Croatia Telecommunications Report Q1 2008

In the second quarter of 2007, the number of Croatian mobile subscribers grew by 3.4%, which meant that Q207 was a stronger growth quarter than Q107, when the sector grew by just 2.4%. Nevertheless, with the Croatian sector having achieved 5.8% mobile subscriber growth in the first half of 2007, BMI decided to upgrade its growth predictions for 2007 as a whole. Although we previously suggested that the sector would expand by 9.5% in 2007, we now estimate that mobile subscribers will increase by as much as 12.5% in 2007, to reach 4.911mn by the end of the year.

Croatia's mobile sector continues to be led by T-Mobile, which had a 48.1% share of the market at the end of June 2007. Despite the dominance of T-Mobile and its closest rival, Vipnet of the Telekom Austria group, both operators appeared to lose market share to third ranked Tele2 Croatia in Q207.

Following numerous reports about Tele2 Croatia's financial difficulties in the early part of 2007, the country's third largest mobile operator appears to have had a comeback, securing 50% of new subscribers in the second quarter of 2007 and increasing its subscriber base to 400,000 by September 2007. By the end of June 2007, Tele2 had boosted its share of the market vis--vis T-Mobile and Vipnet. Meanwhile, it was reported in October 2007 that Tele2's Swedish parent company had increased its stake in its Croatian mobile business from 51% to 93% via a HRK120mn (US$23mn) recapitalisation. As a result of Tele2's capital investment, the stake in Tele2 Croatia which previously belonged to Croatian private equity fund Quaestus, has been reduced from 49% to 7%.

In August 2007, Croatia's mobile sector also saw the arrival of its first mobile virtual network operator (MVNO). The new entrant was formed out of a partnership between telecoms firm TelCro and the Croatian bank Zagrebacka Banka. The MVNO service is offered in partnership with T-Mobile Croatia.

One of the most significant announcement in recent weeks, was the news that the Croatian government planned to divest 32.5% of national incumbent T-Hrvatski Telekom (T-HT) for HRK265 (US$51.8) per share. The sale would leave the government with a 9.5% stake in T-HT, down from its current 42% holding. The 32.5% stake will be split between domestic private investors, who will take 25% of T-HT, and institutional investors, which will acquire 7.5% of the company. Germany's Deutsche Telekom will continue to hold a majority stake of 51% in T-HT. T-HT continues to retain a near monopoly over the provision of fixed-line services in Croatia, despite ongoing attempts by the sector's regulatory authorities to improve the lot of alternative operators. Nevertheless, a number of companies have been making steady inroads into Croatia's broadband sector, including Metronet which, in September 2007, signed an agreement to purchase rival broadband operator, Vodatel. Vodatel currently provides satellite-based TV, broadband and voice telephony services to residential and business customers; its acquisition by Metronet has therefore significantly boosted Metronet's position in Croatia's residential segment, which Metronet itself entered in May 2007.

• Executive Summary
• Market Data Analysis
• Mobile
• Fixed-Line/Internet
• Industry Developments
• Mobile Operator Data
• Industry Forecast Scenario
• Mobile
• Fixed-Line
• Internet
• Business Environment Analysis
• Eastern European Markets
• Croatia
• SWOT - Croatia's Telecommunications Industry
• Company Monitor
• Ericsson: Maturing Sectors in Eastern Europe Look Set to Remedy Weak Third Quarter Results
• Selected Profiles - Operators
• T-Hrvatski Telekom
• VIPNet
• Appendix: Competitive Landscape
• Market Structure
• Fixed-Line Overview
• Internet Overview
• Mobile Overview
• Macroeconomic Forecast Scenario
• BMI Forecast Modelling
• How we generate our industry forecasts
• Telecommunications Industry
• List of Tables
  • Table: Croatia Mobile Market Net Additions, Q207 vs. Q107 & 2006
• Table - Croatian Mobile Market, Q207
  • Table: Croatia Mobile Market Prepaid and Postpaid Subscribers, Q106 - Q207
  • Table: Croatia Wireless ARPU2005-07 (EUR/user/month)
  • Table: T-Mobile
  • Table: Vipnet
  • Table: Tele2
  • Table: Croatian Telecom Sector - Mobiles - Historical Data & Forecasts
• Table - Croatian Telecoms Sector - Fixed-line - Historical Data & Forecasts
  • Table: Croatian Telecoms Sector - Internet - Historical Data & Forecasts
  • Table: Central & Eastern Europe Business Environment Ranking
  • Table: Ericsson Recent European Contract Wins, 2006-07
  • Table: Key Players: Croatia Telecoms Sector
  • Table: Selected Telecoms Operators - Financial Indicators
  • Table: Regional Fixed-Line Penetration Overview
  • Table: Regional Broadband Penetration Overview
  • Table: Regional Mobile Penetration Overview
  • Table: Croatia - Economic Activity