It has emerged that the government’s crisis tax that is impacting telecoms operators would be phased out from 2012, and totally eliminated by 2014. This is not a certainty at this stage, but BMI believes it highly likely that the crisis taxes on telecoms operators will be phased out on the timeline to 2014. This should help to introduce certainty for investors and therefore reduce the negative impact on the development of the market. So far, there has been little impact on the levels of investment by operators, reinforcing our view that the tax, if phased out, will have a limited impact on the development trajectory of the wider market in the longer term. However, in financial terms it continues to affect operator performance. Magyar Telekom, as the incumbent and wealthiest operator, is expected to account for nearly half the additional HUF61bn between 2010 and 2012. Smaller firms such as the cable operator UPC have also been hit by the tax. These large sums have reduced financial performance.

Hungary Telecommunications Market Report Q1 2012

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The Hungarian mobile market experienced a mixed 9M11, with declining subscriber numbers, but an improving subscriber mix. The majority of subscriber losses occurred in the first quarter of the year, with only minor losses in Q211 and Q311. Market leader T-Mobile reported a subscriber loss of 431,000 in Q111, with the majority of the losses occurring in the postpaid segment. The higher value of the postpaid segment makes this particularly damaging for the operator. However, T-Mobile’s parent company says in its results that the loss is related to a restating of figures and this time excludes business customers. This explains the postpaid losses. This is an issue BMI plans to watch closely in the coming quarters to determine the impact on the market.

The most recent results reported by operators has also shown a slight slowdown in the fixed and mobile broadband markets. This resulted in us restating our forecasts for the broadband sector and downgrading them slightly, but we still expect robust growth. In the other segments, BMI forecasts a deceleration in the rate of decline in the fixed-line voice sector as intransigent fixed-line customers are hesitant to upgrade technologies. We downgraded our mobile forecasts based on the restated subscriber figures from T-Mobile.