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Market Overview and Regulation in Albania
Market Trends 2015
2
3
4
5
Revenue growth for the sector (after many years of stagnation)1
Steady growth of fixed broadband
Higher substitution of mobile voice and SMS with OTT services
Number of subscribers to triple play bundles increased 3 times
Significant growth of mobile broadband due to 4G
6 IPTV important driver for increased broadband connections
Fixed telephony subscribers: in decline since 20097
Market TURNOVER 2015
- 10,000 20,000 30,000 40,000 50,000 60,000 70,000
2008
2009
2010
2011
2012
2013
2014
2015
Million LEK
Mobile and Fixed operators
Telekom Albania Vodafone Albtelecom (Mobile) Plus Albtelecom (Fiks) OA
- 10,000 20,000 30,000 40,000 50,000
2008
2009
2010
2011
2012
2013
2014
2015
Million LEK
Mobile Networks
Telekom Albania Vodafone Albtelecom (Mobile) Plus
• Mobile networks: 2% growth Vodafone, Telekom, EM: 0-2% increase
Plus: 20% growth
• Fixed networks: 2% growth Albtelecom: -4%
AO: +22%
• Total market Turnover: € 309 mil. 2% annual growth
Growth after decline since 2009 (exc.2012)
• Main operators revenues stable
• Revenue from mobile v fixed networks: 77% v 23%
Revenue Market Shares
Vodafone 47.07%
Telekom Albania34.35%
Albtelecom 12.01%
Plus6.57%
Mobile Networks Rev. 2015
Albtelecom fix59.05%ABCOM
17.32%
ASC4.79%
Abissnet3.41%
Nisatel2.42%
ATU2.28%
Other AO10.73%
Fixed Networks Rev. 2015
MNO-s market shares stable in 2014-2015
62% of MNO investments in 2015 for broadband
Albtelecom market share in fixed sector declined from 66% in 2014 to 59% in 2015
Fixed Broadband 2015
5
End of 2015: 243 thousands subscribers (QII_2016: 255 thousands)
2010-2015: steady annual growth 14-17%.
8.6% subscribers per population
31% subscribers per Household
• International Connectivity: 77Gbps (61 Gbps 2014)
• Market shares: – Albtelecom 40%– Abcom 21%
• Four main operators: – 84% of the total market – Triple play offers (Internet, telephony, TV)
59%43% 42% 40% 40% 40%
11%
21% 22% 24% 23% 21%
6% 11% 11% 11% 11% 10%
5% 7% 7% 8% 14% 13%
19% 18% 17% 16% 12% 16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015
Market Shares
2010-2015
Albtelecom Abcom Abissnet ASC OA te tjere
4%4.90%
5.70%6.40%
7.3%
8.6%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0
50,000
100,000
150,000
200,000
250,000
300,000
2010 2011 2012 2013 2014 2015
Fixed broadband subscribers and penetration per
population
Subscribers Penetration
Fixed Broadband and IPTV
• Broadband subscribers: + 17%
• Triple Play (Internet, Tel, +TV (IP/CATV) subscribers: 3 times (from 23 thous. To 69 thous.)
• Albtelecom: increase 4 times of triple play ( with IPTV), and 63% of total broadband subscribers
0
20,000
40,000
60,000
80,000
100,000
120,000
2013 2014 2015
Albtelecom broadband subscribers
Broadband No bundles Internet + Telephony
Internet, Telephony +IPTV
Fixed Broadband by Technology
1.DSL: 63% (FTTN/C 52%)
2. Cable 23%
3. Cable DOC SIS 3.0: 14% of total cable
4. NGA Subscribers: 63% mostly FTTN/C
1. DSL: 69% (VDSL included)
2. Cable 19%
3. Cable DOC SIS 3.0: 80% of total cable
4. NGA: 35% mostly VDSL, FTTH/B and Cable DOC SIS 3.0
Albania Albania EUEU
DSL on 100% copper line
11%
DSL on FTTN/FTTC
52%FTTH/B7%
Cable23%
Other7%
Albania 2015
Fixed broadband by Download Speed
8%
28%
60%
4%
0% 0%
256 kbps up to < 2 Mbps
2 Mbps deri ne < 4 Mbps
4 Mbps up to < 10 Mbps
10 Mbps up to < 30 Mbps
30 Mbps up to < 100 Mbps
100 Mbps or more
5%
25%
64%
5%
1% 0%
256 kbps up to < 2 Mbps
2 Mbps up to < 4 Mbps
4 Mbps up to < 10 Mbps
10 Mbps up to < 30 Mbps
30 Mbps up to < 100 Mbps
100 Mbps or more
20142015
• Moving up from 1-2 Mbps to 4-10 Mbps
• 64% of subscribers on 4-10Mbps
• 256kbps-4Mbps: from 36% in 2014 to 30% in 2015
• Fast (30 Mbps) and ultra fast (100 Mbps): 1% of total connections
Broadband Prices (PPP adjusted)
89
76 76
60 58
5249 47 46 45 44
3936 35 34
3128 27
0
10
20
30
40
50
60
70
80
90
100
LV IS CY ES HR
NO LU
EU2
7 SI SK HU LT AL FI PL
DK EE SE
Monthly Price Fixed Tel, Internet, TV 8-12Mbps (EURO PPP)
69
5249
46 4543
4138 38 37
35 34 33 33 3230 30 30 28 27 27 25 25 24
22 21 21 2017
12
0
10
20
30
40
50
60
70
80
Monthly Price Fixed Tel+Internet, 8-12 Mbps (EURO PPP)
Mobile Broadband 2015
10
• 4 MNO-s with 3G services
• 3 MNO-s launched 4G services in July-September 2015
• 2 million users of mobile broadband
• 1.4 million active users(1.5 milionQ2 2016) o 43% Annual Growth: mostly access
from mobile phones
o QIII 2015: 23% growth Impact of 4G
• 46% penetration per population for active mobile broadband users(53.3% Q2 2016)
• 550 MB average download per user
32.1%34.1%
35.5%
43.6%45.8%
49.2%
53.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Celular Devices USB/Modem Penetration per population
Active users with broadband access 3G/4G and penetration per capita
Impact of OTT
Albanian MNO-s areexperiencing thedecrease in voice/SMStraffic and surge indata traffic
SMS: -12%
DATA downloaded: +148% 2014/2013+103% 2015/2014
Number of GSM users(active/SIM):
+1%/-3%
Voice calls:+ 1% 2016/2015-15% Q12016/Q12015
Number of active mobile broadband
users: +43%
Infrastructure
• Good coverage in main urban areas with optical fibers: Tirane, Durres, Vlore, Shkoder etc
• Many operators have their own urban/local FO infrastructure
• Inter-urban area only Albtelcom and ATU present
Optical Fiber in Tirana
Optical Fiber: Interurban
13
• Optical Fiber: all operators • Optical Fiber: All operators except Albtelecom and ATU
Broadband/Infrastructure Market
• Most fixed operators with their own networks Infrastructure based competition
• LLU not effective• Bitstream Access:
o Albtelecom has signed agreements with 4 operators
o End of QII_2016 approx.2400 connection
• Passive infrastructure sharing:o 924 km access to dark fiber (no change from
2014)o 61 km: access to ducts (19 km in 2014)
• AKEP approved a Regulation for passive infrastructure sharing in 2015
• MOU for co-investing was signed between three mobile operators and AKEP on December 2015.
Market Analysis 2014-2016
Broadband Access & Leased Lines
Fixed telephony
Mobile Telephony
Market 3 and 4/2014
Wholesale local access (WLA)
Wholesale central access (WCA)
Wholesale high quality
access (WHQA)
Wholesale access to passive
infrastructure network in
national level
Wholesale Local Access – 3a
Non discrimination
Transparency
Local loop access unbundling on MSAN level
Access in physic infrastructure (duct/pole for connection POI - MSAN
Price control of LLU and duct access
Vectoring for VDSL ( if it is applicable)
Wholesale Central Access – 3b
Non discrimination
Transparency of tariffs and services (their publication)
Obligation for Bitstreamaccess (Continuance of obligation of
2014 market`s analysis)
Obligation for access in duct/optic fiber in urban level
Price control of Bitstream and duct access
Wholesale High Quality Access - 4
Non discrimination
Transparency of tariffs and services (their publication)
Obligation for leased lines accessaccess (Continuance of obligation of 2014 market`s
analysis)
Obligation for leased lines access in national/interurban connection and local level (termination segment)
Price control of leased lines access
Wholesale Access in Passive Infrastructure Network in National Level
Albtelecom
& ATU
Symmetric regulation
Non discrimination
Transparency of tariffs and services (their publication)
Access on duct and optic fiber in
national/interurban connection level
Price control of duct/optic fiber
access
Market analysis (1/2014)
AKEP on October 2015 approved the final document of the "Analysis of the fixed telephony market: retail markets and wholesale markets of termination, transit and origination". AKEP decided :
Wholesale fixed call termination marketo Designation of Albtelecom and all AO as SMP o FTRs:
• from 1.01.2016 symmetric rates between Incumbent and AO and one segment (from two);
• glide path in three stages 2016-2018.
Retail market of Access (market 1/2007) and wholesale Call origination on fixed networks (market 2/2007):o no longer susceptible to ex-ante regulation (do not meet the 3 criteria
test) and no SMP operators. o fixed and mobile calls in the same market (fixed calls high degree of
substitution from mobile calls).
Market analysis( 2/2014)
4 MNOs SMP
Wholesale Mobile Call Termination
Transparency
(RIO publication)
Non-discrimination
Access
Tariff regulation
Cost orientation
Market analysis( 2/2014)
Based on the market analysis, in the recommendation ofCompetition Authority and the best practices to addressthe “Club effect”, AKEP has imposed additional measuresto reduce/eliminate behaviors with anti-competitiveeffect of discrimination in on-net/off-net.
Market analysis( 2/2014)
1. Further reduction of MTRs according to thebenchmark method, using the average MTRs inBEREC countries that have applied the ‘pure LRIC’method;
2. Internal non-discrimination in MTRs: prices forretail on-net calls not lower than off-net retail prices.
Structure of Calls Originating From Mobile Phones2013-QII 2016
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 QIV_2014 QI_2015 QII_2015 QIII_2015 QIV_2015 QI_2016 QII_2016
93%
80%74% 69% 65% 68% 64% 61%
On net Off net Towards fixed Towards international
,