Albania - Telecoms, Mobile & Broadband

A developing country, Albania is seeking closer ties with and eventual accession to the European Union As part of this process Albania signed a Stabilisation and Association Agreement (SAA) with the EU, which came into force in April 2009, the same month that Albania submitted its application for EU membership. As part of the EU pre-accession process, Albania has received financial aid to build public institutions and improve cross-border co-operation under EU funding mechanism Instrument for Pre-Accession Assistance. Under the IPA, Albania is expected to receive €81.2 million during 2009, €93.2 million during 2010, €95.0 million during 2011 and €96.9 million during 2012.

Over the past decade, Albania's economy has enjoyed real GDP growth, counting the EU as its main trading partner. Despite the global economic turmoil of 2008 Albania's economic growth was in line with initial forecasts of 6% while inflation remained within the 2-4% target band of the Bank of Albania. Albania was one of only two countries in Europe that recorded economic growth in the first quarter of 2009, growing by 0.4%.

Albania's telecom industry has been liberalised and legislation has been recently introduced that adopts regulatory principles found in the EU's regulatory framework for communications, which promotes competition as the most efficient way to offer communications products and services while ensuring universal access. The market's growth potential has attracted international investment into both the incumbent and alternative operators. Future network development is expected in order to support the growing popularity of broadband services.

Albania's Internet market offers much growth potential due to currently low penetration levels. Internet access is available through a variety of means including dial-up, leased line, microwave radio, ADSL, WiFi and fibre. Broadband take up is rising in response to increased availability and drastic tariff reductions implemented during late 2008 and early 2009. Public Internet access is also accessible through Internet cafes. Recognising the potential of applying ICT to improve both social and economic development, Albania has taken steps to develop a knowledge-based society, principally by improving IT literacy.

Albania's mobile market has undergone rapid growth due to competition, initially with the entrance of Vodafone and later through the entrance of Eagle Mobile. The majority of mobile users utilise prepaid services, with its inherent affordability and flexibility popularising mobile ownership. With the mobile voice market maturing, new subscriber additions will become increasingly harder to attain hence mobile network operators are slowly turning their attention to increasing average revenue per user levels. Initiatives include encouraging prepaid users to take up postpaid offers and encouraging take up of mobile data services, with GPRS, EDGE-based mobile data services available.

Key highlights:

• Since privatisation the telecoms incumbents is working to improve the quality and reach of services and network infrastructure while reducing pricing to increase its subscriber base. A significant competing operator has consolidated its presence through a number of acquisitions and financial backing from its international parent. Recently enacted legislation, designed to improve competition, will eventually ease market entry for new competing operators.
• Broadband represents a strong growth market given currently low penetration levels. Price led competition continuing in 2009 has resulted in broadband overtaking dial-up and representing the majority of Internet connections. ADSL is overwhelmingly the most popular broadband access platform and the telecoms incumbent is the dominant services provider. In a country where fixed line and Internet penetration is low, broadband presents an opportunity to entice first time fixed line subscribers.
• Digital TV availability via cable, satellite and DTTV. Cable operators offer triple play services bundling VoIP telephony, broadband Internet access and cable TV services. A new satellite-based digital pay TV platform commenced broadcasts from satellite Eutelsat W2 in MPEG-2 format in October 2008.
• Competition is shaking up a previously cosy duopoly in the mobile market, leading to increased take up and penetration levels indicative of maturing market. Future revenue growth is expected to come from increasing ARPU levels by encouraging mobile data services usage.