Slovakia - Telecoms, Mobile, Broadband and Forecasts

Defined as an upper middle-income country by the World Bank, Slovakia has enjoyed strong economic growth since joining the European Union in May 2004; from 2004 until 2009 real GDP grew by an average 7.4% while unemployment dropped by 8.5%. An export-dependent economy, the recent global economic turmoil has hit Slovakia’s exports, which counts Germany, Czech Republic and France as its principal trading partners, as well as softening demand at home due to falling confidence and employment, with the country entering its first recession since independence in 1993. GDP is expected to contract by 2.6% for the whole of 2009.

Despite the difficult conditions Slovakia’s telecoms market is expected to fare well given the essential nature of most telecom services. Competing telecom operators have noted that the recent global economic turmoil has not hit telecoms and IT services as much as other industries, such as manufacturing and finance, given that telecoms and IT services are productivity enablers. However it has increased the difficulty in securing financial funding for telecoms projects. During 2008 the telecoms market generated SKK69.2 billion in revenue, a 3.7% annual increase, with the mobile market driving growth. Competition led to flat consumer prices for telecom services during 2008, with a similar trend expected during 2009.

Despite market liberalisation telecoms incumbent Slovak Telecom holds a near monopoly of the fixed-line services market with over 90% share of the fixed telephony market. A number of alternative operators have entered the market although tough competitive pressures have forced a number of mergers and acquisitions, resulting in small number of larger alternative operators. Fixed-line penetration has gradually fallen, a trend primarily attributed to users cancelling fixed lines in preference for using mobile phones.

Slovakia’s Internet market is undergoing a transition as users migrate from narrowband to broadband access platforms due to increasing affordability of cable, ADSL2+, fibre access and wireless broadband. Broadband is being sold as a platform through which telecom operators hope to sell additional services, such as broadband TV (IPTV), in addition to slowing the fall of fixed lines. Riding on this trend is development of Slovakia’s Internet economy, which has received substantial EU funding to develop and improve access to e-government services. Digital terrestrial TV developments are underway, with three multiplexes to be launched by 2013.

Slovakia’s mobile market is serviced by three mobile network operators with penetration levels indicating multiple SIM card ownership. A relatively new market entrant and introduction of mobile number portability has increased competition. Both of the established mobile network operators have focused on improving ARPU levels by encouraging existing prepaid users to migrate to postpaid plans, as well as offering mobile broadband access and content services, which have benefited from deployments of 3G/HSDPA networks. With competition increasing one of the two established operators has embarked on a plan to become an integrated telecoms services provider.

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