2010 Croatia - Telecoms, Mobile, Broadband and Forecasts

An EU future beckons for Croatia's telecoms market

Croatia has prospered due to its close relationship with the European Union although its ambition of EU ascension has taken longer than anticipated. Close economic ties with both EU and non-EU nations are evident; principal export partners are Germany, Bosnia-Herzegovina and Italy, while its main import sources are Italy, Germany and Russia.

The global financial crisis affected Croatia due to reduced capital inflows and a drop in export demand. This was coupled with a large current account deficit, a high level of external debt, as well as significant exposures to interest and exchange rate risks. The collapse in market confidence coincided with real GDP contraction of 5.8% during 2009. The EU forecasts a further 0.5% contraction during 2010 before expanding again in 2011 by 2%.

The overall telecoms industry has weathered the economic turmoil relatively well due to the essential nature of most telecom services although it has been impacted by initiatives such the imposition of a tax to improve the state budget and decreased demand for services.

Following market liberalisation alternative operators have made inroads into the fixed telephony market, with the incumbent’s market share slipping below 80% of total subscribers and revenue. To ensure fair competition, the regulator has introduced a number of regulatory measures including reducing the incumbent’s rates for call termination as well as improving access to the incumbent’s last mile network.

Broadband services are widely available and DSL is the dominant form of broadband access, with competing services available via cable, Fibre-to-the-Home, and wireless broadband. Recognising the potential of applying ICT to improve both social and economic development, Croatia has taken steps to develop a knowledge-based society, encompassing education, health and government services. A healthy digital TV market is evident, with content accessible via cable TV, satellite and broadband TV. Bundled offerings such as triple play have been launched by the cable operators and the telecoms incumbent.

Croatia’s mobile market is one of the most highly penetrated in the Balkans region with services offered by three mobile network operators. With the mobile voice market at near saturation levels, the established mobile network operators have focused on improving ARPU levels by encouraging prepaid subscribers to migrate to postpaid plans as well as encouraging take up of mobile broadband services based on deployed 3G/HSPA networks.

Market highlights:

• The regulator has insisted the incumbent offer bitstream access on its deployed fibre access networks, potentially threatening future deployments.
• Fixed broadband penetration is rising on the back of increasing availability; competing platforms include cable, FttX and WiMAX as well as regulatory-based measures such as local loop unbundling and bitstream access. Future broadband growth is assured given the large remaining number of Internet subscribers not using broadband platforms.
• Analogue switch-off commenced in January 2010. To assist in the switch-off a DVB-T receiver purchase subsidy has been made available to all households.
• Strong mobile broadband growth rates highlight this growth opportunity to the saturated mobile market. Competition has led to tariff cuts and increased bundled data allowances, improving value for end users.

Croatia broadband and telecoms statistics – 2010 -2011

(Source: BuddeComm based on industry data)

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