Mobile phone market exceeds all predictions

The penetration of the mobile telephone market today stands at approximately 10%, meaning that half a million Slovaks own wireless telephones. With the market only a little over two years old, these numbers have surprised many experts in the field and have exceeded all expectations.
In January of 1997, a study conducted for the Ministry of Transport, Post and Telecommunications by Pyramid Research forecast that the 8% mark, let alone the current 10% mark, would not be achieved until the year 2001. Stanislav Vanek, director of the ministry's regulatory department, counted himself among those who had been taken aback by the industry's rapid growth and observed that the 10% penetration is, "an astonishing figure."


Mobile phone popularity has now entered the automobile.
photo: Courtesy of EuroTel

The penetration of the mobile telephone market today stands at approximately 10%, meaning that half a million Slovaks own wireless telephones. With the market only a little over two years old, these numbers have surprised many experts in the field and have exceeded all expectations.

In January of 1997, a study conducted for the Ministry of Transport, Post and Telecommunications by Pyramid Research forecast that the 8% mark, let alone the current 10% mark, would not be achieved until the year 2001. Stanislav Vanek, director of the ministry's regulatory department, counted himself among those who had been taken aback by the industry's rapid growth and observed that the 10% penetration is, "an astonishing figure."

The two current operators on the market are EuroTel and Globtel. However, with the unexpected growth, the ministry has decided to add a third operator into the market, banking on the belief that the growth will continue.

Chris Mattheisen, director of marketing and sales for EuroTel Bratislava, a.s., shares this belief. "The growth has been amazing, particularly in Slovakia," he stated. "I have worked in Hungary and Poland and, while all the markets have grown quickly, Slovakia's growth has been the most dramatic."

When asked if the market had been saturated, Mattheisen told The Slovak Spectator, "It has definitely not become saturated. The market in Europe was greatly underestimated by analysts, which is why any predictions you see from five years ago have all been proven wrong."

Far from being saturated, in fact, Mattheisen only sees the market expanding. Pointing out that some experts have predicted a 120% saturation rate in Sweden within the next ten years, he sees no reason why Slovakia's market growth should sputter. "Slovakia has 10% penetration right now and I would predict that within the next five years the country will see penetration reaching 40, 50, even 50-plus percent. There is no reason at all why it is not possible." Mattheisen also added that, "for Slovakia to reach 10% in two years is pretty wild."

Optimism abounds at Globtel as well, although in a more reserved manner. Pavol Lančarič, commercial director of Globtel in Bratislava, also predicts a continuation of their already realised good fortune. "My predictions are a bit more conservative. I think that within the next five years, penetration will not exceed 30%." However, Lančarič then added that, "the most optimistic studies have, so far, proven to be the most correct."

As for the immediate future, Lančarič observed, "There was a great increase six-10 months ago but I see a slow down this year, although not a great slow down. I still think that the market will grow substantially in '99, just not as quickly as it did in '98."

While the rapid growth of the market is a testament to the popularity of mobile phones in Slovakia, complaints do exist. In particular, the high rates that mobile phone users are forced to pay when calling a phone registered under the competition. Mattheisen addressed this issue, saying that amendments will come. "It is something we would like to resolve and it is something that has been resolved in other countries. Right now, we have to charge more (when a EuroTel subscriber calls a Globtel mobile) because we have to pay more. Lower prices will come with the direct interconnection of all the networks. But, now there is a new government and we will have to wait to find out what its prioroties are."

Dynamic Slovak Market

EuroTel and Globtel both view the Slovak mobile telephone market as extraordinarily dynamic and they both agree on the reasons why. It is simply a case of the market being introduced at the right time.

"One reason why penetration has risen so quickly in Slovakia is the price of the unit," Mattheisen explained. "When we started in Hungary, for example, the manufacturer's unit price was around 700-800 USD. Now, they cost around 150 USD. At 700-800 USD, growth was slower in Hungary because we really could not give a good deal on the units when we were paying so much for them. But when the market started here, the unit prices were much cheaper, so growth was much quicker."

Lančarič agreed, saying that "in general, the later you start, the better the opportunity for growth." He also added that Slovakia invited the growth by providing "entrance fees here [which] are lower than say in Poland, Hungary, or the Czech Republic."

The rapid rise of the market has also called the future of fixed lines into question. When asked if people would, in the future, begin choosing wireless over fixed lines in voice communication, both representatives agreed that such is the probable trend.

"In the future, you will see wireless communication being chosen over fixed lines," Mattheisen stated. Lančarič added, "I think that will be the trend. Mobile phones offer many advantages," he explained. "They are personalised, small, affordable, the coverage is more or less everywhere. There are no good reasons for people not to have mobile phones."

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