2012 Croatia - Telecoms, IP Networks, Digital Media and Forecasts

Croatia’s needs regulated fibre wholesale pricing model to kick-start the internet economy

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 from late 2008 deeply affected Croatia, mainly due to a drop in export demand. This was coupled with a large current account deficit, a high level of external debt, as well as significant exposures to interest and exchange rate risks. Real GDP contracted by about 5.8% in 2009 and a further 1.9% in 2010, while GDP growth in 2011 is expected to reach only about 0.8%. Although public debt was estimated to have reached 51% of GDP in 2011 the government has developed few significant growth enhancing reforms, which has hindered the country’s economic recovery and investment in infrastructure. High inflation is compounded by unemployment approaching 17%.

Membership to the EU was the catalyst for the necessary reform of Croatia’s telecom market. As part of EU entry requirements, the market was liberalised and the incumbent, T-Hrvatski Telekom (T-HT), privatised. This process has resulted in a range 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 on a par with the EU average. Effective cross-platform competition exists in the broadband market, with dominant DSL complemented by cable, FttX and WiMAX as well as 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, while there is as yet only a minor MVNO presence. 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 10% and IPTV penetration at 23%. DTTV is available nationally, with the country’s ASO process reached two months ahead of schedule. About 60% of TV viewers access DTTV. 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 falling prices for voice services and regulated roaming tariffs, though the scrapping of the 6% mobile services tax effective from 2012 will ease the burden on operators and consumers.
• Having trialled LTE in the 800MHz, 2.1GHz and 1800MHz band, MNOs expect to launch commercial services later 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.
• The regulator planned to auction frequencies suitable for 4G services, including the 700MHz-800MHz digital dividend, during 2012.
• 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. Currently, DTTV accounts for 60% of TV viewing.

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.