BMI View: Slovenia's fairly small size and population has led to the market becoming saturated quickly, with minimal levels of growth throughout the sector. The continued dominant position of state-owned Telekom Slovenije has also stunted overall growth and investment in the market. With limited subscriber growth opportunities, we expect to see increased levels of M&A activity, as consolidation of smaller players by larger companies plays out over the next few years. For such a small market, there are too many active players, none of which can properly challenge Telekom Slovenije. This has led to bankruptcy procedures at T-2 as well as Tusmobil becoming an acquisition target Telemach and Telekom Austria. The p rivatisation of Telekom Slovenije expected to be sold by February 2014, and that would bring a new, private investor into the market, with upside benefits to growth as a result.
The country's relatively high income levels have led to it having the highest ARPU and postpaid subscription mix in the region, backed by growth in 3G services. The combination of high incomes and strong value-added service uptake means that the rollouts of 4G by the two largest mobile operators should be met with stronger demand than in neighbouring states in the region.
The mobile market has continued to grow even as penetration reached 112.8% by the end of June 2014, with 2.7% year-on-year (y-o-y) growth to 2.311mn subscriptions. BMI forecasts growth will continue to slow in the medium term and total subscriptions will increase to 2.377mn by the end of 2018.
The broadband market has shifted towards higher speed technologies such as cable and fibre-to-the-home (FTTH). Fibre now represents 21% of the total fixed broadband market, 114,000 subscribers.
By July 2014, Mobitel reported it had over 100,000 active LTE users on its network, with its coverage reaching over 60% of the population and 300 LTE base stations. The operator aims to expand this to a 75% footprint by the end of 2014.
Total turnover from electronic communication services in Slovenia reached EUR1.25bn in 2013, according to data published by the Statistical Office of the Republic of Slovenia, a decrease from EUR1.21bn in 2012. Of the total turnover, public mobile telephone services accounted for 36%, or EUR405mn.
Key Trends And Developments
Slovenia's third-largest mobile operator Tusmobil has become an acquisition target of both Telemach and Telekom Austria, as of October 2014. In addition to its mobile business, Tusmobile also has a presence in the fixed-line, broadband internet and pay-TV sectors, although its share of the market is considerably smaller than its strong mobile market share. The company is owned by Mirko Tus, head of Slovenian retailer EngroTus, and is reportedly available at a price of EUR150mn.
The privatisation of Slovenia's dominant telecoms operator Telekom Slovenije is reportedly expected to be completed by February 2015. The sale was to have been finalised by the end of 2014, but the selection of a new cabinet and a general election have delayed the process. Bids for the takeover were submitted by Russia-based Mobile TeleSystems, Turkcell and Deutsche Telekom and financial funds Apollo Global Management, PPF Group, Apax, Cinven, CVC Capital Partners, Bain Capital and Providence Equity Partners. Interested parties were scheduled to start a thorough review of Telekom Slovenije in the week ended July 5. Bain Capital and Providence Equity Partners reportedly submitted the highest bid of EUR150-160 (USD204-217) a share and Deutsche Telekom offered EUR140 (USD190). Offers for a 75.58% stake in Telekom Slovenije had been invited earlier in 2014; the previous government expected to attain a sale price of more than EUR700mn (USD957mn). The state has been attempting to sell its majority stake in Telekom Slovenije for several years, with the sale process having been restarted in early 2013 to take advantage of improving conditions in the financial markets.
Slovenian alternative telecoms operator T-2 has entered receivership as a district court in Ljubljana declared it bankrupt. The operator's creditors, which include Hypo Alpe Adria Bank, Bank Asset Management Company and Banka Celje, insisted on receivership after they took over loans worth EUR90mn (USD116.5mn). T-2 shareholders plan to appeal against the court's decision and claim that the firm remains a healthy business with more than 175,000 subscribers. The operator reported a 9.1% y-o-y rise in sales to EUR14.3mn (USD18.51mn) in Q214.
In June 2014, ACH Holding and its affiliate Adria Mobil put their Slovenia-based mobile virtual network operator (MVNO) Debitel up for sale. ACH hopes to raise about EUR10mn (USD13.6mn) from the sale, with expected buyers to include its rival operators in Slovenia's mobile market. Telekom Slovenije is believed to be the frontrunner for an acquisition of Debitel.
The Agency for Communications Networks and Services (AKOS) announced that the country's multi-band mobile spectrum licence auction in the 800MHz, 900MHz, 1,800MHz, 2,100MHz and 2,600MHz frequency ranges had been completed during April 2014. The auction raised EUR148.741mn (USD205.938mn) through the allocation of 2×200MHz paired (FDD) spectrum and 1×70MHz unpaired spectrum under technology-neutral concessions. Three of the country's four existing mobile operators, Telekom Slovenije, Si.Mobil and Tusmobil purchased the licences worth EUR64.2mn (USD88.89mn), EUR63.87mn (USD88.44mn) and EUR20.67mn (USD28.61mn) respectively. Frequencies will expire after 15 years, except 2,100MHz band spectrum which is valid until September 2021. All available spectrum was allocated excluding 20MHz in the 1,800MHz band and 10MHz in the 2,100MHz FDD band.