2008 Europe - Telecoms, Mobile and Broadband in Baltic countries

BuddeComm’s Annual Publication ‘2008 Europe - Telecoms, Mobile and Broadband in Baltic countries’ profiles the Baltic nations of Estonia, Latvia and Lithuania. Referred to as the Baltic tigers following years of strong economic growth, the latest global financial crisis has exposed the fragility of the economic boom. Economic deceleration is expected to continue although this has had the benefit of reducing inflation rates which were among the highest in the EU. 

Like most sectors of the economy, the telecoms sector will be impacted in 2009, with lower anticipated demand and spending on products and services and increased funding costs for capital expenditure and/or operating activities. However the essential nature of most telecom services such as voice and to a lesser extent broadband, will cushion most telecom service providers from decreasing consumer spending. 

Competition coupled with ongoing user and technological trends will continue to shape the telecoms sector in 2009, particularly in the broadband and mobile markets, both of which are highly penetrated for the region. Despite the reach of copper loop networks, growth in xDSL based broadband connections is struggling to keep up with overall broadband growth as other technology platforms such as fibre and mobile gain popularity. Driving the push into fibre is the need for speed, as competitors seek a superior product to support consumption of high-bandwidth content such as HDTV. Competing mobile operators on the other hand, are on a mission to make broadband personal, leveraging 3G/HSDPA networks to offer affordable mobile broadband access with prepaid buckets of data, often bundled with notebook computers. 

This report presents a concise overview of the telecom markets in a small but sophisticated corner of Eastern Europe. Covered in detail are the regulatory frameworks that have shaped the market; major market players; and the key fixed-line, IT, Internet Society, Broadband, Convergence, Digital TV and Mobile markets. Completing the overview is a wide range of statistics on all market sectors as well as scenario-based forecasts of broadband subscriber numbers and 3G take up. 

Key highlights:

·         Mobile operators continue to threaten fixed-line incumbents. After many years of enticing voice traffic from fixed to mobile networks, mobile operators are threatening to do the same with broadband, aggressively marketing mobile broadband access plans, often bundled with notebook computers or advanced multimedia phones such as Apple’s iPhone 3G. Increased competition between mobile network operators in 2009 is expected to improve the value and subsequently take up of mobile broadband offerings.

·         xDSL’s dominance of the broadband market is under threat as operators shift focus to fibre, attracted to the faster speeds on offer, with deployments of both FttH and FttB networks.

·         Lithuania’s incumbent, unattached to any mobile operator, is unique in its continued widescale deployment of WiFi hotspots, accounting for over 90% of hotspots within the country.

·         Annual growth rates for DSL is expected to be outstripped by annual growth rates for non-DSL broadband connections during 2009 in all three countries.

·         The region’s well established cable TV operators have been busy, upgrading networks to offer broadband as well as launching digital TV and VoIP services. Such activity is expected to continue during 2009 in response to the growing threat posed by broadband TV (IPTV) services on offer by the telco incumbents,

·         Growing broadband penetration is underpinning Internet society development, based on fostering interaction in an efficient, effective and convenient manner. This report offers a range of statistics providing an insight into the next stage of Internet development: online activities by individuals as well as the growth of e-commerce, e-government services by both individuals and businesses.

·         Projecting future growth, this report offers scenario based forecasts to 2018 for both broadband subscriptions and 3G mobile take up, two key growth areas for telecom markets in the Baltic region. 

Baltic mobile subscribers and penetration rate – 2008

(Source: BuddeComm)

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

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.