1. Central and Eastern Europe telecoms market: interim forecast update 2013–2018
December 2013
Hilary Bailey, William Hare and Pablo Iacopino

2. About this report This report provides:
an interim update of our 5-year forecast of more than 200 mobile and fixed KPIs (see Figure 1) for Central and Eastern Europe (CEE) as a whole and for 14 individual countries, which was previously published in July
an explanation of the significant changes to our previous forecasts for the region and for four key markets. For the complete data set, see the accompanying Excel file.
This update is based on a historical dataset as at the second quarter of
Upward or downward revisions to our previous forecasts occurred mainly as a result of:
market developments, based on the latest operator and regulator data
changes to the macroeconomic outlook, competitive and regulatory environment
changes to historical data because of newly available information and restated data.
Figure 1: Summary of report coverage [Source: Analysys Mason, 2013]
Geographical coverage
Major KPIs
Regions modelled:
Central and Eastern Europe.
Countries modelled individually:
Bulgaria
Croatia
Czech Republic4
Estonia
Hungary
Latvia
Lithuania
Poland4
Romania
Russia4
Slovakia
Slovenia
Turkey4
Ukraine.
Connections3
Revenue3
Mobile
Handset, mobile broadband, M2M
Prepaid, contract
2G, 3G, 4G
Smartphone, non-smartphone
Fixed
Voice, broadband, IPTV, dial-up
Narrowband voice, VoBB
DSL, FTTH/B, cable, BFWA, other
Service, retail
Handset voice, messaging, data
Voice, broadband, IPTV, dial-up, BNS
ARPU3
Voice traffic3
Mobile:
SIMs, handset
Handset voice, data
Fixed and mobile
Outgoing minutes, MoU, SMS sent
1 See Central and Eastern Europe telecoms market: trends and forecasts 2013– Available at
2 The previous forecast was based on a historical dataset as at the fourth quarter of Note that all EUR values are shown in EUR calculated at constant (2012) exchange rates, to eliminate the impact of local exchange rate fluctuations.
3 Most results are provided for the business and residential segments as well for the total market.
4 Country forecast changes and drivers are discussed in this report.

3. Contents Executive summary
Slide no.
Slide no.
Executive summary
Our forecasts for the entire Central and Eastern Europe region are largely unchanged, but this masks significant revisions in some countries
In the large growth markets (Russia, Turkey and Ukraine), we expect a faster transition away from legacy voice and messaging services
We forecast that total revenue in Russia, Turkey and Ukraine will peak in 2015, a year later than our previous forecast, and not grow again thereafter
We also expect the threat from OTT applications to increase in the more mature markets in Central and Eastern Europe
Telecoms and pay-TV revenue will decline a little faster than previously predicted in the 11 mature markets
The outlook for telecoms retail revenue has worsened in all but two countries
Mobile service revenue declined in many CEE countries during the first half of 2013, and SMS volumes are beginning to saturate
Key trends since our previous forecast: messaging revenue is being eroded more quickly, but data services are looking stronger
Key trends since our previous forecast: there is considerable scope for fixed consolidation, and we expect stronger growth in NGA
Summary of forecast drivers for each Central and Eastern European market [1]
Summary of forecast drivers for each Central and Eastern European market [2]
Forecast highlights for major markets
Czech Republic: We have reduced our revenue forecast because of increased competition in the mobile market
Czech Republic: Competitive forces wiped CZK4.3 billion (EUR168 million) off mobile retail revenue in the first half of 2013
Poland: The mobile market will continue to be very competitive
Poland: We anticipate a more positive outlook for mobile data revenue and for fixed broadband as cable stimulates demand
Russia: The Russian telecoms market will peak in 2014 – slightly later than previously expected
Russia: Overall revenue is largely unchanged, but the transition from traditional to next-generation services will be quicker
Turkey: We have increased our growth estimate for 2013, following a strong performance in the first half of the year
Turkey: We have revised the overall growth rate for 2013–2018 slightly downward
About the authors and Analysys Mason
About the authors
About Analysys Mason
Research from Analysys Mason

4. List of figures [1] Figure 1: Summary of report coverage
Figure 2: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, CEE, 2010–2018
Figure 3: Telecoms retail revenue by service type, and growth rates, CEE, 2012–2018
Figure 4: Connections by type, and growth rates, CEE, 2012–2018
Figure 5: Telecoms retail revenue by service type, previous and new forecasts, Russia, Turkey and Ukraine, 2013 and 2018
Figure 6: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, Russia, Turkey and Ukraine, 2010–2018
Figure 7: Telecoms retail revenue by service type, and growth rates, Russia, Turkey and Ukraine, 2012–2018
Figure 8: Connections by type, and growth rates, Russia, Turkey and Ukraine, 2012–2018
Figure 9: Telecoms retail revenue by service type, previous and new forecasts, 11 mature markets in CEE, 2013 and 2018
Figure 10: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, 11 mature markets in CEE, 2010–2018
Figure 11: Telecoms retail revenue by service type, and growth rates, 11 mature markets in CEE, 2012–2018
Figure 12: Connections by type, and growth rates, 11 mature markets in CEE, 2012–2018
Figure 13: Telecoms retail revenue growth by country, previous and new forecasts, CEE, 2012–2018
Figure 14: Year-on-year change in mobile service revenue, by country, CEE, 1H 2011–1H 2013
Figure 15: Year-on-year change in SMS volume, by country, CEE, 1H 2011–1H 2013
Figure 16a–b: Summary of major changes compared with our June forecast for CEE
Figure 17a–b: Major forecast drivers and impact, by country, CEE, 2012– 2018
Figure 18: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, Czech Republic, 2009–2018
Figure 19: Telecoms retail revenue by service type, and growth rates, Czech Republic, 2012–2018
Figure 20: Connections by type, and growth rates, Czech Republic, –2018
Figure 21: Telecoms retail revenue by service type, previous and new forecasts, Czech Republic, 2013 and 2018
Figure 22: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, Poland, 2009– 2018
Figure 23: Telecoms retail revenue by service type, and growth rates, Poland, 2012–2018
Figure 24: Connections by type, and growth rates, Poland, 2012–2018
Figure 25: Telecoms retail revenue by service type, previous and new forecasts, Poland, 2013 and 2018

5. List of figures [2]
Figure 26: Telecoms retail revenue by service type, and previous
forecasts for total and mobile retail revenue, Russia, 2009–2018
Figure 27: Telecoms retail revenue by service type, and growth rates, Russia, 2012–2018
Figure 28: Connections by type, and growth rates, Russia, 2012–2018
Figure 29: Telecoms retail revenue by service type, previous and new forecasts, Russia, 2013 and 2018
Figure 30: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, Turkey, 2009–2018
Figure 31: Telecoms retail revenue by service type, and growth rates, Turkey, 2012–2018
Figure 32: Connections by type, and growth rates, Turkey, 2012–2018
Figure 33: Telecoms retail revenue by service type, previous and new forecasts, Turkey, 2013 and 2018

6. Executive summary
Forecast highlights for major markets
About the authors and Analysys Mason

7. Connections (million)
Our forecasts for the entire Central and Eastern Europe region are largely unchanged, but this masks significant revisions in some countries
Figure 2: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, CEE, 2010–2018 [Source: Analysys Mason, 2013]
Figure 3: Telecoms retail revenue by service type, and growth rates, CEE, 2012–2018 [Source: Analysys Mason, 2013]
Service type
Revenue (EUR billion)
CAGR 2012–2018
2012
2018
New
Previous
Mobile voice
29.2
24.4
–3.0%
Mobile messaging
4.6
2.0
–13.0%
–7.8%
Handset data
5.2
11.3
13.6%
12.6%
Mobile broadband1
2.4
2.9
3.0%
2.7%
M2M
0.2
0.5
20.4%
22.4%
Fixed voice and narrowband2
13.3
9.2
–6.0%
–5.5%
Fixed broadband3
7.4
9.1
3.5%
Business network services
2.8
3.4
4.2%
Total telecoms
65.1
62.8
–0.6%
Pay TV
5.3
6.6
3.8%
Total
70.4
69.3
–0.3%
–0.2%
1 Includes USB modem, and mid- and large-screen, but not handset-based data.
2 Includes narrowband, VoBB and dial-up Internet access.
3 Includes IPTV.
Figure 4: Connections by type, and growth rates, CEE, 2012–2018 [Source: Analysys Mason, 2013]
Connection type
Connections (million)
CAGR 2012–2018
2012
2018
New
Previous
Mobile handsets
478.4
497.3
0.6%
0.1%
Mobile broadband
25.7
31.4
3.4%
2.9%
M2M
7.7
42.5
33.0%
36.4%
Fixed voice
102.2
92.9
–1.6%
Fixed broadband
55.4
74.9
5.2%
5.3%
IPTV
5.6
10.5
11.1%
10.8%

8. In the large growth markets (Russia, Turkey and Ukraine), we expect a faster transition away from legacy voice and messaging services
Figure 5: Telecoms retail revenue by service type, previous and new forecasts, Russia, Turkey and Ukraine, 2013 and 2018 [Source: Analysys Mason, 2013]
Our 2013 total retail revenue estimates for Russia, Turkey and Ukraine have increased only slightly, from EUR42.5 billion to EUR42.6 billion.
However, this masks significant changes at service level – particularly a faster transition from traditional voice services to next-generation data services.
Fixed broadband and IPTV revenue is increased by almost 10% in comparison with our previous forecast, partly as a result of improvements to our historical data methodology, but also because of a stronger ARPU performance in the first half of 2013 – particularly in Russia and Turkey.
Similarly, our forecast for 2018 is revised upwards marginally, but with a greater change in the service breakdown.
We have revised messaging revenue down substantially because the threat from over-the-top (OTT) services has increased. The young population in Turkey, high 3G take-up, and high SMS traffic indicate a high degree of vulnerability to OTT substitution as smartphone penetration increases.
However, the resulting growth in handset data service usage will offset the decline in voice and messaging revenue.
The timetable for 3G and 4G licensing in Ukraine remains unclear, but we expect a lot of latent demand to be released when services are eventually launched.

9. Connections (million)
We forecast that total revenue in Russia, Turkey and Ukraine will peak in 2015, a year later than our previous forecast, and not grow again thereafter
Figure 6: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, Russia, Turkey and Ukraine, 2010–2018 [Source: Analysys Mason, 2013]
Figure 7: Telecoms retail revenue by service type, and growth rates, Russia, Turkey and Ukraine, 2012–2018 [Source: Analysys Mason, 2013]
Service type
Revenue (EUR billion)
CAGR 2012–2018
2012
2018
New
Previous
Mobile voice
17.8
15.7
–2.1%
–2.4%
Mobile messaging
2.5
1.1
–12.7%
–7.6%
Handset data
4.0
8.4
12.8%
11.6%
Mobile broadband1
1.5
1.9
3.8%
3.3%
M2M
0.1
0.3
24.2%
26.7%
Fixed voice and narrowband2
9.5
6.6
–5.9%
–5.5%
Fixed broadband3
4.5
5.9
4.3%
Business network services
2.0
5.1%
6.1%
Total telecoms
41.4
41.7
0.1%
–0.1%
Pay TV
1.6
Total
43.1
43.7
0.2%
1 Includes USB modem, and mid- and large-screen, but not handset-based data.
2 Includes narrowband, VoBB and dial-up Internet access.
3 Includes IPTV.
Figure 8: Connections by type, and growth rates, Russia, Turkey and Ukraine, 2012–2018 [Source: Analysys Mason, 2013]
Connection type
Connections (million)
CAGR 2012–2018
2012
2018
New
Previous
Mobile handsets
319.9
339.0
1.0%
0.2%
Mobile broadband
16.0
19.4
3.2%
2.6%
M2M
3.9
25.3
36.8%
40.3%
Fixed voice
71.4
66.1
–1.3%
–1.6%
Fixed broadband
32.5
46.4
6.1%
6.3%
IPTV
2.6
6.0
14.9%

10. We also expect the threat from OTT applications to increase in the more mature markets in Central and Eastern Europe1
Figure 9: Telecoms retail revenue by service type, previous and new forecasts, 11 mature markets in CEE, 2013 and 2018 [Source: Analysys Mason, 2013]1
In our previous forecasts we anticipated a strong decline for retail voice revenue during 2013, and the first half results indicate that the reduction will be just a little heavier.
The most significant revision to our forecasts in these mature markets is on the mobile messaging retail revenue. This revenue stream is already in decline in Bulgaria, Czech Republic, Lithuania and Hungary. OTT applications such as WhatsApp Messenger and Line are gaining traction, and smartphone adoption is set to reach between 69% and 81% by 2018 in those countries, so traditional messaging revenue is at risk in these markets. We have cut our total revenue forecast for 2018 for the 11 markets excluding Russia, Turkey and Ukraine by 30%.
We have slightly increased our projection for fixed broadband revenue because of a stronger fibre element in the technology mix (which carries a higher ARPU) and more optimistic IPTV revenue forecasts.
The European Commission (EC) downgraded the forecasts for growth between 2012 and 2014 for 7 of these 11 countries in its May 2013 forecasts, compared with its February version.2 This has led us to reduce our business network services revenue for these countries, because this is largely driven by the volume of economic activity.
1 The countries included in this category are: Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.
2 European Commission (May 2013), Economic forecasts. Available at

11. Connections (million)
Telecoms and pay-TV revenue will decline a little faster than previously predicted in the 11 mature markets1
Figure 10: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, 11 mature markets in CEE, 2010–2018 [Source: Analysys Mason, 2013]1
Figure 11: Telecoms retail revenue by service type, and growth rates, 11 mature markets in CEE, 2012–2018 [Source: Analysys Mason, 2013]1
Service type
Revenue (EUR billion)
CAGR 2012–2018
2012
2018
New
Previous
Mobile voice
11.4
8.7
–4.4%
–4.0%
Mobile messaging
2.1
0.9
–13.3%
–8.1%
Handset data
1.2
2.9
16.1%
15.6%
Mobile broadband2
1.0
1.6%
1.7%
M2M
0.1
0.2
16.7%
17.5%
Fixed voice and narrowband3
3.9
2.6
–6.1%
–5.5%
Fixed broadband4
3.2
2.0%
1.9%
Business network services
1.3
1.5
Total telecoms
23.7
21.1
–1.9%
–1.5%
Pay-TV
3.7
2.2%
Total
26.9
24.8
–1.4%
–1.0%
2 Includes USB modem, and mid- and large-screen, but not handset-based data.
3 Includes narrowband, VoBB and dial-up Internet access.
4 Includes IPTV.
Figure 12: Connections by type, and growth rates, 11 mature markets in CEE, 2012–2018 [Source: Analysys Mason, 2013]1
Connection type
Connections (million)
CAGR 2012–2018
2012
2018
New
Previous
Mobile handsets
158.5
158.3
–0.0%
0.2%
Mobile broadband
9.6
12.0
3.8%
2.6%
M2M
3.8
17.2
28.5%
40.3%
Fixed voice
30.7
26.8
–2.3%
–1.6%
Fixed broadband
22.9
28.5
3.7%
6.3%
IPTV
3.0
4.5
7.1%
14.9%
1 The countries included in this category are: Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.

12. The outlook for telecoms retail revenue has worsened in all but two countries
Figure 13: Telecoms retail revenue growth by country, previous and new forecasts, CEE, 2012–2018 [Source: Analysys Mason, 2013]
In most CEE countries we have reduced our growth forecast to some degree. In general we perceive a greater threat from OTT, to messaging revenue in particular, but also to voice, particularly as 4G becomes established. The introduction of unlimited bundles (such as the FREE range that Telefónica Czech Republic (O2) launched in April 2013) will further erode traditional revenue streams.
Increased mobile competition has driven significant downward revisions in the Czech Republic, Croatia (where VIPnet is working to increase its proportion of contract subscribers, and Tele2 is focussing on gaining prepaid subscribers) and Estonia (where MTRs have been cut dramatically, which increases the scope for more-intense price competition at the retail level).
Our forecasts have been revised upwards for two countries: Latvia, where mobile voice revenue is holding up better than expected; and Ukraine, where a higher economic forecast and a strong performance from mobile data services in the first half of 2013 have caused us to take a more optimistic view of the growth potential.

13. Mobile service revenue declined in many CEE countries during the first half of 2013, and SMS volumes are beginning to saturate
Figure 14: Year-on-year change in mobile service revenue, by country, CEE, 1H 2011–1H 2013 [Source: Analysys Mason, 2013]
Mobile service revenue in many countries declined dramatically during the first half of Estonia suffered a 22% year-on-year decline because of a large cut in MTRs. More widespread adoption of unlimited bundles has also eroded mobile voice revenue. In other markets, revenue declined because of increased competitive pressure. Play has been a disruptive force in Poland, and at least ten companies are actively operating as MVNOs in the Czech Republic – just over a year since the first MVNO agreement was signed in October 2012.
Even previously strong markets, such as Russia and Ukraine, experienced a slowdown in growth rates.
Our previous forecast anticipated such developments, but we have fine-tuned the output to reflect the impact of regulation and competition on mobile service revenue, trimming EUR1.2 billion from our 2018 figure for the region.
Until recently, SMS volumes were increasing in the most mature markets in this region, but growth has declined in recent quarters for the nine countries shown. We conclude that the impact of OTT applications is beginning to have an effect, and have intensified the erosion of mobile messaging revenue in our new forecast.
Figure 15: Year-on-year change in SMS volume, by country, CEE, 1H 2011–1H 2013 [Source: Analysys Mason, 2013]

14. Key trends since our previous forecast: messaging revenue is being eroded more quickly, but data services are looking stronger
Figure 16a: Summary of major changes compared with our June 2013 forecast for CEE [Source: Analysys Mason, 2013]
Change
Description or driver
Mobile competitiveness:
Mobile voice prices are declining faster than expected in some markets 
Competition has intensified in a number of countries, and mobile voice in particular is becoming increasingly commoditised. Increased use of bundling and a focus on data services is depressing prices. MVNOs are gaining momentum in some countries, although some consolidation is also likely.
We have revised our forecast revenue per minute for mobile voice down in a number of countries, notably Croatia, the Czech Republic and Estonia.
Mobile messaging revenue (SMS):
The outlook for mobile messaging services has worsened
Our historical baseline has increased by around 3%, but we are forecasting a steeper decline for mobile messaging revenue, compared with our previous forecast. OTT services are becoming established, and operators are using bundling to counter the threat, which has the effect of reducing the revenue allocated to SMS.
We expect messaging revenue to decline to EUR2.00 billion in 2018, compared with EUR2.72 billion in the previous forecast.
Mobile handset data revenue:
Mobile handset data will perform more strongly then expected
An increase in handset data revenue more than compensates for the downward revision to mobile messaging revenue. Operators are adjusting their tariffs to encourage take-up and usage of data services, and this has resulted in a stronger 1H 2013 than expected.
The CAGR for handset data revenue has increased from 12.6% previously to 13.6% in our new forecast, and revenue will reach EUR11.3 billion in 2018.
Mobile broadband:
Mobile broadband will peak in 2016, at a slightly higher level than we expected
Our view of mobile broadband in the medium-to-long term is unchanged – it will enter decline as a result of substitution by handset usage (both directly on smartphones and via tethering) and increased availability of public Wi-Fi.
However, in the short-term, growth will be a little stronger than we expected, and revenue will peak in at EUR3.01 billion, (previously EUR2.93 billion) before declining to EUR2.87 billion in 2018.

15. Key trends since our previous forecast: there is considerable scope for fixed consolidation, and we expect stronger growth in NGA
Figure 16b: Summary of major changes compared with our June 2013 forecast for CEE [Source: Analysys Mason, 2013]
Change
Description or driver
Convergence between fixed operators:
Increased M&A activity makes consolidation likely in certain markets 
There has been a general upswing in M&A activity, and this creates opportunities for consolidation in a number of countries that have a large number of fixed players. In particular, Bulgaria, Hungary, Latvia, Lithuania, Poland, Russia, Slovenia and Ukraine have a large number of local fixed network operators that represent potential acquisition targets.
Fixed NGA:
Fibre take-up is accelerating in certain markets
Fixed operators are investing heavily in NGA infrastructure, and consumers are showing an increased appetite for superfast broadband. Take-up of FTTH/B has been faster than expected in the first half of in a number of markets, particularly Bulgaria, Romania, Slovenia and Turkey, and we have revised our forecasts upwards accordingly.
We now forecast that NGA (VDSL, cable and FTTH/B) will account for 64.3% of total fixed broadband connections in 2018, compared with 63.7% previously.
Pay TV:
Our pay-TV forecasts have been fully re-worked
We updated our European pay-TV forecasts in August 2013,1 which have been incorporated into the latest Core Forecast results, and adjusted further for recent market developments, such as the continued strong growth in Bulgaria and Turkey.
In 2018 we now expect the number of IPTV subscribers in CEE to be 10.5 million, compared with 10.2 million previously.
1 See Pay-TV and OTT video services in Central and Eastern Europe: forecasts and analysis 2013–2018. Available at

16. Economic and regulatory Technological outlook 2012–2018
Summary of forecast drivers for each Central and Eastern European market [1]
Figure 17a: Major forecast drivers and impact, by country, CEE, 2012–2018 [Source: Analysys Mason, 2013]
Drivers:
Economic and regulatory
Competitive outlook 2012–2018
Technological outlook 2012–2018
Country
Real GDP growth (CAGR 2012–2014)1
MTR reduction 2012–20182
Mobile: level of competition
OTT impact
Quadruple-play prevalence
Likelihood of fixed consolidation
Year 4G reaches 5% share of handsets
Smartphone share of handsets at 2018
NGA share of fixed broadband connections 20183
Bulgaria
1.3%
77%


2016
70%
36%
Croatia
–0.4%
80%

2015
81% 7%
Czech Republic
0.6%
78%
35%
Estonia
3.5%
83%
2014
49%
Hungary
0.8%
53%
75%
22%
Latvia
4.0%
51%

79%
52%
Lithuania
3.4%
38%
69%
67%
Impact of a high value for this driver:
Drives up revenue in all segments
Reduces mobile service revenue
Reduces mobile revenue
Reduces voice and messaging revenue
Drives up fixed broadband revenue
Reduces mobile data revenue
Drives up mobile data revenue
Key:  = very high;  = very low.
1 European Commission (May 2013), Economic forecasts. Available at
2 Source: Analysys Mason estimates based on reported regulatory glide path.
3 NGA is defined as cable, VDSL and FTTH/B.

17. Economic and regulatory Technological outlook 2012–2018
Summary of forecast drivers for each Central and Eastern European market [2]
Figure 17b: Major forecast drivers and impact, by country, CEE, 2012–2018 [Source: Analysys Mason, 2013]
Drivers:
Economic and regulatory
Competitive outlook 2012–2018
Technological outlook 2012–2018
Country
Real GDP growth (CAGR 2012–2014)1
MTR reduction 2012–20182
Mobile: level of competition
OTT impact
Quadruple-play prevalence
Likelihood of fixed consolidation
Year 4G reaches 5% share of handsets
Smartphone share of handsets at 2018
NGA share of fixed broadband connections 20183
Poland
1.7%
74%



2015
75%
20%
Romania
1.9%
63%
80%
Russia
N/a
30%
72%
65%
Slovakia
81%
38%
Slovenia
–1.1%
54%
32%
Turkey
44%

2017
49%
Ukraine
2018
47%
43%
Impact of a high value for this driver:
Drives up revenue in all segments
Reduces mobile service revenue
Reduces mobile revenue
Reduces voice and messaging revenue
Drives up fixed broadband revenue
Reduces mobile data revenue
Drives up mobile data revenue
Key:  = very high;  = very low.
1 European Commission (May 2013), Economic forecasts. Available at
2 Source: Analysys Mason estimates based on reported regulatory glide path.
3 NGA is defined as cable, VDSL and FTTH/B.

18. Executive summary
Forecast highlights for major markets
About the authors and Analysys Mason

19. Connections (million)
Czech Republic: We have reduced our revenue forecast because of increased competition in the mobile market
Figure 18: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, Czech Republic, 2009–2018 [Source: Analysys Mason, 2013]
Figure 19: Telecoms retail revenue by service type, and growth rates, Czech Republic, 2012–2018 [Source: Analysys Mason, 2013]
Service type
Revenue (CZK million)
CAGR 2012–2018
2012
2018
Current
Previous
Mobile voice
38 894
25 899
–6.6%
–4.7%
Mobile messaging
9116
2407
–19.9%
–9.7%
Mobile handset data
3782
9992
17.6%
17.5%
Mobile broadband1
2375
2074
–2.2%
–3.6%
M2M
384
1480
25.2%
25.7%
Fixed voice2
7359
5256
–5.5%
–4.2%
Fixed broadband3
13 440
13 603
0.2%
0.6%
Business network services
5 234
5 324
0.3%
–0.1%
Total
80 584
66 036
–3.3%
–1.8%
1 Includes USB modem, and mid- and large-screen, but not handset-based data.
2 Includes narrowband, VoBB and dial-up Internet access.
3 Includes IPTV.
Figure 20: Connections by type, and growth rates, Czech Republic, 2012–2018 [Source: Analysys Mason, 2013]
Connection type
Connections (million)
CAGR 2012–2018
2012
2018
Current
Previous
Mobile handsets
12.9
12.7
–0.2%
Mobile broadband
0.6
0.7
0.9%
0.3%
M2M
0.5
3.5
37.1%
41.7%
Fixed voice
1.6
1.3
–4.0%
–2.6%
Fixed broadband
2.7
3.1
2.7%
3.0%
IPTV
0.1
0.2
2.3%
2.4%

20. Czech Republic: Competitive forces wiped CZK4
Czech Republic: Competitive forces wiped CZK4.3 billion (EUR168 million) off mobile retail revenue in the first half of 20131
Figure 21: Telecoms retail revenue by service type, previous and new forecasts, Czech Republic, 2013 and 2018 [Source: Analysys Mason, 2013]
The Czech mobile market became extremely competitive in The regulator, CTU, reported in December 2013 that there were more than 50 MVNOs. Telefónica Czech Republic (O2) launched its unlimited FREE tariffs in 2013, which drove a sharp increase in voice traffic volumes, but at the expense of revenue. Mobile retail revenue fell sharply in the first half of 2013: year-on-year growth was –12% in the second quarter of Revised data-oriented plans have encouraged smartphone adoption, which will leave the market open to the threat of OTT applications. We have therefore reduced our forecasts for mobile voice and messaging revenue.
We now expect no fourth entrant, since in November the regulator did not allocate any spectrum to a new operator after all, and PPF’s recent acquisition of O2 makes a new entrant unlikely. Overall, our revised figures for mobile revenue in 2018 are 13% lower than in the previous forecast.
We have slightly increased our forecast for FTTH/B (at the expense of cable). O2 has confirmed that it will not pursue this technology, but other players such as Netbox and RIO Media are continuing to expand in some regions (although not the large cities, so take-up remains restricted). Appetite for pay-TV services is limited, which will limit the appeal of cable.
1 This figure compares revenue accrued in the four quarters up to the second quarter of with that accrued in the four quarters to the second quarter of 2012.

21. Poland: The mobile market will continue to be very competitive
Figure 22: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, Poland, 2009–2018 [Source: Analysys Mason, 2013]
Figure 23: Telecoms retail revenue by service type, and growth rates, Poland, 2012–2018 [Source: Analysys Mason, 2013]
Service type
Revenue (PLN million)
CAGR 2012–2018
2012
2018
Current
Previous
Mobile voice
13 539
11 182
–3.1%
Mobile messaging
3429
1681
–11.2%
–7.5%
Mobile handset data
979
2780
19.0%
17.9%
Mobile broadband1
1442
1519
0.9%
0.5%
M2M
134
295
14.0%
15.9%
Fixed voice2
5045
3453
–6.1%
–5.3%
Fixed broadband3
2969
3364
2.1%
1.5%
Business network services
1999
2272
2.2%
1.9%
Total
29 536
26 547
–1.8%
–1.5%
1 Includes USB modem, and mid- and large-screen, but not handset-based data.
2 Includes narrowband, VoBB and dial-up Internet access.
3 Includes IPTV.
Figure 24: Connections by type, and growth rates, Poland, 2012–2018 [Source: Analysys Mason, 2013]
Connection type
Connections (million)
CAGR 2012–2018
2012
2018
Current
Previous
Mobile handsets
46.6
47.0
0.1%
0.0%
Mobile broadband
3.9
4.9
3.9%
2.5%
M2M
1.2
5.1
27.2%
30.4%
Fixed voice
8.5
7.5
–2.2%
–2.0%
Fixed broadband
7.3
9.3
4.0%
3.5%
IPTV
0.2
0.4
12.4%

22. Poland: We anticipate a more positive outlook for mobile data revenue and for fixed broadband as cable stimulates demand
Figure 25: Telecoms retail revenue by service type, previous and new forecasts, Poland, 2013 and 2018 [Source: Analysys Mason, 2013]
We have revised our 2018 retail telecoms revenue forecast slightly downward (by –0.5%) because a more positive outlook on data service growth (fixed broadband and mobile handset data) has been offset by a more negative outlook on messaging revenue, caused by OTT cannibalisation.
We forecast a CAGR of –1.8% on mobile retail revenue.
The mobile market continues to be competitive because all operators have launched promotions offering unlimited voice calls and SMS to all networks on prepaid and contract services. This will cause a 3.1% and 11.2% decline per year in voice and messaging revenue, respectively.
Mobile handset data will have the highest growth (at a CAGR of 19%) because the increasing proportion of smartphones and growth in GDP per capita will boost data spending, which is still relatively low.
Total fixed revenue will be more resilient than mobile, declining at a CAGR of –1.6%. during the forecast period.
Growth in fixed broadband subscriptions is strong (at 10% year-on-year in June 2013) as cable operators Multimedia Polska and UPC stimulate demand via increasing availability of DOCSIS3.0-upgraded networks, competitive pricing and triple-play offers. We have revised upwards our subscriber forecast (from 6% to 10% year-on-year growth) and our 2014–2018 forecasts accordingly.

23. Connections (million)
Russia: The Russian telecoms market will peak in 2014 – slightly later than previously expected
Figure 26: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, Russia, 2009–2018 [Source: Analysys Mason, 2013]
Figure 27: Telecoms retail revenue by service type, and growth rates, Russia, 2012–2018 [Source: Analysys Mason, 2013]
Service type
Revenue (RUB million)
CAGR 2012–2018
2012
2018
Current
Previous
Mobile voice
–3.6%
–3.8%
Mobile messaging
68 778
30 469
–12.7%
–8.0%
Mobile handset data
11.3%
9.4%
Mobile broadband1
38 953
47 658
3.4%
M2M
2013
6943
22.9%
25.5%
Fixed voice2
–5.4%
–4.9%
Fixed broadband3
3.8%
3.1%
Business network services
30 780
42 354
5.5%
6.9%
Total
–0.7%
–1.0%
1 Includes USB modem, and mid- and large-screen, but not handset-based data.
2 Includes narrowband, VoBB and dial-up Internet access.
3 Includes IPTV.
Figure 28: Connections by type, and growth rates, Russia, 2012–2018 [Source: Analysys Mason, 2013]
Connection type
Connections (million)
CAGR 2012–2018
2012
2018
Current
Previous
Mobile handsets
212.7
198.5
–1.1%
–2.1%
Mobile broadband
8.8
9.9
1.8%
M2M
2.2
13.8
35.8%
39.3%
Fixed voice
45.3
43.2
–0.8%
–1.2%
Fixed broadband
20.7
29.5
6.1%
IPTV
2.4
5.4
14.4%

24. Russia: Overall revenue is largely unchanged, but the transition from traditional to next-generation services will be quicker
Figure 29: Telecoms retail revenue by service type, previous and new forecasts, Russia, 2013 and 2018 [Source: Analysys Mason, 2013]
We have decreased our historical baseline for Russia because of a revision to our mobile revenue model to take account of the latest available data.
Our historical estimates for mobile messaging revenue have been raised, but this is more than offset by a reduction in mobile voice revenue.
As a result, our estimated total retail revenue for 2013 is about 0.9% lower than previously estimated, at RUB1.12 trillion (EUR28.2 billion).
Our forecast trajectory is largely unchanged, although the CAGR has increased slightly, from –1.0% to –0.7%. Total revenue in 2018 is almost unchanged, at RUB1.05 trillion (EUR26.4 billion), but the breakdown of revenue has changed significantly in some cases.
Mobile messaging revenue will decline much more quickly, to account for 2.9% of the total in 2018 (instead of 3.6% previously forecast), because of an increased OTT threat.
Conversely, handset data revenue will grow more strongly, to reach RUB229 billion (EUR5.76 billion) in 2018, when it will account for 32.6% of mobile retail revenue.
Fixed voice and business network services have been revised down, but fixed broadband has increased, driven by faster take-up of fibre services and slower decline in ARPU.

25. Connections (million)
Turkey: We have increased our growth estimate for 2013, following a strong performance in the first half of the year
Figure 30: Telecoms retail revenue by service type, and previous forecasts for total and mobile retail revenue, Turkey, 2009–2018 [Source: Analysys Mason, 2013]
Figure 31: Telecoms retail revenue by service type, and growth rates, Turkey, 2012–2018 [Source: Analysys Mason, 2013]
Service type
Revenue (TRY million)
CAGR 2012–2018
2012
2018
Current
Previous
Mobile voice
9906
10 748
1.4%
1.0%
Mobile messaging
1433
604
–13.4%
–6.1%
Mobile handset data
1758
4666
17.7%
18.1%
Mobile broadband1
561
835
6.8%
5.4%
M2M 50
191
25.2%
27.8%
Fixed voice2
5336
3163
–8.3%
–7.9%
Fixed broadband3
3657
4982
5.3%
4.4%
Business network services
1244
1646
4.8%
5.9%
Total
23 944
26 835
1.9%
2.0%
1 Includes USB modem, and mid- and large-screen, but not handset-based data.
2 Includes narrowband, VoBB and dial-up Internet access.
3 Includes IPTV.
Figure 32: Connections by type, and growth rates, Turkey, 2012–2018 [Source: Analysys Mason, 2013]
Connection type
Connections (million)
CAGR 2012–2018
2012
2018
Current
Previous
Mobile handsets
59.4
83.8
5.9%
6.1%
Mobile broadband
1.9
3.4
10.1%
9.3%
M2M
1.1
7.7
37.3%
40.9%
Fixed voice
14.2
13.3
–1.1%
–1.0%
Fixed broadband
7.8
11.0
IPTV
0.2
0.5
21.5%

26. Turkey: We have revised the overall growth rate for 2013–2018 slightly downward
Figure 33: Telecoms retail revenue by service type, previous and new forecasts, Turkey, 2013 and 2018 [Source: Analysys Mason, 2013]
Our historical baseline for Turkey has been revised upwards, because of an improvement in our methodology for the fixed broadband market, which resulted in an increased ARPU.
Accordingly, our total revenue forecast for each year is higher than previously, but the overall CAGR is slightly lower (1.9% rather than 2.0% for 2012–2018), because of changes in our forecasts for some of the revenue lines.
A number of revenue lines have been revised upwards.
We have increased our forecast for fixed broadband revenue, because our new figures indicate that ARPU has been growing more strongly than we had thought.
Mobile voice revenue growth has increased – revisions to our traffic model indicate that the price per minute (PPM) is declining at a slower rate than expected, leading to a stronger forecast.
Such gains are outweighed by declines in other areas, such as fixed voice, business network services and mobile messaging.
In particular, messaging is cut significantly, because of the OTT threat. Turkey has a young population with high take-up of 3G, and we expect a strong and growing substitutive effect – particularly towards the end of the forecast period, as smartphone penetration approaches 72% of handsets.

27. Executive summary
Forecast highlights for major markets
About the authors and Analysys Mason

28. About the authors
Hilary Bailey (Senior Analyst) has worked for Analysys Mason for more than 20 years. She specialises in quantitative forecast modelling: she manages and is a key contributor to Analysys Mason’s European Core Forecasts research programme, and helped to develop and implement our converged core forecast methodology. She manages and is one of the key contributors to Analysys Mason's Telecoms Market Matrix, which tracks and compares telecoms metrics and market shares for all the major fixed and mobile operators in Europe. She has previously specialised in telecoms price comparison studies encompassing fixed, mobile and the converged fixed/mobile markets. Hilary has a degree in Economics from the University of Bristol, and an MPhil in Economics from the University of Cambridge.
William Hare (Analyst) is co-leader of Analysys Mason’s Global Telecoms Forecasts programme, and is a key contributor to the modelling behind the Telecoms Market Matrix. He joined Analysys Mason’s Consulting division in 2007, before transferring to the Research division in William’s primary specialisations include business and market modelling and data analysis, for both the mobile and fixed telecoms markets. He read mathematics at the University of Cambridge.
Pablo Iacopino (Analyst) focuses on forecasting and analysing telecoms markets in Europe and Latin America. He is co-leader of Analysys Mason’s Global Telecoms Forecasts programme and the lead analyst for research on the Latin America region. He is a key contributor to the Telecoms Market Matrix and European Core Forecasts. Pablo joined Analysys Mason in 2012, after 8 years in the telecoms industry. He worked for 5 years in Strategy and Investor Relations at Telecom Italia, where he was responsible for European telecoms benchmarking, followed by 3 years in investment banking as a senior equity research analyst covering telecoms stocks. Pablo specialises in industry analysis, benchmarking, modelling, forecasts and valuation. He holds a Master’s degree in business administration and a postgraduate Master’s degree in statistics and economics from Università degli Studi di Roma ‘La Sapienza’.

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