The saturated Slovenian telecommunications market is highly competitive, while complicating the operations of service providers are the growing expectations of users who demand high-quality services at low prices. Because there is increasingly less room to attract new users, providers are focusing on maintaining existing subscribers. Trends in fixed-mobile convergence and the use of services are also spreading to the segment of business users, as all major providers of fixed services also offer mobile telephony services.
In terms of the range of fixed-mobile convergence products, the Telekom Slovenije Group is the most comprehensive and highest-quality service provider on the Slovenian market, and maintains the highest market share in all segments.
Alternative operators gain market share primarily through an aggressive pricing policy that we cannot follow due to the limitations imposed by the regulatory body and the principles of good management. The aforementioned fall is being offset by optimising the sales network, through cross-sales of services, the development of new services and new subscriber models, through differentiation and the exclusivity of content, by improving the user experience, by providing standardised cloud computing services, and through a comprehensive range of ICT services.
Number of connections in Slovenia
Sources: SORS, Q4 2014, internal data Telekom Slovenije
Telekom Slovenije Group market shares at the end of 2014 in key segments
Vir: Poročilo za četrto četrtletje 2013, APEK; interni podatki TS.
Fixed broadband access
Fixed broadband access penetration in Slovenia is continuously growing: the household broadband penetration rate stood at 72.0%1 in the fourth quarter of 2014, while the population penetration rate stood at 27.7%. There were more than 555,000 broadband connections in Slovenia (compared with 530,000 in 2013), 86.3% of which was accounted for by residential connections.2 Telekom Slovenije maintains the leading market share followed by Telemach and T2.
There was a notable trend of increasing speeds in this segment, which can be attributed to the increased proportion of FTTH technology (fibre-optic networks) and the range of high-speed internet services included in the packages of service providers. At the end of the fourth quarter of 2014, the number of active fibre-optic connections in Slovenia exceeded 121,000, accounting for 21.8% of all connections. The number of fibre-optic connections rose by 14% in one year. Telekom Slovenije had more than 42,000 users on FTTH connections at the end of the fourth quarter of 2014.
The household penetration rate of fixed-line television connections stood at 71.4% at the end of the fourth quarter of 2014. At 48.5%, cable TV holds the highest market share, primarily on account of digital cable TV, followed by IPTV at 45.6%.
Telekom Slovenije still holds the highest share of the IPTV market at 52.9%, which is falling slightly, followed by T-2 and Amis.
Mobile telephony market
The number of active users rose by 41,000 in 2014 relative to the figure at the end of 2013. The increase in the number of users is driven primarily by dual SIM cards (SIM2). The increase in the number of the latter, in turn, is driven by growth in data services. The penetration rate has risen to 112.6%.
At 48.4% at the end of 2014, Telekom Slovenije held the leading share of the mobile telephony market, followed by Si.mobil, which held a 29.3% market share.
Telekom Slovenije’s share of the mobile telephony market
Market shares of mobile broadband internet access operators
Inter-operator segment (wholesale)
The international operator environment offers numerous business opportunities and opportunities for growth, despite the significant impact of the economic crisis. Telekom Slovenije is strengthening its presence in the area of international wholesale services in the region, which is reflected in sharp year-on-year growth in revenues.
The majority of inter-operator services are regulated on the domestic market. The regulatory body defines Telekom Slovenije as an operator with significant market power on the majority of relevant markets. The Company thus generates the highest proportion of revenues from regulated services. There are still, however, numerous opportunities for growth, particularly in the area of multimedia services and content, in the leasing of data connection capacities, in facilitating access to open broadband networks and in the resale of retail services.
Markets of South-Eastern Europe
Ipko remains the leading provider of broadband connections in Kosovo and one of the leading mobile telephony operators. According to figures of the regulatory authority (ARKEP),33 there were 183,127 broadband connections in Kosovo at the end of the third quarter, meaning a household penetration rate of 61.4% and a population penetration rate of 10.5%. Ipko holds a 50.2% market share. There were nearly 1.8 million mobile telephony users, translating to a population penetration rate of 97.1%. Ipko recorded a significant increase in its market share in 2014, from 33.7% at the end of 2013 to 36.4% in the third quarter of 2014. We assess that there were around 172 thousand digital TV connections at the end of the third quarter, meaning a household penetration rate of 60%, while Ipko’s assessed market share is 49%.
According to figures of the regulator authority (AEK),34 there were 343,222 broadband connections in Macedonia at the end of the second quarter of 2014, meaning a population penetration rate of 16.6%. The mobile telephony market is saturated, with a population penetration rate of 108.7% at the end of the second quarter. The total number of mobile telephony users exceeded 2.2 million, while One’s market share was 25.1%. The fixed telephony market continues to decline. There were 391 thousand fixed telephony connections at the end of the second quarter, meaning a population penetration rate of 18.9%.
According to figures of the regulatory authority (RAK),35 there were 534,444 broadband connections in Bosnia and Herzegovina, meaning a population penetration rate of 13.9%, accompanied by a positive growth trend. Growth also continues on the mobile telephony market, which comprises 3.5 million users or 90.7% of the population. The decline continues on the fixed telephony market, which comprises 858,664 users, translating to a population penetration rate of 22.3%. The aforementioned market is tracking trends on developed markets and points to the further loss of market share by incumbent operators, while alternative operators are enjoying double-digit growth and gaining market share. Blicnet’s assessed share of the broadband access market stood at 4.6%, while its estimated share of the pay TV market is 6.5%.
Telekom Slovenije began to fully exploit the regional fibre optic network in 2014, which represents the main link to subsidiaries, as well as the greatest potential for growth in revenues and margin from international wholesale data services. The network facilitates a transfer speed of 100 Gb/s and facilitates the implementation of the broadest possible range of data services, including MPLS functionality.
1 Source: AKOS – new methodology for counting households (EU-SILC), calculated as the ratio of the number of residential and business user connections to the number of households in the Republic of Slovenia.
2 Vir: Source: AKOS, Q4 2014; SORS, Q3 2014
33 Source: Kosovo AR KEP regulatory authority, Q3 2014 report.
34 Source: Macedonian AE K regulatory authority, Q2 2014 report.
35 Source: Bosnia and Herzegovina RA K regulatory authority, Q3 2014 report.