CEE WEATHER REPORT – Telecom
After the liberalization of the market, the former telecom monopolists in Central and Eastern Europe (CEE) are facing the same challenges as their competitors in Western Europe. A decisive success factor in CEE is the market success of the mobile telephony subsidiary. The reason for this is that the low penetration rate of the conventional telephone network, of barely 40 percent, the bad network quality and the comparatively low number of computers accelerate the growth of the mobile telephony sector in the region even further. In the meantime, all former monopolists have founded or acquired their own mobile telephony subsidiary. Those who did so before 2001 are now in the better position. At the same time, the low stage of development of the conventional telephone network is slowing down development in the corresponding broadband segment and impeding the spreading of innovative products in this sector. Yet new products and services, such as broadband including IP-TV or IT services would be the best way to distinguish oneself from competitors, attract new customers and make the conventional telephone network more attractive.
The know-how and the financial power of strong strategic investors that some ex-monopolists are able to fall back on has also proved to be a success factor. In those cases, restructuring was commenced immediately after the sale. In doing so, the new owners were able to fall back on the experience gathered by their parent firm and to put on the market those products and services that had previously proved to be turnover generators in Western Europe. Enterprises with this kind of background react more flexibly in a difficult environment and this gives them a competitive advantage.
Altogether, the efficiency of the operations of the providers in CEE is still insufficient: in dealing with the personnel-intensive organizational structure and the elaborate bureaucracy, but also with regard to marketing – customer segmentation and target-group-specific approach – the providers are obliged to rationalize and economize in order to stay within their means.
