Growing net handset revenues mitigate mobile market decline
Mobile SIM market keeps contracting, reaching estimated penetration rate at 113.2% at the end of 2014 vs. 115.6% penetration rate reported for the end of 2013. All the operators make efforts to increase number of postpaid customers by different tariff bundles with attractive handset/tablet offers. HT keeps stable share of total mobile customers at estimated 46.7% at the end of 2014.
Mobile usage pattern has been changing during 2014 as a result of more smartphones and tablets usage increase. Mobile customers use mobile data access more than ever thanks to increasing "Over the Top" services usage. As a result, total Croatian mobile market minutes of use (MOU) grew at slower rate (1.2% yoy) in first nine months of 2014 and the number of SMSs sent sharply decreased yoy by 8.6% in the same period * .
New mobile fee has been introduced on 23 May 2014 by the decision of the Croatian government to increase radiofrequency spectrum fee by three times.
Consolidation of Optima Telekom
Fixed telephony remains highly competitive in Croatia, with 13 operators active in the market * . Fixed to mobile substitution is key market driver in declining fixed-line market. The number of fixed-line minutes of use (MOU) in first nine months of 2014 decreased yoy by 14.6%. In line with the stipulations from pre-bankruptcy settlement of Optima Telekom and following realisation of Mandatory Convertible Loan instrument, HT and Optima Telekom signed on 30 July 2014 the agreement on conversion of rights into the share capital, resulting with an increase of share capital of Optima Telekom. HT gained additional 10.88% stake and now holds 19.11% of the share capital of the Company.
Optima Telekom is fully consolidated in the HT Group financial statements, due to the fact that HT exercises control over the Company, based on the Agreement with Zagrebačka Banka, major shareholder of the Company.
T-HT successfully maintained its leading position in the fixed line market, reflecting the Group’s continuing dedication to high-quality services and improved offers.
Convergent offers and growth in payTV market are key market drivers
The Croatian fixed broadband market grew yoy by 3.1% in Q3 2014 reaching 943,966 fixed broadband connections. DSL is still the dominant broadband technology. T-HT is the largest fixed broadband operator in Croatia. At the end of 2014 T-HT Group had 614,231 broadband access lines.
T-HT offers fiber optic Ultra MAX packages at the price of the standard MAX packages. The packages are FTTH-based (Fiber to the Home) and offer 10 times higher speed compared to MAX packages for residential customers. This is a step forward in spreading T-HT’s fiber optic network that enables the fastest Internet in accordance with the today’s pace of life that includes fast and undisturbed consumption of digital content.
The Croatian pay TV market grew yoy by 6.6% in Q3 2014 reaching 728,367 customers* . T-HT is the pay -TV market leader thanks to its IPTV service, MAXtv.
From traditional data to IP-based services
T-HT keeps its leading position in the data market that is migrating from traditional data services to more cost-effective, IP-based services. Although the data market is relatively small, it represents an important service for business customers.
Following liberalization of the fixed line market, demand for infrastructure services requested by alternative operators remains high in Q4 2014 with major focus on broadband services. The number of broadband wholesale customers (BSA and Naked BSA) increased to 72,604 at the end of Q4 2014 (increase of 76.0% compared to 2013). Due to high churn and migration to broadband services number of Unbundled Local Loops (ULL) and Wholesale Rental Lines (WLR) is decreasing, which resulted with 167,941 ULL access and 115,555 WLRs at the end of the period.
In January 2014, wholesale prices were amended for the following regulated services: call origination, fixed and mobile call termination. Standard offer for regulated leased lines was amended (price were decreased) as from 1 September 2014.
Also, from October 2014 standard offer for wholesale broadband access (BSA and NBSA) was amended. Main change is related to new model of charging wholesale broadband access resulting with lower wholesale prices.
According to the latest IDC Adriatic analysis*, slight growth of Croatian ICT market is expected in 2014. Preliminary analysis shows that Hardware segment (PCs, servers, storage, printers, tablets) grew about 6%. Comparing to 2013 slight growth is also expected in IT services and Packaged software segments. The strongest growth is again expected for Cloud services.