Friday, March 31, 2017

Update on the telecommunications market in Poland - Part 4

P4, operating as Play (continued)

According to UKE's report on the Polish communications market in 2015, P4 had the largest share in the market for bundled services in terms of the number of subscribers, with 30% of subscribers purchasing the service from that operator, up from 10.6% in 2014. Also according to UKE, P4 ranked third after Orange Polska and Polkomtel in terms of its share of fixed and wireless Internet subscribers, with a market share of 7.6%, up from 7.0% in 2014.

On January 6th UKE reported 1.75 million users had taken advantage of MNP in 2016 and the company, which had gained most from the scheme, was Poland's second largest mobile operator. P4 gained a net 295,241 new users from other networks to reach its market share of 25.8% by subscribers, and 23.6 % in terms of revenues. P4 also made a meaningful mobile market share gain in terms of subscribers in 2015 compared with 2014. On January 13th P4 announced that its LTE network, using carrier aggregation technology, covered 1,378 municipalities with at least 1,000 inhabitants.

On January 17th, local Polish news-source reported informed as saying that P4, which historically depended on roaming agreements, primarily with T-Mobile Polska (but also with Orange Polska and Polkomtel), intended to expand its own network coverage with about 2,000 new locations by 2018/2019. This would give it a similar number of base stations as Polkomtel and significantly reduce the difficulties of having to rely on competitive networks. 

Polkomtel, operating as Plus

To recap, in January 2014 Reuters reported that Polish media group and leading national DTH operator Cyfrowy Polsat, majority controlled by Polish billionaire Zygmunt Solorz-Zak, had agreed to a PLN6.15 billion ($2.01 billion) share issue to buy mobile provider Polkomtel in a share-swap based on purchasing a controlling stake in Polkomtel's holding company, Metelem, giving the latter's owners a 45.53% stake in the enlarged group. The merger of Cyfrowy Polsat with Polkomtel was designed to significantly help to alleviate the latter's debt burden. The deal closed in May 2014. The impact of the deal was described as follows In the Cyfrowy Polsat annual report for 2014, published in March 2015:

-    "By adding the operator of Plus network to Cyfrowy Polsat Group, it has become the biggest media and telecom group in the region, servicing 6.1 million contract customers and providing a total of 16.5 million pay TV, mobile telephony and LTE Internet services, as well as one of the biggest private Polish enterprises with the capitalisation of PLN 15 billon… total consolidated revenue of Cyfrowy Polsat Group in 2014 was PLN 7.4 billion, with EBITDA of PLN 2.7 billion and profit at PLN 292.5 million".

According to the UKE report on the Polish communications market in 2015, Polkomtel:

·         Had a 22.6% subscriber market share of the Polish mobile services market, but a remarkable 27.9% share by revenues.

·         Had a 9.2% subscriber market share of the combined fixed and wireless Internet market, up from 8.8% in 2014 (Polkomtel has virtually no position in the Polish fixed-line market).

·         Had an almost dominant position in interconnection revenue, with a market share of 38.5%, more than half as much again as P4, the second-placed player with a market share of 23.0%.

·         Had an 8.1% subscriber share in bundled services, up from 6.6% in 2014.

(NB: It should be noted that Cyfrowy Polsat and other subsidiaries of the company also participate independently in some of the same markets as Polkomtel.)

On January 20th Polkomtel and Cyfrowy Polsat, which had introduced a 300 Mbit/s mobile data service in the first half of 2016 based on LTE Plus Advanced aggregation technology, announced the LTE Plus Advanced network of Group Cyfrowy Polska covered more than 15 million inhabitants (40% of the population), while its standard LTE coverage was approaching 100% of the population.

On February 2nd Poland's UOkIK announced that it was fining Cyfrowy Polsat and Polkomtel a total of over PLN40 million for misleading advertising campaigns concerned with smartDOM and Power LTE products (both service packages offered by Cyfrowy Polsat and Polkomtel), all of which focused on the slogan 'Power LTE – LTE Internet with unlimited data'. PLN 30.7 million of this will be paid directly by Polkomtel. UOkIK is also requiring the two companies to publish details of the decision on their websites and explain it on TV.

On February 14th Cyfrowy Polsat and Polkomtel/Plus announced a new phase of communication of their smartDOM strategic bundled services offer, which would include up to nine household products and services that customers would be able to combine and thus obtain a significant reduction in their collective annual costs of running a home. Apart from mobile telephony services offered by Plus, as well as Cyfrowy Polsat's DTH , the other options include electricity supply, banking services, insurance services, security services for homes, as well as the sale of telecommunication devices, home electronics and household appliances. On March 1st it was announced that natural gas supply for homes would be added to the program.

(Errata: the reference in Part 3 to Orange Polska's 40% share of mobile revenue was meant to refer only to its revenue from outgoing voice calls. For total mobile revenue, Orange's share was given by UKE as 26.7%, 1 point below its previously quoted subscriber market share of 27.7%.)