In our Q309 Telecommunications Report for Croatia, we have left the mobile market data analysis sectionunchanged and have added greater detail into our fixed-line and internet market data analysis sections.Mobile forecasts, operator data and operator profiles have been updated.
Fixed-line incumbent T-Hrvatski Telekom (T-HT) is the dominant operator in both the fixed-line andbroadband sectors. There are nine active alternative fixed-line operators, including Optima Telekom, H1Telekom and Vipnet, the mobile operator. During 2008, T-HT’s fixed-line subscriber base fell by 4.1%to 1.56mn fixed-line accesses. As well as a general market decline driven by fixed-to-mobile substitutionand a preference for cheaper VoIP services, the incumbent is losing out to alternative operators. As such,we believe that Croatia’s fixed-line market declined by just 1% in 2008, falling to just over 1.8mnsubscribers and a penetration rate of 40.3%. Croatia’s fixed-line penetration remains among the highest inthe region. Fixed-to-mobile substitution does not appear to have impacted Croatia’s fixed-line sector tothe extent that it has in some of its neighbouring countries, but we are still forecasting the fixed-linesector to continue declining.
T-HT has been channelling its energies into its internet business, centred around broadband, in an effortto stem its declining fixed-line subscriber base and prop up its revenue streams, as competition in thefixed-line sector eats into average revenue per access (ARPA) and voice traffic declines. In April thisyear, T-HT revealed ambitious plans to accelerate its broadband network expansion and upgrade. By theend of 2009, T-HT hopes to offer access to 1mn households. The HRK1bn investment that T-HT hasearmarked is predominantly intended for expanding its fibre-optic network, for which the incumbenthopes to have 50,000 subscribers by the end of the year. The alternative operators in Croatia have failedto make as big an impact on the broadband sector as they have in the fixed-line market. However,bitstream access (BSA) is now available over T-HT’s network and the number of unbundled local loops(ULLs) is increasing. In addition, the alternative operators, fragmented though they are, are continuing toexpand their own proprietary network infrastructure, resulting in renewed optimism that Croatia’sbroadband market could become more competitive. Rumours of consolidation have continued tocirculate, centring on Optima, H1, Metronet Telekomunikacije and B.net Hrvatska.
Mobile subscriber growth in the fourth quarter of 2008 was slightly disappointing, taking the country’smobile subscriber base to 5.880mn and mobile penetration to 131.2%. Nevertheless, we believe thatCroatia’s predominantly prepaid mobile subscriber base still contains a large number of inactive SIMsand growth opportunities do remain. Croatia’s smallest operator Tele2 Croatia has made large inroads in2008, taking its market share from 9.3% at the end of 2007 to 12.0% at YE08. Both market leader TMobileCroatia and Vipnet saw their market shares dwindle as a result. However, this was to the benefitof Vipnet which has seen its market share converge on that of T-Mobile’s, and at the end of 2008Vipnet’s market share was just 3.4 percentage points (pps) below T-Mobile’s.
The mobile operators are attempting to improve their subscriber mixes, adding new postpaid customersand targeting mobile data users. As well as upgrading their networks to advanced 3G technologies, theoperators offer an array of multimedia content and value-added services (VAS). The country’s firstmobile virtual network operator (MVNO) TelCro had still not launched at the time of writing andrevealed no updates on when it intends to launch. However, if and when it does launch, competition in theprepaid sector is set to be stirred up, which could see greater focus from the mobile network operators inattracting higher value customers.
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