2009 Slovenia - Telecoms, Mobile, Broadband and Forecasts

Slovenia is a comparatively prosperous Eastern European country, enjoying a high GDP per capita relative to neighbouring nations. Since joining the European Union Slovenia has enjoyed the benefits of EU membership; the first of the 10 new 2004 members to adopt the Euro and the recipient of past and present EU structural funding designed to improve economic development, for the period 2006-2013 a total of €4.2 billion (at current prices) has been allocated to Slovenia. Some €1.1 billion has been allocated for R&D and innovation, €160 million for renewable energy sources and energy efficiency projects and €156 million allocated to ICT infrastructure and services, with priority given to e-services for business and citizens and modernisation of broadband networks.

However Slovenia has lagged behind its peers in privatising state enterprises, as seen in the majority state ownership of the telecoms incumbent, and in foreign direct investment, possibly due to relatively high taxes and a labour market often seen as inflexible.

The global financial crisis has impacted Slovenia, given that exports support 80% of the economy. Western Europe is Slovenia’s main export market; Germany and Italy alone take 40% of Slovenian exports. Economic growth is expected to slow to 1% in 2009 while private consumption growth will fall from 3.4% in 2008 to 2.8% to 2009. Investment activity is also expected to slow predominantly due to tightening lending terms and a deteriorating business climate.

Despite the difficult conditions Slovenia’s telecoms market is expected to fare well given the essential nature of most telecom services although the impact of the economic slowdown will vary across different telecom market segments, eg, voice compared with data, prepaid compared with contract services. Slovenian households spend approximately €42 per month on electronic communications, representing around 5% of an individual’s monthly net salary, or 3% of household monthly income.

Slovenia boasts Internet usage levels on par with western European nations. Broadband represents the majority of Internet subscriptions. Despite the launch of competing platforms xDSL remains the most popular although the growing appetite for bandwidth is shifting the focus of many operators to FTTx. Increased Internet usage and activity is characteristic of an emerging Internet society, comprised of e-government, e-commerce and e-health. Digital TV available is expanding via cable, IPTV, satellite and terrestrial free-to-air platforms, increasing competition and choice for end consumers.

Slovenia’s mobile market is potentially one of the most competitive in Europe given that four mobile network operators and a number of MVNOs operate in a country with a potential market of only two million people. With mobile SIM card penetration at saturation levels, established mobile network operators have shifted focus to defending market share from new market entrants and increasing ARPU levels, encouraging prepaid users to take up postpaid services as well as encouraging spending and uptake in the underdeveloped mobile broadband and content market. 3G/HSDPA networks have been deployed to support delivery of mobile broadband services; competing network deployments have led to increased transfer speeds.

Key highlights:

·         The regulator is flexing its muscle, issuing a decision in May 2009 to base the cost of terminating calls on the incumbent’s fixed network on a bottom-up long run incremental cost pricing model. Under the LRIC model interconnection rates have been set under the EU average for the first time. The regulator has also improved the wholesale market, with falling LLU prices driving take up, with naked DSL also available.

·         FTTx represents 10% of all fixed broadband subscriptions, up from 3% in the previous year. Competing deployments by alternative operators and the incumbent will see FTTx rise in importance. xDSL is still the most popular fixed broadband platform although this may eventually change given FTTx developments.

·         Encouraging business usage of e-government services is evident, with up to 85% of businesses using e-government services to obtain information, forms and return forms online. Initiatives have been launched to improved usage by private citizens due to less than impressive usage levels.

·         Digital Terrestrial TV broadcasts have commenced, with a licence to operate Slovenia’s second DTTV multiplex allocated in December 2008. IPTV take up doubled during 2008. The market has developed into a semi-duopoly, with the incumbent and an alternative operator representing 96% of total IPTV subscriptions. IPTV is growing at the expense of cable TV, with IPTV representing 35% of total cable TV/IPTV subscriptions in March 2009, up from 22% the previous year. It is perhaps due to increasing digital TV market competition that pan-European cable TV operator UPC decided to sell off its ownership in Slovenia’s dominant cable TV operator in early 2009.

·         Mobile broadband is the next growth opportunity for mobile network operators and has entered the mainstream, as mobile broadband subscriptions have surpassed fixed broadband. The availability of affordable mobile broadband plans with generous data allowances is expected to lead to some fixed mobile substitution.

Slovenia broadband and telecoms statistics overview – 2006; 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.

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.