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

Regulator’s fibre access measures kick start flagging FttH investment

BuddeComm’s annual publication, Slovenia - 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 smaller but more progressive markets. It includes the regulator’s 2010 annual report and Q1 2011 market updates as well as operator data for Q1 2011.

A comparatively prosperous Eastern European country, Slovenia was one of the ten accession countries to the European Union (EU) in 2004. It had one of the strongest economies among the new accession states, being the first among them to adopt the euro. However, the global financial crisis has negatively impacted the economy in recent years, exacerbated by the country’s reliance on exports, particularly to its main trading partners Germany and Italy. The economy contracted by an estimated 7.8% in real terms during 2009, though the EU estimates 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. Economic growth was estimated at 0.9% in 2010, and is forecast at 2.5% in 2011 and 3.1% in 2012 in expectation of improving conditions on the labour market and in construction and related activities.

The telecoms market has fared relatively well during the downturn due to relatively low debts levels among telcos and stable cash flows. Identified risks include subdued growth prospects and difficulty in access new financing sources. Nevertheless, the economic crisis initially affected the construction of fibre networks where the main operators largely halted their investment and programs in 2009. To stimulate the sector, the regulator has complemented its measure on unbundling copper infrastructure by unbundling the fibre loop as well.

The telecom sector overall contributed 3.6% to GDP, compared to the EU average of 2.8%. Telecom sector revenue increased 2.76% in 2009, year-on-year, reaching €1.266 billion, and is expected to reach €1.3 billion for 2010 and €1.35 billion in 2011.

Much of this steady growth is due to the recovery in network investment following the sharp fall in 2009: investment fell 47% in 2009, year-on-year, to only €146 million. Overall investment has recovered since, reaching an estimated €190 million in 2010 and €210 million in 2011. Much of this investment is being channelled to developing fibre networks and upgrading mobile networks with HSPA and LTE technologies.

In the broadband sector DSL remains the most popular platform although the growing appetite for bandwidth has led to the introduction of FTTx and upgrades to cable networks, offering speeds of up to 120Mb/s.

Slovenia’s competitive mobile market has four MNOs and a number of MVNOs. Market potential is limited by the population of only two million people. With the mobile voice sector essentially saturated, due to high SIM card penetration, MNOs have shifted their focus to defending market share from new entrants and increasing Average Revenue per User (ARPU) levels through encouraging prepaid users to take up postpaid services as stimulating the underdeveloped mobile broadband and content market. Further pressure has been placed on operators through regulatory-mandated mobile termination rate (MTR) reductions.

 Key telecom parameters – 2010; 2012

(Source: BuddeComm)

Market Highlights

• Mobitel began trialling LTE in the 1800Mhz band in mid-2011, having been allotted supplementary frequencies by the regulator. The operator plans to deploy LTE and LTE-advanced services in the 800MHz, 1800MHz and 2600MHz bands, dramatically improving broadband availability in rural areas.
• Investment in HSPA technology among MNOs will provide near universal population coverage, utilising 900MHz spectrum made available for 3G in late 2010.
• Analogue switch-off (ASO) was achieved at the end of 2010: Slovenia’s DTTV broadcasts will be provided by a total of nine multiplexes, four of which will be used for digital TV broadcasting. Two national multiplexes are complemented by seven smaller multiplexes intended mainly for covering local areas.
• Following ASO, the regulator planned to assign digital dividend spectrum by the end of 2011, principally for mobile broadband use.
• TV access is dominated CATV which has a 52% market share of subscribers, followed by IPTV with 41 %, and satellite TV with 5%. Multichannel Multipoint Distribution Service (MMDS) technology has about 1.6% market share. IPTV growth is expected to be strong in coming years as fixed networks are upgraded with DOCSIS 3.0 and FttH technologies.
• The fibre market is dominated by a few operators: T-2 with a market share of 57.4% and Telekom Slovenije with a 38.6% share. The cost of network roll-outs and the economic downturn halted investment in 2009, though recovery is now again underway as a result of the regulator’s measures to stimulate the sector by introducing access regulations on the incumbent’s ducts and infrastructure.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Slovenia. 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 in 2010;
• 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.