2008 Europe - Telecoms, Mobile and Broadband in the Balkans West - Albania, Bosnia-Herzegovina, Croatia, Cyprus, Macedonia, Montenegro & Serbia (including Kosovo)

BuddeComm’s annual publication 2008 Europe - Telecoms, Mobile and Broadband in Balkans (West) profiles the emerging Balkan markets of Albania, Bosnia-Herzegovina, Croatia, Cyprus, Macedonia, Montenegro and Serbia (including Kosovo). Once an unsavoury corner of Europe, integration with the EU is driving economic development and change, a trend that has manifested itself in the region’s telecoms markets. Market liberalisation and competition is pushing down prices and increasing choice, which in turn is leading to increased take up of services. 

The key trend dominating markets across the region is broadband, be it fixed, wireless or mobile. Incumbents are looking to xDSL to arrest the contracting fixed-line market, an acute situation give that fixed-line penetration in the region is low to begin with. Alternative operators, in most cases unable yet to gain cost-effective local loop access to offer competitive retail services, are deploying alternative broadband access networks such as WiFi and WiMAX. Mobile operators, competing in saturated mobile voice markets, are making use of deployed WCDMA/HSDPA networks to market aggressively priced mobile broadband access with prepaid data bundles. 

This report presents an overview of the telecom markets in what are arguably some of Eastern Europe’s most promising, 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, along with forecasts for broadband growth to 2018 in Croatia and Cyprus 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:

·         Fixed broadband take up across the region is gaining momentum, with annual growth rates of 200% in Bosnia-Herzegovina, 51% in Croatia, 62% in Cyprus, 22% in Macedonia, 63% in Montenegro and 167% in Serbia. Similar growth rates are expected in 2009 as most markets are in the early stages of development. Driving growth are the incumbents, which are deploying xDSL infrastructure as a precursor to convergence services such as IPTV, which is already available in Croatia, Cyprus, Montenegro, Serbia, with plans to introduce it in Macedonia.

·         Wireless broadband has established itself in the gap created by the lack of existing broadband infrastructure. Fixed or portable wireless broadband based on WiFi or WiMAX is available in all Balkan countries. However, the inherent lack of bandwidth found in wireless coupled with the consumer shift towards consumption of high-bandwidth multimedia content is leading some operators to re-evaluate the technology. This will become more evident in 2009 and 2010 as ADSL availability expands and competition intensifies.

·         Macedonia’s largest competing broadband provider, which despite possessing a wireless broadband network providing 95% population coverage, is constructing its own ADSL2+ network over which it plans to offer VoIP services.

·         Montenegro’s pay TV market has developed overnight as a number of cable operators launched operations after receiving licences in 2007. However, the incumbent’s IPTV offering overshadows the pay TV market despite its third place ranking in terms of subscribers, due to the reach of its fixed-line network and its financial resources. During 2009 and 2010 BuddeComm expects consolidation to take place due to competition and the size of Montenegro’s market.

·         Use of e-government services is growing year-on-year in Cyprus, as individuals and the majority of businesses utilise the Internet for interaction and transactions with administrative bodies. Similar e-government initiatives are underway in all other countries, with support coming from the EU. As Internet take up increases, usage of e-government and other Internet society services is expected to rise.

·         Mobile operators in region are beginning to focus on mobile data, leveraging the now widely-available EDGE/WCDMA/HSDPA networks to launch aggressively priced mobile broadband services with prepaid data bundles. This trend is more evident in highly-penetrated markets where competing operators have deployed WCDMA/HSDPA networks such as in Croatia, Cyprus, Montenegro and Serbia. Competition is expected to force down prices and increase prepaid data bundles as revenue growth opportunities fade in highly-penetrated mobile voice markets. As mobile broadband tariff prices fall, in the medium term the mobile operators will be competing head-to-head with the fixed and portable wireless providers. 

Balkans (West) – Mobile subscribers and penetration rate – March 2008

(Source: BuddeComm based on Global Mobile data)

Note: *Penetration was 111.7% for Serbia and 59.1% for Kosovo. 

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

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