Slovenia Telecommunications Report 2013

BMI View: The Slovenian market is one of the smaller in Central and Eastern Europe, but at the sametime one of the highest value markets with high penetration of postpaid services and high ARPU in themobile market. It contains a vibrant competitive market with the incumbent Telekom Slovenijechallenged by Telekom Austria owned Si.mobil and Tusmobil in the mobile segment. Meanwhilecompetition in the wireline market has driven a shift towards higher capacity services such as fibre andcable as operators such as Telemach and T-2 have taken on the incumbent with converged servicepackages.

Key Data:

The mobile market has continued to grow even as penetration reached 107.1% by the end ofJune 2012, with 2% year-on-year (y-o-y) growth to 2.207mn subscriptions. BMI forecastsgrowth will slow in the medium term and total subscriptions will increase to 2.3mn by the end of2017 when penetration will reach 111.7%.

The broadband market has shifted towards higher speed technologies such as cable and fibre-tothe-home (FTTH), which together accounted for 44.2% of fixed broadband subscriptions at theend of June 2012.

Meanwhile dedicated mobile broadband has seen sluggish growth compared to many markets inCEE, although we believe the rollout of LTE services could catalyse the market by offeringspeeds comparable to Slovenia's high quality wireline infrastructure.

Key Trends And Developments

The mobile data market is set to enter the next phase with the arrival of LTE services followinginvestment by the leading operators. In July 2012 Si.mobil became the first operator in Slovenia to launch4G LTE services in parts of the capital Ljubljana. At launch customers could access download speeds ofbetween 30 and 80Mbps, with the top rate theoretically set at 100Mbps. Meanwhile, in October 2012Mobitel announced it was set to launch LTE in Slovenia. The LTE project is part of the broadermodernisation of Telekom Slovenije's network. In November 2012 Telekom Slovenije announced that itwould launch commercial LTE services in two months following successful trials.

The wireline market could also be set for a shake-up with a potential change in ownership for theincumbent. In October 2012 the Slovenian government announced plans to sell off its stake in TelekomSlovenije as part of a wider sell-off of state holdings. Slovenia's government owns a 74% stake inTelekom Slovenije, with the remainder held by a variety of investors. After the announcement that thegovernment plans to sell its stake it was reported that the incumbent was also considering the sale of anumber of foreign subsidiaries such as in Macedonia, Kosovo and Gibraltar.