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Croatia Telecommunications Report Q3 2011
Business Monitor International, May 2011, Pages: 93
BMI's Q3 2011 report on Croatia’s Telecommunications market analyses and assesses the growth of the country’s mobile communications, fixed-line telephony and internet/ broadband subscriber sectors. The report contains five-year growth forecasts which chart how the country’s different telecommunications sectors are likely to develop. Our five-year forecasts are based on the most recent available figures to be published by Croatia’s telecoms regulator, the Croatian Post and Electronic Communications Agency (HAKOM) and by the country’s leading network operators. In addition to our five-year growth forecasts for the mobile, fixed-line and internet markets, our report explores each sector in depth in our market data analysis sections. In addition to including the latest data, these sections examine the latest data, trends and developments.
Data from Deutsche Telekom-backed T-Mobile, Telekom Austria’s Croatian mobile unit Vipnet and Sweden’s Tele2 suggests Croatia’s mobile subscriber market increased by 176,000 customers in the three months to 31 December 2010. This was higher than the 140,000 new customers added to the sector in Q310. By the end of December the market had 6.389mn mobile subscribers, reflecting an increase of 2.8% q-o-q and 5.4% y-o-y. By the end of 2010 Croatia had a mobile market penetration rate of more than 144%. The improved performance of the mobile market in Q410, compared with the earlier part of the year, was based mainly on a robust customer growth experience for mobile market leader T-Mobile. A strong performance by the market leader resulted in the loss of market share by smaller rivals Vipnet and Tele2.
Over the next five years, BMI forecasts a slowdown in the rate of mobile subscriber growth. Growth will be slower as operators find it increasingly difficult to grow organically due to market saturation. This new forecast envisages growth of 1.8% in 2011, with subsequent years seeing diminishing rates of growth. Meanwhile, this report estimates the number of mobile subscribers with 3G handsets increased by 65% in 2010 to reach 574,000. This is equivalent to about 9% of the total mobile customer base. We maintain our view that 3G customer growth could have been higher had it not been for Croatia’s economic recession and its lingering after-effects, including a tendency for subscribers cut down on high-end services. Over the long-term, we expect a steady increase in 3G customer numbers.
During this quarter, we introduced a mobile ARPU forecast for Croatia. This forecast is based on historical ARPU data published by the sector’s two largest mobile operators, T-Mobile and Vipnet, and is expressed in local currency, the Croatian Kuna. Examined as a market average, the mobile ARPU rate for Croatia fell by 6.9% in 2010 to reach HRK81.7 (EUR14.6). Both of Croatia’s mobile operators contributed to the fall in blended ARPU. This long-term forecast for Croatia’s blended ARPU rates is one of gradual decline. This research forecasts the rate of decline will diminish in the latter years of the forecast as the acquisition of new prepaid customers tails off and as operators establish more stable sources of income from the deployment of data services.
Based on the latest figures from the regulator, BMI estimates Croatia had 1.864mn fixed lines in service at the end of 2010, equivalent to 42.1% penetration and up by 0.2% from the start of the year. In the 12 months to December 2010, fixed-line incumbent operator T-Hrvatski Telekom (T-HT) reported a 3.6% fall in fixed-line connections. These apparently contradictory trends suggest alternative operators such as Optima Telekom and H1 experienced strong growth in 2010, most likely after aggressive price-based promotions.
This report expects the internet sector to remain one of the main growth areas in Croatia’s telecoms market over the next five years. With an internet user base which is already high, we expect only single digit growth annually, for the duration of our forecast. By the end of 2015 we believe the internet user base will have risen to 3.25mn, equivalent to a penetration rate of more than 74%. Meanwhile, broadband subscriber growth is expected to remain robust for each of our five forecast years. Despite this, we lowered our longterm forecast expectations, as a result of weaker subscriber growth in 2010. By the end of 2015 we envisage a market of about 1.99mn broadband subscribers, equivalent to a penetration rate of more than 45%. Although mobile broadband services are expected to grow at a faster pace than fixed broadband alternatives, the fixed broadband segment should also benefit from operator investments.
This quarter sees Croatia slip from 12th to 14th position in BMI’s latest set of Business Environment Rankings for Central and Eastern Europe. The country receives a weaker overall ranking as a result of lower scores in the Country Rewards and Country Risk categories. Although they are unchanged this quarter, Croatia scores below average in the Industry Rewards category and just below average in the Industry Risks category.
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