. Nevertheless, BMI believes DT is more likely to retain and consolidate its position in the market, despite continued pressures from new operators, third-party service providers and network upgrade costs.