Bosnia-Herzegovina Telecommunications Report Q3 2008

Data for the fixed-line, internet and mobile telephony sectors of the Bosnian telecoms market have just been made available by the Communications Regulatory Agency (CRA) for the first time in several years.

While BMI's previous estimates for the fixed-line telephony and general internet market were close to the actual results, our estimates for the mobile and broadband sectors were rather different and the inclusion of the CRA's latest data has led us to revise at least some of our forecasts for the next five years.

The fixed-line market served just 1.06mn subscribers at the end of 2007, 99% of which were served by the three regional incumbent operators, BH Telecom, Telekom Srpske, and HT Mostar. This was slightly short of our previous estimate of 1.1mn, but does prove that there remains some demand for fixed-line services. Further evidence is that all three operators are reporting network expansion and modernisation initiatives, which should run through to the end of 2008 and beyond. The anticipated privatisation of BH Telecom and HT Mostar will also prove beneficial, if these processes are not derailed by political upheavals caused by the Q108 declaration of independence by Kosovo.

The mobile market appears to have benefited hugely from the decision to allow the three regional operators to compete openly in each others' service areas from August 2007 onwards. As a result of this, plus increased network deployments and aggressive campaigns promoting cheap prepaid services, the number of mobile customers grew by nearly 28% in 2007 to reach a total of 2.45mn. This brought mobile penetration to 63.5%. We now expect that there will be 3.44mn subscribers by 2012, or 86.9% penetration. 3G licensing is not yet timetabled, though operators are currently deploying the latest equipment that will allow for swift 3G migration when the time comes. However, with GDP per capita rates among the lowest in the region, we believe that uptake will be muted from the foreseeable future, especially given the market's emphasis on cheap prepaid 2G services.

Data published by the CRA show that the number of broadband subscribers grew by only 113% in 2007 to reach less than 85,000 connections, far short of the 170,000 we had been expecting. Partly, this is attributable to our using an incorrect subscriber figure for 2006 as the basis for this forecast. The revised 2006 data, coupled with reported growth for 2007 means that we now expect there to be 387,000 subscribers by 2012. The most interesting factor to emerge from the CRA's new figures must surely be the revelation that cable-based broadband accesses grew faster than xDSL connections during 2007. It would seem that the slower than expected uptake of xDSL in 2007 was due to the tardiness of fixed-line operators in enhancing their networks and opening up to competitors. There are now 60 ISPs in Bosnia, of which 55 are said to be active. There are also 13 fixed-line operators, some of which are offering IP-based broadband services.