FTTH Coverage Laudable, But Mobile Data Market Impacted
Lithuania ' s fibre to the home/building (FTTH/FTTB) penetration rate has reached 30%, according to the latest data published by the FTTH Council Europe. The country remains well ahead of its nearest European rival, Norway, and mature markets such as Sweden and France, owing to its relatively small size , as well as concerted efforts by incumbent TEO to meet growing demand for converged service bundles over high-speed connections. However, success in fibre is coming at the cost of the development of Lithuania's mobile broadband market, BMI believes.
The Communications Regulatory Authority (RRT) notes that fibre accounts for the largest proportion of fixed broadband connections in Lithuania. The 380,970 FTTH/B connections as of Q212 accounted for 51.1% of all fixed broadband accesses and 37.7% of all broadband accesses if mobile connections are included. FTTH/B connections grew by 16.4% y-o-y, while the number of mobile broadband connections (devices accessing the country's GPRS/EDGE, UMTS/HSPA and LTE networks grew by 20.2% y-o-y to a much smaller 265,807 connections.
|Turning A Corner|
|Lithuania Mobile Data Revenue Trends, 2008-2012|
Although the number of mobile broadband connections is currently growing at a faster rate than fibre accesses, actual usage of advanced mobile data services is expanding much more slowly. RRT data show that, in 2011, mobile data service revenue (excluding income from highly-commoditised services such as SMS) totalled just LTL44.2mn, or a meagre 5.3% of total retail mobile revenue. This was a decent y-o-y increase of 54.5% from LTL28.6mn in 2010 (3.3% of total revenue), but it is not enough to offset declining voice and SMS revenue.
Mobile data revenue amounted to LTL31.5mn in H112 , which is a pleasing y-o-y increase of 63.7% and is 7.8% of total mobile revenue for the half-year period . However , it is still small considering the high level of smartphone and mobile computer penetration in Lithuania. Operators' revenue have been hit by changes to service and sales taxes, reductions in interconnection and termination fees and increased availability of mobile number portability , while also striving to combat sluggish subscriber growth linked to high mobile saturation levels and chillier economic conditions weighing on consumers' propensity to spend on services. With this in mind, recent mobile data revenue growth appears to be well earned, but we still contend that fibre and multiplay packages are proving to be a heady distraction in the mobile market.
RRT reports there were 204,931 double-play and 2,017 triple-play subscribers as of Q212, with mobile telephony seemingly appealing only to double-play customers on broadband plans. There were 171,385 such customers as of Q212, up by 172.4% y-o-y. This suggests there is considerable scope for mobile operators to exploit the fixed service packages market, but BMI believes they will be wary of sharing revenue with cable and fibre operators while also accepting reduced subscription payments through packages.
With 4G licences under their belts, Lithuania's mobile operators will be considering their business strategies with regards to advanced data service provision. The latest data suggest there is a way forward , but that much remains to be done to foster greater interest in , or willingness to , engage with such services.