Roaming for higher shares of the telecoms market

The Czech Republic is experiencing high levels of market saturation in its telecommunications industry. T-Mobile is working to maintain its position as a leader in that market


According to many, the old world ended on December 21, 2012 and we have entered a new, more spiritual era. Frankly, I’m not sure about that, but what I know for sure is that we have entered a new business era. And, on a personal note, this is the first year for me to spend as the Best Telecoms CEO in Eastern Europe heading the Best Telecoms Operator in Eastern Europe.

These recognitions from World Finance mean a lot to me and to all of my colleagues: we have been rewarded for our long-term hard work under difficult circumstances. And what’s more, this provides motivation for the future, which will be anything but easy. The beginning of a new year offers an opportunity both to look back and to think of the future.

Let’s take this opportunity.

Stability in unstable times
2012 brought the EU crisis to a new level. It is obvious that certain economies are in trouble – Greece, Spain, Italy, Cyprus et al are not fulfilling long-term financial plans and they are not able to repay their debts. This puts stronger economies, namely Germany, and their leaders in a complicated situation. The euro is unstable, members of the EU are rethinking their membership and the EU’s very existence is a topic of discussion. All of these factors have an influence on the EU and consequently on economics.

As part of Deutsche Telecom, a global telecommunications group, T-Mobile operates in the telecommunications market, which is very sensitive to instability. The effects of the financial crisis are multiplied by specific developments on the market. We can see very rapid change in users’ behaviour, as customers shift their focus to data services, leaving the ‘old’ ways of communication – voice and SMS – behind. On one hand, operators are forced to invest heavily in new frequencies and networks; on the other hand, they continually lose on their service revenues. Moreover, telecommunications have degraded on the level of utilities – they are supposed to be accessible everywhere in the highest quality and, if possible, nearly free of charge. Needless to say, politicians both at the EU and local levels support the idea, imposing stricter and stricter regulation while somehow forgetting that for economic health, long-term investment ability is needed.

The industry is getting tougher, more dynamic and more competitive. For example, we see an increasing number of international players such as American Movil moving into the European market. Mexican billionaire Carlos Slim has invested in Dutch KPN and Telekom Austria. This puts all competitors under pressure. But it also shows that investors still believe in the market’s opportunities.

Market saturation
With just over 10 million inhabitants, the Czech Republic is a relatively small economy. Since the start of liberalisation of telecommunications in the early 1990s, the market has developed very quickly, especially with regard to mobile technology. For example, voice services are almost exclusively provided by mobile operators. The country’s first operator, Eurotel (now Telefónica), entered the market in 1992, followed by Paegas (T-Mobile) in 1996 and, lastly, Oskar (Vodafone) in 2000. Adoption of mobile services was enormously intensive and fast; today, we have one of the highest penetration rates in Europe (137 percent). This trend has attracted global players – all three local operators belong to the world’s biggest telecommunications groups: Vodafone, Telefónica and Deutsche Telekom.

Until 2008 the business was growing, gaining new customers ready to spend their money.

Since 2009, the relatively small Czech market has been declining by approximately 10 percent per year; a development that is not really surprising when one considers the level of market saturation, strong competitive pressure and regulatory efforts at the local and EU levels. Customers demand both cheap and perfect services, while the increased emphasis on data services makes the situation even more challenging.

The year 2012 can be seen as a turning point: the first virtual operator entered the market, the regulator increased pressure and an auction of broadband frequencies took place, setting the scene for the next 15 years. At the time of writing, the results of the auction have yet to be determined, so I cannot comment on them. What we know for sure is that new entities will enter the market. Will we succeed in the auction, gaining the necessary frequencies for the next 15 y


We are in a situation where everybody uses services with no intention of increasing. A dead end? No, I don’t think so. We see the correct path in the development of the current customer base. The industry’s future lies in mobile internet and online applications. We can see a rapid increase in mobile data traffic – the number of mobile data users increased by 25 percent on a year-on-year basis in 2012, while the amount of data transmitted more than doubled. Of course, customers expect more services for the same price and with excellent quality. In order to meet their high expectations, we have to continuously improve our network. We are expected to invest heavily in long-term evolution (LTE), networks and thus in the future. At the same time, we have to maintain satisfactory profitability.

Customer relationships
The situation we are facing poses an industry-wide challenge and it places us under constant pressure to do more for less. First of all, we are focusing on delivery of high-quality networks – the network is the core of our business, after all. In order to generate revenues and fulfil our goals, we have to make sure that we are the customers’ first choice. You could say that all competitors have the same ambition, and you would be right.

The industry is getting tougher, more dynamic and more competitive. There are an increasing number of international players moving into the European market

In order to be customers’ first choice, we need to satisfy them in terms of quality and pricing and to give them the best price-value ratio. We already provide them with the best and fastest internet access available in the Czech market, as has repeatedly been proven by independent measurements. Also, our 2G network has been proven to be the best in the Czech Republic.

At the same time, we offer favourable and simplified pricing. Customers get free calls within the biggest local network and can communicate with their friends and families free-of-charge. We have recently redefined our relationship to current customers and now they also benefit from higher subsidies and better extension offers. We emphasise excellent customer care, something which virtual operators cannot offer. All of our employees are trained in fair and friendly interaction with customers. Are you a strategist, marketing, sales or HR manager? Let’s have a lively experience involving interaction with real customers. Everyone has to be familiar with the customers’ needs and expectations.

Business customers comprise an important segment. Even small enterprises feel the need for smart ICT solutions that form a part of comprehensive business solutions. The B2B market offers untapped growth opportunities and we plan to double our fixed B2B revenues. Regardless of whether we are talking about private or business customers, for us the customer experience always has a huge influence on our actions. By fulfilling our customers’ expectations, we can offer the best price-value ratio in the Czech market.

The plan for 2013
The focus for the year ahead? Customers, of course. We appreciate their loyalty and want to offer them the best price-value ratio available, while also offering them an emotional experience. We want to further establish T-Mobile as an emotional brand – a fair and friendly operator. Therefore, we are continuously working on incorporating focus on the customer into our employees’ DNA. However, we also have to make sure that we continue to have the fastest network and focus on new areas – transaction services, financial services, B2B, etc. – organically as well as through mergers and acquisitions. The future of the LTE launch depends on the results of the aforementioned spectrum auction.

Big investments in networks and frequencies and strict focus on the efficiency of our operations are the necessary preconditions for our future success. Personally, I see the biggest challenge in changing the mindset of employees. It is not difficult to change things when you start a new company or when you are in the position of a newcomer.

But we are in a different situation: we previously lived in a very favourable environment and now we have to get used to much more Spartan conditions. I personally find the situation highly motivating. This is the time when we reveal our strengths, the time when we find out who we really are. Our mission is to help people to achieve their goals and dreams.