Served by three big operators (Magyar Telekom, with 47.4% of market share, Telenor, 29.5%, and Vodafone, 22.8%), Hungary’s telecommunications market has high penetration all over the country. New network infrastructure is also allowing these companies to meet the growing consumer demand for mobile data services.
“A radical change of the mobile market has been happening,” Telenor corporate communications expert Nelli Kadlok tells the Budapest Business Journal. “Our customers have started to use more mobile data and less voice services. We expect that, in the near future, unlimited tariff packages will be getting more and more popular. We have already exceeded 100% market penetration in Hungary, and we expect further increases as the internet of things (IoT) gains space: many everyday objects and devices will become smart – and to use them, we are going to have multiple subscriptions.”
Sometimes the competition can seem extreme, with the deployment of new technologies, such as the use of fiber optics, opening up fresh markets. “Digital services are now also strategically important, and in the near future, people traveling on the subway won’t just read the news or listen to music or a podcast, but watch films and TV channels,” continues Kadlok. Telenor is focused on mobile services as it says nine out of every ten devices it sells are smartphones. “According to the numbers of the Central Statistical Office, there were 6.9 million postpaid and 4.8 million prepaid subscriptions on the Hungarian market in Q2 2016,” comments Kadlok.In Hungary, as in many other markets worldwide, the number of fixed lines has been affected by the growing popularity of mobile lines. Fixed line operators have had to offer new types of services to fill the gap, improving operating speeds and broadband internet service as part of a policy of internet modernizations.
Market leader Magyar Telekom (MTel) has seen revenues decline by 6.5% compared to last year. According to its financial report, total revenues for 2016 have thus far amounted to HUF 148.2 billion: HUF 79.8 bln came from mobile revenues, while fixed line revenues remained stable at HUF 52.7 bln, thanks to a lot of improvement in broadband retail and TV. According to Christopher Mattheisen, Magyar Telekom’s CEO, the downturn in revenue was primarily “due to our decisions with respect to the energy business and lower systems integration and IT revenues, resulting from a temporary slowdown in EU fund inflows”. However, MTel has recently won HUF 12.2 bln of EU funds that will be employed to help develop digital networks across the country.
Telenor doesn’t offer fixed line services, and Kadlok underlines that “in Q2 2016 there was more than 11.7 million active mobile subscriptions on the Hungarian market, while the number of fixed lines was only 3.1 million.”
Another source of competition for the big three comes from mobile virtual network operators (MVNOs), services offered by other companies, such as Tesco and MOL using their own brand but buying network coverage from one of the main providers. How much do these affect the market of the big telecommunications companies? “MVNOs are small: in April, Tesco terminated its Tesco Mobile service – launched back in 2012 – and its customers were transferred to Vodafone,” says Kadlok. “MOL is not a real MVNO, as the company’s MOL Mobile service is just a rebranded MTel tariff. Currently, UPC is the only real MVNO in Hungary and is cooperating with Vodafone to offer its mobile service in a bundle with its cable TV and internet packages to 200,000 customers.”
Vodafone was asked to comment for this article but had not got back to us by our print deadline.