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COMPANY PROFILE
The middle ground
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�oris Nemsic, who took over
management of Telekom Austria
Group in the summer of
2006, has also held the position of
chief executive officer of wireless
unit, Mobilkom, since 2000. “Given
that the main growth of the company
is coming from mobile, it makes sense
for me to be the chief executive of the
group,” he says, offering a pragmatic
assessment of his promotion.
In the Austrian mobile market,
strong competition has led to price
declines and driven fixed to mobile
substitution, resulting in an acceleration
of fixed line losses at the
company. Although this phenomenon
is not unusual in mature European
markets, in Austria fixed to mobile
substitution has extended to internet
access as well, with mobile broadband
offerings competing strongly
with xDSL broadband access.
Austria has long been saturated
in terms of mobile subscription.
The mobile penetration rate in the
country rose from 110.9 per cent
at the end of the third quarter in
2006 to 115.3 per cent at the end
of September 2007, largely due to
multiple SIM ownership for mobile
data cards as well as voice services.
Perhaps unusually for Europe, 66
per cent of subscribers are of the
more lucrative post-paid variety,
due to the comparative wealth of
the Austrian population.
“We’re selling loads of data cards,”
says Nemsic, estimating that the
company’s mobile operations have
sold more than 500,000 data cards
in total. “But the success of mobile
data is having a negative effect on
fixed line. We are losing 20,000 fixed
lines per month, with people going
to mobile,” he says.
For the first nine months of 2007,
Telekom Austria reported that fixed
net revenues remained stable at
�1.6bn but only because higher
Telekom Austria company history
1887: All responsibilities for Austrian telephone services were
integrated in the K.K Post- und Telegrafenverwaltung (PTV). For
more than 100 years, the sector is administrated by the state.
1996: Austrian Post Restructuring Act passed. Independent
company created out of the Post- und Telegrafenverwaltung (PTV):
Post- und Telekom Austria AG (PTA AG). This comprises independent
companies, Telekom Austria and Mobilkom. Capital held by PTBG, a
holding company wholly-owned by the Republic of Austria.
1997: As preparation for partial privatisation, PTA AG sells 25.001
% of its share capital in Mobilkom Austria AG to Telecom Italia.
1998: Austrian telecom market fully deregulated and PTA AG split.
Telekom Austria AG created, owned by the PTA AG. Mobilkom Austria
AG founded Croatian mobile communications subsidiary Vipnet d.o.o.
2000: mobilkom liechtenstein AG, a wholly-owned subsidiary of
mobilkom austria, started operations in September 2000. Mobilkom
expands its international business in Croatia and increases stake
in Vipnet to 61 %. Telekom Austria stocks were listed for the first
time on the Vienna Stock Exchange and New York Stock Exchange
(NYSE).
2001: Mobilkom acquires controlling stake in the Slovenian
operator Si.mobil d.d.
2005: Telekom Austria finalises aquisition of the Bulgarian market
leader Mobiltel. Mobiltel.
2007: Telekom Austria Group to set up greenfield operations in
Serbia and Macedonia.
revenues from internet access and
wholesale voice and internet offset
lower revenues from switched
voice. Switched voice revenues for
the period declined 9.2 per cent to
�116.9m, with the number of access
lines falling to 2.5 million, compared
to 2.7 million at the end of September
2006.
But Telekom Austria and its mobile
subsidiary, Mobilkom, are also
coming under intense pressure in
the domestic wireless space. In June
the European Parliament and the
European Council voted on the introduction
of extensive regulations on
international roaming, which were
introduced in the second half of 2007.
The introduction of this regulation
is expected to impact the results of
the Austrian carrier going forward.
Furthermore, the Austrian regulatory
authority adopted a final schedule for
the reduction of termination charges
between mobile operators in Austria
in October.
The regulator is seeking to abolish
the asymmetry between Austrian
mobile operators by the end of 2008
and has decided to lower termination
charges. This will impact on Telekom
Austria’s finances in the short term,
although it is likely to stengthen the
company’s position in the long run
because of the introduction of symmetric
rates.
“The Austrian mobile market is
like a telecom zoo,” says Nemsic,
referring to the competitive war
being fought out by mobilkom, T-
Mobile, Connect Austria/One, and 3
Austria in a country with a population
of just over eight million. “Why
we need four GSM licences I don’t
know,” he says.
There has been some evidence
of further consolidation—last year
T-Mobile was granted approval to
acquire Austrian mobile operator
tele.ring, then the country’s smallest
Mobile Communications International | First for news, best for business
james.middleton@informa.com
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