2010 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 EU it 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, of which €1.1 billion has been allocated for research and development (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.

The recent global financial crisis negatively impacted Slovenia due to its high reliance on exports, with Germany and Italy as its main trading partners. Slovenia’s economy contracted by an estimated 7.8% in real terms during 2009, with EU estimates of 1.1% real GDP growth for 2010, rising to 1.8% for 2011 on the back of continued government policy support and a pickup in external demand.

The telecoms market fared well due to relatively low debt levels and stable cash flows given the essential nature of most telecom services. Identified risks moving forward include subdued growth prospects and difficulty in accessing new financing sources.

Slovenia’s fixed telephony market is dominated by the fixed-line incumbent which is still majority owned by the state, unique for the EU region. Regulatory intervention in the absence of effective competition has improved market conditions for competitors, with network interconnection rates now below the EU average and LLU monthly fees trending downwards, based on regulator-approved pricing models. Faced with diminishing domestic growth prospects the incumbent has followed the path of many Western European incumbents and expanded internationally, focusing predominantly on the developing markets in the neighbouring Balkans region.

Slovenia boasts an Internet market comprised almost entirely of broadband connections. Despite the launch of competing platforms xDSL remains the most popular although the growing appetite for bandwidth has led to the introduction of FTTx and upgrade to the DOCSIS 3.0 standard by a major cable operator, offering speeds of up to 120Mb/s. Increased Internet usage and activity is characteristic of an emerging Internet society, comprised of e-government, e-commerce and e-health.

As in neighbouring countries the broadcasting market was severely affected in 2009 due to a contraction in advertising spend in response to the state of the economy. Despite this the transition to digital broadcasting continues, with digital TV available 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 given that four mobile network operators and a number of mobile virtual network operators operate in a country with a potential market of only two million people. Further pressure has been placed on operators through regulatory-mandated mobile termination tariff reductions. With mobile SIM card penetration at saturation levels, the focus for operators has shifted to increasing Average Revenue per User levels; primarily by encouraging increased voice traffic as well as take up of mobile broadband services.

Market highlights:

• FTTx represents 15% of all fixed broadband subscriptions, up from 10% in the previous year. Competing deployments by alternative operators and the incumbent will see FTTx rise in importance. The variety and availability of faster alternatives to xDSL has improved following the launch of DOCSIS 3.0 based broadband services by a major cable TV operator, offering speeds of up to 120Mb/s.
• Improved uptake of e-services is evident, with increasing participation in e-education, e-government and e-commerce by the general population. Businesses are advanced in terms of usage, with up to 85% of businesses using e-government services to obtain information, forms and return forms online.
• Digital TV take up improved despite the state of the economy, with growth expected to continue in 2010 as Slovenia progresses in its transition from analogue to digital TV.
• Mobile broadband is delivering on its growth promises, with mobile broadband subscriptions expected to grow by 20% during 2010, compared with an estimated 1% contraction for total SIM card penetration.

Slovenia – 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.