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Telecom - One is lonely, two is company, three’s a bunch

Telecom - One is lonely, two is company, three’s a bunch

2.10.2013 9:27
Autor: Redakce, Patria Online

Yesterday, BASE Company announced the commercial roll-out of its 4G network in 15 Belgian cities, making it the 2nd carrier to launch (after Belgacom (19,65 EUR, -0,13%) who was first in Nov-12). Following is based on company contacts.

BASE, the runner-up:Residential customers with an unlimited tariff plan as of B-39 are automatically offered 4G in their existing package. Professional customers having a Pro Talk, Pro Leader (+/EU) or Internet Anywhere 28 will also be converted to 4G. The roll-out is limited to 15 cities (Aalst, Antwerpen, Beveren, Bruges, Charleroi, Genk, Ghent, Hasselt, Kortrijk, Leuven, Liege, Mechelen, Namur, Ostend and Sint-Truiden). BASE is targeting representative downlink speeds between 6 to 20 Mbps.

Belgacom, the 4G pioneer: The incumbent telco was the 1st to launch 4G in Nov-12. As of end 1H13, Belgacom has an outdoor coverage of 44% and is available in approx. 140 cities. We believe Belgacom will roll out 4G in the capital within a 12 to 18 month timeframe. With BASE’s B-39 offering 4G, the entry-point for 4G remains virtually unchanged as it is possible to combine Belgacom’s Smart 25 with a 4G option (at € 10), bringing 4G in reach as of € 35 (both 2GB in-bundle). Furthermore, Generation Connect –a plan geared more towards data – offers 2G of 4G connectivity at € 20 per month.

Mobistar, left in the dust: Shortly after this press release, Mobistar announced a similar move, i.e. launching 4G in 50 cities before YE13 (to limit churn in our opinion) and adding 40 others cities in 1Q14 (with a commercial offer at the beginning of 2014 so no info yet on pricing). We stress that this is merely an opening up of the 4G network, and will probably not be accompanied by a full-blown marketing push. Mobistar highlighted 2 obstacles: (i) modification of the emission standards in Brussels and (ii) the availability of the 800MHz spectrum for adequate inside coverage. 800MHz auction is slated for Nov-12. Note that Mobistar already has 4G in Luxembourg, and is the only carrier licensed for iPhone 5(S) 4G functionality.

Telenet/VOO, the piggy-backers:The cable operators will automatically enjoy 4G through Telenet’s MNVO with Mobistar (for which VOO has a step-in agreement). Just as us, Telenet (36,69 EUR, -0,90%) does not seem worried by cable cutting in Belgium. No surprise, given that we estimate that only 5% of handsets is 4G-ready. Given the cable boys will be able to offer 4G as of the moment Mobistar launches it, raises some questions on how Mobistar will be able to monetize this investment (besides additional MVNO revenue).

Our view & Conclusion: With pricing left broadly intact but also an extra competitor, this news is rather a mixed bag for Belgacom. We regard this news as more negative for Mobistar. Neutral for Telenet/VOO. Big pro for Telenet is its ability to offload over WiFi, limiting the cash-out to Mobistar. Belgacom’s Fon partnership is commercially interesting but means less out-of-bundle data. Big question is for how long carriers will be able to recoup 4G investments (radio stations + minimum € 120m price tag for 800 MHz) via the current pricing schedule. Additional capex for Mobistar in 4Q probably limited, given that this is merely switching on 4G in the base stations.

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