Croatia Telecommunications Report Q1 2013

BMI View: Croatia has one of the more developed telecommunications markets in CEE. It has managedto maintain relatively high ARPUs, given the high usage of VAS services. Croatia has one of the highestproportions of non-voice services as a % of ARPU, demonstrating that the Croatian population isrelatively receptive to new technology and data services.

Key Data

Based on data from the main operators, BMI estimates that the Croatian mobile market had 5.296mnsubscribers at the end of Q312. The latest regulatory data available is for Q212, when HAKOM revealedthe market had 5.089mn subscribers.

In Q212, the fixed-line market grew to reach 1.632mn subscribers, up. We have revised upwards ourYE2012 forecast and now envisage nominal positive growth for most of the next five years.

In the broadband market, there were 1.206mn broadband subscribers at the end of Q212, 876,160 ofwhich were fixed and 329,562 were mobile.

Industry Trends And Developments

In November 2012, mobile operators VIPnet and T-Mobile each secured 10MHz paired frequencyblocks (making for a total of 20MHz apiece) in the 800MHz band. The operators each paid HRK150mn(EUR20mn) for the spectrum. The sale of the 800MHz 'digital dividend' frequencies was conducted bythe regulator, HAKOM, over the September/October period. Although three frequency blocks wereoffered, only VIPnet and T-Mobile participated in the auction. The terms of the frequency licencesrequire operators to cover at least 50% of the country within three years from an as-yet unspecifiedstarting date. The spectrum will enable them to offer 4G services in sparsely populated areas.

T-Mobile is already offering 4G services, however. In early October, the operator said it had extended 4Gcoverage to 20 districts in the capital, Zagreb. As a result, the operator now covered 50% of the city.

Earlier, in late August 2012, T-Mobile said it had extended 4G coverage in the cities of Split, Rijeka andOsijek.