2009 Cyprus - Telecoms, Mobile, Broadband and Forecasts

Defined by the International Monetary Fund as an Advanced Economy, Cyprus has enjoyed over a decade of strong sustained economic growth until the recent global economic turmoil. A traditional regional financial centre due to its geographical location, Cyprus possesses a large financial sector measured as a percentage of GDP. Adoption of the Euro in 2008, conservative financial sector practices and strict supervision allowed Cyprus’ financial sector to escape the worst of the global economic turmoil.

Entering 2010 GDP growth is expected to remain stagnant due to depressed investment and private consumption, the latter attributed to a relatively high household debt-to-GDP ratio and depressed consumer sentiment due to a projected rise in unemployment to historically high levels.

Telecom services are expected to remain largely unaffected given the utility nature of most telecom services although the desire to rein in spending may influence certain consumer behaviour, particularly in price-sensitive market segments such as prepaid services.

Cyprus possesses a small, liberalised telecommunications market, with competition improving following market analyses and remedies issued by the regulator designed to improve competition, particularly in regards to the unbundled local loop market which is essential to stimulate competition in the fixed broadband market.

Broadband accounts for the majority of household Internet connections in Cyprus with DSL the most popular fixed broadband access platform. Alternative operators have taken advantage of regulatory mandated network access to launch DSL products in competition with telecoms incumbent CyTA, which also competes with minor cable and wireless broadband platforms. Competing triple play offerings are offered by both the cable and telecoms operators while the country’s growing broadband population is forming the basis of an emerging Internet society.

Two mobile network operators offer services in Cyprus. With the mobile voice market at near saturation, the launch of 3G/HSDPA networks has opened up a new revenue growth opportunity in 2010 centred on mobile broadband, with both operators offering competitive offerings with generous data allowances.

Key highlights:

·         Improved regulatory mandated network access has opened up competition in the fixed telephony market and will form the basis of continued competition in the burgeoning ADSL market in 2010.

·         Over half of all households possess a fixed broadband connection, with recent spectacular broadband growth attributed to competition in the ADSL market. Competition will intensify in 2010 after a competing operator landed the multi terabit HAWK international submarine cable in Cyprus to improve international Internet connectivity.

·         An emerging Internet society is evident, encompassing commerce, health and government services with participation expected to improve in 2010 and 2011 in the wake of increased broadband penetration.

·         Digital TV services are accessible via satellite pay TV and broadband TV (IPTV), with take up potential of the latter improving due to increased broadband penetration.

·         Cyprus’ two established mobile network operators have launched 3G/HSDPA services. Growth in 2010 will be focused on promoting 3G take up as existing revenue from voice comes under pressure from competition due to lack of revenue growth opportunities in the saturated market.

Cyprus broadband and telecoms statistics – 2008 - 2009

(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.