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Matav Hungarian Telecommunications Company Essay

Matav Hungarian Telecommunications Company was established in 1991 when Hungarian Post was split into three divisions. Matav remained a state-run company until 1993 when the Hungarian government sold off the company , and that was a significant turning point in the history of the company since the privatization process was the largest foreign investment in Hungary. Matav’s majority shareholder , Deutsche Telekom was one of the largest Telecommunications companies in Europe, and was involved in all kinds of Telecommunication Business Services. Therefore , Matav benefited from the technical expertise of Deutsche Telekom , and became a fully integrated Telecommunications company. Even the culture of the corporation had changed into a customer-oriented culture after the privatization process. In February 1994 , Matav’s local telephone services covered about 80% of the territory of Hungary.

After it had been privatized from the state in 1993, Matav had a monopoly inside Hungary in a way that it operated 80 % of the country’s fixed line telephone system. But there were four other domestic incumbents that controlled the fixed lines in the remaining 20% of the country ( HTCC , Monortel , Emitel and Invitel ) . So , Matav had some kind of competitive advantages in its domestic markets. Also , In mobile market , for instance , Matav controlled about 47% of the market , but was in a competition with two other companies : Pannon GSM (owned by TeleNor ) with 37 % of the market , and Vodafone with 16% . Tele2 and MonorTel were also being so active in the segment. Moreover , there was a great deal of competition between the fixed line business segment and the mobile segment.As for the internet segment , the ISP Axelero had Pantel ( owned by KPN , Holland ) as an active competitor.

As part of its successful strategy, Matav was trying to become an international telecommunications group , and its first international expansion was in 2001 through purchasing the majority share of MakTel , Macedonia’s national telecommunications company. So as a result , MakTel became a consolidated subsidiary of Matav. Matav’s first international acquisition of MakTel was a real success as the domestic fixed line business was declining. Also , in July 2001 , Matav purchased the remaining 50% ownership share in Emitel, and Emitel became a new subsidiary of Matav group that provided residential and business telecommunication services in the South region. In December 2001 , Matav acquired the remaining 49% share of Westel Mobile Telecommunications ( which was known later as T-Mobile Hungary Co. ).

In January 2002 , a new strategic plan introduced a new company structure , and Matav was restructured into four business lines : Business services , residential services , Mobile division and Internet division. The restructure plan was necessary as each business area needed a dedicated management team. In fact , international expansion was of great strategic importance to Matav . The first international acquisition of MakTel in early 2001 was a great strategic opportunity as the penetration in Macedonia was being very low in almost all business segments : 25% of the country had fixed lines , 5% of the country had mobile phones , and under 2% had the internet service. So , Matav’s main task was to rebalance the pricing of the fixed line business through the tariff packages and others , and to grow competition on the mobile market. MakTel revenues had grown from the year 2000 to 2003 , and the key measure that was used by Matav ( EBITDA : Earnings before interest , tax , depreciation and Amortization ) also raised. In addition , Matav increased the number of MakTel’s fixed lines.

In December 2003 , the connection of ADSL lines and other broadband services became available. And since January 2004, the Electronic Communication Act entered into force, and it allowed the fixed-line number portability in Hungary. Although it was becoming an international company , Matav lacked the dynamic growth, and that was because there was a limited growth opportunity in Hungary. For instance , fixed line subscriptions were declining because of the the fixed-mobile substitution. Consequently , Matav was looking forward into its second international expansion , and that was the international acquisition of Montenegro Telecom ( TCG ) that was sold off by the government in March 2005 . Basically , Matav chose Montenegro because it was the only fixed operator in the country , and it had one mobile competitor.

In 2004 , Matav had to develop a strategy plan for the entire company, and the management team was to choose between the multiple strategic crossroads in the complex and the rapidly changing telecommunications business environment. The strategy group leader , Andras Balogh , had to choose a reliable strategy plan for the next three years. Basically , the strategy group had three main options for Matav. The first choice was to focus on the existing product lines. For example , the company could maximize productivity , provide new services , produce more tariff packages in order to limit the fixed lines business declining, in addition to managing the pricing on new mobile services ( GPRS , 3G , WAP…and all Broadband services ).

The second choice was to focus on the regional growth, and the third one was to keep expanding internationally. If I were a member of the strategy group , I would recommend the international expansion strategic direction, but I do believe that some requirements should be met, and one of those requirements would be the guaranteed existing of sufficient company resources that would guarantee a healthy future of the company. In addition , I think that the international expansion would compensate the lack of dynamic growth that Matav lacked in Hungary .

• What has been the impact, positive and negative, of the Internet on the way we do business? • What is his future vision of the Internet and the way it will evolve? • What challenges and concerns do we face for the future?

Since this is a position paper, not only present the speaker’s points but analyze them and add your considered opinion about them. Examples and perspective to support your viewpoint are strongly welcomed.

It is recommended that your write-up should be between one and two pages long (single spaced, 11 pt.) Please submit your assignment electronically via Blackboard by class time on Tuesday September 25th.


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