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

Lithuania’s fragmented FttX market providing one of the highest fibre availabilities in Europe

BuddeComm’s annual publication, Lithuania - 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 Eastern Europe’s more mature and dynamic markets.

Lithuania’s developing telecoms market has been affected by the country’s recent economic troubles, largely in connection with the global financial turmoil. The market contracted by 10.8% in 2010, with falls in revenue from fixed and mobile telephony offset by increases from the cable TV sector. Although the country’s GDP fell 14.8% in 2009, it recovered in 2010 with an anticipated growth of 1.3%, while growth is expected to improve in 2011, reaching about 3.1%. This recovery will have knock-on repercussions for consumer confidence, leading to anticipated growth in spend on telecom services and consequently on further investment in infrastructure.

In the broadband sector there is effective infrastructure-based competition with cross-platform access options including DSL, fibre, cable and wireless, although the incumbent operator TEO remains by far the largest DSL provider, having a near market monopoly despite the presence of local loop unbundling. Almost uniquely within Europe, fibre based services (FttC and FttH) have become the most popular fixed broadband access platform. Its market dominance is likely to grow steadily in coming years as the multiplicity of mainly local operators continue to expand their networks.

Widespread internet usage has also laid the foundation for an emerging internet society, the application of information and communication technology to improve both social and economic development, with various e-commerce, e-government, e-education and e-health services available.

Lithuania’s mobile sector is the largest communications market in terms of revenue. Multiple SIM card ownership has pushed penetration levels to more than 150%. Rationalisation within the market, including the removal of dormant SIM cards, will lead to a reduction in the calculated subscriber base during the next two years. In conjunction with this, MNOs will continue to chase growth by migrating prepaid users to postpaid plans and to market mobile broadband services.

Key telecom parameters – 2010 - 2012

(Source: BuddeComm)

Market highlights:

• After a period of steady growth the number of fixed lines started to decline from 2001, largely attributed to fixed-to-mobile substitution. About 12% of fixed lines are provided by wireless, cable TV and ISDN platforms. Individual VoIP usage will fall in coming years as the facility is increasingly bundled with other services.
• The incumbent TEO will face increasing pressure from fixed-line competition and fixed-mobile substitution. The company, having no presence in the mobile market, is diversifying revenue through broadband and convergence offerings, focusing on fibre access network deployments.
• The mobile telephony sector was worth some LTL982 million in 2010 and an expected LTL920 in 2011: the sector’s value is likely to continue to slide during the next two years due to competition and the impact of regulated MTRs and roaming charges. Some recovery is anticipated from 2013 as revenue from high-end mobile data is made possible as a result of a wider deployment of HSPA and LTE networks.
• FttX infrastructure had been limited to greenfield sites, but TEO’s plan to roll out FttX by the end of 2011 will extend its NGN infrastructure to Lithuania’s five largest cities. Fibre is now available to half of the population (570,000 households), while coverage reaches up to 95% in some towns. By the end of 2011 the incumbent’s network will be expanded to over 50 cities, and covering 80% of the country’s corporations and organisations. A number of smaller operators means that the fibre market, though fragmented, has become among the most developed in Europe.

This report is essential reading for those needing high-level strategic information and objective analysis on the telecom sector in Lithuania. 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 licence awards;
• 3G developments, regulatory issues and technologies including HSPA;
• 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.