BMI's Executive Summary

[TOP]

The Sector At A Glance

Key Insights On The Telecomunications sector of Slovakia

The licensing of a third mobile operator in Telefónica O2 in August continues to be the most important news in Slovakia’s telecoms market. The company has indicated it will begin testing its GSM network by the end of the year and launch services in Q107.

Slovakia’s mobile market has been characterised by relatively slow growth rates in comparison with many of its peers due to the lack of competition in the market. This has enabled both Orange Slovensko and T-Mobile Slovensko to focus efforts on the post-paid sector rather than looking to sign up prepaid subscribers whatever the cost. The result has been increasing ARPU levels.

The promise of increased competition already seems to be having an impact, with mobile growth in Q306 far higher than anticipated: net additions were nearly double those in Q2. We expect an even better Q4 in the seasonally strong pre-Christmas period as both Orange and T-Mobile look to consolidate their positions ahead of the planned Q1 launch by Telefónica O2, and have raised forecasts accordingly. We now believe the market will expand by 6.5-7% in 2006 as a whole, raising penetration to 89.3%.

That growth in the mobile market will accelerate once Telefónica O2 launches is surely a given, but to what extent will depend on a number of factors. These include the timing of the launch, Telefónica’s strategy for the market, how well its services are marketed and, crucially, how the existing operators react to the new player.

Telefónica is currently looking for an early launch of services, and we expect the company will come to market with an attractive offering to lure customers away from the existing operators and, more importantly, sign up new subscribers who have previously found services to be beyond their pockets. The company could be the first to market budget ‘no frills’ prepaid packages in Slovakia. Telefónica could look to aggressively promote low-cost prepaid services in order to build up a critical mass of subscribers in as short a time as possible. While we anticipate Orange and T-Mobile will follow suit to a certain degree, they could instead let the new operator take the lowest revenue-generating subscribers, and maintain their primary focus on serving contract customers and promoting their 3G services in order to try to sustain ARPU levels.

We have raised forecasts for 2007 and beyond upwards in light of Telefónica’s entry, but until the company actually launches it is impossible to say how much more quickly the market will accelerate, and we have erred on the side of caution in our forecasting. We anticipate growth of 10-12% for 2007, which will be maintained at a similar level in 2008 before slowing in 2009. This should increase penetration to nearly 100% by YE07, with 110% penetration breached in H208 and 120% in 2010. The improved mobile forecast has had a positive impact on Slovakia’s growth potential score in BMI’s regional telecoms business environment table, and the country has now overtaken Russia, where lack of 3G services have pulled down the country’s market maturity score. However, the entry of a new player could have implications for the fixed-line market, which has been in decline since 2000. If growth in the mobile sector picks up considerably, this will result in an accelerated decline in the country’s fixed-line sector, and we will need to revise downwards forecasts for the fixed-line sector. For the moment, growth in Slovakia’s fixed-line and broadband markets is in line with expectations and our forecasts remain unchanged.

Contents

[TOP]

Chapter 1 - Executive Summary

Chapter 2 - Industry Forecast Scenario

Fixed-Line

Table - Slovakian Telecoms Sector – Fixed-line – Historical Data & Forecasts

Internet

Table: Slovakian Telecoms Sector – Internet – Historical Data & Forecasts

Mobile

Table - Slovakian Telecoms Sector – Mobiles - Historical Data & Forecasts

Chapter 3 - Macroeconomic Forecast Scenario

Further Acceleration Ahead

Political Risk To FDI?

Possible Monetary Response

Table: Economic Indicators

Chapter 4 - Country Snapshot: Slovakia Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 5 - Business Environment

Emerging European Markets

Slovakia

Slovakia Telecoms Industry SWOT Analysis

Chapter 6 - Competitive Landscape

Market Structure

Table - Key Players: Slovakia Telecoms Market

Table – Selected Operators Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Internet Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data Analysis

Fixed-line

Internet

Table - Slovakia Broadband Market 2005

Mobile

Table - Slovakia Mobile Market Q206

Table - Slovakia Mobile Market Net Additions Q206

Chapter 7 - Company Monitor

Regional Case Study: Nokia

Table: Nokia Key European Network Contracts

T-Com (Slovak Telecom)

Orange Slovensko

T-Mobile Slovensko

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Europe Telecommunications Reports: Sample of Companies Ranked

[TOP]

Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of European Telecommunications Sources

[TOP]

BMI's European Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include:.