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Croatia Telecommunications Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: September 2009 Product Code: R302-8110 Description In our Q409 Telecommunications report for Croatia, we have updated our fixed-line, internet user andbroadband forecasts along with the market data analysis sections across the country’s telecoms markets.Croatia’s fixed-line sector is dominated by incumbent T-Hrvatski Telekom (T-HT), which had an 84.3%market share at the end of 2008, down from around 88% at the end of 2007. The operator has beensuffering at the hands of intensifying competition from the country’s nine active alternative operatorssuch as Optima Telekom, H1 Telekom and Vipnet. This resulted in T-HT’s fixed-line subscriber basedeclining by 4.1% during the year to 1.539mn. The incumbent’s large subscriber decline is being offsetby strong performance from its competition, which resulted in Croatia’s fixed-line subscriber baseincreasing by 0.2% during 2008 to reach 1.851mn subscribers. However, looking ahead, we see thenumber of fixed lines entering a period of decline as fixed-to-mobile substitution and the growingpopularity of VoIP services begin to outpace the growth of the alternative operators. In an effort tocounter this and strengthen their fixed-line businesses, Croatia’s fixed-line operators have been looking tobundled services, packaging their fixed-line services with other service lines such as broadband andIPTV. The country’s broadband sector is also dominated by T-HT and to a greater extent than the fixed-linesector as the competition has struggled to carve out such a strong position. Although the alternativeoperators are developing their own proprietary network infrastructure, due to the fragmented nature ofCroatia’s wireline market, they are struggling to compete with T-HT. Bitstream access (BSA) wasintroduced by the regulator in 2008, which sees the alternative operators gain greater access to T-HT’snetwork and T-HT witnessed the number of unbundled local loop (ULL) lines more than double during2008. This should see T-HT’s market share continuing to fall. However, in April this year, the incumbentrevealed its network investment plans and plans to cover 1mn households by the end of 2009. T-HT isalso expanding its fibre-optic network and plans to have 50,000 fibre subscribers by the end of the year. Ifcompetition promoting regulations are not put in place with regards to T-HT’s next generation networkdevelopment, then T-HT could consolidate its position at the head of the market. In the first quarter of 2009, Croatia’s mobile sector grew by 2.9% to reach 6.049mn subscribers. Althoughpenetration is now over 130%, BMI believe that the market holds a significant number of inactive SIMsas a result of the predominantly prepaid nature of the sector and a trend for multiple SIM ownership ascustomers look to exploit different tariffs and promotions. The country’s second largest operator, Vipnet,reported a net loss of 7,000 prepaid customers in the first quarter of 2009, which we believe was the resultof the operator discounting inactive SIMs. ARPU saw double-digit declines in the first quarter of 2009 asintense price competition exacerbated the effects of Croatia’s slowing economy. Tele2, which prides itsitself on being the price leader in the market is increasingly turning its attention towards the postpaidsegment and mobile data users in an effort to attract higher quality customers. While this appears to beworking for the operator, it is having an adverse affect on mobile ARPU, and this is something we seebecoming more of a problem throughout 2009. Table of Contents
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