The telecommunications market in Poland will grow by 1.8% in 2015
According to PMR forecasts presented in the latest report “Telecommunications market in Poland 2015. Development forecasts for 2015-2020”, the market of operator services in Poland will grow by 1.8% in 2015. In 2014 the market of telecommunications services in Poland was worth PLN 35.5bn. Compared to the preceding year its value contracted by 1.7%. Following the clearly worse year 2013, year 2014 witnessed the flattening off of the negative change.
The sector results were primarily influenced by the performance of mobile telephony operators. Their aggregated revenue turned out to be higher than in the previous year, although in nominal terms the growth only reached PLN 200m. It should be noted here that this was a result comprising the operators’ total revenue, including the sales of devices, telephones and other hardware accompanying the acquisition of telecommunications services. It is important inasmuch as the mobile operators have recently introduced separate agreements for hardware sales, choosing hire purchase instead of the classical subsidies. The performance of the whole sector was adversely impacted by the decline in the fixed-line telephony segment where the operators’ revenue generated both on the retail and wholesale market again dwindled at a double-digit rate. This, however, came as no particular surprise.
A trend reversal took place on the market of data transmission and internet access which – according to our data – lost 1.2% last year. The saturation with internet services and the bundle competition prevented the cumulative revenue from growing. The stagnation on the mass market was also accompanied by substantial price cuts and renegotiation of agreements in the B2B segment. As a result, the market experienced the first drop in its history, although in practice it had been balancing on the verge of decline for three years.
We expect that in 2015 the market of operator services in Poland will grow by 1.8%. Analysing for example the performance for the first two quarters of this year we are of the opinion that the cumulative revenue of mobile networks and MVNOs in Poland will expand. For the first time in many years the mobile telephony market will not be directly affected by the actions taken by the regulator which systematically lowered MTRs in the past. Purely market-related factors and competition between the operators will be of key significance.
We believe that in the coming years the biggest operators will continue to pursue their current strategies of creating sort of telecommunications conglomerates offering to their customers a broad range of services from every market segment. Obviously each of the companies will lay emphasis first of all on the benefits offered by the nature of the business they conduct (cheaper calls to IP, mobility, digital quality of the received signal etc.). The more services, the more cross-selling opportunities there are and the higher the customer loyalty is, a crucial factor at a time of high market saturation.
The growing saturation with services and the statistics on customer migration exert a lot of pressure on the operators. Even putting aside the benefits of a higher ARPU, the more services the operators have available for attaching their customers to themselves in the future, the smaller the chance such customers will be inclined to switch to another provider. Low churn in the situation of high market saturation is of paramount importance. This is, in principle, the key factor – as admitted in interviews by the operators themselves – that greatly strengthens the present approach and does not encourage any rapid changes. It may be questioned whether customers actually need some of the services, whether bundles really generate additional revenue or how the suppliers of telecommunications services perform in their new role of retailers on the electricity market. The viability of supplementary services may be challenged as they are prone to contribute 1-2% or even nothing at all from the viewpoint of pure profitability. Nevertheless, churn rates provide an incentive for the operators, and will continue to do so in the future, to continue applying the bundle strategy.
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