Future brightens for mobile operators

Low market penetration among reasons for operators' optimistic subscriber acquisition forecasts

By Timothy Sifert

Analysts are becoming more bullish on the country's mobile telecom sector, with some optimistically forecasting that customer-acquisition numbers will reach more than 4 million this year - a number that is especially high as the economy boasts so few other over-performing sectors.

Market watchers recently lauded PTK Centertel's announcement that the company could reach profitability in the third quarter and is set to meet its revenue target of

zł. 4.3 billion (E968 million) for the year. They say the company, jointly owned by TPSA and France Telecom, is reflective of the entire mobile market, which is growing quickly primarily because the country has comparably low mobile penetration - around 35 percent - and therefore a lot of potential.

"I think that it's very positive," said Michał Marczak, telecom analyst at BRE Bank, about the industry's outlook. "We have an even more optimistic forecast for Centertel."

He said that, while Centertel figures its Idea mobile phone network will be able to acquire one million subscribers this year, he expects it to add some 200,000 above that level. Marczak added that he based his forecast on the fact that the company already counted some 600,000 customers at mid-year, without adding the lucrative Christmas season to come in the fourth quarter. "The fourth quarter is always the best quarter," he said. "So we think their estimates are conservative."

He explained that investors are sanguine on the entire sector, which also includes PTC, operator of the Era mobile network and the largest player in the market, as well as Polkomtel, the operator of the Plus GSM mobile network, which was recently relegated to third place behind Centertel. "The second quarter looks very strong for operators," he said, noting that the market generally expects PTC to maintain its leading market share while Polkomtel remains third.

"I expect that this year will be the best year for the mobile sector (in terms of subscribers)," Marczak said. He said the three operators are gradually taking advantage of the potential for customer growth. All told, he expects 4.1 million Poles to subscribe to mobile contracts this year.

Yet, not everyone is as optimistic.

"Over 4 million? That's quite bullish," said Andrzej Kasperek, analyst at Citibank Handlowy. "I think the industry as a whole is doing quite well, but we don't have specific forecasts."

He explained that, when looking at the overall economy, mobile operators seem to be the stalwarts. But, he said, "I would consider some number below 4 million."

He said a possible exception in the industry might be Polkomtel, which he expects to continue to lose market share to its two competitors. "Polkomtel seems to be the laggard," he said. "They're losing some ground."

He chalked up the operator's falling stature to it being "partly state-owned." Commenting on the current management, he said, "These guys aren't aggressive enough. PTC, I think, will continue to be number one."

In addition to high expectations for subscriber acquisition, analysts also cheered operators' plans to try to delay the implementation of UMTS services, which would damage balance sheets in the near term. They said the measure was an important one for the concerns, as it is still unclear how much demand there is for next-generation mobile services.