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SLOVAKS' APPETITE FOR MOBILE PHONES HAS ATTRACTED TWO OF THE WORLD'S BIGGEST PLAYERS

Global giants battle for Slovak mobile market

SLOVAKIA'S dominant fixed-line provider Slovak Telecom (ST) is under increasing pressure from mobile operators, and saw its customer base drop by 8 per cent in 2002. It now has just 1.46 million lines, less than mobile operator Orange and only marginally ahead of its rival Eurotel.
The rivalry within the mobile sector is just part of an ongoing global battle between two of Europe's telecommunication giants: France Telecom and Deutsche Telekom.
Orange Slovakia is part of France Telecom, which took a controlling stake in the company under its former name Globtel in February 2002. It was rebranded as Orange at the end of March 2002, several months after France Telecom bought a controlling stake in the Orange group, now the world's second-largest mobile-operator group with more than 44 million customers worldwide.

SLOVAKIA'S dominant fixed-line provider Slovak Telecom (ST) is under increasing pressure from mobile operators, and saw its customer base drop by 8 per cent in 2002. It now has just 1.46 million lines, less than mobile operator Orange and only marginally ahead of its rival Eurotel.

The rivalry within the mobile sector is just part of an ongoing global battle between two of Europe's telecommunication giants: France Telecom and Deutsche Telekom.

Orange Slovakia is part of France Telecom, which took a controlling stake in the company under its former name Globtel in February 2002. It was rebranded as Orange at the end of March 2002, several months after France Telecom bought a controlling stake in the Orange group, now the world's second-largest mobile-operator group with more than 44 million customers worldwide.

Eurotel is 51 per cent owned by ST itself, whose majority shareholder is Deutsche Telekom. The other 49 per cent of the company is owned by an American consortium of Verizon Communications and AT&T Wireless Services. Deutsche Telekom is Europe's largest communications company, and holds a large share of the European and US mobile markets through its T-Mobile subsidiary.

Both of the European parent companies suffered heavy losses in 2002, with Deutsche Telekom recording Europe's biggest-ever corporate loss of 24 billion euro, despite seeing its revenue increase by almost 15 per cent, 30 per cent of which comes from its mobile operations. France Telecom has fared no better, notching up a net loss of 20.7 billion euro.

However the mobile-communications companies they own in Slovakia both scored record gains. Orange recorded gross EBITDA profits of Sk5.5 billion (130 million euro) and Eurotel saw its own gross profits jump 21 per cent to Sk3.2 billion (76 million euro) in 2002.

Orange claims it now has more than 62.2 per cent of the Slovak mobile-communications market. It has consistently dominated the mobile-communications market in Slovakia since the end of its first year of operation, overtaking rival Eurotel in December 1997, when the company claimed 112,000 customers to Eurotel's 110,000.

Since then, the gap has widened, and last year Orange claimed a customer base of over 1.7 million, a 42 per cent year-on-year rise. Rival Eurotel saw its numbers rise by 27 per cent to 1.3 million. Eurotel has claimed that the main reason for its slip behind Orange was its focus on yearly profits rather than on building its client base.

While mobile phones have fast become a part of everyday life in Slovakia, the market did not really take off until 1997 with the introduction of second-generation GSM networks. Since then, Slovaks have taken advantage of the falling prices and ever increasing capabilities modern mobile telephones offer.

The first mobile phone, about half the size and weight of a hardback dictionary, hit the market 20 years ago for around $4,000 (3,760 euro). In contrast, the mobile phones of today are more powerful than the business computers of that time, and are capable of taking pictures and surfing the Internet even though they can weigh in at just 100 grams. These phones are offered in Slovakia for less than Sk3,000 (72 euro) when tied with a provider's contract.

Slovak customers have been eager to try out the new mobile-phone services on offer. On Christmas Day 2002 Slovak mobile users sent more than 20 million SMS text messages, and when Orange introduced its multimedia messaging service (MMS) in February, more than 140,000 picture messages were sent in the first three weeks alone.

This eagerness has led to a high penetration in the Slovak market. According to Eurotel, 56 per cent of Slovaks now have mobile phones, which is well above the global average of 20 per cent and only marginally less than the European average of 61 per cent.

However, growth in the market has also led to changes in where and when people are allowed to use their mobile phones.

Most buses, banks, hospitals, and shops have banned mobile phone use, although these bans are not widely enforced. The same is true of a ban on using handheld mobile phones when driving, which has been in effect since 1997.

For several years, mobile phones have been especially popular among secondary school students, leading some schools to ban or restrict their use. Now even some primary schools have imposed limits on phones.

Karol Müller, head of a Bratislava primary school, told the daily SME that last fall children's excessive use of phones had forced him to act.

"It was unbearable. Pupils were sending SMSs to each other when sitting in the same classroom, so we had to ban mobiles," said Müller.

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