For this Q210 edition of the Croatia Telecommunications Report, we have amended slightly our forecasts for the country's mobile, fixed-line and internet markets. Our forecasts are broadly unchanged, although we have reined in our 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, though 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 Q209 to disconnect 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 Q309, which stopped it from making the most of a lacklustre performance from TMobile and narrowing the gap between the two. We believe that there were 6.354mn mobile subscribers in Croatia at the end of 2009, a y-o-y 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, though, 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, we expect that there will be 1.514mn 3G subscribers in Croatia, which would 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. BMI forecasts that the number of broadband subscribers will reach 1.3mn 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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Croatia Telecommunications Report Q2 2010
Published on March 2010
Report Summary
For this Q210 edition of the Croatia Telecommunications Report, we have amended slightly our forecasts for the country's mobile,
fixed-line and internet markets. Our forecasts are broadly unchanged, although we have reined in our 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, though 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 Q209 to disconnect 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 Q309, which stopped it from making the most of a lacklustre performance from TMobile and narrowing the gap between the two.
We believe that there were 6.354mn mobile subscribers in Croatia at the end of 2009, a y-o-y 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, though, 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, we
expect that there will be 1.514mn 3G subscribers in Croatia, which would 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. BMI forecasts that the number of broadband subscribers will reach 1.3mn 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.
Table of Content
Executive Summary ...5
SWOT Analysis...........6
Croatia's Mobile Industry SWOT ................. 6
Croatia's Fixed-Line/Internet Industry SWOT................. 7
Croatia Political SWOT............. 8
Croatia Economic SWOT........... 8
Croatia Business Environment SWOT .......... 9
Business Environment Analysis 10
Central And Eastern European Markets .......... 10
Croatia.................. 12
Croatia Telecommunications Report Q2 2010 Page 1/5

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Table: Eastern Europe Business Environment Rankings .................. 14
Industry Forecast Scenario........15
Mobile..... 15
Table: Telecoms Sector ' Mobile ' Historical Data & Forecasts..... 15
Fixed Line.................. 17
Table: Telecoms Sector ' Fixed-Line ' Historical Data & Forecasts .................. 17
Internet ... 18
Table: Telecoms Sector ' Internet ' Historical Data & Forecasts .... 18
Market Data Analysis ..................20
Mobile..... 20
Table: Croatia Mobile Market Prepaid And Postpaid Subscribers, Q208-Q309 (mn)............. 21
Table: Croatian Mobile Market, Q309 ....... 23
Mobile Contract Wins 25
Table: Mobile Contract Wins... 25
Mobile Content .......... 26
Regional Outlook.. 26
Country Outlook ... 30
Table: Growth Of Annual SMS & MMS Traffic, 2007-2008 ............. 32
Value-Added Services Timeline 33
Table: Selected VAS Services... 33
Mobile Operator Data .................. 34
Table: Mobile Operator Data For Croatia. 34
Table: Mobile Operator Data For T-Mobile.................. 35
Table: Mobile Operator Data For Vipnet ... 36
Table: Mobile Operator Data For Tele2 .... 37
Fixed Line.................. 38
Internet ... 42
Wireline (Fixed-Line & Broadband) Developments....... 47
Table ' Wireline Developments (2008-09).. 47
Regulatory Environment.............48
Table: Croatia: Regulatory Bodies And Their Responsibilities ......... 48
Industry Developments ............ 49
Competitive Landscape..............52
Competitor Analysis... 52
Key Players........... 52
Table: Key Players: Croatia Telecoms Sector ............... 52
Table: Selected Telecoms Operators ' Financial Indicators, 2004-2008 ............. 52
Company Monitor.....53
T-Systems - Strong Today, Stronger Tomorrow............. 53
Streamlining Efficiency............ 53
T-Systems Key Facts ................ 53
T-Systems Strategy 55
Cloud Computing.. 55
Smart Metering ..... 55
Major T-System Contract Awards in Q409. 56
Selected Profiles ' Operators ....... 57
T-Hrvatski Telekom.................. 57
Tele2 Croatia........ 61
Appendix 64
Regional Telecommunications Penetration Overview......... 64
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Fixed Line............. 64
Table: Regional Fixed-Line Penetration Overview........ 65
Broadband ............ 65
Table: Regional Broadband Penetration Overview ....... 66
Mobile 66
Table: Regional Mobile Penetration Overview.............. 68
Country Snapshot: Croatia Demographic Data ..............69
Section 1: Population............... 69
Table: Demographic Indicators, 2005-2030.................. 69
Table: Rural/Urban Breakdown, 2005-2030 ................. 70
Section 2: Education And Healthcare......... 70
Table: Education, 2000-2003 .. 70
Table: Vital Statistics, 2005-2030............... 70
Section 3: Labour Market And Spending Power ............ 71
Table: Employment Indicators, 1999-2004. 71
Table: Consumer Expenditure, 2000-2010 (US$) .......... 71
Table: Average Annual Wages, 2000-2010. 72
Glossary Of Terms ...73
Table: Glossary Of Terms........ 73
BMI Methodology .....74
How We Generate Our Industry Forecasts . 74
Table: Key Indicators For Telecommunications Industry Forecasts.. 74
Telecoms Business Environment Ratings .... 75
Table: Weighting Of Indicators .................. 76
Table: Ratings Indicators ........ 77
Sources ................. 77
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