Croatia - Telecoms, Mobile, Broadband and Forecasts

This report covers trends and developments in telecommunications, mobile, Internet, broadband, digital TV and converging media including VoIP and IPTV developments. Subjects include:

• Market and industry analyses, trends and developments;
• Facts, figures and statistics;
• Industry and regulatory issues;
• Infrastructure;
• Major players, revenues, subscribers, ARPU;
• Internet, VoIP, IPTV;
• Mobile voice and data markets;
• Broadband (FttH, DSL, cable TV, wireless);
• Convergence and digital media;
• Broadband and mobile market forecasts for selective years to 2018.

Researcher:- Paul Kwon

Croatia has prospered due to its close relationship with the European Union although its ambition of EU ascension has been hampered recently by an ongoing border dispute with neighbouring EU member nation Slovenia. Close economic ties with both EU and non-EU nations is evident; principal export partners are Germany, Italy, Bosnia and Herzegovina while its main import sources are Italy, Germany and Russia. The global financial crisis has impacted Croatia, with GDP contracting during Q1 2009 by 6.7% on an annualised basis due to falling personal consumption, which represents approximately 60% of GDP, while unemployment has risen for the first time since 2002.

The overall telecom industry is expected to weather the economic turmoil relatively well due to the essential nature of most telecom services. Croatia's liberalised telecommunications generated a total of HRK15 billion during 2008, a 3.4% annual increase. The mobile market was the biggest contributor, generating HRK8.5 billion in revenue, followed by the fixed-line market, generating revenue in excess of HRK5 billion; data transmission revenue exceeded HRK1 billion in revenue.

Following market liberalisation alternative operators have made inroads into the fixed telephony market, with the incumbent's market share slipping below 80% of total subscribers. To ensure fair competition a number of regulatory measures have been introduced including reducing the incumbent's rates for call termination as well as improving access to its last mile network.

Broadband services are widely available and DSL is the dominant form of broadband access, with competing services available via cable, FttH, and wireless broadband. Recognising the potential of applying ICT to improve both social and economic development, Croatia has taken steps to develop a knowledge-based society, encompassing education, health and government services. A healthy digital TV market is evident, with content accessible via cable TV, satellite and broadband TV. Bundled offerings such as triple play have been launched by the cable operators and the telecoms incumbent.

Croatia's mobile market is one of the most highly penetrated in the Balkans region. MVNOs have commenced services adding to the present competition provided by a recently established third mobile network operator. With the mobile voice market at near saturation levels, the established mobile network operators have focused on improving ARPU levels by encouraging prepaid subscribers to migrate to postpaid plans as well as encouraging take up of mobile broadband services based on deployed 3G/HSPA networks.

Key highlights: Regulatory measures designed to improve competition are having an effect: the number of local loops unbundled from the incumbent rose by 28% during the first six months in 2009; call termination rates on the incumbent's fixed network as well as the networks of the two biggest mobile operators fell by 14% during 2008 and 2009 respectively.

• Representing an increasing proportion of total Internet subscribers, fixed broadband penetration is rising on the back of increasing availability; competing platforms such as cable, FTTx and WiMAX as well as regulatory-based measures such as LLU. The incumbent and competing operators have utilised broadband to offer and bundle convergence services such as IPTV and VoIP into double and triple play packages.
• An emerging Internet society is evident, encompassing education, health, commerce and government services. E-government services are available for both businesses and individuals and usage is increasing. E-government services development during 2009-2012 will be guided by a development strategy adopted in January 2009.
• Digital TV prospects have improved: an analogue to digital TV switch-over strategy has been adopted and a licence to operate two DVB-T multiplexes was awarded in May 2009, with the successful bidder required to expand DTTV coverage to 95% of the population. Competing digital TV offerings are already available via cable, IPTV and satellite.
• Mobile broadband is the next growth opportunity for Croatia's three GSM/WCDMA mobile network operators in the country's saturated mobile market, with mobile broadband penetration hovering at only 4%. The future growth path of mobile broadband take up is expected to emulate that of the mobile voice market over the coming years due to the decreasing cost of access and capable handsets decrease and increasing end user awareness and ease of use.

Data in this report is the latest available at the time of preparation and may not be for the current year.