cellco, allowing it to consolidate its
second place position behind mobilkom.
Highlighting how difficult
it is for traditional MVNOs to survive
in the Austrian mobile market, tele.
ring has now become a discount
brand in T-Mobile’s arsenal.
“An MVNO model just cannot
be sustained in Austria; just look
at Tele2,” says Nemsic. Mobilkom
is in the process of acquiring the
Austrian mobile operations of Tele2
for approximately �7m, giving it
another channel to market under its
segmented access strategy as well as
clearing the crowded mobile arena.
Tele2 had around 131,000 customers,
mainly prepaid, at the end of June.
But that’s not to say Telekom
Austria’s mobile operations are
struggling. Revenues for the mobile
communication business rose 3.1 per
cent to �2.2bn during the first nine
months of 2007. It is important to
note, however, that this growth was
driven by international operations
in Bulgaria, Croatia and Slovenia
which more than offset lower domestic
revenues.
It is this international expansion,
principally into Eastern and South
Eastern Europe, that is key to Telekom
Austria’s growth strategy. In
order to strengthen its profile the
Telekom Austria Group acquired
mobile licences for Serbia in November
2006 and Macedonia in
February 2007. Mobile operations
were launched in Serbia in July and
in Macedonia in September of this
year. The Macedonian operation,
Vip, takes the third place slot in the
country behind T-Mobile and OTE’s
Cosmofon, while Vip mobile Serbia
competes with state-owned operator
mt:s and Telenor.
In October, Telekom Austria acquired
a 70 per cent stake in SB
Telecom, owner of Belarusian mobile
operator MDC. The acquisition offers
the carrier entry into an attractive
telecommunications market with
strong potential for growth, as mobile
penetration in Belarus reached
only 66 per cent at the end of June.
Telekom Austria has also entered into
a put option agreement, which would
allow it to buy the remaining 30 per
cent stake in the fourth quarter of
2010 for approximately �320m.
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With the addition of its greenfield
initiatives in Serbia and Macedonia,
Telekom Austria now has operations
in nine mobile markets: Austria, the
Czech Republic, Slovenia, Croatia,
Serbia, Kosovo, Bulgaria, Macedonia
and Belarus, a fixed line presence
in Austria and the Czech Republic
and a partnership with Vodafone,
which gives it a global approach.
Strong growth in existing international
operations largely offset the
start up costs of the Serbian and
Macedonian units, helping to grow
group revenues by 3.6 per cent during
the first nine months of the year,
to �1.27bn. Growth aside, an 18 per
cent decrease in net income over the
same period highlights the pressures
of expansion and competition.
“The ICT market in Eastern Europe
is growing three times faster
than Western Europe,” says Nemsic,
“And our strategy is to build up on
the two pillars of fixed and mobile.”
Although in July the company completed
a corporate restructuring
that will see its fixed line business
operating as an independent subsidiary
to the mobile unit—a telling
organisational shift—Nemsic still
sees the value in “exploiting the
synergies between fixed and mobile
and the subsidiary operations.”
In an increasingly competitive
market, where the once clear boundaries
between different service providers
are being blurred, Nemsic
believes that, “a state of the art infrastructure
remains a stronghold for
telcos.” With an international backbone
boasting an available capacity
of up to 960Gbps, Telekom Austria
runs some of the fastest connections
in Central and Eastern Europe, and
is in the process of refining this
platform under a Next Generation
Network initiative—ALLMediaNet.
Nemsic is under no illusions about
hype. “The customer doesn’t care
about convergence,” he says, and
while the company is bundling
its products, Nemsic anticipates it
will be three to four years before
Telekom Austria sees healthy fixed
line growth.
In mid-November, the company
launched “KombiPaket”, a service
bundle featuring fixed line voice,
broadband internet access and mo-
COMPANY PROFILE
bile telephony for one monthly rental
of �19.90. “We have everything in
place to sell, bill and influence the
customer’s choice,” says Nemsic, acknowledging
that carriers are sitting
on a gold mine of information—information
that is best exploited by
the introduction of more targeted
service offerings.
Telekom Austria launched IPTV
services in March 2006 with 62
free-to-air channels and 20 premium
channels. By the start of next year
that will have grown to more than
100 channels in total and will be
supplemented by more than 1,000
video on demand movies, time shift
TV features and special interest
channels—including user generated
content as a way of “monetising the
long tail”. In August, the company
bought TV voting specialist Mass
Response Service from Dutch owner
Twister Media Group for �19.5m to
boost TV activities.
“TV is changing the complexity of
the market,” says Nemsic—and not
just in the fixed line market either.
“One of the main growth drivers is
in non real time services, such as
TV on demand over 3G,” he says.
Telekom Austria is trialling DVB-H
in combination with “interactive mobile
technologies” such as UMTS and
SMS, with Nemsic viewing the role of
the MNO as a programme aggregator,
offering direct and tailored access to
the end user as well as handling the
customer care, billing and loyalty
management. “Growth is coming
from data services but you need good
infrastructure (such as that owned
by the MNOs),” he says.
And with an ever increasing
number of players encroaching on
the mobile services space—such as
Apple with its iPhone and accompanying
operator revenue kickbacks,
and Google with its own web services
and mobile operating system—partnering
with the content providers to
act as a smart pipe might just be the
smart thing to do.
“Sharing voice revenues is not on,”
says Nemsic, maintaining protection
of the operators’ main revenue
stream, but Telekom Austria increasingly
finds itself, “fighting for
a share of the pocket,” or the service
revenues themselves. �
23
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