2010 Estonia - Telecoms, Mobile, Broadband and Forecasts

Since independence Estonia embraced market reform and joined the European Union, overseeing rapid economic growth characterised by large real wage increases driven by declining unemployment and emigration, EU sourced development funds and extremely rapid credit growth. Like its Baltic neighbours the global financial turmoil brought an end to Estonia’s economic boom, with real GDP contracting by 3.6% during 2008 followed by 14.1% during 2009.

Recovery has been assisted by Estonia’s low public debt and swift adjustment measures, with EU estimates of a 0.1% contraction in real GDP in 2010 followed by 4.2% expansion in 2011. Medium-term growth prospects is dependent on addressing private sector debt, regaining international competitiveness and a focus on exports which is largely contingent on the health of its main trading partners; Finland, Sweden and Russia.

Estonia’s telecom market benefited from the recent economic growth in terms of demand for new products and funding sources for investment. Increased demand was also the result of regulatory changes such as market liberalisation and implementation of an EU-mandated regulatory framework designed to stimulate competition. Telecom services’ spending was largely protected during the economic downturn due to the utility nature of most telecom services.

Internet usage is high, with the proportion of the population who are Internet users exceeding 70%. The market has moved almost completely from dial-up access to broadband, with DSL subscriptions the most popular, and boasts the highest fixed-broadband penetration level of all Eastern European countries, approaching 30%.

Widespread Internet usage has underpinned the country’s emerging Internet economy. A variety of e-commerce, e-government, e-education and e-health services are widely available. Usage rates, among the highest in the world, indicate the success of well-thought out applications and a willingness by Estonians to embrace technological innovation.

A well-developed cable TV sector has provided a strong base for infrastructure-based competition with the network of the largest cable TV operator accessible by over 50% of households. Competition in the digital pay TV market is healthy as take up of broadband TV (IPTV) and satellite pay TV is growing annually. Analogue switch-off has been brought forward from the original date of 2012 to July 2010, with a phased transition to complete switch-off currently underway.

A highly developed mobile market is evident, with seven competing GSM or WCDMA networks pushing SIM card penetration levels beyond 100%. To grow revenue service providers are focusing on increasing usage and hence revenue per subscriber, mainly in the form of minutes of use and marketing of mobile broadband services. The latter holds much promise given the current low mobile broadband penetration levels and hence strong growth potential.

Market highlights:

• Estonia continues to lead Eastern Europe in fixed-broadband penetration. Competition is expected to improve after a state proposal for a nationwide FTTx network was approved in late 2009. The proposal aims to provide 90% of the population with 100Mb/s by 2012.
• Broadband TV (IPTV) penetration is equal to approximately 20% of total households. Take up is likely to increase following an agreement to share programming between the incumbent IPTV provider and the region’s largest satellite pay TV operator.
• Usage of online services is growing; one in six people has purchased an item online while almost one in three has used the Internet for training and education. Usage figures for e-government services is higher, with three quarters of the population obtaining public administration-related information online and over half of the population submitting completed forms online.
• Four 3G mobile networks compete for customers in the mobile broadband market. Offered speeds are increasing in response to competition, with 4G LTE trials undertaken, offering speeds of up to 100Mb/s. The future growth path of mobile broadband is expected to emulate that of the mobile voice market over the coming years as the cost of access and capable handsets decrease and end-user awareness and ease of use increases.

Estonia key telecom parameters – 2009 - 2010

(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.