Executive summary
Continuing economic turmoil effecting telecom sector revenue
BuddeComm’s annual publication, Iceland - Telecoms, IP Networks and Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecoms market in Iceland. It incorporates the regulator’s market data to mid-2011, operator data to the end of 2011, and market developments into 2012. The report provides an overview of the telecoms market including the mobile voice and data, broadband and digital media sectors.
With one of Europe’s smallest economies and markets, there is little room for growth within Iceland’s telecom sector. The market continues to suffer from the grim effects of the ongoing economic downturn, a situation which is likely to persist for the next two to three years at least. Iceland recorded Europe’s first and worst economic collapse during the downturn in 2008, though telecom revenue proved more resilient than many other sectors – mainly due to the nature of its being a crucial utility. Investment crashed by about 50% in 2009 as a result of liquidity difficulties, though it has since recovered and further growth, though slight, is anticipated in 2012 and 2013 as the incumbent operator continues to upgrade its fixed-line network with FttH.
The government’s economic forecast for 2011-2016 predicted that the economy would grow 3.1% in 2012, driven by increased investments and consumption. Unemployment will remain high but fall steadily with economic growth.
The incumbent, Síminn, remains in a precarious position with creditors as a result of it having hedged against the falling króna and the failure of banks to honour their currency swap agreements. The company saw a 15% fall in revenue in 2010 and an 18% fall in 2011, obliging it to adopt efficiency measures and streamline its operations. Most other operators have also suffered as consumers reign in their discretionary spend. As a result, operators are unlikely to see revenue growth in the short term. Services on which they had hoped to realise significant returns, such as high-end mobile data applications, are expected to generate only moderate income during the next few years.
There is effective competition in all market sectors, with a small number of new players having emerged to challenge the dominance of the two leading players Síminn and Vodafone Iceland. The new entrants Nova and Tal have expanded their launched fixed-line services, complementing their existing presence in the mobile phone market.
Iceland – Key telecom parameters – 2010; 2012
Sector
| 2010
| 2012 (e)
|
|---|
Broadband:
|
|---|
Fixed broadband subscribers (thousand)
| 109
| 115
|
Fixed broadband penetration rate
| 37%
| 39%
|
Mobile broadband subscribers (thousand)
| 110
| 170
|
|
|---|
Fixed-line telephony (thousand)
| 142
| 130
|
SIM cards in service (million)
| 341
| 355
|
SIM penetration (population)
| 117%
| 124%
|
(Source: BuddeComm based on industry data)
Market highlights:
- Broadband adoption in Iceland remains among the highest in the world. FttH networks have been stimulated by government policies to deepen the fibre footprint in the capital and major outlying towns. Fibre is laid as standard in new-build zones and redevelopments, providing an important stimulus for high-end IP-delivered services.
- The government ITC policy to 2012 is geared at enabling public services including health, education, government procurement, telecommuting and teleconferencing to be available online via a coordinated network, so stimulating further broadband uptake.
- The mobile sector remains dominated by Síminn and Vodafone Iceland, with the two smaller players having secured only 6% of the voice market. Nevertheless, they have capitalised on their ability to offer 3G services in the 900MHz spectrum band, accounting for 55% of mobile data traffic in 2010.
- Síminn was fined ISK400 million for abusing its market dominance, restricting the ability of new entrants to gain a foothold.
- Skipta plans to invest almost ISK3 billion by the end of 2013 to complete its Ljósnet FttH network, providing 89,000 households with access to up to 100Mb/s services.
Henry Lancaster
May 2012
Data in this report is the latest available at the time of preparation and may not be for the current year.
This report provides a comprehensive overview of trends and developments in Iceland’s telecommunications market. The report analyses the mobile, internet, broadband, digital TV and converging media sectors. Subjects include:
- Market and industry analyses, trends and developments;
- Facts, figures and statistics;
- Industry and regulatory issues;
- Infrastructure;
- Major players, revenues, subscribers, ARPU, MoU;
- Internet, VoIP, IPTV;
- Mobile voice and data markets;
- Broadband (FttH, DSL, cable TV, wireless);
- Convergence and digital media;
- 3G subscriber and mobile ARPU forecasts to 2015;
- Broadband market forecasts for selective years to 2020.
Key developments:
Mobile 3G use reaches half of all subscribers; projected mobile data use growth of 115% in 2012; mobile revenue continues to slide though recovery expected in 2012; telecom investment slowly recovers from 2009 crash; mid-2012 election expected to have investment repercussions for telecom sector; Síminn revenue falls 18% in 2011; DSL subscriber base continues to fall; Síminn fined ISK400 million for abuse of market dominance; regulator market data to June 2011; operator data to end-2011; market developments into 2012.
Companies covered in this report include:
Vodafone, Síminn, Nova, Tal.
This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Iceland. It provides further information on:
- Market liberalisation and regulatory issues;
- The impact of the global economic crisis;
- Telecoms operators – privatisation, acquisitions, new licences;
- Mobile data market developments in coming years in light of spectrum auctions and new license awards;
- 3G developments, regulatory issues and technologies including HSPA and LTE;
- Broadband migration to an FttH architecture;
- Historical and current subscriber statistics and forecasts;
- ARPU statistics and forecasts.
