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Croatia Telecommunications Report Q1 2012
Business Monitor International, Dec 2011, Pages: 95
The Q112 report on Croatia's Telecommunications market includes extended forecasts through to 2016. These forecasts cover mobile subscriptions, monthly blended ARPUs for the mobile market, fixed-line subscriptions and broadband subscriptions over mobile and fixed networks. BMI's 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. It also contains data analysis of the most recent results from telecoms operators. In addition to forecasts and the latest data analysis, it examines the trends and developments in the sector as well as an update to telecoms regulations.
Data from Deutsche Telekom-backed T-Mobile and Sweden's Tele2 for Q311, and a BMI estimate for Telekom Austria's Croatian mobile unit VIPnet's results suggest Croatia's mobile subscriber market contracted by 532,000 customers in the three months to September 31 2011. This loss followed the loss of 607,000 subscribers in Q211. The reason for these large losses was the adoption of a 90-day active definition for mobile subscribers by VIPnet and T-Mobile in Q211 and Q311 respectively. Although the market lost over 1.1mn subscribers in the six months to the end of September 2011, it is believed that the data now better reflects the reality of the market.
Despite this shedding of subscriptions, over the next five years BMI still forecasts the rate of mobile subscriber growth to slow incrementally to below 1% by the end of the forecast period. Growth will be slower as operators find it increasingly difficult to grow organically due to market saturation. Meanwhile, the number of mobile subscribers with 3G handsets is estimated to increase by 43.5% in 2011 to reach 597,000. This is equivalent to over 11.1% of the total mobile customer base. This represents a sharp uptick in 3G as a percentage of the total market, but this is entirely the result of the discounting of inactive subscribers rather than a boom in 3G subscriptions. BMI maintain the 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, a steady increase in 3G customer numbers is expected.
Based on the latest figures from the regulator, BMI estimates Croatia had 1.8mn fixed lines in service at the end of 2011, equivalent to 41% penetration, a decrease of 3.4% from the start of the year. This is an acceleration in subscriber losses, although negative growth is not expected to persist based on a number of factors. The first is the increased competition from alternative operators, particularly with the introduction of wholesale line rental access regulations in July 2011. BMI expects alternative operators such as Optima Telekom and H1 to benefit from the lower cost accesses to invigorate competition in the sector, helping to limit subscriber losses through lower prices. In a similar vein, BMI expects the increasing centrality of converged services to operator's strategies to help limit fixed-line losses by bundling fixed-voice services with more popular services such as broadband and pay-TV.
BMI expects the internet sector to remain one of the main growth areas in Croatia's telecoms market over the next five years particularly if wholesale line rental regulations are implemented by HAKOM that promote competition from alternative operators. BMI expects rapid development to continue in IPTV and mobile broadband. With an internet user base which is already high, only single digit growth annually is expected, for the duration of the forecast. By the end of 2016, it is believed the internet user base will have risen to 3.265mn, with a penetration rate of more than 75%. Meanwhile, broadband subscriber growth is expected to remain robust for each of our five forecast years. By the end of 2016, a market of about 2.013mn broadband subscribers is envisaged, with a penetration rate of more than 46%. 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 stay in 12th position in BMI's latest set of Business Environment Rankings for Central and Eastern Europe. The country received unchanged scores this quarter. However we note that there is a strong likelihood of it scoring higher later in 2012, with the implementation of wholesale line rental regulations and upward movement in ARPUs following the discounting of inactive subscribers in Q211 and Q311.
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