Brand wars
The big news on the mobile phone market in 2005 was the tender for the UMTS and GSM 1800 frequencies as well as the rebranding of Idea to Orange. The UMTS tender was won by Netia, while the tender for the much-sought-after GSM frequency was a failure. None of the participants managed to fulfill the necessary requirements.
A new GSM 1800 tender is expected to be announced by the Office of Telecommunications and Post Regulations (URTiP) later this year. Already five companies have announced their willingness to apply for the frequencies - the three existing operators, as well as Netia and Sweden's Tele2. "It is important for us to have the widest possible portfolio of services," Netia's spokesperson Jolanta Ciesielska said.
What's the frequency?
But some question Netia's strategy. "I do not think that there is a justification for Netia to apply for the GSM license if they already have UMTS," telecom analyst for Deutsche Bank, Krzysztof Kaczmarczyk said. "The other operators, on the other hand, would definitely need them as the current frequencies are congested," he claims.
However, independent IT expert Tomasz Kulisiewicz disagrees. He sees UMTS as a niche service, and thus "Netia has to get the GSM frequencies - it is a matter of life and death for them." He underlines that the UMTS market currently has a few thousand users, which is nothing compared to over 23 million GSM subscribers.
Roam if you want to
For its own part Netia is still determined to offer services using GSM technology. "We are negotiating the local roaming issue with the other operators. This would enable us to launch our mobile services right after the signing of the agreement. But we are not doing this just for the sake of doing it, we may actually wait with the introduction of mobile services until we are able to cover 16-17 percent of the country with our own infrastructure," Netia's president Wojciech Mądalski said.
Whoever eventually becomes the fourth operator faces a tough road even if it manages to win the tender. Polska Telefonia Cyfrowa (PTC), PTK Centertel and Polkomtel, the operators of Era, Orange and Plus respectively, are firm in their opposition to the so-called issue of local roaming, which would allow any new operator to use their existing infrastructure. "With the issue of local roaming unsolved, Netia will have no other option but to build its own infrastructure. Therefore, I expect them to concentrate on business clients and large cities - that's where the money is," said Kulisiewicz.
Small wonder
No wonder the three established operators are resistant to a fourth provider entering the market, as the status quo has led to a surge in revenues and profits. At the end of the first half of 2005 Centertel posted a revenue of zł.3.02 billion in comparison to zł.2.668 billion for the same period in 2004, which represents 13.3 percent growth. The operator's net profit grew by over 64 percent, from zł.280 million in H1 2004 to zł.460 million for the first six months of 2005.
Polkomtel, the operator of Plus, also recorded a successful first half of the year. Its zł.3 billion revenue represents an increase from the zł.2.724 billion in H1 2004. Net profits also rose - from zł.427 million in the first six months of 2004 to zł.527 million after the first two quarters of 2005.
Market leader PTC, which had a 37-percent market share at the end of 2004, recorded revenues of zł.3.27 billion in H1 of 2005, in comparison to zł.3.08 billion in H1 of 2004. Net profits rose from zł.477 million to zł.624 million in the same period.
Room to grow
Mobile-phone penetration in the Polish market is still low even in comparison to other new EU members. The EU average penetration for 2004 was around 80 percent, in the Czech Republic it exceeded 100 percent, while currently in Poland it is only around 65 percent. "Perhaps the prices are too high," reflects Kaczmarczyk. Although prices were falling throughout 2004, since Q4 of that year they have been fairly stable. Those falling prices had been the three operators' main argument that the market was competitive enough, and that there was no need for a new operator.
Kaczmarczyk sees another possible reason for such low penetration in Poland. "Only around 25 percent of subscribers in the Czech Republic and Hungary are post-paid, while in Poland the figure is closer to 40 percent," he points out.
Branding bungle
Kaczmarczyk thinks that both operators that haven't rebranded yet could gain more clients if they did so as quickly as possible. "However, I do not think it is possible in the near future," he claims. He points out that the unsolved ownership issue of PTC will make it hard for Era to be changed to T-Mobile even in the coming years. As for the situation with Polkomtel, Kaczmarczyk believes that due to the change of government, the Treasury Ministry, which has shares in the company through KGHM Polska Miedź and PKN Orlen, will want to keep the company in Polish hands.
Centertel has been in the spotlight in the last few months due to its switch from Idea to the Orange brand, but as Kaczmarczyk points out, it is very successfully chasing market leader PTC. A few years ago Polkomtel and PTC each had around 40 percent market share, while today the market is split fairly equally three ways. "Centertel has the highest number of new clients. I expect them to be the market leader by fall of 2006," Kaczmarczyk said. "While other operators are launching more improvised campaigns, Centertel really has a vision which they are carrying out." he added.
