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Czech Republic - Market Intelligence Report
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Market Intelligence Reports provide an invaluable mix of vital market data and background information, including telecoms regulation. A new phase of liberalisation in the telecommunications market of the Czech Republic began in May 2005, when the long-awaited Act on Electronic Communications finally entered into force. Originally, the new act was to have been in place a year earlier as the Czech Republic became a member of the European Union (EU) in May 2004. Consequently, much work had to be accomplished in a very short space of time for the Czech Telecommunications Office (CTO) to complete its assessment of the key 18 electronic communications markets in order to identify those operators with significant market power (SMP). In the meantime, previous SMP designations achieved under the Telecommunications Act of 2000 remained effective. By July 2006, draft SMP findings had been announced for all 18 markets and the process of notifying the affected operators and imposing remedial action to ensure effective competion had been completed by the end of the year. Incumbent operator, Telefonica O2 Czech Republic (formerly Cesky Telecom), has been designated as the SMP operator in 12 markets for public fixed-line telephone networks and services, the provision of public telephony networks and services, in the provision of leased-line services, and in the provision of data transmission services. In the market for public mobile telephone networks and services, Telefonica O2 Czech Republic and its rivals T-Mobile Czech Republic and Vodafone Czech Republic are designated as SMP operators. At the end of June 2007, Telefonica O2 Czech Republic served approximately 2.910 million fixed-line customers, including some 462,000 retail ADSL customers. Consequently, it accounts for more than 90% of the fixed-line market. Its wireless operations served 4.894 million wireless customers at the end of June 2007 and accounted for 38.8% of that market. T-Mobile accounted for a further 41.1% of the wireless market at the end of June 2007, leaving third wireless operator, Vodafone Czech Republic, with a 20.1% share. In all, there were 12.589 million cellular customers in the Czech Republic as of June 2007. There has been a degree of consolidation in the Czech market in the last four years. Alternative fixed-line operator Contactel became a wholly-owned subsidiary of Denmark's TDC before being swallowed up by GTS Novera in early-2006. GTS Novera was created through the March 2005 merger of alternative fixed-line operators Aliatel and GTS Czech, making it the single largest competitive carrier in the country. Its leading position was consolidated in the first quarter of 2006 when it followed up the Contactel acquisition with the purchase of the Czech subsidiaries of Norway's Telenor ASA. Broadcaster Ceske Radiokomunikace (CRa), which also had some extensive telecommunications operations, acquired the Czech subsidiary of Tele2 in 2006; Tele2 had withdrawn from the market citing the prevailing inflexible and unfair regulatory regime. CRa was itself acquired by private equity investors later in 2006. ISP Tiscali is also seeking to sell its Czech division. The mobile market has also seen some changes in the last two years. At the end of May 2005, Vodafone group of the UK acquired Oskar Mobil from its Canadian owner, Telesystem International Wireless (TIW). Vodafone's marketing and application development expertise has given Oskar a new lease of life and subscriptions are growing healthily. Renamed Vodafone Czech Republic, the company has also acquired a third-generation (3G) universal mobile telecommunications system (UMTS) licence in the Czech Republic and aims to begin offering services in 2008. Telefonica O2 Czech Republic and T-Mobile launched their own 3G offerings in 2005. Having acquired the outstanding shares of its Eurotel joint venture in 2004, Telefonica O2 zech Republic merged the wireless business into its existing corporate structure in mid-2006. In April 2005, the Czech government completed the privatisation of Cesky Telecom. A 51.1% stake was sold to Telefonica SA in June 2005 for €2,746 million. Later in June, Telefonica submitted to the Czech Securities Commission a mandatory tender offer for the 48.9% of Cesky Telecom it did not own. By the end of September 2005, Telefonica had increased its stake in Cesky Telecom to 69.4%, paying minority shareholders a total of €917 million for their shares.
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