The value of the Croatian telecom market by 2009 is 15 billion kuna

The Croatian telecom market is expected to be worth nearly 15 billion kuna by 2009, with an average annual growth rate slightly above 4%, according to estimates from the analytical firm InfoCom, which is mentioned in the prospectus accompanying the public offering of shares of Hrvatski Telekom.

At the end of last year, the domestic telecommunications services market was estimated at around 13.3 billion kuna, and by the end of this year, its value should increase by an additional half a billion kuna. The largest revenue growth is expected in the Internet segment (which includes IP telephony), where revenues are projected to grow annually by about 25%, from last year’s 769 million kuna to 1.5 billion kuna in 2009. A slightly lower average growth of about 9% per year is expected in so-called wholesale services, which refers to the leasing of telecommunications infrastructure to service providers, with revenues in that market segment expected to rise from last year’s 824 million kuna to around 1.1 billion kuna in 2009.

Even lower growth, averaging 5.3% annually, is expected in mobile telephony, but this segment will generate the largest portion of revenue, which is expected to amount to nearly 8 billion kuna by the end of this year and reach 8.8 billion kuna in 2009. These estimates also include revenues from so-called wholesale services in mobile telephony. In contrast to these market segments, InfoCom predicts a continued decline in revenues from traditional fixed telephony, at about 4.2% annually, from last year’s 3.9 billion kuna to 3.44 billion kuna in two years. Cable television is not included in these estimates, as noted in the prospectus. The average annual growth of the Croatian telecommunications market from 2004 to 2006 was around 8.6%.

During that period, annual spending on telecommunications services per capita in Croatia increased from 315 euros at the end of 2003 to 422 euros at the end of last year. In the same comparative period, in the EU15 countries, that spending rose from 636 to 686 euros annually, and the figures “suggest the conclusion that there is still potential for growth in the Croatian telecommunications market over the next few years if it aims to achieve parity with […] EU15 countries,” conclude the authors of the HT prospectus.

However, they also state that this depends on the expected future GDP growth and higher wages – the average gross salary in Croatia in 2005 was 844 euros, compared to 2,858 euros in EU15 countries. However, the average annual spending per capita on telecommunications services in Croatia is higher than in some more advanced transition countries. Thus, at the end of last year, it was 344 euros in the Czech Republic, 306 euros in Hungary, 238 euros in Slovakia, and only 185 euros in Poland.