Latvia Telecommunications Report 2013

BMI View: The Latvian telecommunications market sits near the middle of BMI's regional risk/rewardsratings for a number of reasons. The country's mobile market is effectively saturated and cannot reallysustain significant additional growth. Operators should be looking to mobile broadband and convergedservices to protect their investments, but consumer apathy and the weakened economy preclude a rapidturn-around. However, like neighbouring Lithuania, a concerted investment in mobile and fixedbroadband could cushion the sector, providing a clear path for growth later in our five-year forecastperiod to 2017.

Key Data

Approximately 99,000 mobile subscribers were added in 9M12, with incumbent LMT andalternative player Tele2 jockeying for market leader position.

Promoting their mobile broadband services enabled operators to stabilise their ARPUs in 9M12,but we expect the average for the year as a whole will be lower than in 2011.

The broadband market is being driven by mobile broadband. Around 64% of broadbandconnections were mobile accesses at the end of 2011.

Key Trends & Developments

In late-October 2012, the Public Utilities Commission awarded new wireless frequencies to LatvijasMobilais Telefons (LMT) and Bité Latvia. LMT secured frequencies in the 2,300-2,330 megahertz(MHz) range, while Bité was granted frequencies in the 2,330-2,360MHz band. Each operator paidLVL110,000 for the new spectrum, which will enable them to provide advanced wireless datatransmission services. Earlier, in January 2012, Latvia's four mobile operators each secured 4G LTElicences from the regulator for a total consideration of LVL2.37mn. The operators will be able to offerservices in the 2,500-2,690MHz band from January 1 2014.