Trends in the ICT sector and development of ICT markets

Technological trends in the ICT sector

In 2014 the ICT sector was again characterised by sharp growth in activities relating to wireless data transfer and mobile telephony. The latter now generates some 25% of global internet data traffic. At the same time, the extensive establishment of LTE networks across the world is in progress. Such networks are already in place at 331 operators in 112 countries, with more than 380 million users, representing annual growth of 131%. Telekom Slovenije is also following the aforementioned trend, with the intensive development of its LTE network (see section for more information).

In terms of connections for data centres and applications that require the shortest delays, 100 GE (Gigabit Ethernet) is becoming the new standard. Fully integrated solutions of this type are now available. In the context of reduced energy consumption, continued growth in transfer speeds will result in photonics that will facilitate a new record in data transfer of 250 Tb/s (250,000 Gb/s) via a single fibre using 50 wavelengths (DWDM). The storage of and quick access to data will be crucial in the context of ever increasing transfer speeds. NAND flash technology already facilitates the storage of 128 Gb on a single chip (Samsung), while a 1 TB flash drive has even been promised in 2015.

The social media networks that contribute most to the global flow of data play an extremely important role in the development of the ICT sector. One response to growth in data traffic is the introduction of new analytical tools that offer added value in different areas of use: audio, cash transactions and healthcare (e.g. Google Voice Search, OpenGov, Wealthfront and Zephyr). Research indicates that the following devices are used most frequently to receive information:

Naprave za sprejem informacij

IDC is predicting that 90% of all IoT (Internet of Things) services will be hosted by cloud solution providers in the future. This represents an opportunity for telecommunication operators to provide these types of solutions regionally using their ICT infrastructure and established security protocols. The IoT is also becoming a reality in terms of connecting home devices, and encourages major operators to search for interoperable solutions to stimulate market growth.

With the standardisation of the so-called eSIM card (electronic SIM card), which will be built into devices during the manufacture process itself, telecommunication operators have the opportunity to offer security mechanisms and processes as additional services. GSMA envisages the use of eSIM cards in the fields of logistics, industry automation, smart energy grids and e-healthcare. A built-in, so-called soft SIM card has already been presented by Apple in its new iPhones, although for a different business model. This represents a major threat to telecommunication operators, as it will facilitate migrations between operators without switching SIM cards.

Electronic payments using mobile phones is poised to be the next breakthrough, provided that an appropriate level of security, the anonymity of data and simplified administration are ensured. This has been promised by the Apple Pay solution in connection with NFC terminals. MasterCard has introduced a competitive electronic money solution with fingerprint identification built into the card, which eliminates the need to enter a PIN as a form of authentication.

The transfer of messages in the mobile segment has shifted from SMS to mobile instant messaging applications. These represent the greatest threat to mobile operators, as they are recording annual growth in the number of users and messages of more than 100%. For example:

WhatsApp SnapChat
400 million users 1.2 billion messages a day
50 billion messages a day  

In the area of cloud computing, the linking of Microsoft and IBM will bring benefits primarily to business users, as IBM’s business solutions (Websphere, MQ, DB2 and Pure Application) are now available on the Microsoft Azure platform. IBM and Apple have also announced a link that will be intended for iPad business users and the users of IBM’s business services. These types of integrations narrow the playing field for other regional operators and providers of cloud computing services.

Annual global growth in sales of tablet computers is 52%. Users of the aforementioned devices spent USD 10 billion on applications on the iOS platform alone. There is also a notable trend of declining smart phones prices (by 5% annually).

With access to mobile and continuously connected devices, electronic, cardless and cashless transactions are coming to the fore, representing an opportunity for telecommunication operators to generate revenue. Some major operators are already transforming mobile telephones into e-wallets in cooperation with banks. NFC, the technology that facilitates the latter, is available on an increasing number of devices.

Wide-open online education, which is already used by millions of users around the world, represents a new breakthrough in ICT.

State of the European telecommunications sector

Revenues on the European telecommunications market were down again in 2014. Forecasts indicate a continued fall in revenue. However, the decline will slow after 2014 and revenues will stabilise by 2016.

Forecast of telecommunications sector revenues: Eight Western European (source: Analysys Mason, 2014) countries

EUR billion 2010 2011 2012 2013 Forecast
2014 2015 2016 Growthrate13–16
Mobile telephony and data transfer 113.8 109.9 103.2 93.5 88.7 85.5 84.1 –3.5%
Mobile telephony 79.9 72.0 63.5 53.8 48.1 43.9 40.9 –8.7%
Mobile data transfer 33.9 37.9 39.7 39.7 40.6 41.6 43.2 2.8%
SMS 18.0 18.3 17.4 15.4 13.7 12.3 11.1 –10.3%
Mobile data transfer 15.9 19.6 22.3 24.3 26.9 29.3 32.1 9.7%
Fixed telephony and internet services 88.7 86.2 84.4 82.4 80.8 79.6 78.9 –1.5%
Fixed telephony 45.4 42.0 39.3 36.4 33.2 30.5 28.2 –8.2%
Internet services 43.3 44.2 45.1 46.1 47.6 49.1 50.7 3.2%
Pay-TV 22.9 23.7 24.6 25.5 26.6 27.8 28.9 4.3%
Total revenues (with pay-TV) 225.4 219.8 212.2 201.5 196.1 192.9 191.9 -1.6%

* Germany, France, United Kingdom, Italy, Spain, Netherlands, Belgium and Portugal.
Source: Arthur D. Little, Exane BNP Paribas estimates, March 2014


A decline in revenues is forecast for the telecommunications market until 2016 due to declining revenues from mobile services (–3.5%) and fixed services (–8.2%). The aforementioned decline will be offset by growth in internet services (+3.2%) and pay TV services (+4.3%). The mobile telephony segment (telephony and SMS) is having the most significant impact on the fall in revenue overall due to regulation and aggressive competition. The decline in revenue is expected to slow, primarily due to the easing of regulatory policy and growth in fixed broadband connections.

The analysts and consultants of Analysys Mason (source Analysys Mason, 2014) are forecasting a drop in revenues from telecommunication services in Western Europe until 2019. The aforementioned fall will be driven primarily by a decline in revenues from mobile telephony, SMS, fixed telephony and mobile broadband access. They are forecasting the highest growth for M2M devices and mobile data transfer on mobile phones. Fixed broadband access and pay TV services will achieve somewhat lower growth.

Declining revenues from services is also forecast for Central and Eastern Europe until 2019. Similar to Western Europe, the highest growth is being forecast for M2M devices and mobile data transfer on mobile phones. In contrast to trends in Western Europe, growth in revenues from mobile broadband access services is forecast for Central and Eastern Europe.

Revenue from telecommunications services and the proportion of GDP it accounts for in the period 2009 to 2019 – Western, Central and Eastern Europe (Source: Analysys Mason, 2014)

Prihodki od telekomunikacijskih storitev in njihov delež v BDP-ju

Prihodki od telekomunikacijskih storitev in njihov delež v BDP-ju

Development of ICT markets

Moderate growth in fixed broadband connections market

The number of broadband connections continues to rise in the EU, although the annual growth rate is low and has stabilised between 1% and 1.3%.

Penetration rates for household broadband internet access in Slovenia and the EU-27

Penetracija širokopasovnega dostopa do interneta na gospodinjstvo v Sloveniji in EU 27

Net growth in the revenues of new operators has outstripped the growth recorded by incumbent operators for the last eight years. Major changes in the overall market share of new operators are not expected due to low market growth. Incumbent operators still account for 42% of all fixed broadband internet access connections. With a 35% market share in the third quarter of 2014, Telekom Slovenije is below the average of incumbent EU operators.

According to figures from the European Commission (January 2014), Slovenia is below the EU average of 27% in terms of household broadband penetration, while growth in the previous period was also lower and below the EU average. This is also true for connections with higher transfer speeds, i.e. in excess of 10 Mbps. The prices of high-speed fixed broadband internet access services are falling in all EU Member States, while prices in Slovenia are among the highest.

Growth in the fixed broadband services market

Rast na trgu fiksnih širokopasovnih storitev

Growth in mobile broadband access

Mobile broadband access is the fastest growing segment of broadband services, although growth has slowed slightly. It is used for the most part as an alternative form of access to the internet and does not represent a replacement for fixed access. More than 30% of EU households have the latter, while only 8% have only mobile access. The majority of mobile broadband subscriptions are used on smart phones, followed by tablets and laptop computers.

According to forecasts by Analysys Mason, the European mobile broadband internet market will be characterised in the future primarily by growth in mid-screen devices (tablets and e-readers) and by a decline in large-screen devices (desktop and laptop computers, and netbooks).

Packages with leased data transfer services account for the highest proportion in Slovenia, followed by standard packages with voice services and data packages intended for use on other devices.

Development of fibre optic connections for higher speeds

Slovenia still ranks among the leading countries in Europe in terms of household fibre optic access penetration (FTTx), and stands above the EU average in this regard, although that rate is growing faster in other countries. Broadband FTTx connections accounted for 21.8% of all broadband connections in Slovenia at the end of 2014, compared with 6% in the EU (January 2014).

Telekom Slovenije provides the fibre optic network with the highest level of quality, reliability and security of services. Users were provided SiOL internet services with speeds of up 1 Gb/s on the fibre optic network in 2014.

Growth in the pay TV market

Digital IPTV services and multimedia content (video-on-demand, HD content, interactive TV content and internet television) continue to record growth. IPTV accounts for 45.6% of all TV connections in Slovenia (Q4 2014) and continues to grow. Cable TV is also recording growth in connections, primarily on account of the number of digital connections. At 52.9% (Q4 2014), the Telekom Slovenije Group holds the highest share of the IPTV market. According to AKOS figures, 71.4% of Slovenian households have pay TV (Q4 2014).

According to forecasts by Analysys Mason, the pay TV market in Western Europe is expected to grow by 21% from 2013 to 2019, with growth in OTT (over-the-top) and IPTV services contributing most to overall growth. Cable TV will remain the leading technology in the pay TV market, although it is expected to decline by 4.4% until 2019. Pay TV household penetration will exceed 64% in Western Europe over the same period.

OTT services for households will grow, primarily as a second TV receiver, as users will wish to reduce TV costs. A total of 3.2% of households in Western Europe will use OTT as their primary receiver by 2019, while 47.7% will use the aforementioned technology as their secondary receiver.

Growth in mobile voice telephony compared with fixed telephony

More than two thirds (68%) of EU households have fixed telephony. According to forecasts by Analysys Mason, the fixed telephony penetration rate (residential users) will fall to 62% in Europe by 2019. With a fixed telephony penetration rate of around 76%, Slovenia stands above the European average, although that rate is in constant decline. In the mobile segment, Slovenia has the lowest per capita penetration rate of active mobile telephony users in the EU (112.8% in 2014), giving it sufficient room for further development. The penetration rate in Slovenia is constantly rising.

Mobile SIM card penetration in EU Member States (2013)

Penetracija mobilnih SIM kartic v državah članicah EU (2013)

The proportion of households with both fixed and mobile telephony is higher in Slovenia (73%) than in the EU28 (61%). In contrast, the proportion of households with only mobile telephony is lower in Slovenia (23%) than in the EU28 (31%). The proportion of households with only mobile telephony can be expected to rise is Slovenia in the future, resulting in a decline in fixed telephony connections. The proportion of traffic from the mobile network and VoIP is also rising, while the proportion of traffic from the fixed network is on the decline. That trend is quite obvious in Slovenia, as traffic from the fixed network accounted for just 17.7% of total traffic in the fourth quarter of 2014 compared with 82.3% from the mobile network.

The migration from prepaid to subscriber services is characteristic of the EU mobile telephony market, where the average is 54%, while Slovenia is among the countries with the highest proportion of subscriptions (73%).

Rising proportion of package services, in particular triple play and quadruple play

With the aim of maintaining existing customers and attracting new customers, European operators are offering more varied packages that combine fixed telephony, the internet, TV and mobile telephony (quadruple play). The popularity of such packages is on the rise, while the number of independent broadband access connections is falling.

Slovenia is also recording growth in all packages, most notably in quadruple play. The main reasons lie in affordability and the fact that these packages are the newest on the market. With the most advanced network, Telekom Slovenije also has great potential for further growth in this segment.

January 2014 Slovenja EU28
Proportion of households with mobile telephone access 94 % 92 %
Proportion of households with a fixed telephone connection 76 % 68 %
Proportion of households with broadband internet access 67 % 60 %
Proportion of households with internet access via mobile telephone 52 % 52 %


IT market and cloud computing

Trends in the ICT sector dictate the need for new sales strategies on the management consulting and cloud computing services market. The aforementioned market is expanding in line with the development of information technology, as companies are increasingly searching for internal reserves and focusing on their core activity, while hiring management consultants for other areas. The entire ICT is following that trend by accelerating the development of cloud computing services, and services based on the latter. Even leading advisory and analytical service providers such as Gartner and IDC are forecasting growth in this sector in the future. Major telecommunication companies are focusing on an additional range of ICT services accordingly, as they expect to compensate for the drop in revenues from the provision of basic telecommunication services.

We have witnessed significant changes on the Slovenian ICT market, as major transactions are becoming increasingly rare due to a lack of investment funds. A small number of large transactions can thus transform into a large number of smaller transactions that are indispensably linked to an external provider of ICT and cloud computing services. This area represents a significant opportunity for Telekom Slovenije and is also one of its advantages over other ICT service providers, as the Company is already an experienced provider of such services.

Notable progress has also been made in the development of integrated solutions that facilitate the advanced use of telecommunication services. Trends are geared towards the upgrading and/or transformation of standard telecommunication and TV solutions into OTT28 and IPTV solutions – pay TV. These will facilitate the use of the same services on different platforms and devices, offer additional functions and thus increase usefulness and added value.

28 OTT relates to the broadcasting of the broadband audio and video signal with the help of the internet and the involvement of a systems administrator in the control and broadcasting of content.