T-Hrvatski Telekom has released a review of its operations in Croatia,where it remains a key player in fixed-line and mobile. Fixed-line has experienced a minor decline as the company increases its role in Internet provision. Broadband technologies are proving successful with targets remaining ambitious.
By the end of this year, T-Hrvatski Telekom (T-HT) plans to offer broadband access to 1 million households in Croatia. This is perhaps the most ambitious forecast made by the company whose operations are reviewed in analyst companies and markets’ Q309 telecoms report for Croatia. The report updates predictions for mobile forecasts, operator data and operator profiles.
T-Hrvatski Telekom describes itself as “the dominant operator in both the fixed-line and broadband sectors.” In fact, there are nine active alternative fixed-line operators, including Optima Telekom, H1 Telekom and Vipnet, the mobile operator. During 2008, T-HT’s fixed-line subscriber base actually fell by 4.1% to 1.56 million fixed-line accesses.
As well as a general market decline driven by fixed-to-mobile substitution and a preference for cheaper VoIP services, the incumbent is losing out to alternative operators. As such, companies and markets believes that Croatia’s fixed-line market declined by just 1% in 2008, falling to just over 1.8 million subscribers and a penetration rate of 40.3%. Croatia’s fixed-line penetration remains among the highest in the region. Fixed-to-mobile substitution does not appear to have impacted Croatia’s fixed-line sector to the extent that it has in some of its neighbouring countries but the analyst is still forecasting the fixed-line sector to continue declining.
T-HT has in fact been channelling its energies into its Internet facility, centred around broadband in an effort to stem its declining fixed-line subscriber base and prop up its revenue streams, as competition in the fixed-line sector eats into Average Revenue Per Access (ARPA) and voice traffic declines.
In April this year, T-HT revealed ambitious plans to accelerate its broadband network expansion and upgrade. By the end of 2009, T-HT hopes to offer access to 1 million households. However, the US$ 195 million investment that T-HT has earmarked is predominantly intended for expanding its fibre-optic network, for which the incumbent hopes to have 50,000 subscribers by the end of the year.
The alternative operators in Croatia have failed to 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 to expand their own proprietary network infrastructure, resulting in renewed optimism that Croatia’s broadband market could become more competitive. Rumours of consolidation have continued to circulate, centring on Optima, H1, Metronet Telekomunikacije and B.net Hrvatska.
And in Croatia as a whole...
Mobile subscriber growth in 4Q08 was slightly disappointing, taking the country’s mobile subscriber base to 5.88 million and mobile penetration to 131.2%. Nevertheless, we believe that Croatia’s predominantly prepaid mobile subscriber base still contains a large number of inactive SIMs and growth opportunities do remain.
Croatia’s smallest operator, Tele2 Croatia, has made large inroads in 2008, having taken market share from 9.3% at the end of 2007 to 12.0% at year-end 2008. Both market leader TMobile Croatia and Vipnet saw their market shares dwindle as a result. However, this was to the benefit of Vipnet which has seen its market share converge on that of T-Mobile’s; at the end of 2008 Vipnet’s market share was just 3.4 percentage points below T-Mobile’s.
The mobile operators are attempting to improve their subscriber mixes, adding new postpaid customers and targeting mobile data users. As well as upgrading their networks to advanced 3G technologies, the operators offer an array of multimedia content and value-added services (VAS). The country’s first Mobile Virtual Network Operator (MVNO) TelCro had still not launched at the time of writing and revealed no updates on when it intends to launch. However, if and when it does launch, competition in the prepaid sector is set to be stirred up, which could see greater focus from the mobile network operators in attracting higher value customers.