Slovakia - Telecoms, IP Networks, Digital Media and Forecasts

Publication Overview

This report provides a comprehensive overview of trends and developments in Slovakia’s telecommunications market. The report analyses the mobile, 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:

Slovakia trials DVB-T2; UPC Slovakia’s 120Mb/s Fibre Power service extended to ten cities; municipal FttH developments; WiMAX Telecom bought by Slovanet; regulator calls for tenders for a fourth DTTV multiplex; MNOs begin LTE trials in the 2.6GHz band; revenue slides in wake of regulatory measures and falling number of contract customers; regulator to auction additional spectrum in the 800MHz and 2600MHz bands in the first quarter of 2012, expanding rural broadband coverage; government upholds regulator’s licence renewal charges on Orange Slovensko and T-Mobile; Orange upgrades base stations for HSPA+ and successfully tests a 42Mb/s service; Telefonica Slovakia launches commercial 3G services; STV ends analogue TV broadcasts; Slovak Telecom and T-Mobile Slovensko integrate; regulator transposes new NRF into law; state’s sale of remaining interest in Slovak Telecom delayed until after March 2012 elections; Slovak Telekom contracts Ericsson to manage its fixed line network; operator data to June 2011.

Companies covered in this report include:

Slovak Telecom, UPC Slovakia, T-Mobile Slovensko, Orange Slovensko, Telefónica O2, GTS Slovakia.

Researcher:- Henry Lancaster
Current publication date:- October 2011 (10th Edition) 

Executive Summary

Regulatory measures on fibre network access needed to expand FttX deployment

BuddeComm’s annual publication, Slovakia - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Eastern Europe’s smaller but more progressive markets. It includes operator data to June 2011.

Slovakia enjoyed strong economic growth after joining the European Union (EU) in mid-2004: from 2004 until 2009 real GDP grew by an average 7.4% while unemployment dropped significantly. With an export-dependent economy, the recent global economic turmoil has hit Slovakia’s exports to its principal trading partners Germany, the Czech Republic and France. It also softened domestic demand for goods due to falling consumer confidence and rising unemployment: the country entered its first recession since independence in 1993. Real GDP contracted 4.8% in 2009 before a recovery in 2010 with an estimated growth at 4%. This is expected to continue in 2011 with estimated growth at 3.8%.

Yet the economic turmoil has not hit telecoms and IT services as much as it has other sectors, such as manufacturing and finance. This is largely due to telecoms and IT services being productivity enablers. In addition, many services (particularly broadband and mobile telephony) are considered essential by most consumers who make use of them, and so for operators there is a guaranteed revenue stream though growth has been stymied by competition and a host of regulatory measures, contributing to lower revenue in both 2009 and 2010. This is expected to continue for 2011 before showing moderate growth in 2012, largely on the back on the developing broadband and mobile telephony sectors.

Economic conditions have also exacerbated funding difficulties for telecoms projects. Total investment in telecom networks fell 3.7% in 2009 to €390 million, including a 26% drop reported by mobile operators (to €133 million).

Broadband services are widely available in Slovakia. A large number of ISPs are active in the market, principally in the DSL sector through LLU on Slovak Telecom’s network, though there are also a number of cable broadband operators serving the main towns. A small number of FttX networks have been built, while wireless broadband via WiMAX networks are complemented by services offered by mobile network operators. The dominant ISP Slovak Telecom, majority-owned by Deutsche Telekom, is pursuing a growth strategy centred on broadband, online services and pay TV. Upgraded networks (with ADSL2+ and DOCSIS3.0 technologies) have enabled providers to introduce bandwidth-intensive applications and services: bundled offers based on these services will be a key growth area in coming years. Such applications also increase the potential value of existing fixed-line subscriptions for subscribers who may otherwise cancel fixed-line services for mobile-only solutions.

The mobile market is a triopoly of the MNOs T-Mobile Slovensko, Orange Slovensko and Telefonica 02. High voice penetration is indicative of multiple SIM card use. New revenue growth opportunities for all three operators lie in mobile broadband, given the low mobile broadband penetration levels at present. Hence competitively-priced mobile broadband access services have been launched, often bundling generous prepaid data plans. LTE services, trialled during 2011, will complement commercial HSPA services by the end of 2012.

Key telecom parameters – 2010; 2012

(Source: BuddeComm)

Market Highlights

• All MNOs were issued trial licences in mid-2011 to test LTE in the 2.6GHz band. Previously, T-Mobile Slovensko had relied on test results from Deutsche Telekom for its LTE research and planning. Commercial services are expected by the end of 2012.
• Investment in HSPA technology has continued strongly: Orange Slovakia upgraded 50 base stations for HSPA+ in early 2011 and planned to upgrade the entire network by the end of the year. T-Mobile also expected to launch DC-HSPA+ by the end of 2011, providing theoretical speeds of up to 42.2Mb/s.
• DTTV has been slow to develop a strong viewer base, partly the result of there being only two new channels on the platform which are not duplicated in analogue. There is no HD or sports channel, usually among the first to be launched. Nevertheless, a digital information campaign, started in early 2011, has focussed on DTT to develop consumer interest.
• In late 2011 the regulator called for tenders to make use of additional frequencies for a fourth DTTV multiplex.
• Approximately 40% of TV households subscribe to CATV services. The market is dominated by UPC, which has a digital offering including about 70 channels.
• By early 2011 alternative operators had about 110,000 FttX subscribers. FttH projects are generally municipal or small-scale private networks, though some operators offer FttB services on a national level, such as SANET connecting university buildings, schools and local government offices and Railways Telecom connecting buildings located near railway lines. The FttX sector requires further regulatory involvement to provide clarity on access to infrastructure before it can expand beyond its current limited scale.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Slovakia. 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 in 2010;
• 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.

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

Table of Contents

• 1. Key Statistics
• 2. Telecommunications Market
  • 2.1 Overview of Slovakia’s telecom market
• 3. Regulatory Environment
  • 3.1 History
    • 3.1.1 Electronic Communications Act 2003
    • 3.1.2 EU Regulatory Framework
    • 3.1.3 Revised NFR
  • 3.2 Regulatory authority
    • 3.2.1 Telecommunications Office of the Slovak Republic (TUSR)
  • 3.3 Telecom sector liberalisation in Slovakia
    • 3.3.1 Privatisation of Slovak Telecom
    • 3.3.2 Interconnection
    • 3.3.3 Access
    • 3.3.4 Number portability (NP)
    • 3.3.5 Carrier selection and Carrier PreSelection (CPS)
• 4. Fixed Network Market
  • 4.1 Overview
  • 4.2 Fixed Network Operators
    • 4.2.1 Slovak Telecom (T-Com)
    • 4.2.2 GTS Slovakia
    • 4.2.3 Slovak Wireless Access Network (SWAN)
• 5. Telecommunications Infrastructure
  • 5.1 National telecom network
    • 5.1.1 Alternative operators
  • 5.2 Wholesaling
    • 5.2.1 Overview
• 6. Broadband Market
  • 6.1 Overview
  • 6.2 Slovakia’s emerging internet society
    • 6.2.1 Legislation
    • 6.2.2 Government support
    • 6.2.3 E-government
    • 6.2.4 Infrastructure
    • 6.2.5 E-health
    • 6.2.6 E-education
  • 6.3 Broadband statistics
  • 6.4 Asymmetrical Digital Subscriber Line (ADSL)
  • 6.5 Cable modems
  • 6.6 Fibre-to-the-Home (FttH) networks
  • 6.7 Wireless broadband
    • 6.7.1 WiFi
    • 6.7.2 WiMAX
• 7. Digital Media
  • 7.1 Overview of digital media market
    • 7.1.1 Digital TV (DTV)
• 8. Mobile Communications
  • 8.1 Overview of Slovakia’s mobile market
    • 8.1.1 Mobile statistics
  • 8.2 Regulatory issues
    • 8.2.1 GSM licences
    • 8.2.2 UMTS licences and third GSM licence
    • 8.2.3 Fourth mobile network operator licence
    • 8.2.4 Mobile Number Portability (MNP)
    • 8.2.5 Mobile Termination Rates (MTR)
    • 8.2.6 Spectrum auctions
  • 8.3 Mobile technologies
    • 8.3.1 Digital
    • 8.3.2 Third Generation (3G) mobile
  • 8.4 Major mobile operators
    • 8.4.1 T-Mobile Slovensko
    • 8.4.2 Orange Slovensko
    • 8.4.3 Telefónica 02
  • 8.5 Mobile Virtual Network Operators (MVNOs)
  • 8.6 Mobile voice services
    • 8.6.1 Prepaid
  • 8.7 Mobile data services
    • 8.7.1 Enhanced Data for GSM Evolution (EDGE)
    • 8.7.2 Evolved High Seed Packet Access (HSPA+)
    • 8.7.3 Long-term Evolution (LTE)
    • 8.7.4 Mobile TV
    • 8.7.5 Mobile broadband forecast
  • 8.8 Mobile content and applications
• 9. Forecasts
  • 9.1 Forecasts – fixed broadband subscribers – 2010 - 2013; 2020
    • 9.1.1 Scenario 1 – higher broadband subscriber growth
    • 9.1.2 Scenario 2 – lower broadband subscriber growth
  • 9.2 Notes on scenario forecasts
• 10. Glossary of Abbreviations

• Table 1 – Country statistics Slovakia – 2011 (e)
• Table 2 – Telephone network statistics – 2011 (e)
• Table 3 – Internet user statistics – March 2011
• Table 4 – Internet subscriber statistics – 2011 (e)
• Table 5 – Broadband subscriber statistics – 2011 (e)
• Table 6 – Mobile statistics – 2011 (e)
• Table 7 – National telecommunications authority
• Table 8 – Telecom market revenue – 2009 - 2012
• Table 9 – Market share of telecom revenue by operator – 2010
• Table 10 – Slovak Telekom interconnection rates – 2006 - 2010
• Table 11 – Slovak Telekom financial data – 2009 - 2011
• Table 12 – Slovak Telekom subscribers – 2009 - 2011
• Table 13 – Fixed lines in service and teledensity – 2000 - 2012
• Table 14 – Total international internet bandwidth – 2000 - 2011
• Table 15 – Cost of local loop unbundling and share access – 2006 - 2009
• Table 16 – Online purchases by individuals – 2005 - 2012
• Table 17 – Uptake of e-government services by businesses – 2004 - 2011
• Table 18 – Uptake of e-government services by individuals – 2004 - 2011
• Table 19 – E-education usage by individuals – 2007 - 2011
• Table 20 – E-education usage by businesses – 2007 - 2011
• Table 21 – Internet users, subscribers and penetration rate – 2000 - 2012
• Table 22 – Workplace network usage by network type – 2004 - 2012
• Table 23 – Broadband subscribers and penetration rate – 2002 - 2012
• Table 24 – Broadband market share by platform – May 2011
• Table 25 – Slovak Telekom retail DSL subscribers – 2005 - 2011
• Table 26 – UPC broadband and voice subscribers – 2006 - 2011
• Table 27 – Orange Slovensko FttH homes connected – 2009 - 2011
• Table 28 – Total TV advertising spending – 2004 - 2011
• Table 29 – Magio IPTV subscribers – 2008 - 2011
• Table 30 – UPC – homes passed – 2003 - 2011
• Table 31 – UPC TV subscribers by service type – 2003 - 2011
• Table 32 – Mobile subscribers and penetration rate – 1998 - 2012
• Table 33 – T-Mobile subscribers – 2006 - 2011
• Table 34 – T-Mobile mobile financial data – 2004 - 2011
• Table 35 – T-Mobile mobile ARPU – 2004 - 2011
• Table 36 – Orange subscribers – 2007 - 2011
• Table 37 – Orange revenue – 2003 - 2011
• Table 38 – Orange data ARPU proportion – 2008 - 2011
• Table 39 – Telefónica O2 subscribers – 2007 - 2011
• Table 40 – Ratio of prepaid to postpaid subscribers – 2000 - 2012
• Table 41 – T-Mobile Slovensko prepaid users – 2004 - 2011
• Table 42 – Telefónica 02 prepaid users – 2007 - 2011
• Table 43 – Total SMS messages sent – 2003 - 2012
• Table 44 – Mobile broadband subscriber forecasts and penetration rate – 2006 - 2012
• Table 45 – Forecast fixed broadband subscribers – higher growth scenario – 2010 - 2013; 2020
• Table 46 – Forecast fixed broadband subscribers – lower growth scenario – 2010 - 2013; 2020

• Chart 1 – Slovak Telekom financial data – 2009 – 2011
• Chart 2 – Slovak Telekom subscribers – 2009 – 2011
• Chart 3 – Fixed lines in service and teledensity – 2000 – 2012
• Chart 4 – Broadband subscribers and penetration rate – 2002 – 2012
• Chart 5 – UPC subscribers – 2006 – 2011
• Chart 6 – UPC TV subscribers by service type – 2003 – 2011
• Chart 7 – Mobile subscribers and penetration rate – 2000 – 2012
• Chart 8 – T-Mobile mobile financial data – 2004 – 2011
• Chart 9 – Orange subscribers – 2007 – 2011

• Exhibit 1 – The EU regulatory framework for communications
• Exhibit 2 – Access, the local loop and unbundling – an overview
• Exhibit 3 – 2G spectrum awarded in Slovakia