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 Thursday, 09 May 2013

A price war is in progress in the Czech mobile market. The line up of cheaper flat-rate mobile tariffs is likely to have further repercussions going forward. A recent line-up of flat-rate calling plans in the recent weeks by T-mobile, O2 and Vodafone will mean that higher ARPU customers in the Czech mobile market stand to benefit.

O2 cut its full flat-rate call plan from 1,900 K? per month until mid-april, to 749 K? “Free CZ” plan for customers signing up for two years.

T-Mobile and Vodafone responded with similar price cuts, and Vodafone has since doubled to 1.2 gigabytes the amount of data offered free to customers of its 691 K?-per-month flat calling plan. It is reported that almost 300,000 people have taken up these offers!

Unlimited call plans

  • T-Mobile : 1.5GB for 749 K?
  • Telefónica O2 : 1.0 GB for 749 K?
  • Vodafone: 1.2 GB for 691 K?

Consumers get a cheaper price, and the operators may see an increase in ARPU. Margins may be lower on these deals, but ARPU could go up. Depending on the profile of users in the country, this could be good or bad news for the operators.
There is a downside to these deals as well, and that of possible cannibalisation of revenue from erstwhile high ARPU users, now migrating to these plans to take advantage of these offers. If price elasticity favours the operators, and there is a broad acceptance of these offers, then this will take the ARPU higher.

Smartphone penetration in the Czech market is still at very low levels (approximately 16%) compared to other markets in Europe this is almost 1/3rd that of markets like Denmark. It is possible that there will be a very strong growth in Feature phone to Smart phone penetration with the introduction of entry level smartphones.

Smartphones with a non-data oriented feature set, like that of the Lumia 520 and other entry level smart phones will greatly help boost smart phone penetration over the next 12-18 months.

Local news agencies in Czech market are reported to have said that Telefonica believes that the interest in these plans is “Phenomenal”, according to Hany Farghali of Telefonica Czech.

The Czech market is likely to see a fourth entrant in the market. The Czech Telecommunication Office is running an auction to award mobile spectrum frequencies for 4G/LTE.

It turns out that a recent MVNO launch, BLESKMobil and other possible MVNO launches may have triggered this price drop, according to some sources. This seems unlikely as longer duration and unlimited plans are not the domain of MVNOs like BLESKMobil, until they plan to go the “Free Mobile” route of the french operator, who came in and single handedly shook the french mobile market.

Source: Wireless Federation.