Proportionate customer growth in both the Central and Eastern European regions fell to an all-time low in Q2 2007, with increases of 2.3% and 3.1% recorded respectively in the two areas. For new lows to be reached in the second quarter is perhaps surprising, previous minimums having been set in the traditionally weak first quarter. Whilst the Ukraine is largely accountable for this trend in Eastern Europe - its quarterly growth rate falling from 4.1% in Q1 2007 to just 0.3% in Q2 - the downward trend was noticeable in other major markets, including Romania, Bulgaria, Belarus and Lithuania, where the size of the market shrunk for the second successive quarter. Turkey was the only sizable market to improve upon its first quarter growth rate in the three months to June, but this was not enough to alter the overall trend. In turn, the trend in Central Europe was also dominated by one country - Poland - although, again, the growth rates in other significant countries such as Serbia, Czech Republic and Slovakia all fell, quarter-on-quarter.

As the chart shows, Western Europe did not follow the trend exhibited in the other parts of the continent.

Growth increased slightly from 1.78% to 1.81% as the quarterly rate of increase in customer numbers picked up in important markets such as France, Germany, Netherlands, Greece and Sweden - despite a slowdown in Italy and, to a lesser extent, the United Kingdom. As can be seen from the chart the seasonal variations in growth in Western Europe have been more tempered in the last year than in previous periods, a general indication (if nothing else) of the greater maturity of the market. This said, we would be very surprised if growth rates did not pick up again to over 2% in Western Europe this year, certainly by the fourth quarter.

Indeed, it is unlikely that the rates in Central and Eastern Europe will remain in the duldrums for the rest of the year either as we expect the well-recognised fourth quarter peaks to appear as usual, although growth is most unlikely to match that seen last year. This is particularly true in Eastern Europe, although if the Ukraine market recovers from the temporary hiatus in growth - as Russia did following a similar period of explosive expansion - then we will not necessarily see any more new lows set in the coming year. The second chart shows the high degree of correlation between the results in the Ukraine and the overall growth of the Eastern European region.

Posted to the site on 27th September 2007

Posted to: www.cellular-news.com/story/26307.php