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Estonia Telecommunications Report 2011
Business Monitor International, Jan 2011, Pages: 97
Estonia Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Estonia's telecommunications industry.
2011 report on Estonia’s telecoms market contains updated and extended forecasts, which predict how the country’s fixed-line, internet, broadband and mobile sectors will develop through to the end of 2015. Our new forecasts reflect Q310 data published by Nordic operator TeliaSonera, which owns Estonia’s fixed-line incumbent operator Elion, as well as the country’s largest mobile operator, Eesti Mobilitelefon (EMT). Our forecasts and analysis also incorporate Q310 data published for Elisa Eesti, which is part of Finland’s Elisa Oyj, and Tele2 Eesti, the Estonian arm of Swedish carrier Tele2.
Data from Estonia’s three cellular operators suggests that the number of mobile users grew by 3.2% in the first nine months of 2010 to reach 1.62mn. We estimate that, in 2010 as a whole, the mobile customer base expanded by 4.2%. By the end of the year, the mobile customer base had risen to almost 1.64mn, equivalent to a penetration rate of 122%. The positive growth in 2010 stands in contrast to the previous year. In 2009, the Estonian mobile customer base shrank by 2.9%. BMI believes that the loss of mobile customers occurred as a result of operator moves to deduct inactive prepaid customers from their reported totals.
Our new forecast for Estonia’s mobile subscriber market envisages an annual average growth rate of 1.3% in the five years to 2015. By the end of our forecast, we expect the sector to have around 1.75mn mobile subscribers, equivalent to a penetration rate of over 131%. Going forward, it is feasible that further customer deductions will occur. This would result in negative growth for the sector, together with a falling penetration rate. In addition to inactive prepaid users, the high penetration rate reflects a high number of multiple SIM owners.
Meanwhile, based on operator reports, 3G customer growth remains strong in recent months, and has benefited from operator investments in HSPA (3.5G) technology. We estimate the 3G subscribers accounted for over 27% of the total mobile customer base at the end of 2010 and predict that this figure will rise to over 51% by the end of 2015.
We estimate that the number of Estonian broadband connections grew by 10.1% in 2010 to surpass 400,000, equivalent to a penetration rate of 30%. Cable, fibre and DSL remain the most popular broadband platforms for accessing the internet. However, investment in HSPA infrastructure by Estonia’s 3G operators is resulting in a growing number of Estonians using USB sticks and other mobile devices to access the internet. Over the next five years, we predict that Estonia’s broadband market will expand at an annual average growth rate of 6.5%. By the end of 2015, predict that penetration will have risen to almost 41%. In addition to a growing number of mobile broadband subscribers using 3.5G and (in due course) 4G networks based on Long Term Evolution (LTE) technology, Estonia’s broadband market will benefit Estonia Telecommunications Report 2011 Business Monitor International Ltd Page 6 from the construction of the National Broadband Network Plan. Known locally as EstWIN, the plan envisages every Estonian having access to broadband at speeds of 100Mbps by the end of 2015.
Finally, we now believe that that Estonia’s fixed-line telephony market experienced a slight decline in 2010, with the number of lines falling by 0.7% to just under 493,000 (equivalent to a penetration rate of 36.8%). Recent growth in Estonia’s fixed-line market was stimulated by the take-up of triple-play packages offered by companies such as Starman and STV. The latter companies sell fixed voice connections together with a broadband internet and TV service.
However, despite continued growth in the number of fixed voice connections, prior to 2009, the use of fixed voice services has declined at a steady pace in recent years. Our new forecast envisages a 0.7% annual average rate of decline for Estonia’s fixed-line sector over the next five years. By the end of 2015, we predict that the fixed-line penetration rate will have risen to 35.5%. With such a high fixed-line penetration rate, the Estonian sector has considerable room for contraction. However, we believe that the rate of decline will depend on the speed at which the triple-play market continues to grow.
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