Eurotel (ET) has announced FY05 subscriber growth of 6.4%, to 4.68m, from 4.40m in 2004. Given TMobCR's reported 4.63m, and VOD's 2.14m subscribers, implied market subscriber base is now 11.45m, translating to a 112% penetration rate, in line with our estimate. ET and TMobCR are neck-in-neck in terms of market share, at 40.8% and 40.4% respectively. The share of post-paid customers at ET is now 33%, compared to 24% at the end of 2004.
The intense competition among the Czech mobile operators is likely to be reflected in stagnant ARPU. Further, we expect promotions and other loyalty rewards to encourage migration to contract subscriptions to prevent churn to be reflected in margin pressure. We do not expect material share price impact on the subscriber news, as all eyes are set to be on dividends for 2006. We maintain our Sell rating and CZK 480 fair value for Cesky Telecoml.