2011 Croatia - Telecoms, IP Networks, Digital Media and Forecasts

Croatia benefits from ASO with LTE trials progressing in the 800MHz band to improve rural broadband

BuddeComm’s annual publication, Croatia - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Europe’s smaller and more dynamic markets.

Croatia’s accession to the European Union in mid-2004 was followed by a period of strong economic growth and integration, with the privatisation of most of the economy and stronger ties formed with its main EU trading partners. The global financial crisis, coupled with a large current account deficit and a high level of external debt, contributed to the collapse in market confidence and a significant contraction in real GDP. Some growth in GDP in the last quarter of 2010 may provide some relief for the country’s economic prospects: a steady economic recovery is expected for 2011 and 2012. Nevertheless, recovery has been affected by the lack of public sector reforms and investments, as well as high inflation and unemployment approaching 20%. About a third of active companies are insolvent, which has dampened consumer spend on all market sectors.

Membership to the EU was the catalyst for Croatia’s necessary reform of its telecom market. As part of EU entry requirements, the market was liberalised and the incumbent, T-Hrvatski Telekom (T-HT), was further privatised. Full market liberalisation in 2005 has resulted in a number of alternative operators entering the market, while the regulator has taken steps to ensure fair competition through implementing a number of measures based on European Commission guidelines.

Broadband penetration is among the highest in the Balkans region, while effective competition exists between access platforms including DSL, cable, FttX, as well as WiMAX and emerging mobile broadband options. ISPs have focused on increasing broadband uptake, generating additional revenue through offering bundled services.

Croatia possesses a well developed mobile market, with penetration rates among the highest in the region. Three mobile network operators offer services, though no effective competition exists from the MVNO sector. Given the high voice penetration, operators have focused on improving ARPU by encouraging prepaid subscribers to migrate to postpaid plans as well as by upgrading networks to encourage consumer use of high-end mobile data offerings.

In the digital media sector, the satellite and cable TV markets remain underdeveloped by European standards, with cable TV household penetration at about 10% and cable broadband penetration at 4%. There is some IPTV activity, with operators exploiting their upgraded networks to expand their offerings to consumers. Digital Terrestrial TV is underway, with analogue switch off taking place regionally. Digital TV programming is also available via cable TV and satellite TV.

Key telecom parameters – 2010 – 2012

(Source: BuddeComm)

Market Highlights

• Mobile revenue continues to be affected by the 6% mobile services tax introduced in response to Croatia’s economic crisis, as also by regulated MTRs and voice and data roaming tariffs. This has impacted on the MNOs’ ability to upgrade their networks to promote mobile broadband.
• MNOs trialling LTE in the 800MHz band expect to launch commercial services in 2012. VIPNet plans to assign 10% of its investment to or the platform, which will facilitate rural mobile broadband given the spectrum’s propagation characteristics.
• Complementing LTE, HSPA+ networks have been extended to a number of major cities, offering up to 21Mb/s.
• The purchase of Croatia’s largest cable company, B.net, by Telekom Austria, has added fixed broadband and pay-TV to the latter’s existing mobile portfolio, creating a strong bundled services player. B.net’s network is largely upgraded with DOCSIS3.0 technology, potentially scaleable up to 400Mb/s.
• ASO was completed in late 2010, assisted by government subsidies for STBs available to all households. Digital dividend spectrum has been made available for mobile broadband services, and so closing the digital divide for rural areas in coming years.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Croatia. It provides further information on:

• Market liberalisation and regulatory issues;
• The impact of the global economic crisis;
• Telecoms operators – privatisation, acquisitions, new licences;
• Mobile data market developments in coming years in light of spectrum auctions and new license awards;
• 3G developments, regulatory issues and technologies including HSPA and LTE;
• Broadband migration to an FttH architecture;
• Historical and current subscriber statistics and forecasts;
• ARPU statistics and forecasts.

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