A region with still some room to grow
By Dimitris Mallas
A look in the region
South East Europe is one of the most interesting markets in Europe. When consumers in Western Europe were making their first phone call through a mobile device using a digital GSM network back in 1992-1993, most of the countries in South East Europe were trying to get into their feet after the collapse of communism. Fast forward to 2013 and most of the countries have a mobile penetration well above 100% and also there following with quick steps the trends in Western Europe, while at the same time some of them are members of the European Union.
Mobile market has seen a tremendous uptake in these countries. Greece was the first one where mobile operators saw tremendous growth in the late ‘90s. The same scene was played at the turn of the century in countries like Romania or Bulgaria, while in the last 5-6 years the big star of the region is definitely Turkey.
It is very interesting to point out, though, that the economic crisis has hit pretty hard the whole region and in countries like Greece we have seen a tremendous fall in service revenues for mobile operators. Also, we have seen the fall of sales of mobile devices, which in some cases was justified by the economic situation. Greece, Bulgaria and Romania were the countries that were more hit by the economic recession.
Market estimations (Greece, Bulgaria, Romania & Serbia)
| Market value (€ million) | 2010 | 2011 | 2012 | 2013 (F) | 2014 (F) |
| Total market Southeastern Europe | 16.310 | 15.589 | 15.328 | 15.517 | 15.956 |
| Total market Southeastern Europe / IT | 3.824 | 3.637 | 3.550 | 3.710 | 4.109 |
| Total market Southeastern Europe / Telco | 12.486 | 11.952 | 11.778 | 11.807 | 11.847 |
| Total market Southeastern Europe / Mobile Services | 9.733 | 9.320 | 9.089 | 8.961 | 8.849 |
| Total market Southeastern Europe / Mobile Data services | 931 | 1.052 | 1.225 | 1.376 | 1.498 |
Source: EITO, BMI, Wireless Intelligence
The table above shows that the mobile market in the countries mostly hit by the crisis was seriously affected by the recession. On the other hand is important to note that the existing estimations are positive for 2013 and 2014.
Also, it is noteworthy that mobile data services have gone up and especially during 2012, something which is attributed to the smartphones trend which is taken South East Europe by its feet as younger people –and not only- are using their mobile devices for accessing the Internet and all kind of digital services.
Market estimations (Greece, Bulgaria, Romania & Serbia)
| Market indicators (thousands) | 2010 | 2011 | 2012 | 2013 (F) | 2014 (F) |
| Total Mobile phones (Shipments) | 9.052 | 9.321 | 8.124 | 7.907 | 7.895 |
| Total Smartphones (Shipments) | 2.017 | 2.807 | 1.994 | 2.224 | 2.664 |
| Total # of Mobile Broadband subscribers | 9.766 | 11.567 | 14.251 | 16.863 | 19.259 |
| % of total Mobile Subscribers | 16% | 19% | 23% | 27% | 30% |
| Total # of Broadband Internet subscribers | 5.884 | 6.713 | 7.416 | 8.074 | 8.675 |
| % of households | 17% | 20% | 22% | 23% | 25% |
Source: EITO, BMI, Wireless Intelligence
The above table shows that smartphones are continuously growing as on the same time featured phones are falling. Also, it is very interesting and encouraging, that mobile broadband is starting to grow pretty fast and has outpaced the fixed broadband penetration increase. Some analysts are predicting that in the near future mobile will be the only way to access the Internet in broadband speeds in some countries in the region. For that thing to happen it is necessary to see a lot of 4G networks implementations. So far, 4G is something that we have seen only in Greece and Bulgaria. On the other hand, 2013 and 2014 are expected to be the years of 4G broadband.
Total subscriptions in certain countries (estimations)
| Dec 11 | Mar 12 | Jun 12 | Sep 12 | Dec 12 | |
| Albania | 4.614.882 | 4.614.500 | 4.745.226 | 5.058.405 | 5.193.004 |
| Bosnia Herzegovina | 3.171.290 | 3.193.000 | 3.247.200 | 3.328.800 | 3.419.144 |
| Bulgaria | 11.941.400 | 12.130.100 | 12.237.400 | 12.432.480 | 12.659.100 |
| Kosovo | 2.741.630 | 2.771.010 | 2.831.490 | 2.946.277 | 3.002.740 |
| FYROM | 2.323.956 | 2.302.800 | 2.315.100 | 2.343.550 | 2.345.761 |
| Montenegro | 1.159.100 | 1.096.450 | 1.021.570 | 1.100.479 | 990.872 |
| Romania | 26.800.900 | 26.162.200 | 26.104.625 | 26.345.992 | 26.717.500 |
| Serbia | 10.288.700 | 10.262.200 | 10.289.250 | 10.525.800 | 10.671.050 |
In most of the other countries in the region, the trend is for mobile subscribers’ number to grow. Perhaps only in Greece the number is falling but that has to do also with the fact that government policy has asked for all prepaid number to be identified by their user, so that led to millions of disconnections. On the other hand, we are seeing in countries like Montenegro, mobile penetration percentages of well above 130% which is a little bit exaggerated. Take into account though, that in some countries growth in mobile connections is driven by machine-to-machine (M2M) connections, which is one of the big trends in the worldwide market.
The fall of mobile termination rates in Greece, Bulgaria and Romania is expected to seriously hit operator’s revenues and margins. That is the reason why major operators in the region are trying to find new revenue streams. M2M is one of them but we are going to see a lot more coming in the coming years especially in the areas of entertainment through mobile devices. Another interesting fact is that in most countries there are 2-3 mobile operators which are subsidiaries of big European players. The main players in the area are Deutsche Telekom (Germany), Vodafone (UK), Telekom Austria, Telenor (Norway). Deutsche Telekom is present in Montenegro, Bosnia & Herzegovina, FYROM, Greece, Bulgaria, Romania and Albania. With exception of Turkey and Serbia, Deutsche Telekom is everywhere.
Vodafone is present in the biggest markets (Greece, Turkey, Romania) while Telekom Austria is present in Bulgaria and Serbia. Telenor is gaining traction as it is present in Serbia but has bought recently Globul in Bulgaria from Greek mobile operator Cosmote. Take note that Cosmote belongs to OTE Group, 40% owned by Deutsche Telekom) which is going to lose one country of presence.
Greece
Greece is the more mature mobile market in the South East Europe region. Mobile telephony services have been provided to Greek customers from 1993 and it is a market that has gone pretty fast to the high end, especially regarding the devices that consumers are using in their everyday communication.
In total, there are around 15.2 million mobile connections in the Greek market, with the penetration being around 140%. A few years ago, there were 20 million subscriptions but new legislation making obligatory to provide and prove personal details has resulted to clean up databases and diminish the number of connections. Still, there are a lot of customers with more than one prepaid subscriptions who are expected to cut them to only one.
There are three operators in the Greek market. Cosmote, which is a 100% subsidiary of OTE Group, the country’s incumbent telecom operator, is the largest one with around 7.6 million customers according to the numbers published regarding 1st quarter of 2013. Cosmote was the operator that came last in the market (1998) but it still has managed to reach to the top in a rather short period of time. Its market share is estimated between 47% and 50%. But in prepaid mobile connections, because of the popular What’s UP package is above 55% according to some estimation. That’s the reason, that Vodafone Greece, the main competitor of Cosmote has asked for the regulator to rule that Cosmote has dominant position in the prepaid market.
Vodafone is the second largest operator in the Greek market with around 4.5 million subscribers and a market share which is estimated at around 30% – 32%. Vodafone has tried from 2012 and on to focus on its existing customer base trying not to lose any more customers to Cosmote. So far it has succeeded in that task and the next step will be to try to get more market share without getting involved in a price war. One of its strong advantages has been its cooperation with hellas online, one of the main fixed operators with around 500,000 subscribers. Vodafone Greece has around 18% of hellas online and its promoting heavily the fixed – mobile bundles.
Wind Hellas is the third largest operator in Greece with a market share of around 20% – 22%. The company has changed three times ownership in the last 10 years and after a lot of adventures regarding its debt, now has reached a point that has no debt and it owned by its former creditors. Wind Hellas has tried in the last couple of years to lower its operating costs and succeeded in that area and tried to be more competitive in the market by providing fixed – mobile bundles as it runs the third largest fixed operator in the Greek market.
Competition is going to be a little more intensive till the end of the year as it expected that there will be at least one mobile virtual network operator (MVNO). Cyta Hellas, a wholly-owned subsidiary of Cyta, the incumbent operator in Cyprus, has reached an agreement with Vodafone Greece to use its network in order to provide mobile telephony services in the Greek market. Cyta Hellas is the fifth largest fixed operator in the Greek market in number of subscribers. (OTE is in the first place in the fixed market, with Forthnet in the second place, hellas online in the third, Wind in the fourth and Cyta in the fifth).
Forthnet is also talking to the mobile operators trying to reach an agreement to provide mobile telephony services as an MVNO. Note that Forthnet is also the owner of Nova, the largest paid-TV platform in Greece.
The Greek regulator is the Hellenic Telecommunications & Post Commission (EETT), a very active regulator which usually comes under fire mainly from the incumbent (OTE) for its decisions, especially regarding the fixed market.
One of its last main decision was the move to lower the termination rates to a little above 1.2 eurocents from January 1st, 2013 which has resulted to a new fall for the mobile operator revenues. Mobile service revenues are expected to be at a level of 2.2 billion euros for the whole 2013 while in 2007 it was at 4.3 billion euros. Greek operators are considered to be the cheapest in Europe but that does not mean that local customers pay less than other Europeans, as on the same time, taxation in mobile connections is the highest in Europe. There are three main trends in the Greek mobile market from 2012 and on.
The first is the focus in bundle packages that combine fixed with mobile services. On the same time, the lower termination rates have offered the opportunity to operators to give a big number of free airtime minutes to their customers.
The second one is the increasing popularity of smartphones. At the end of 2012, 50% of mobile devices that were sold in the Greek market were smartphones. In 2013, it is expected that more than half of the Greek market for mobile devices will be smartphones as people are following the trend. The problem for operators is that people do not seem to use mobile networks for surfing the Internet and mainly if they do it they prefer WiFi connections either at home or at public cafes where they are offered for free.
On the other hand, and that is the third trend, mobile operators are investing in new network infrastructures. Cosmote is focused in its 4G network which has already around 2000 base stations. Vodafone has also announced the implementation of a 4G network, but its coverage is rather limited in certain areas of the capital of Greece, Athens. Wind is implementing a new 3G network which is easily upgradeable to 4G if the market conditions demands a move like that.
Bulgaria
Despite the fact that there was some serious delay, as it happens with other Eastern European countries, regarding mobile phone services adopted in the market, Bulgaria has reached a point to be characterized as a relatively mature market for mobile telephony. That conclusion comes up taking into account that in a population of 7.2 million inhabitants (based on the 2012 census) there were around 12.7 million mobile connections at the end of 2012, according to data from Informa Telecom & Media. In those connections, it is included a significant but very hard to count number of Machine to Machine (M2M) mobile connections. M2M is a rather new but very strong trend in Bulgaria.
The fact that Bulgaria is a member of the European Union in accordance with the steady economic growth has helped the mobile telephony market to present higher growth rated. It interesting that Bulgarian consumers have access to the latest generation services such as 4G/LTE with MobilTel, the largest mobile operator in Bulgaria being the first to provide them. Besides Mobiltel, in Bulgaria there are two more mobile operators: Globul which was sold from Greek telecom group OTE to Telenor from Norway and Vivacom which is ownedn by local and Russian bankers.
In January 2012, about 85.5% of all fixed broadband lines operated at download speeds exceeding 10Mbps and about 22.8% of all broadband lines had download speeds above 30Mbps. Cable operators are often the major broadband provider in rural regions. Their market share remained stable with 14% of all active broadband lines.
The mobile broadband penetration rate was 14.4% in January 2012 (the EU average was 43.1%). The share of mobile broadband subscribers using a dedicated data service device (card, key and modem only) reached 265 000. In comparison to the EU average of 8.1% on mobile penetration as regards dedicated data services, Bulgaria is far behind with 3.5%.
The retail broadband competition based on alternative technological platforms, especially LANs and cable-TV networks, is very fragmented. A big obstacle for the development of the infrastructure-based competition on the wholesale broadband market remains the deployment of illegal aerial cables by operators using the LANs technology platform.
Whilst the fixed voice market is still dominated by the incumbent (BTC) with a market share by traffic volume of more than 92% in all types of calls at the end of 2010, the trend towards fixed to mobile substitution continued also in 2011. As regards mobile penetration in terms of dedicated data service, Bulgaria is with 3.5% still far behind the EU average of 8.1%. The bundling of fixed and mobile voice as well as triple-play has significantly increased. Despite attempts by the Communications Regulation Commission (CRC) to enforce its decision on regulated Mobile Termination Rates (MTR) for incoming international calls, none of the three mobile operators applies the given rates.
Romania
Romania has one of the most competitive mobile markets in Europe with 3 major players (Orange, Vodafone, Cosmote) and a penetration that has reached 115% taking into account just active users. Total mobile subscriptions were at 25.63 million at the end of 2012 with the market showing signs of impact from the economic crisis. The crisis has hit the Romanina market for the last 3-4 years but it is difficult to assess the impact as the financial results have not been published in full.
According to National Authority for Management and Regulation in Communications (ANCOM), the revenues obtained from the provision of electronic communications networks and services in 2013’s first half totalised RON 7.48 billion, increasing by 3.5% as compared to 2012’s same period. With the exception of the fixed telephone and leased line services, which registered revenue decreases of approx. 11% compared to the first semester of 2011, down to RON 745 million and, respectively, RON 133 million, the other revenues achieved from electronic communications services – Internet access (+16.2% to RON 1.1 billion), mobile telephony (+0.1% to RON 2.7 billion), linear audiovisual media programme retransmission to end-users (+2.6% to RON 796 million) – registered increases. The revenues from interconnection at mobile locations and, respectively, at fixed locations registered annual growth rates of 1.4%, amounting to RON 999 million, respectively of 14.6%, to RON 341 million.
According to the data reported by the fixed telephony providers, in the first six months of 2012, the number of access lines enjoyed a relatively constant evolution as compared to end-2011 and increased slightly as compared to 30 June 2011 – 0.3%, amounting to 4.68 million, whereas the number of subscribers rose by 0.3% to 4.05 million. An access line is the so-called “telephone post”, while a subscriber is the natural or legal person who concluded a contract with the service provider. One subscriber may have installed several access lines, each line having assigned its own telephone number. Out of the 4.68 million fixed telephony access lines, 3.84 million were installed to residential subscribers, accounting for 82% of the total, whereas 0.84 million access lines were installed to business subscribers.
The fixed telephony penetration rate per 100 inhabitants (computed as the ratio between the total amount of access lines and the number of inhabitants in Romania) was 24.6%, whereas the fixed telephony penetration rate per 100 households (computed as the ratio between the amount of access lines provided to residential subscribers and the number of households in Romania) was 54.2%. The end-users’ traffic on the fixed public telephone networks kept decreasing in the first half of the year by 0.7% as compared to end-2011 and, respectively, by 8.7% annually, reaching 2.8 billion minutes. In terms of structure of the traffic, the voice traffic on the providers’ own fixed networks registered an annual drop of 17% (to 1.57 billion minutes), whereas the traffic to other fixed networks and to mobile networks grew by 4% (to 527 million minutes), respectively by 7% (to 600 million minutes). Furthermore, the voice traffic to international networks fell annually by 0.7% (to 138 million minutes).
In this year’s first six months, at the level of a fixed telephony line, an average of 1 hour and 41 minutes was registered for the landline phone, by 10 minutes less than in the same period of 2011, in the context in which a call lasted on average 3 minutes and 16 seconds, down, as well, by 2 seconds.
With regard to the value added services, one may notice a 25.4% growth (to 19.3 million minutes) of the traffic achieved from the fixed telephone networks to national non-geographic numbers in 0Z = 08 domain, 17 million minutes of which were made to 0800-type freephone numbers. The traffic to numbers in 0Z = 08 domain achieved from mobile telephone networks grew by almost 41% annually, amounting to 15.5 million minutes, and calls were made in particular to freephone numbers.
The traffic to the single emergency call number 112 achieved from fixed telephone networks augmented annually by 17.3%, to 1.1 million minutes, whereas the traffic originated on mobile telephone networks to this number amounted to 6.2 million minutes, up by 12.8%.
According to the statistical data report, at midyear there were 5.5 million users of electronic communications service bundles (integrated services and tied services) in Romania, up by 68.8% as compared to the same period of the previous year, while the penetration rate per 100 households of these services reached 77.6%. Out of the total number of bundle users, 3.77 million used bundles made of two electronic communications services (2-play), up by 105.5% as compared to the same period of 2011, whereas the number of users of bundles comprising at least three electronic communications services grew by 21.5%, registering 1.73 million users.
The fixed broadband penetration reached 15.3% in January 2012, compared to 14.0% in January 2011, but it still accounts for the lowest in the EU (the EU average stood at 27.7% in January 2012). As regards the infrastructure used, the Romanian broadband market is characterised by platform based competition. As far as the market structure is concerned, 1,010 operators provide fixed broadband internet access, of which 41 by cable network, 210 by fibre, 215 by radio, 17 by xDSL, 861 by UTP/FTP cable.
FYROM
Former Yugoslav Republic Republic of Macedonia (FYROM) is a rather small country in South Balkans with a little over 2.1 million people population. Despite being a small country, FYROM has three mobile operators with over 2.3 million mobile connections at the end of Q3 2012. That number takes mobile penetration at 105% which is around the usual penetration that we see in most countries in Eastern Europe and on the Balkans.
There are three operators in FYROM. T-Mobile (former MobiMak) is the subsidiary of MakTel, the incumbent operator which is controlled by Magyar Telecom from Hungary, which in turn is controlled by Deutsche Telekom. T-Mobile has around 50% of FYROM’s mobile market.
The two other players in mobile space have around 25% each. The mobile operator called “One” used to be called Cosmofon and was owned by Cosmote of Greece. But Deutsche Telekom’s entrance with a 40% share in OTE Group, which owns Cosmote, had resulted the sell of Cosmofon to Telekom Slovenije for an amount of around 200 million euros. The third player is VIP, owned by Telekom Austria, which is one of the major telecom groups in South East Europe confronting head to head in most markets Deutsche Telekom – OTE.
UMTS licences were awarded late, in 2008, and only to the two established operators (t-Mobile and Cosmofon). In 2009 the frequency plan was amended to allow UMTS in the 900 and 1800 MHz bands. Most of the licences for fixed wireless access issued in 2007 have been returned to the regulator and currently there is only one active licensee operating in all six regions. Analogue switch-off is planned for 2013. Digital dividend procedure is expected this year.
Fixed voice telephony was liberalised by introducing a general authorisation framework in 2005. Theconcession contracts of the fixed incumbent and the mobile operators were abolished and replaced by general authorisation in 2008. Makedonski Telekom (MakTel) is the incumbent provider of fixed voice telephony services. Alternative fixed operators have gained a market share of about 25%. In the provision of fixed broadband services where the incumbent faces a particularly strong competition from cable operators its market share has shrunk to below 50%.
The telecoms market in FYROM is expected to show slow growth in the coming years because of the economic crisis which has affected the entire region. On the other hand, there are opportunities in terms of smartphone penetration which is very low at this point, as well as in introducing new mobile services in the market.
Fixed lines penetration is rather low (just 21% of the population) and is interesting that it was fallen from 25% in 2005 which means that consumers are moving towards mobile services. The same thing goes in broadband with fixed broadband having a penetration of 14% at this point, but mobile broadband considered to be the way of the future as mobile operators will start to promote their own services based on next generation networks.
Montenegro
Another small country in the South Balkans which has rather recently has declared its independency is Montenegro. The country, as it attracts a large number of tourists, has set a record regarding mobile penetration as at one point at the end of 2011 181%, a percentage which is well above European average. In half 2012, mobile connections in Montenegro were at around 1.122 million but they are expected to lower to below 1 million, as the operators are supposedly working on a cleanup of their customer base.
There are three operators in Montenegro. The biggest one is Telenor, formerly known as Promonte, which is owned by the Norvegian telecoms group Telenor. Its market share is estimated at around 39%-40%.
In the second place is T-Mobile, which is a 100% subsidiary of the incumbent operator, Crnogorski Telekom. The latter is controlled by Magyar Telekom, which in its turn is controlled by Deutsche Telekom. Practically, Deutsche Telekom is trying to have the same approach in Montenegro as it has in all the other countries where T-Mobile brand exists.
The third player is the newer one and it is m:tel, an operator which is owned by Telekom Srbija (51%), which is the incumbent operator of Serbia, and Telekom Srpske (49%) which is the main telecom operator in the serbian part of Bosnia & Herzegovina.
The Agency for Electronic Communications and Postal Services (EKIP) is the national regulatory authority. It was established in 2001, but its competencies and name were changed first in 2005, when it took over regulation of the postal sector, and then in 2008, when it became the sole authority responsible for spectrum assignments in telecom and broadcasting sectors.
Montenegro has three mobile operators, with spectrum assignments in the 900 MHz, the 1800 MHz and the 2 GHz. In late 2011 additional spectrum available in these bands was distributed between two operators, Telenor and Crnogorski Telekom, whereas the third operator m:tel did not show any interest in additional spectrum. Mobile operators are allowed to use the GSM bands for UMTS and LTE services. Montenegro has also awarded several licences for fixed wireless access. Analogue switch-off was initially planned for 2012, but was postponed until mid-2015.
Serbia
One of the late bloomers in the mobile market in Europe is Serbia. A country that because of the war conflicts of the ‘90s has discovered mobile telephony in the 21st century but its progress has been very fast in the last few years. That said, Serbia, a country of 7.2 million population, has reached a level of over 140% mobile penetration at the end of 2011 as the three mobile operators had close to 10.3 million subscribers. Final data for 2012 have not been disclosed but the estimations are that at the end of 2012 there were 10.6 million subscribers.
The Serbian market seems to have some room for growth as customers are now turning their attention to smartphones and mobile Internet applications. There are three mobile operators. The biggest one is the oldest one and that is m:ts, the mobile subsidiary of the incumbent telecom operator Telekom Srbija. The latest is fully owned by the Serbian state after Greek telecom group ??? sold its 20% stake to the government of Serbia at the end of 2011. m:ts has a market share of around 51% – 53% well in front of the other two mobile operators.
The second largest player in the Serbian mobile market is Telenor, a subsidiary of the Norwegian telecom group with the same name. Telenor in Serbia is the rebranded Mobtel Srbija which was the second player in the mobile market since the end of the ‘90s. Its market share is around 30% but for now it is not threatened by the third mobile operator which is Vip. The last one is owned by Telecom Austria and Vip’s market share in Serbia is around 16%-17%.
The national regulatory authority, RATEL, was established in 2003 but became operational only in 2005. During its first years of operation, RATEL’s independence had been challenged by the ministry’s supervision powers and by the systematic delays in approval of its board members. The institutional capacity of RATEL has improved recently, but its expertise on implementation of the regulator’s framework still needs to be strengthened. The Ministry of Culture, Media and the Information Society has overall responsibility for policy in the sector, including spectrum and universal service. A unit “Administration for Digital Agenda” within the ministry is specifically responsible for information society issues. The key functions of the government and the electronic communications sector regulator were redefined in the laws adopted in 2010.
Mobile operators are not allowed to implement 3G services in the 900 MHz and the 1800 MHz bands and there has been little progress on refarming. Some part of the spectrum in the 900 MHz band (EGSM spectrum) is currently reserved for the use by military services, which makes refarming process problematic.
Investment in electronic communications has been largely driven by mobile networks operators which contributed to almost 60% of total investment in the sector in 2011. Future market growth primarily depends on the promotion of mobile broadband which requires a more technology neutral and open spectrum policy fully aligned with the EU regulatory framework.
Turkey
Turkey is the most interesting market regarding mobile telephony services in the whole Europe perhaps. A country with over 75 million residents, a still booming economy and with mobile penetration below 100%. To put it simply, the Turkish mobile market has still some room to grow in order to catch up with the rest of Europe and the more developed markets.
Turkey has three mobile network operators, each offering GSM and UMTS services. Turkey has not awarded licenses for fixed wireless access, something that has happened in a lot other countries in the region. That is also an advantage for mobile operators as theirs competition has not been increased. Analogue switch-off is planned to be completed by March 2015. In 3Q 2011 ICTA, the Turkish regulator, drafted a proposal to allow 3G services in the 900 and 1800 MHz bands, which it sent to the ministry as an input for consideration in policy making. It also proposed that before this change takes place, additional spectrum in the 900 MHz (E-GSM) and 1800 MHz bands may be auctioned t operators that do not have a certain amount of frequencies in these respective bands.
Mobile subscribers in Turkey are around 70 million, which means that penetration is around 93%, one of the lowest in Europe especially taking into account that we are talking about on of the fastest developing economies in the region.
Turkey’s biggest mobile operator is Turkcell with 36 million subscribers and a market share of 52%-53%. The problem with the company is its complex shareholder structure as TeliaSonera is the biggest shareholder with 37% but local conglomerate Cucurova Group with 14% and Alfa Group (14%) from Russia have also a saying in running the company. Sometimes the three shreholders do not agree which causes a lot of internal problems which for the time being has not really affected Turkcell in terms of market share and revenues fall.
The second largest operator is Vodafone, known before as Telsim, which has around 19 million subscribers. Vodafone Group is pretty happy with the results of its Turkish subsidiary even though it is not so far behind Turkcell. On the other hand the growth is exceptional.
The third player is Avea, which has around 15 million subscribers. The company is controlled by Turk Telekom, the local telecom incumbent operator, which was a little late in deciding to get into the mobile market. Turk Telekom controls 90% of Avea while Turkiye Is Bankasi, one of country’s largest banks the other 10%.
Turkey’s Electronic Communications Law of 2008 brought the Turkish regulatory framework closer to the EU 2003 framework. However, Turkey’s legislation remains a complex hierarchy of laws, bylaws and regulations, with some key issues addressed only by secondary legislation.
Competition in the fixed networks sector started late, as Turk Telekom had exclusive rights to the provision of local networks and services until 2009. In the internet market, the retail and wholesale arms of Turk Telekom were separated in 2006, when retail subsidiary TTNet was established. In 2Q 2012 the Council of State stopped the execution of an ICTA decision of August 2011 that had allowed Turk Telekom to provide retail bundled internet services from January 1, 2012 under its own brand.
The mobile sector is more competitive, as there are three mobile network operators, although Turkcell has more than a 50% market share of both subscriptions and revenues. While fixed broadband penetration is moderate, mobile broadband penetration has grown fast in 2011-2012, following a slow start due to the late launch of UMTS. Mobile broandband is growing in a pace that for sure it will be more important than fixed broadband in the near future. Take also into account that Turkey is a country with no fixed infrastructure and it is obvious that mobile broadband will be the main trend in the years to come.
Albania
One of toughest and most competitive markets in the mobile sector is Albania. The government has decided that 4 operators are needed even though when there were two the competition was pretty fierce. Mobile connections were, according to IDC estimates at 4.6 million at the end of 2011 and have been over 5.1 million at the end of 2012. That number takes the estimated mobile penetration at over 180% as Albania’s population is a little over 3 million people.
Albania has implemented the EU acquis relatively late, between 2008 and 2010. The electronic communications law is based on the EU 2003 regulatory framework. The legislative procedure is slow. Amendments for introducing the EU 2009 regulatory framework were prepared in 2010, but have not been submitted to Parliament yet. Draft laws on rights of way and audiovisual media are being discussed in Parliament since 2010.
The national regulatory authority (ARCEP) was established in 2000 as an independent legal entity. However, its independence has in practice been hampered as parliament repeatedly replaced the entire board upon government initiative. In particular spectrum management and tariff regulation are subject to strong political influence. The administrative capacity and resources of the regulator remain limited.
There are 4 mobile operators, 2 of them (Vodafone, AMC) are dominating the market while the other two as later entrants are struggling to gain market share. Vodafone Albania, a wholly subsidiary of known British telecoms group, is mobile operator with the biggest market share which it reaches 52%. In second place is AMC, which is controlled by Cosmote, the largest Greek mobile operator. AMC, which at the beginning of ‘00s was a subsidiary of the incumbent telecom operator, has a market share of 34% and is in a decline the last 3-4 years.
The new players have not managed so far to unbalance the domination of Vodafone – AMC duo. Eagle Mobile, which is owned by the incumbent telecom operator, Albtelecom, has a market share of just 12%, while Plus, the newest mobile operator, has a market share of less than 1% after 2 years.
Take into account that only Vodafone and AMC have a license for 3G services. On the other hand, broadband culture is now starting to be on the rise in Albania. Having in mind, that only 12% of the population has access to a fixed line, it is expected that people will turn their interest to mobile broadband solutions which are starting to appear in the Albanian market.
Bosnia & Herzegovina
From different points of view, Bosnia & Herzegovina telecoms market is a rather strange one. The reason is that because of the political system in the country there are three incumbent operators: Telekom Srpske, BH Telecom and HT Mostar. The first one is owned by Telekom Srbija and operates in the serbian part of the Bosnia federation while the other two in the rest of the country.
All three have their own mobile subsidiaries. Telekom Srpske has m:ts which has over 1.4 million subscribers, while BH Telecom has BH Mobile with 1.5 – 1.6 million subscribers and HT Eronet is the mobile part of HT Mostar with around 600 thousand subscribers. Take into account that BH Telecom is owned by the government of the Federation of Bosnia & Herzegovina, while in HT Mostar one of the main shareholders is the Croatian incumbent, Hrtvatski Telekom, which in turn is controlled by Deutsche Telekom.
Bosnia and Herzegovina had at the end of 2011 3.171 millions subscribers in total, or an 83% penetration rate (compared to official population estimate) and was expected to have risen to 3.4 million subscribers for mobile services at the end of 2012. This number means that there is room for growth especially in a country with not so much fixed infrastructure because of the past political situations.
The three incumbent operators have equivalent spectrum blocks in the 900 MHz, 1800 MHz and 2 GHz bands. UMTS licences were awarded late, in 2009. Since 2010, the 900 and 1800 MHz bands are technology neutral and allow deployment of UMTS services. The digital switchover initially scheduled for the end of 2011 has been postponed until December 2014. No licences for fixed wireless access have been awarded, but several operators offer wireless broadband services in the unlicensed 2.4 GHz and 5 GHz bands.
The Regulatory Authority for telecommunication in Bosnia and Herzegovina is the Communications Regulatory Agency (RAK). The Communications Regulatory Agency (RAK) was established in 2001 as a converged regulator for telecommunications and media. Implementation of the EU regulatory framework is hindered by a lack of administrative capacity and resources both at the regulator and in the ministry.
Bosnia and Herzegovina is impaired by the lack of coordination between different levels and institutions within its government, the struggle for competencies between the state and the entities and overall limited administrative capacity.
Kosovo
Kosovo can be characterized as a very interesting case as a mobile market. Kosovo is a rather new country which is now trying to make its first moves into the European environment. Kosovo’s population is around 1.7 million people and according to some estimates mobile subscriptions are between 2.7 and 3 million subscriptions, while other estimations come to the conclusion that mobile penetration is below 100%. In any case, Kosovo seems to be an interesting market for any player.
Kosovo has only two authorised mobile network operators (Vala and IPKO) and is the only country in the SEE region not having awarded any UMTS licence. Two more mobile operators (Zmobile and D3) are expected in the near future to start operations. Kosovo has neither awarded licences for fixed wireless access nor made the 900 and 1800 MHz bands technology neutral. Neither has it decided on a strategy for analogue switch-off and use of the digital dividend.
Vala is the subsidiary of the incumbent telecom operator, PTK, which the government is trying to sell the last few years. Vala is considered to have around 65% market share, while IPKO, which is very strong in the Internet market, has around 35% of the mobile market.
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