2007 Europe - Telecoms, Mobile and Broadband in Balkans and South East Europe

BuddeComm’s Annual Publication ‘2007 Europe - Telecoms, Mobile and Broadband in Balkans and South East Europe’ profiles the promising markets of Albania, Bosnia-Herzegovina, Croatia, Cyprus, Macedonia, Montenegro and Serbia (including Kosovo) and the three largest countries in the region: Greece, Bulgaria and Romania.

Economic development is transforming telecoms markets within this region as international investment drives infrastructure deployments and service rollouts. Numerous fixed-line networks in the region are undergoing modernisation at a fortunate time, with NGNs and advanced wireless broadband technologies such as WiMAX widely available. Low broadband penetration levels are rising at extraordinary rates, mirroring growth rates recorded in Central Eastern Europe during that region’s initial broadband growth period in 2004/05. Future fixed-line broadband growth may be constrained by the falling number of fixed lines in service, given that numerous countries in the region had low fixed-line penetration levels to begin with. Mobile penetration growth is levelling off in some countries, indicative of mature markets. Service providers in such markets are focused on increasing ARPU levels through promoting 3G/HSDPA mobile broadband services and higher-spending postpaid plans to prepaid users.

Both Bulgaria and Romania opened their markets as a result of EU ascension in 2007 and transposed the EU’s communications regulatory framework into national law. Romania has achieved the most success immediately following liberalisation, with incumbent RomTelecom and a number of now well-established competitors modernising and upgrading infrastructure to expand availability of existing services and prepare for the introduction of new ones. The country’s nascent broadband sector will provide considerable opportunities in coming years, partly through the size of the market and the reach of both existing and new alternative infrastructure such as cable and FttH. Bulgaria is also witnessing new infrastructure rollouts, with FttH and WiMAX alternative operators launching services. A sizeable cable TV sector also exists, from which a new regional player is emerging after M&A activity in the sector. Greece’s growing wholesale market, evident from rapidly rising number of unbundled and shared local loops, is paving the way for competing ADSL2+ services.

This report presents an overview of the telecom markets in what is arguably some of Eastern Europe’s most promising markets, including an assessment of sector liberalisation and privatisation, together with the key regulatory measures which affect competition and investment. Emerging players in liberalised markets are introduced and new infrastructure deployments covered. The important broadband market is assessed, together with forecasts broadband growth to 2017 on selected countries, based on factors such as network investment, the regulatory environment and consumer demand. The report provides essential statistics covering the broadband, mobile and digital TV sectors, highlighting technological developments and the emergence of media convergence and triple play offerings.

Key Highlights

• Establishment of a competing fibre backbone wholesale carrier in Albania has allowed a number of broadband ISPs to flourish. FttH services and Digital Video Broadcasting-Handheld (DVB-H) services are available, with plans to increase DVB-H coverage to 80% by 2008.
• Bosnia-Herzegovina’s government is preparing to privatise incumbent operator BH Telecom. Broadband subscriber levels are increasing and accounting for a growing percentage of total Internet users. During 2006 ADSL subscriber levels grew by 358% while cable broadband subscribers grew by 150%. For more information, see chapter 2, page 12.
• FttH services have been launched in Croatia. Numerous WiMAX operators have started operations, including a mobile network operator that also offers HSDPA mobile broadband. Year-on-year increasing GPRS usage growth rates suggest the product has reached critical mass and is gaining widespread market acceptance.
• Regulatory reforms designed to ensure a competitive wholesale market are bearing fruit in Cyprus, with local loops unbundled for the first time, which will assist the country’s main competing ADSL service provider that has launched ADSL2+ based triple play services. For more information, see chapter 5, page 85.
• Macedonia’s first alternative fixed-line operator launched services in January 2007. Broadband subscriber numbers grew by 194% during 2006 with competing WiMAX services to be launched during 2008. The country already boasts one of the world’s largest WiFi mesh networks providing 95% coverage.
• WiMAX licences were awarded in Montenegro in February 2007 to two alternative operators and a mobile network operator. ADSL subscriber numbers grew by 50% in the first six months on 2007 while 3G services were launched by both of the country’s established mobile network operators.
• A third mobile network operator has launched services in Serbia while a second approved operator is to launch services in Kosovo. 3G services were launched by all three Serbian mobile operators during 2006 - 2007 and HSDPA services are also available. Triple play services have been launched by a competing operator in Kosovo. For more information, see chapter 10, page 207.
• Opportunities in the region’s emerging markets continues to attract investment from established European telecom players: Slovenia Telecom acquired the largest competing ISPs in Albania, Bosnia-Herzegovina, Macedonia and Kosovo, while Telekom Austria launched two mobile network operators in Serbia and Montenegro during 2007.
• RCS&RDS and UPC have emerged as Romania’s premier alternative operators, each capturing an equal share of the fixed-line market through triple play offerings. For more information, see chapter 9.8.3.3.2, page 195.
• Cable and LAN are the two most popular broadband access methods in Romania, together accounting for 66% of all broadband users. LAN broadband is available from a large number of micro ISPs, many of which are likely to consolidate as competition from ADSL provider RomTelecom intensifies.
• Romanian cable operators are well positioned to offer triple play services as cable TV household penetration is the third highest in the EU behind Belgium and Holland.
• Traditionally a cable TV operator, RCS&RDS has rolled out FttB networks in 15 cities, enabling the operator to take advantage of consumers’ appetite for services and content.
• RCS&RDS and CDMA mobile operator Zapp have both been awarded Romania’s third and fourth 3G / WCDMA licences. This is RCS&RDS’ first foray as a mobile network operator and Zapp’s second as it already operates a 1x EV-DO network capable of 3G speeds.
• WiMAX services in Bulgaria have been rapidly launched by at least four competing alternative operators. The largest operator offers 85% population coverage, with plans to extend coverage to all cities with a population in excess of 50,000 during 2008. Another operator has used its WiMAX network to launch IPTV services. For more information, see chapter 3.7.5, page 45.
• M&A activity in Bulgaria’s cable market has reduced the number of significant operators to two, the largest of which has expanded into Macedonia, with plans to expand further into the Balkans, with Serbia, Albania and Turkey likely target markets.
• All three mobile network operators in Bulgaria have launched 3G services. Price competition of 3G data services will encourage promotion and development of affordable and desirable mobile content, opening up a new market to complement the saturated mobile voice market.
• Regulatory reforms designed to ensure a competitive wholesale market are bearing fruit in Greece, with the combined number of shared access/unbundled loops increasing 918% in the year to June 2007.
• The number of LLU-based ADSL/ADSL2+ service providers is increasing in Greece, with the market’s growth potential attracting unlikely players such as mobile network operator Vodafone, which commenced offering LLU-based ADSL services in October 2007. For more information, see chapter 6, page 107.

Balkans and South East Europe - mobile subscribers and penetration - March 2007

Data in this report is the latest available at the time of preparation and may not be for the current year.