Download telecommunications sector: perrils&opportunities

TELECOMMUNICATIONS SECTOR:
PERILS&OPPORTUNITIES
IN LITHUANIA
By Dainius Pupkevičius,
UAB Omnitel Vice-president, CFO
Topics
•Role
•Regulation
•Future
TELECOMMUNICATIONS – THE MOST SIGNIFICANT PART IN
“KNOWLEDGE SOCIETY”
ICT
KNOWLEDGE
Access is key to Knowledge Society
Telecommunications provide access to Knowledge
TELECOMMUNICATIONS THE MOST SIGNIFICANT PLAYER IN:
Contribution to GDP
1997
GDP growth
(at constant 1995 prices)*
GDP (mln. LTL,
at current prices)*
7,3%
38,340
1998
1999
2000
2001
5,1%
-3,9%
3,8%
5,9%
42,990
42,655
45,148
47,968
3,4%
3,4%
3,8%
Telecommunications
share in GDP**
(LT, Omnitel, Bitė GSM,
Tele2)
2,5%
3,3%
* - Source – Lithuanian Department of Statistics
** - Estimates
TELECOMMUNICATIONS THE MOST SIGNIFICANT PLAYER IN:
Contribution to the State Economy
2
1
15%
9%
Other
Other
Telco sector
Telco sector
91%
85%
1.
3
2.
2%
Other
Telco
98%
3.
Telco sector capital investment
contribution to the total Lithuanian capital
investments in 2001, estimates;
Telco sector contribution to national
Budget VAT inflows in 2001, estimates;
Telco sector contribution to 2001 SODRA
budget, estimates.
TELECOMMUNICATIONS THE MOST SIGNIFICANT PLAYER IN:
New jobs creation
Employed persons increase/decrease, comparison to 2000
State economy in general*
Transport and communications sector*
Lietuvos telekomas
Mobile sector (Omnitel, Bite GSM, Tele2)**
* - source Lithuanian Department of Statistics
** - estimates
2001
-4%
-8%
-15%
23%
MARKET WITH EFFICIENT COMPETITION:
- WHAT THE REGULATION SHOULD BE
• Regulation should be more forward looking and preventive against
abuse of dominance in a pursuit of a fully competitive environment;
• New commercial models and services must be allowed to develop to
meet changing consumers’ demand without regulatory intervention;
• Sector-specific regulation should be applied only for the markets
which are not effectively competitive;
IS TELECOMMUNICATIONS’ MARKET
THE MARKET WITH EFFECTIVE COMPETITION?
Market is effectively •Differentiation in costs structure;
competitive, if there • Competitive differentiation in products and
services;
is :
•Continuous decrease in wholesale and
retail prices;
•Aggressive customer acquisition;
•Rapid technological evolution;
•Increasing demand from the customers.
IS TELECOMMUNICATIONS’ MARKET
THE MARKET WITH EFFECTIVE COMPETITION?
FIXED
MARKET
MOBILE
MARKET
VOICE
DATA
VOICE
DATA
Competitive differentiation in products and
services
NO
NO
YES
Differentiation in costs structure
NO
NO
YES
Continuous decrease in wholesale and retail
prices
NO
NO
YES
Aggressive customer acquisition
NO
NO
YES
Rapid technological evolution
YES
YES
YES
Increasing demand from the customers
NO
YES
YES
E
M
E
R
G
I
N
G
WHAT IS EFFICIENT REGULATION?
•Least objectively required
- Rounding by 1 sec. requirement for LT;
- Requirement to compensate invoice payment costs;
- Requirement to combine statement&invoice into one document.
•Enhancing
- Limited possibility for credit check;
- Cost justification.
•Transparent
-Dialogue between the operator community&NRA today is “UNDERCONSTRUCTION”;
- Quantity of the secondary regulations should not be sacrificed for quality.
•Fair – technology neutral
-Stricter NRA requirement to the fixed operator as to the accuracy of call duration metering;
-Different service provision rules for fixed&mobile operators.
•Balanced
- LLU vs metrology standards;
-Number portability&carrier preselection.
•Less “politically” correct
-Industry can not become a hostage of the EU requirements! EU is changing!!!
-Political parties should not use regulation in a pursue of purely political goals.
LITHUANIAN TELECOMMUNICATIONS IN FUTURE
GDP Growth forecast
GDP growth (at constant 1995 prices)*
GDP (mlr. LTL, at current prices)*
2002
2003
2004
5,0%
51,086
5,1 %
54,407
5,2%
58,000
4,2%
4,1%
Telecommunications share in GDP*
(LT, Omnitel, BitėGSM, Tele2)
4,1%
* - Source – Lithuanian Department of Statistics
** - Estimates
FUTURE OF THE LITHUANIAN TELECOMMUNICATIONS
70.0%
Mobile market penetration
Mobile market penetration grow th
120.0%
60.0%
100.0%
50.0%
80.0%
40.0%
60.0%
30.0%
40.0%
20.0%
20.0%
10.0%
0.0%
1997 1998 1999 2000
2001 2002 2003 2004
Mobile market penetration 3.6% 6.4% 8.5% 13.5% 27.2% 45.0% 57.5% 64.2%
Mobile market penetration
grow th
77%
33%
58% 102% 66%
28%
12%
0.0%
Mobile market penetration
growth
Mobile market penetration
Mobile penetration growth forecast
LITHUANIAN TELECOMMUNICATIONS
2003 market forecast*
1. 2003 fixed market forecast
2. 2003 mobile market forecast
5%
24%
Omnitel
LT
Bitė GSM
other
50%
Tele2
26%
95%
3. 2003 data market forecast
1.
11%
6%
LT
Omnitel
13%
51%
19%
BiteGSM
Other
Delfi&Co
Fixed market will remain in monopoly
situation de facto
2.
3 SMP players will be in mobile market;
3.
No significant changes in 2003 Data
market, in comparison to 2002.
* estimates
IS THE ROLE OF TELCO SECTOR UNDERVALUED
IN LITHUANIA ?
 State can not settle on the
responsibilities among the State
institutions;
YES
 A new Telco Law has been passed
in the Parliament in less than one
week time!
 To much ‘‘buzz’’ words, too little
real tasks in the vocabulary of State
officials
IS THE ROLE OF TELCO SECTOR UNDERVALUED IN
LITHUANIA ?
BECAUSE...

Telco sector – is a ‘‘stranger’’, It is
a “new born” baby in the running
shoes;

Role of telecommunications is
sunk in the tanks of Mazeikiu
Nafta;

Least linked to the “Power
Games” to compare with “Political
Power” sectors: energy,
agriculture, transportation, etc.
TELECOMMUNICATIONS IN LITHUANIA
CONCLUSION
Telecommunications sector
is vital to the development of
Knowledge Societyc and thus
the Lithuanian Economy, although
it’s role – not realised.
TELECOMMUNICATIONS IN LITHUANIA
CONCLUSION
Effective development of
telecommunication services and
effective competition is possible
only under the conditions of the
least objectively required.
Mobile market – is the market with
the effective competition