Juraj Sedivy, CEO of TEF O2 Slovakia (subsidiary of TEF O2 CR) announced launch its operations on 2 February 2007 with pre-paid services, followed by post-paid services in 2Q07. So far more than 400,000 potential clients registered to get unlimited lifetime calls in TEF O2 Slovakia network for SKK 2/minute (EUR 0.06/minute). Other calls will be charged SKK 8.5/minute (EUR 0.24/minute) and SMS by SKK 3.2 (EUR 0.09/minute).
Our view:
Although sooner-than-expected launch and the initial customer registration is exceeding the expectations and market could react positively on the news, it needs to be stressed that these are mostly users of other two incumbent international players on the Slovak market (T-Mobile and Orange) which sees the offer attractive but TEF O2 Slovakia is not the network of first choice. We stick to our opinion that network build up will result in substantial cash outflow, dragging TEF O2 CR’s profitability down. We remind that the mobile penetration of Slovak market reaches some 90% and the space for new market player is therefore questionable. Revealed pricing policy confirms that company has to fight for market share only by prices as range of services provided by incumbent operators are wide.