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

Estonia’s ambitious EstWin national fibre network opens for customers

Economic conditions

The Estonian economy has undergone major reforms following independence in 1989 to develop competition and free-market business models. The introduction of regulations and legislation providing for private ownership of businesses and property, reduce inflation, establish exchange rate stability and secure international investment resulted in considerable economic growth – albeit from a relatively low base – through the 19990s and into the new century. The recent financial crisis saw GDP contract in both 2008 and in 2009, mainly due to the collapse in demand for exported goods. However, a second tranch of regulatory measures and fiscal tightening since 2008 has led to solid economic recovery, with GDP growth estimated at 6.5% in 2011 and at a similar level anticipated for 2012.

Telecom revenue overview

The Estonian telecoms market is one of the most developed in Eastern Europe. Joining the EU in mid-2004, its regulatory regime has been determined by the EU’s revised regulatory framework. The first of the Baltic States to liberalise its telecom market, competition in all sectors has led to falling consumer prices. Overall revenue has fallen steadily since 2008, a trend which is likely to continue during the next few years as further regulatory measures affecting interconnection and mobile termination rates offset increases in voice traffic and the growing broadband and mobile subscriber base.

Broadband market

Estonia adopted the internet rapidly, supported by government policies which ensured broadband availability through free WiFi in many areas. The market is dominated by Elion, Starman and STV. Widespread broadband availability has underpinned Estonia’s emerging internet economy, with various e-commerce, e-government, e-education and e-health services available and widely used. The cable-TV market is well developed and hence cable-TV operators have been well-positioned to offer bundled play services.

Mobile market

Estonia’s SIM card penetration is on a par with most Western European countries, though actual mobile user penetration is lower due to multiple SIM card ownership. The three MNOs are divisions of the Scandinavian operators TeliaSonera, Elisa and Tele2, while services are also available from a small number of MVNOs. 3G and HSPA are widely available while LTE, launched in late 2010, should be available from EMT nationally by 2014. LTE has been deployed cost-effectively since the 790-862MHz band was made available in mid-2011.

Key telecom parameters – 2009; 2013

(Source: BuddeComm)

Market Highlights

• The number of PSTN lines continues to fall as consumers migrate to VoIP and mobile solutions. The incumbent Eesti Telekom, facing falling revenue, has shifted its focus to selling broadband subscriptions and providing IT infrastructure on which services can develop.
• LTE was launched by EMT in 2010 and its network should provide national coverage by 2014. Current average download speeds are 40Mb/s, with a maximum speed at 70Mb/s. Tele2 and Elisa have adopted a less aggressive LTE rollout, relying on customer satisfaction with their existing HSPA capabilities. Tele2 is obliged to provide 700 LTE base stations by 2016.
• The government’s support of a nationwide FttX network, providing 100Mb/s broadband access for 90% of the population by 2012 and 100% by 2015, is being developed by an independent entity comprised of all major telcos. The State’s EEK1 billion contribution to the project in rural and underserved areas is among the more ambitious, proportionately, in the EU. Parts of the EstWin network were switched on at the end of 2011.

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