Orange: Polish market of telecommunication operators

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Orange Polska has presented a report on the Polish operators market. It shows that the Covid-19 pandemic will not have a negative impact on the telecommunications market. Companies will continue to invest in infrastructure and expand their service portfolio. However, according to more than half of the operators, the Polish market is highly fragmented and this process will grow.

Telecommunications market in Poland in the face of a pandemic

The Covid-19 pandemic is a trying time for many sectors of the economy. At a time when getting out of the house and contact with other people is very difficult, the situation may prove to be a driving factor for some industries. One of them is undoubtedly the telecommunications sector. In the face of the pandemic, this market has been less affected than other industries, and the demand for digital services has increased significantly. This is particularly evident in the case of the largest companies in the market, which have reported strong financial results during this period. However, the second wave of the pandemic did not confirm the optimistic forecasts of experts regarding the future state of the Polish economy. Therefore, according to Orange, the economic slowdown caused by the pandemic will also affect the telecommunications industry and future plans for network expansion.

According to Orange, despite the existing problems, the future of the telecommunications market in Poland looks optimistic. In the near future, we will see new investments in the expansion and modernization of network infrastructure, within the framework of existing programs. More than half of ISPs in Poland (59%) see an opportunity to develop their business in POPC projects. The coming period will also be a time of rebuilding the major economies after the pandemic, for which the European Union will provide assistance. The aim of its recovery program will be to allocate funds to rebuild the economy after Covid-19, amounting to €57 billion – a significant portion of which will be allocated to digital development.

The pandemic does not discourage service expansion

Analyzing the portfolio of telecommunications operators, the most popular service provided in 2020 was fixed-line Internet. Out of 118 telecommunications undertakings registered in UKE, 112 gave this answer.  This was followed by TV services (86 indications), fixed voice services (77 indications), VOD (41 indications) and mobile voice services (32 indications).

In the next part of the survey, operators were asked to indicate the key factors in choosing a particular sub-supplier. The stability of the business partner proved to be the most important factor in the choice (96 indications). The quality of service factor received seven fewer indications. The podium among the most important issues is completed by the price of the service (82 indications). The least important were delivery time and geographical proximity to the supplier (36 and 35 indications respectively).

Nor is the Covid-19 pandemic deterring operators from expanding their portfolios. When asked about their plans to introduce new services to their offerings, more than half (58%) of respondents confirmed such intentions. Operators would most like to complement their offer with voice services based on mobile technology (35 indications). This is followed by TV-related services, including VOD (18 indications) and TV channels and packages (16 indications). The least popular are fixed voice services and Internet access (10 and 7 indications respectively).

For 60% of operators, the pandemic had an impact on their financial performance. 36% indicated that their performance had improved, while 24% indicated a decrease in revenue. The impact of the pandemic on the financial aspect can be seen particularly in the size of individual operators. Among small operators (up to 300 subscribers), as many as 48% responded that their revenues decreased. In the case of the largest operators (over 10,000 subscribers), only a quarter.

Strong market fragmentation

The Polish telecommunications market is highly fragmented. According to Orange, there are currently over 4,000 entities operating on it. However, the vast majority of the market belongs to the largest operators, who hold 80% of the sector’s value. Orange counts among them operators with their own backbone network, the remaining 20% are small and medium-sized enterprises.

According to 57% of respondents, already today competition on the Polish market is high. 35% of operators define it as medium, and only 8% as small. In the near future, the process of fragmentation will expand. In the question about competition in a year’s time, the number of answers concerning high competition increase to 65%.

Telecommunications companies registered with UKE participated in the survey. 83% are small and medium-sized operators. The survey was conducted from 9 to 23 October 2020 in a group of 118 respondents, using an online questionnaire method.