Croatian mobile operators set sights on broadband (Crotia)Vipnet looks to capitalise on low fixed broadband penetration with FMS products; competition in mobile space intensifies as pricing pressures bite.
Croatia’s stunted fixed-line and broadband market plus a highly developed mobile space equals a significant opportunity for the country’s mobile players.
And Croatia’s second largest mobile operator, Telekom Austria-owned Vipnet, has its sights firmly set on poaching fixed minutes and data customers.
“We see a big chance for Vipnet to enter with mobile broadband products,” said Marie-Helene Magenschab, CEO of Vipnet, speaking at a Telekom Austria press event in Vienna last week.
According to Vipnet, fixed broadband penetration in Croatia stands at just 8.3%, largely as a result of a “very monopolistic market situation”; incumbent operator T-Com (Deutsche Telekom acquired a controlling stake in Hrvatski Telekom in 2001) holds fixed-line market share of over 95%.
By contrast, “the mobile market is very well developed,” said Magenschab, which means mobile players are looking towards fixed-mobile substitution and mobile data products to expand their businesses.
A key product for Vipnet is its Homebox, sourced from partner Vodafone, which it brought to market in the fourth quarter of last year.
“[Homebox is] a clear fixed substitution product for people who want to keep their fixed number,” said Magenschab.
The device enables customers to retain their fixed phone number, or to have a new “fixed” number, without having a fixed line. Users plug their fixed-line phone, and a PC if they so desire, into the Homebox, which routes calls over the mobile network.
Vipnet also offers Vodafone’s Connect Cards for laptop users and in March 2007, offering speeds of up to 7.2 Mbps on HSDPA.
Most people in Croatia have dial-up internet access, Magenschab explained. “If you provide them with EDGE they are quite impressed.”
Vipnet’s EDGE network is available to over 90% of the population, while customers in urban areas have access to 7.2-Mbps HSDPA “to compete with ADSL”, Magenschab said. Furthermore, “we are very quick,” she added. It can take several months to get an ADSL connection installed.
Thanks to these products and services, “the data traffic took off,” said Magenschab. And Vipnet has seen an “increase in the data users of almost 400%.”
As of June 2007, the mobile networks accounted for 40% of all minutes in Croatia, up from 31% a year earlier.
But competition in the mobile space is strong. Vipnet shares the market with leading player T-Mobile – the pair command shares of 42.7% and 47% respectively, according to Vipnet - and Tele2’s local unit. Tele2 was the last to come to market when it launched just over two years ago, and it has since built up a share of more than 10% of the market, although Vipnet insists that it has gained this market share largely at the expense of T-Mobile.
Croatia’s SIM penetration stands at 107%, driven by high pre-paid usage, although real user penetration is approximately 76%, Magenschab said. 80% of the market is pre-paid.
“Post-paid is [not necessarily] always the better option,” Magenschab said, since operators have fraud and non-payment of bills to contend with. Tele2 heavily pushed its post-paid offerings, she added. “They have a severe bad debt problem now.”
Nonetheless, Vipnet is pushing its own post-paid offers now, albeit carefully, as it seeks to boost ARPU. “Prices are dropping,” Magenschab admitted.
Pricing pressures could be exacerbated if mobile virtual network operators begin operating in Croatia. “There are a lot of MVNOs trying to enter the market,” but none have been successful so far, said Magenschab. “We hope to keep it like that.”
Like parent company Telekom Austria, VIP has launched a low-cost brand, the interestingly named Tomato, to address the cut price end of the market, rather than compromising its main brand. “[Our brand] is the basis for success,” Magenschab said.
