This report covers Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, Greece, Macedonia (FYROM), Romania, Serbia and Montenegro. Trends and developments in telecommunications, mobile, Internet, broadband, digital TV and converging media including VoIP, VoD and IPTV developments. Subjects include:
Market and industry analyses, trends and developments
Facts, figures and statistics
Industry and regulatory issues
Research, Marketing, Benchmarking
Major Players, Revenues, Subscribers, Prepaid
VoIP, IPTV, VoD, digital TV and DTTV
Telecommunications in the ten countries that comprise the Balkans is following the path taken by neighbouring Central Eastern Europe, with numerous markets liberalised. Incumbents still dominate but are under attack, with alternative operators steadily gaining fixed-line subscribers. Recognising that they can only delay the eventual onset of competition, broadband and convergence services have been chosen by the incumbents as new revenue growth areas. Hence ADSL take up is growing very rapidly, a trend that we expect will continue in 2007, with incumbents expected to eventually launch convergence offerings such as IPTV, once they have established a sizeable broadband base.
Mobile penetration levels are growingly strongly, although markets are maturing in some cases. Fierce competition is forcing the operators to focus on increasing postpaid user penetration and mobile content in order to stabilise ARPU levels, a strategy that will become increasingly common in the region during 2007 and beyond as mobile voice subscriber growth declines. With this mind, third generation networks will be increasingly relied upon to generate mobile data revenue, although we believe non-SMS/MMS mobile data usage will depend on what content/pricing propositions the operators are able to offer.
Both Bulgaria and Romania have liberalised their markets as part of EU requirements, with alternative operators making significant progress in the fixed-line market in Romania. However alternative operators in the two countries have complained of the tactics used by the incumbent to delay offering access, a tactic seen all too well in each EU country which liberalised its fixed-line market. As seen in Western Europe, the incumbents will eventually accept the regulator’s authority rather than raise objections to every decision they make, but this will take time. Croatia, Macedonia, Bosnia and Herzegovina, Albania, and Serbia and Montenegro have also liberalised their markets with important developments such as the issuing of reference interconnect offers concluded. Greece has finally transposed the EU’s regulatory framework for communications into national law, a move that will benefit competition and help drive broadband growth, which is among the lowest of all 25 EU nations. Telekom Srpske, one of the three incumbent operators in Bosnia-Herzegovina, was in the process of being privatised in late 2006, which follows the successful privatisation of the country’s publicly-owned mobile operator. Privatisation plans were also underway in Greece, Macedonia and Romania for each country’s respective fixed-line incumbent. Transferring public ownership of incumbent operators to the private sector will allow the country’s regulators to focus on their jobs, ultimately benefiting competition in the long term.
Increased large-scale international merger and acquisition activity is being witnessed leading to the emergence of regional players in the non-mobile markets such as Hungary’s Magyar Telekom, Greece’s OTE, Romania’s RCS/RDS and Liberty Global’s UPC, a trend which is expected to continue due to recently liberalised markets.
As seen in the Central European markets after they underwent liberalisation in 2004, the incumbents in the more liberalised markets are driving ADSL take up. The untapped financial potential of underdeveloped broadband markets offers a new revenue source for incumbents suffering from competition in low-growth potential fixed-line voice markets. We believe broadband uptake is most likely to expand in two phases; in the first phase due to the incumbents who wish to catch the benefits of first-mover advantage, with serious competition only expected from the cable operators, and the second phase, when alternative operators are able to gain better access to LLU-based services once suitable interconnection and access regimes are in place and enforced. The big question hangs over the impact wireless will have on markets and in particular, technologies such as WiMAX.
WiMAX networks have been deployed in Serbia and in Croatia by the incumbent and an alternative operator, which has deployed a WiBRO network. A mesh WiFi network that will provide nationwide broadband connectivity is under construction in Macedonia, with all of the country’s schools already connected. NGN/VoIP deployments are underway in Croatia by both the incumbent and alternative operators, in Greece by an alternative operator, in Macedonia by the incumbent operator, in Romania by the incumbent operator and in Bulgaria by the incumbent operator. The desire to offer broadband and convergence services are driving NGN/VoIP deployments, with more deployments likely as the strategy of focusing on broadband and convergence becomes more common.
Triple play services are offered by the cable operators, with Croatia’s fixed-line incumbent announcing plans to offer services. An alternative operator has launched a competing triple play offer to that of the incumbent in Cyprus, based on its ADSL2+ network. ADSL2+ networks have also provided the base for triple play services by a Greek alternative operator.
Romania has seen four digital satellite pay TV operators enter the market, with the largest and most successful player expanding services into Hungary, Slovakia and the Czech Republic, with plans to enter Serbia and Croatia. Strong growth has been recorded across most mobile markets, although low annual growth rates in Bosnia and Greece suggest saturated markets. With numerous markets approaching maturity, operators are attempting to maintain revenue growth momentum through increasing ARPU levels. Strategies used include encouraging migration to postpaid plans, differentiated tariff plans and encouraging mobile data and content usage.
3G will become increasingly important in the near future as the focus shifts to mobile data and content usage. However widespread uptake will be challenged in the short/medium term by the lack of desirable mobile content, lack of awareness/familiarity with mobile content services and penetration of 3G-capable handsets.
Commercial 3G services launched during 2006 were witnessed in Romania and Bulgaria, with HSDPA services launched in Romania, Bulgaria and Croatia. Romania’s third and fourth UMTS licences were awarded in October 2006, with an established CDMA operator and the country’s second largest cable operator emerging victorious. The mobile arm of the country’s fixed-line incumbent missed out in the beauty pageant-style tender.
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