Boston, MA -- (SBWIRE) -- 01/08/2014 -- The Croatian mobile market recorded its second straight quarter of growth in Q313, following a number of net losses at end-2012. This indicates the market has reached a high level of maturity, but it has managed to maintain one of the highest ARPU rates in Central and Eastern Europe (CEE). This has been helped by the proliferation of 3G services and smartphones devices, the latter of which account for about 30% of subscriptions. Moves into 4G have been made by the two leading operators, however, the third largest, Tele2, has failed to acquire spectrum to support a launch. The company claims the move to LTE is premature as 3G services have not yet matured. This paints a slightly bleaker picture of the market as 3G has been available for many years. While Tele2's decision may be correct in the short term, this could raise future problems for the company as it may find it difficult to compete. Dedicated mobile broadband subscriptions were up 25% y-o-y in Q213 and demonstrate a growing demand for data in Croatia.

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Key Data

- The mobile market returned to growth in Q213 and Q313 after subscription losses in Q412 and Q113. All three operators reported q-o-q growth as total subscriptions increased by 141,000 to 5.181mn at the end of September, but total subscriptions were still down 2.2% y-o-y.
- The latest regulatory data show stronger growth for broadband subscriptions in 2013 as the dedicated mobile broadband market are expanding rapidly. Previously total subscription figures had been hit by the discounting of inactive mobile broadband subscriptions, while fixed broadband subscriptions continued to grow steadily.

Key Developments

VIPnet continued its acquisition spree acquiring 100% of local cable TV provider Istarska Kabelska, for an undisclosed sum. VIPnet is Croatia's largest cable company through its B.net unit and reported that the purchase of Istarska Kabelska expands its cable footprint by 7,500 households in the Pula (Istria County) area. It intends to carry out upgrades to offer the newly acquired households the same high-speed internet and TV content range as other VIPnet/B.net customers. The buyout marks VIPnet's fifth such transaction of 2013, having already acquired local cable operators OKI and KTS, satellite TV operator Digi TV and residential infrastructure assets from alternative telecoms operator Metronet Telekomunikacije.

In the wireless sector, the Croatian regulatory authority HAKOM, announced in September it would auction the remaining one-third of 'digital dividend' 800MHz spectrum to be used for the provision of 4G LTE services. The unallocated spectrum totalled 20MHz and will be offered in two frequency blocks of 2x5MHz, with the initial price of a single block at HRK105mn (US$18.3mn), as well as an annual fee of HRK8mn.

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