T-Hrvatski Telekom faces competition and market share loss

Details: Category: Trends & Forecasts; 29 March 2010; 10668 views

A new report looking at Croatia in 2Q10 examines the status of incumbent T-Hrvatski Telekom (T-HT), predicting reduced market share and increased competition. The report is also slightly cautious regarding the mobile sector...

For the 2Q10 edition of its Croatia Telecommunications Report, Companies and Markets has amended its forecasts for the country's mobile, fixed-line and internet markets. While its forecasts are broadly unchanged, it has reined in its expectations for the mobile market amid rising saturation levels and slack consumer spending, while the fixed-line sector has been characterised by a steeper drop in subscriber numbers than had previously been anticipated. Meanwhile, growth prospects in the broadband arena remain robust.

Incumbent T-Hrvatski Telekom (T-HT) continues to dominate all three sectors, although it is facing increasing challenges from alternative operators on all fronts and is gradually seeing its market shares being eroded. In the mobile sector, its T-Mobile division lost ground to prepaid-focused rival Tele2 in 2009, despite the newcomer's decision in 2Q09 to disconnect the nearly 30% of its user base deemed to have been inactive. Telekom Austria-backed Vipnet exhibited robust growth in 9M09, but noted a net subscriber loss in 3Q09, which stopped it from making the most of a lacklustre performance from TMobile and narrowing the gap between the two.

companies and markets believes that there were 6,354,000 mobile subscribers in Croatia at end09, a year-on-year increase of 8.1% and a penetration rate of 143.3%. The mobile operators remain reluctant to disclose data relating to the usage of their 3G networks, although figures for non-voice mobile service revenues disclosed by T-Mobile indicate that the usage of the types of value-added services accessed by next generation networks is rising at a healthy pace.

The national regulatory authority suggests that the number of HSPA/UMTS subscribers grew by 79% in the year to September 2009, yielding a subscriber base of more than 242,100. Even allowing for the possibility that this figure includes a number of inactive customers, this still reinforces our view that future growth opportunities in the mobile segment lie in migrating customers to higher value 3G services.

In the meantime, however, while Tele2 continues to focus heavily on the prepaid segment, the others will also look to at least growing their low-cost users at respectable rates. By 2014, companies and markets expects that there will be 1,514,000 3G subscribers in Croatia, which will represent 21.1% of the overall mobile user base at that time.

Even while the fixed-line market declined by 2.3% in 2009, interest in broadband services remained strong, with user numbers growing by 27% to 669,000. The report forecasts that the number of broadband subscribers will reach 1,300,000 by 2014, or a penetration rate of 28.5%. T-HT is also the dominant player here, but it is ceding market share to newcomers, particularly those offering voice services as well. IPTV is quickly becoming a key differentiator for alternative broadband operators, and 2009 ended with five IPTV services on the market, following launches by Amis and Optima.

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