This quarter's update to BMI's Hungary Telecommunications Report contains an analysis of the mobile, fixed line and broadband sectors for the first half of 2010 using figures released by the telecoms regulator, NHH, and the major telecoms service providers. We, however, maintain our forecasts for these markets given that the market trends observed in the first six months of the year are in line with BMI's expectations. At the time of writing, Hungary's largest fixed-line, broadband and mobile services provider, Magyar Telekom/T-Mobile and Vodafone Hungary have released Q210 results for their operations. Both operators reported subscriber net losses in Q210, resulting in a further decline in mobile subscriptions in the country. Although the outlook for the mobile market is a little bleaker than we had previously supposed, we expect positive growth in the market to pick up again in the second half of year as operators complete the process of discounting inactive lines on their networks and Hungary's economy begins to find its feet again after the recession. We believe there were 11.158mn mobile subscribers at the end of Q210, a 0.7% fall y-o-y. A renewed focus on migrating customers away from low-value prepaid services to postpaid offerings is cannibalising existing customer bases. With the worst out of the way, and increasing demand for smartphones, we do expect a return to positive growth in 2010. That said, the 4.9% rise in subscriber numbers forecast for 2010 may be short lived as market saturation and cannibalisation of the prepaid sector will weigh on longterm expansion. Mobile broadband is expected to play an increasingly important role in Hungary's mobile and broadband markets. According to the regulator, mobile broadband subscriptions exceeded the 1mn mark for the first time in Q210. At the end of June 2010, the total number of mobile broadband subscriptions stood at 1.037mn. However, it is noteworthy that the number of connections with data transmission within the three months to June 2010 stood at 798,000, representing 77% of total subscriptions. In view of the rapid take-up of mobile broadband in Hungary, we have raised our expectations for growth in the 3G field, which also takes in the likely impact of the commercial launch of 4G services base on LTE technology before the end of our forecast period. BMI now expects to see 5.920mn 3G/4G subscribers by the end of 2014. The rate of decline in fixed-line usage accelerated in Q210, according to data from the regulator. Although cable operators and alternative service providers continue to grow their user bases, incumbents Magyar Telecom and Invitel are seeing user numbers tumble. They are following the lead of alternative players such as UPC Hungary and Fibernet in offering doubleand triple-play services in order to maintain forward growth momentum, and this means that broadband connections are growing as fast as traditional fixed-line accesses are going out of service. In August 2010, Hungary's president Pal Schmitt signed a law which will restructure the country's telecoms and media regulators, as well as state-owned media companies, according to Telecompaper. Effective immediately, the new legislation will merge telecoms regulator NHH and ORTT, an authority previously responsible for overseeing the broadcasting sector, and thus create the National Media and Telecommunications Authority (NMHH). The consolidation of the telecoms and media regulators will most likely involve removing a number of overlaps in their functions, and thus bring on savings related to their funding.

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Hungary Telecommunications Report Q4 2010
Published on September 2010
Report Summary
This quarter's update to BMI's Hungary Telecommunications Report contains an analysis of the mobile, fixed line and broadband
sectors for the first half of 2010 using figures released by the telecoms regulator, NHH, and the major telecoms service providers. We,
however, maintain our forecasts for these markets given that the market trends observed in the first six months of the year are in line
with BMI's expectations.
At the time of writing, Hungary's largest fixed-line, broadband and mobile services provider, Magyar Telekom/T-Mobile and Vodafone
Hungary have released Q210 results for their operations. Both operators reported subscriber net losses in Q210, resulting in a further
decline in mobile subscriptions in the country. Although the outlook for the mobile market is a little bleaker than we had previously
supposed, we expect positive growth in the market to pick up again in the second half of year as operators complete the process of
discounting inactive lines on their networks and Hungary's economy begins to find its feet again after the recession.
We believe there were 11.158mn mobile subscribers at the end of Q210, a 0.7% fall y-o-y. A renewed focus on migrating customers
away from low-value prepaid services to postpaid offerings is cannibalising existing customer bases. With the worst out of the way,
and increasing demand for smartphones, we do expect a return to positive growth in 2010. That said, the 4.9% rise in subscriber
numbers forecast for 2010 may be short lived as market saturation and cannibalisation of the prepaid sector will weigh on longterm
expansion.
Mobile broadband is expected to play an increasingly important role in Hungary's mobile and broadband markets. According to the
regulator, mobile broadband subscriptions exceeded the 1mn mark for the first time in Q210. At the end of June 2010, the total
number of mobile broadband subscriptions stood at 1.037mn. However, it is noteworthy that the number of connections with data
transmission within the three months to June 2010 stood at 798,000, representing 77% of total subscriptions. In view of the rapid
take-up of mobile broadband in Hungary, we have raised our expectations for growth in the 3G field, which also takes in the likely
impact of the commercial launch of 4G services base on LTE technology before the end of our forecast period. BMI now expects to
see 5.920mn 3G/4G subscribers by the end of 2014.
The rate of decline in fixed-line usage accelerated in Q210, according to data from the regulator. Although cable operators and
alternative service providers continue to grow their user bases, incumbents Magyar Telecom and Invitel are seeing user numbers
tumble.
They are following the lead of alternative players such as UPC Hungary and Fibernet in offering doubleand triple-play services in
order to maintain forward growth momentum, and this means that broadband connections are growing as fast as traditional fixed-line
accesses are going out of service. In August 2010, Hungary's president Pal Schmitt signed a law which will restructure the country's
telecoms and media regulators, as well as state-owned media companies, according to Telecompaper. Effective immediately, the new
legislation will merge telecoms regulator NHH and ORTT, an authority previously responsible for overseeing the broadcasting sector,
and thus create the National Media and Telecommunications Authority (NMHH).
The consolidation of the telecoms and media regulators will most likely involve removing a number of overlaps in their functions, and
thus bring on savings related to their funding.
Table of Content
Executive Summary ... 5
SWOT Analysis .... 7
Hungary Mobile Industry SWOT Analysis .. 7
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Hungary Fixed-Line And Internet SWOT Analysis ... 8
Hungary Political SWOT 9
Hungary Economic SWOT ... 10
Hungary Business Environment SWOT ..... 11
Business Environment Rankings . 12
Central And Eastern European Markets . 12
Hungary ... 16
Table: Central And Eastern Europe Business Environment Ratings .... 18
Industry Forecast Scenario .... 19
Mobile .... 19
Table: Telecoms Sector ' Mobile ' Historical Data & Forecasts . 19
Fixed Line ..... 21
Table: Telecoms Sector ' Fixed Line ' Historical Data & Forecasts .. 21
Internet .. 22
Table: Telecoms Sector ' Internet ' Historical Data & Forecasts ...... 22
Market Data Analysis ...... 23
Mobile .... 23
Table: Hungary ' Mobile Market Net Additions, 2009-2010 ('000) .... 24
Table: Hungary ' Mobile Market, Q210 ... 26
Title: Pannon And T-Mobile ARPU (EUR) ...... 28
Subscriber Mix 29
Table: Hungary ' Mobile Market ' Prepaid And Postpaid Subscribers, 2008-2010 30
Mobile Contract Wins . 31
Table: Mobile Contract Wins ...... 31
Mobile Content .... 32
Regional Outlook ... 32
Table: Total Russian VAS Market, Q309-Q409 ...... 32
Country Outlook .... 36
Value-Added Services Timeline... 41
Table: Selected VAS Services ...... 41
Mobile Operator Data .. 42
Hungary: Mobile Market Overview ... 42
Table: Pannon GSM ..... 43
Table: T-Mobile ..... 44
Table: Vodafone..... 45
Fixed Line ..... 46
Table: Magyar Telekom Consumer Business Unit Voice Customers, Q408-Q110 .... 46
Internet .. 49
Table: Mobile Broadband Coverage, June 2010 .... 51
Table: Magyar Telekom TV Subscribers ... 54
Wireline (Fixed-Line & Broadband) Developments 57
Table: Wireline Developments, 2008-2010 ...... 57
Regulatory Environment & Industry Developments ...... 58
Hungary: Regulatory Bodies And Their Responsibilities ...... 58
Recent Developments .... 59
Competitive Landscape .. 61
Key Players ... 61
Table: Key Players ' Hungary Telecoms Sector ..... 61
Table: Selected Operators ' Financial Indicators (US$mn) . 61
Company Monitor ..... 62
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Emerging Europe Vendor Profile: Nokia 62
Table: Nokia Financial Highlights .... 63
Table: Nokia's Position In The Global Handset Market, Unit Sales (mn) ... 64
Table: Nokia's Position In the Global Smartphone Market, Unit Sales (mn) ..... 65
Nokia Siemens Networks Net Sales by Geographic Area ...... 66
Table: Nokia Siemens Networks Recent Contract Wins in Emerging Europe .... 68
Selected Profiles ' Operators ... 69
Magyar Telekom .... 69
Invitel Holdings (Previously HTCC) .. 73
T-Mobile Hungary . 76
Telenor Hungary (Pannon GSM) 79
Vodafone Hungary . 81
Regional Telecommunications Penetration Overview .. 83
Fixed Line ..... 83
Table: Regional Fixed-Line Penetration Overview . 84
Broadband .... 85
Table: Regional Broadband Penetration Overview 86
Mobile .... 87
Table: Regional Mobile Penetration Overview 87
Country Snapshot: Hungary Demographic Data .... 88
Section 1: Population .. 88
Table: Demographic Indicators, 2005-2030 .... 88
Table: Rural/Urban Breakdown, 2005-2030 ... 89
Section 2: Education And Healthcare ..... 89
Table: Education, 2002-2005 ..... 89
Table: Vital Statistics, 2005-2030 ...... 89
Section 3: Labour Market And Spending Power ... 90
Table: Employment Indicators, 2001-2006 ...... 90
Table: Consumer Expenditure, 2000-2012 (US$) ... 91
Table: Average Annual Wages, 2000-2012 ...... 91
Glossary Of Terms ... 92
Table: Glossary Of Terms .... 92
BMI Methodology ..... 93
How We Generate Our Industry Forecasts .... 93
Table: Key Indicators For Telecommunications Industry Forecasts .... 93
Telecoms Business Environment Ratings 95
Risk/Reward Ratings Methodology .... 95
Table: Ratings Indicators .... 96
Weighting . 97
Table: Weighting Of Indicators .. 97
Sources .... 97
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