Eastern Europe Pay TV Forecasts

Table of Contents

Published in March 2018, this 224-page PDF and excel report comes in five parts:

• Executive summary and regional forecasts, with handy comparison tables to reveal the best growth prospects; • Regional forecasts summary from 2010 to 2023 by platform, by household penetration, by pay TV subscribers and by pay TV revenues; • Country profiles and analysis for 22 territories; • Detailed forecasts for 22 countries, including 75 operators. • NEW FOR 2018: Prospects. Summary subscriber forecasts for 22 countries in a graphically appealing 47-page document.

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Forecasts for the following 22 countries and 76 operators:

Country No of ops Operators Albania 3 Digitalb; Tring; Albtelecom Belarus 3 MTIS, Zala, Velcom Bosnia 3 , M:Tel; Total TV Bulgaria 3 , , M:Tel 2 Max TV/T-HT, Vip Cyprus 3 Cytavision; Cablenet; Primetel Czech Rep 5 UPC, O2, Digi TV, Skylink; T-Mobile Estonia 3 Starman/Zuum, Elion, Viasat Greece 2 , Cosmote 5 T-Home, Digi TV, UPC, Invitel, MinDig Latvia 3 Baltcom, Lattelecom, Viasat Lithuania 3 TEO, Cgates, Viasat Macedonia 3 Vip/Boom; Max TV; Total TV 1 Sun 2 Total TV; CT Poland 9 Multimedia Polska, UPC, Vectra, Inea, Toya, TP/Orange, Cyfra Polsat, NC+, Netia 4 RCS-RDS/Digi TV, UPC, Telecom Romania, Orange TV Russia 8 Akado, ER Telecom, MTS, , /Veon, NTV Plus, Tricolor, Orion 2 SBB, 3 UPC, Skylink, Nova Digi/ Slovenia 5 Telemach, Siol TV, Total TV, T-2, A1 Ukraine 1 Volia

SAMPLE: Hungary pay TV insight

• Pay TV penetration is already very high at 90% of homes, but it will fall slightly over the next five years. The number of TV households is also falling. So, pay TV subscribers will fall by 148,000 between 2017 and 2023. Pay TV revenues peaked in 2017 at $490 million but will fall to $446 million by 2023.

• Just under half the TV households subscribe to cable and a quarter receive satellite TV services. Cable will lose subscribers to IPTV in coming years as competition (mainly to convert analog cable subs) intensifies. IPTV will reach 23.0% of homes in 2023, up from 18.7% in 2017.

Main assumptions behind the forecasts • We have lowered our household and TV household figures since the last edition. • The number of TV households will continue to fall. • The population is falling as people abroad to seek work. • Pay TV penetration is high and competition is fierce. • Price wars ended in 2017. • Pay satellite TV and pay DTT subscriber numbers are falling as homes convert to IPTV and digital cable. • T-Home is the largest pay TV operator, although UPC is not far behind. Digi’s merger with Invitel will create another large player • The HUF strengthened against the USD in 2017 • The IMF has improved its GDP growth forecasts. Source: Digital TV Research

• Digital TV penetration reached 79% of TV households by end-2017, with 100% to be achieved by 2023. As analog terrestrial TV was switched off in 2013, all of the remaining analog homes are cable.

Hungary: Pay TV subs by platform (000) Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec 16 Dec 17 Total pay TV subs 3,122 3,213 3,288 3,402 3,409 3,479 3,533 3,546 Pay TV subs for top 10 2,666 2,842 2,908 3,032 3,095 3,206 3,276 3,338 players (94% share) Total cable/IPTV 2,253 2,257 2,310 2,395 2,381 2,451 2,560 2,618 Cable/IPTV subs for top 8 1,800 1,874 1,907 1,988 2,076 2,206 2,304 2,409 players (92% share) of which analog 1,243 1,184 1,071 984 931 906 843 759 of which digital 557 690 836 1,005 1,145 1,300 1,461 1,649 Sat TV subs (3 ops 98%) 869 920 915 921 901 896 871 831 Total satellite TV 869 920 915 921 920 914 889 848 DTT 0 49 82 123 113 104 101 97 Digital subs for top 10 1,423 1,658 1,836 2,049 2,163 2,299 2,433 2,579 Source: NMHH

• The National Media and Communications Authority’s (NMHH) Flash report estimated 3.55 million pay TV homes by end-2017, up slightly year-on-year. Analog cable, satellite TV and pay DTT all lost subscribers in 2017.

• At first glance, the Hungarian pay TV sector looks fragmented, with more than 400 cable operators, three main satellite TV platforms and three IPTV services.

Hungary: Split of pay TV subs by major operator (%) 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 UPC 29.0 25.9 26.7 26.4 27.0 26.9 26.9 26.4 T-Home 25.0 22.4 22.9 23.7 25.1 25.4 25.2 26.8 Digi TV 25.9 23.0 23.2 22.5 23.3 24.3 25.1 25.5 Invitel 3.3 3.7 4.1 4.5 4.8 4.9 MinDig TV Extra 3.2 2.5 3.6 3.4 3.0 2.9 2.7 Other 20.1 25.5 21.4 20.1 17.1 15.9 15.1 13.7 Source: NRA; T-Home; NMHH

• However, UPC and (T-Home) offer TV services across multiple platforms. DigiTV is the third major operator but will challenge the other two when it merges with Invitel. These three operators control more than three- quarters of pay TV subscribers.

UPC Hungary operating data (000) 2010 2011 2012 2013 2014 2015 2016 2017 Analog cable subs 335 323 307 257 210 170 131 92

Digital cable subs 248 290 327 377 431 479 532 591 Total cable subs 583 613 634 634 641 649 663 683 Satellite TV subs 190 219 243 265 280 289 292 266

Total video subs 772 833 877 899 921 938 955 949 Internet subs 369 428 487 518 554 588 632 675 Telephony subs 276 306 397 446 492 535 580 639

RGUs 1,417 1,567 1,760 1,863 1,967 2,061 2,167 2,263 Customer rels 890 966 1,030 1,051 1,076 1,095 1,113 1,111 Double-play % 32 25 16 13 12 11 11

Triple-play % 24 34 31 35 38 42 46 Source:

• Despite the market maturity, UPC continues to add subscribers. We forecast 1.18 million subscribers by 2023. UPC’s digital cable TV subscribers pay HUF4,590-6,090/month ($17.32-22.98) for 68-98 channels. Analog subs pay HUF2,790/month ($10.53) for 27 channels. By end-2017, 11% of its cable subs were double-play and 46% triple-play.

• UPC had a further 265,900 satellite TV subscribers (HUF2,990-4,290/month ($11.83-16.92) for 80-120 channels. Horizon Go is available – but not the full Horizon service – and SVOD platform Myprime (HUF1,490/month for 300 movies and 1,000 hours of series). Liberty Global also has a worldwide deal to distribute Netflix.

Digi TV operational data (000) 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 Cable TV subs 385 404 411 437 473 500 Satellite TV subs 368 341 330 318 307 291 Total TV subs 753 745 741 755 780 791 Broadband subs 301 329 347 382 428 467

Cable TV ARPU € 7.70 7.32 7.11 7.23 7.45 8.20 Satellite TV ARPU € 8.10 7.97 7.60 7.75 8.22 9.20 Source:

• Digi TV has been much more forthcoming with information since parent and Romania-based RCS-RDS issued bonds. In Hungary, Digi TV had 791,000 TV subscribers by end-2017; up by 11,000 year-on-year. Satellite TV ARPU is a little higher than cable. We forecast 681,000 subs by 2023, with analog cable losing 241,000 subs and digital cable gaining 173,000 and satellite falling by 42,000. Digital cable subs pay HUF2,640/month ($9.96) for 99 channels and satellite TV ones HUF3,300/month ($12.45) for 80 channels.

Invitel operating data (000) 2011 2012 2013 2014 2015 1H16 IPTV subscribers 0 28 44 56 71 80 Cable subscribers 84 81 83 85 85 85 Triple-play 26% 32% 35% Churn 11.5% 13.2% 11.8% Source: Invitel

• The residential and small business interests of Invitel (692,000 RGUs) were acquired by Digi in July 2017, pending regulatory approval. Mid-Europa Partners was reported in March 2014 to have its 51% in the company up for sale. Chinese-CEE Fund bought all of Invitel in January 2017.

• By mid-2016, Invitel had 85,000 cable TV subs (mostly analog, with the total flat) and 80,000 IPTV subs (HUF4,290-5,490/month ($16.19-20.72) for 36-94 channels – prices were lowered in 2017). We forecast slow growth to 189,000 subs by 2023.

Telekom Hungary TV operational data (000) 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 Cable subs 370 290 230 191 173 157 129 122 IPTV subs 124 226 313 390 445 498 550 629 Satellite TV subs 254 281 291 307 307 307 290 276 Total TV subs 749 797 835 888 925 962 969 1,026 Pay TV market share % 25.4 25.8 27.2 27.6 27.7 28.9 Blended TV ARPU 2,949 3,048 3,106 3,139 3,155 3,280 3,332 3,437 (HUF) Cable broadband subs 181 213 246 282 315 341 347 370 DSL/fiber subs 482 500 539 518 549 656 669 704 Source: T-Home

• Incumbent Magyar Telekom (T-Home) recorded 1,026,000 TV subs by end- 2017, with IPTV adding 79,000 in the year, cable (HUF3,560/month, $13.43) losing 7,000 and satellite (HUF1,500-5,047/month, $5.66-19.05 for 21-132 channels) losing 14,000. We forecast 1,173,000 TV subs by 2023, with IPTV providing most of the growth.

• IPTV (HUF2,985-4,830/month, $11.26-18.23, for 34-106 channels) became the largest TV platform for the operator in 2012 and the company appears to have a policy of transferring subscribers from its other platforms to IPTV.

• By end-2017, 28% of its TV subs took dual-play and 44% triple-play bundles. The company provides quad-play bundles. It had 5.29 million mobile subscribers by end-2017. The company also offers electricity and gas services. Magyar Telekom is 59.21% owned by via CMobil.

• Regulator NMHH awarded licenses to M-Tel, Vodafone (2.82 million mobile subs by end-2017), (3.13 million mobile subs by end-2017) and Digi in September 2014.

• HBO Go started as a standalone platform in November 2017 for €6.99/month.

• Antenna Hungaria launched a FTA DTT service (MinDig, 12 channels) in December 2008, with a pay DTT service (MinDig TV Extra, 25-44 pay channels for HUF1,499-2,799/month, $5.66-10.56 – prices were increased in 2017) starting in May 2010.

• MinDig TV Extra had 91,000 subs at end-2017, with subscriber numbers falling. Antenna started standalone SVOD sports platform MinDig Go Sport in November 2017.

• There were 376,000 primary DTT homes by end-2017. The original planned analog switch-off date of December 2011 was postponed until October 2013. About 135,000 settop boxes were given to poorer homes. The fifth multiplex started operations (85% coverage) in October 2014, following on from the fourth which launched in June. TDF sold Antenna Hungaria to state-owned utility company MVM in March 2014 as part of its divestment process.

• The International Monetary Fund forecasts average GDP growth over the next five years. GDP per capita was $13,460 in 2017; slightly above the regional average. The population is slowly declining, with 9.81 million recorded by end- 2017. The UN forecasts that had a population of 1.71 million in 2017.

Hungary pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Total households (000) TV households (000) Digital cable subs (000) Analog cable subs (000) Pay IPTV subscribers (000) Pay Digital Satellite TV subs (000) Free Digital Satellite TV HH (000) Analog Satellite TV Households (000) Analog terrestrial households (000) Primary FTA DTT households (000) Primary Pay DTT households (000)

Digital homes (000) Analog homes (000) Pay TV subscribers (000) Total DTT homes (000)

Digital cable subs/TV HH Analog cable subs/TV HH Pay IPTV subs/TV HH Pay Satellite TV/TV HH Digital Satellite TV/TV HH Analog Satellite TV/TV HH Analog terrestrial/TVHH Primary FTA DTT/TV HH Primary pay DTT/TV HH

TVHH/Total HH Digital/TV HH Analog/TV HH Pay TV Subs/TV HH Total DTT homes/TVHH

Stand-alone digital cable subs (000) Double-play digital cable subs (000) Triple-play digital cable subs (000)

Stand-alone pay IPTV subs (000) Double-play pay IPTV subs (000) Triple-play pay IPTV subs (000)

Hungary pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Revenues ($ million) Stand-alone dig cable revs Double-play dig cable TV revs Triple-play digital cable TV revs Digital cable TV subs revenues Digital cable TV on-demand revs Digital cable TV revenues Analog cable TV subs revs Cable TV revenues

Stand-alone IPTV revenues Double-play IPTV revenues Triple-play IPTV revenues IPTV subscription revenues IPTV on-demand revenues IPTV revenues

Satellite TV subscription revs Satellite TV on-demand revs Satellite TV revenues

DTT subscription revs DTT on-demand revenues DTT revenues

Subscription revenues On-demand revenues Total revenues

Average Revenue Per User (ARPU - $) Stand-alone digital cable subs Double-play dig cable TV subs Triple-play digital cable TV subs Ave digital cable (subs & VOD) Analog cable TV subs Stand-alone IPTV subs Double-play IPTV subs Triple-play IPTV subs Average IPTV (subs and VOD) Pay Satellite TV (subs) Pay Satellite TV (subs and PPV) Pay DTT (subs) Pay DTT (subs and PPV) Average monthly ARPU

Hungary pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2 2020 2021 2022 2023

019

Pay TV subscribers by operator (000) UPC (digital cable) UPC (analog cable) UPC (satellite) UPC (Total) T-Home (digital cable) T-Home (analog cable) T-Home (IPTV) T-Home (satellite) T-Home (total) Digi TV (satellite) Digi TV (digital cable) Digi TV (analog cable) Digi TV (total) Invitel (IPTV) Invitel (digital cable) Invitel (analog cable) Invitel (DTT) Invitel (total) MinDig (pay DTT) Others

Share of pay TV subs by operator % UPC (digital cable) UPC (analog cable) UPC (satellite) UPC (Total) T-Home (digital cable) T-Home (analog cable) T-Home (IPTV) T-Home (satellite) T-Home (total) Digi TV (satellite) Digi TV (digital cable) Digi TV (analog cable) Digi TV (total) Invitel (IPTV) Invitel (digital cable) Invitel (analog cable) Invitel (DTT) Invitel (total) MinDig (pay DTT) Others

Hungary pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Subscription & VOD revenues (US$ million) UPC (digital cable) UPC (analog cable) UPC (satellite) UPC (Total) T-Home (digital cable) T-Home (analog cable) T-Home (IPTV) T-Home (satellite) T-Home (total) Digi TV (satellite) Digi TV (digital cable) Digi TV (analog cable) Digi TV (total) Invitel (IPTV) Invitel (digital cable) Invitel (analog cable) Invitel (DTT) Invitel (total) MinDig (pay DTT) Others

Share of pay TV revenues by operator % UPC (digital cable) UPC (analog cable) UPC (satellite) UPC (Total) T-Home (digital cable) T-Home (analog cable) T-Home (IPTV) T-Home (satellite) T-Home (total) Digi TV (satellite) Digi TV (digital cable) Digi TV (analog cable) Digi TV (total) Invitel (IPTV) Invitel (digital cable) Invitel (analog cable) Invitel (DTT) Invitel (total) MinDig (pay DTT) Others

Hungary pay TV forecasts

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Average Revenue Per User (ARPU - US$) UPC (digital cable) UPC (analog cable) UPC (satellite) T-Home (digital cable) T-Home (analog cable) T-Home (IPTV) T-Home (satellite) Digi TV (satellite) Digi TV (digital cable) Digi TV (analog cable) Invitel (IPTV) Invitel (digital cable) Invitel (analog cable) Invitel (DTT) MinDig (pay DTT)

Source: digital TV research Ltd.

Hungary pay TV subscriber prospects

Homes by platform (000) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2017 2018 2019 2023 A terres 0 0 0 0 Pay DTT 91 86 82 77 Free DTT 285 300 315 365 Free satellite 78 78 78 77 Pay Satellite 846 803 769 710 IPTV 733 780 816 883 A Cable 823 702 583 0 D cable 1,053 1,150 1,244 1,728

Subscribers by operator (000)

Others 99 458

MinDig 77 86

Invitel 189 179

Digi TV 681 782

T-Home 1,173 1,055

UPC 1,179 959

0 200 400 600 800 1,000 1,200 1,400 2023 2018

Hungary pay TV revenue prospects

Revenues by platform ($m) 600

500

400

300

200

100

0 2017 2018 2019 2023 Pay DTT 8 8 7 7 Pay Satellite 131 124 118 108 IPTV 85 92 96 100 A Cable 106 90 76 0 D cable 159 173 183 232

Revenues by operator ($m)

41 Others 83

7 MinDig 8

23 Invitel 23

79 Digi TV 96

122 T-Home 121

175 UPC 157

0 50 100 150 200 2023 2018

Digital TV Research publication schedule for 2018 Title Publication Price 1 Sub-Saharan Africa Pay TV Forecasts January £1200/€1440/$1560 2 Middle East & North Africa Pay TV Forecasts February £1200/€1440/$1560 3 Asia Pacific Pay TV Forecasts March £1200/€1440/$1560 4 Latin America Pay TV Forecasts March £1200/€1440/$1560 5 North America Pay TV Forecasts March £500/€600/$650 6 Eastern Europe Pay TV Forecasts March £1200/€1440/$1560 7 Western Europe Pay TV Forecasts May £1200/€1440/$1560 8 Global Pay TV Subscriber Forecasts May £1500/€1800/$1950 9 Global Pay TV Revenue Forecasts June £1500/€1800/$1950 10 Global Pay TV Operator Forecasts June £1500/€1800/$1950 11 Pay TV Operator Prospects June £800/€960/$1040 12 Pay TV Revenue Prospects July £800/€960/$1040 13 Netflix Forecasts July £600/€720/$780 14 Sub-Saharan Africa OTT TV & Video £1000/€1200/$1300 Forecasts August 15 Middle East & North Africa OTT TV & Video August £1000/€1200/$1300 Forecasts 16 Asia Pacific OTT TV & Video Forecasts September £1000/€1200/$1300 17 Latin America OTT TV & Video Forecasts September £1000/€1200/$1300 18 North America OTT TV & Video Forecasts September £500/€600/$650 19 Eastern Europe OTT TV & Video Forecasts October £1000/€1200/$1300 20 Western Europe OTT TV & Video Forecasts October £1000/€1200/$1300 21 Global OTT TV & Video Forecasts October £1800/€2160/$2340 22 Global SVOD Forecasts November £1500/€1800/$1950 23 OTT TV & Video Prospects November £1000/€1200/$1300 24 SVOD Prospects December £900/€1080/$1170

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Digital TV Research publication schedule for 2017 Title Publication Price Asia Pacific Pay TV Forecasts March £1200/€1440/$1560 Western Europe Pay TV Forecasts May £1200/€1440/$1560 Global Pay TV Subscriber Forecasts May £1800/€2160/$2340 Global Pay TV Revenue Forecasts May £1800/€2160/$2340 Global Pay TV Operator Forecasts May £1800/€2160/$2340 Netflix Forecasts June £750/€900/$975 Global Pay TV Subscriber Databook June £750/€900/$975 Global Pay TV Revenue Databook June £750/€900/$975 Global Pay TV Operator Databook June £750/€900/$975 Sub-Saharan Africa OTT TV & Video Forecasts July £1000/€1200/$1300 Middle East & North Africa OTT TV & Video £1000/€1200/$1300 Forecasts July Asia Pacific OTT TV & Video Forecasts August £1000/€1200/$1300 Latin America OTT TV & Video Forecasts August £1000/€1200/$1300 North America OTT TV & Video Forecasts September £600/€720/$780 Eastern Europe OTT TV & Video Forecasts September £1000/€1200/$1300 Western Europe OTT TV & Video Forecasts October £1000/€1200/$1300 Global OTT TV & Video Forecasts October £1800/€2160/$2340 Global AVOD Forecasts October £1000/€1200/$1300 Global SVOD Forecasts October £1500/€1800/$1950 Online TV Piracy Forecasts November £1200/€1440/$1560 SVOD Digest November £500/€600/$650 OTT & Pay TV Forecasts December £1500/€1800/$1950

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