The Greek market for mobile telephony has seen steady growth in the last 10 years, attaining a 95 percent penetration rate in the first half of 2003 – from 20 percent in 1998. But growth rates of new connections have been falling since 1999 and are projected at between 3 percent and 5 percent for the 2003-2006 period, compared to an average of 57 percent in 1996-2001, a study by the Foundation for Economic and Industrial Research (IOBE) says. Despite the evident saturation of the market, prospects remain positive, industry officials say. On average, Greek mobile owners still use their phones less than other Europeans, which gives rise to expectations for a rise in revenue. Third-generation applications (3G), such as Multimedia Messaging Services (MMS), which are seen as bringing about extensive changes in consumer’s daily habits, are expected to create new sources of revenue of high added value. Benefits are also anticipated by the projected long-term trend of fixed-line services being replaced with mobile telephony, which is adding video, voice and photography applications, the study says. The number of Greek mobile phone connections totaled 10.4 million in the first half of last year (Greece’s population is 11 million). The IOBE study notes the impressive growth of the prepaying customer market segment, which numbered 6.9 million, or 66.8 percent of the total, from 52.7 percent in 1999. Price competition Price competition in the Greek mobile market is especially strong, intensified further by the fact that there is no considerable differentiation in products and services. (Stet Hellas, which operates the Telestet label, was due to launch 3G services in the Athens and Thessaloniki areas yesterday.) Competition has mainly resulted from market liberalization. Combined with rapid technological innovation, it has been the main factor in a sharp and continuous drop in the telecom services consumer price index from 103.9 in 1998 to 80.8 in the first half of 2003, boosting demand. Advertising has been another major factor in the growth of the sector, rising at annual rates of more than 20 percent to reach 68.5 million euros in 2002. In the first half of 2003, three of the four operators accounted for 98 percent of the total number of customers; CosmOTE, the subsidiary of OTE Telecom, 37 percent; Vodafone-Panafon, 35 percent; Stet Hellas, 27 percent, and Q-Telecom, 2 percent. The high cost of investment in equipment, of creating and maintaining sales networks and of advertising are deterrents to the entry of new service providers into the sector. The study shows that CosmOTE commanded the highest market share among contract subscribers between 2000 and last year. Vodadone-Panafon, however, held sway among prepaying customers. The sector’s financial structure appears strong, IOBE says. Its analysis shows that performance indices are at very satisfactory levels, while a small change is noted in capital structures, with foreign investors gradually reducing their shares in total assets. Also, the liquidity ratios show that operators finance a significant part of their activities with short-term borrowing. Further, activity ratios show that they maintain very efficient systems for procuring, managing and renewing inventories. Employment in the sector rose at a brisk average of 32.7 percent annually, reaching 4,375 personnel in 2001 from just 800 in 1995.