BMI's Executive Summary

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Following growth of 16.1% in 2005, Estonia's mobile market grew by a further 9.6% in 2006, with an additional 137,000 customers being added to the sector. Rates of growth were variable during the year, with the 1% and 1.5% growth rates in Q106 and Q206 rising to 3.2% in Q306 and 3.6% in Q406. Market leader EMT once again outperformed its rivals throughout much of 2006, collecting 50% of net additions in Q206, 74% of net additions in Q306, and 70.5% in Q406. These gains had the effect of raising EMT's overall market share to almost 49%. Despite a 4.1% fall in the number of prepaid users in the first quarter of 2006, EMT saw a huge upsurge in prepaid customer numbers throughout the rest of the year; it is largely this prepaid growth which helped boost the operator's market position.

Although the sector performed well in 2006, the most recent data available suggests that Estonian mobile subscriber growth was just 0.9% in Q107 and that in Q207 the sector stagnated, with Elisa Eesti and Tele2 both reporting subscriber gains, but with EMT posting a net loss of 17,000 customers (all prepaid). Notwithstanding these most recent developments, growth in Estonia's mobile sector has continued to be strong, and BMI expects 2007 as a whole to produce further growth. Nevertheless, the sector is already highly saturated, and we have therefore revised our growth estimates to take into account declining growth. We predict that the number of mobile customers will increase by 6% in 2007 as a whole, reaching 1.656mn by the end of the year (giving Estonia a penetration rate of 123.6%). Furthermore, we anticipate a much more modest 4% rate of growth in 2008, with the growth rate dropping in each forecast year thereafter. By the end of 2011, we expect the sector to have 1.799mn mobile subscribers (135% penetration). Looking ahead, we expect the Estonian mobile market to be increasingly characterised by competition for more lucrative postpaid customers, as well an increasing emphasis on winning 3G customers with new high-speed data services. Although 3G subscriber growth has been limited to data, there are signs that it is starting to pick up, and we believe that the rollout of HSDPA technology will help to encourage further subscriber uptake. The 25,000 3G subscribers at the end of 2006 were equivalent to just 1.6% of mobile users. However, we believe that this total has the potential to reach 4.3% by the end of 2007, now that there are three operators offering 3G services.

Meanwhile, although the number of broadband connections in Estonia at the end of 2006 was slightly lower than previously predicted, growth has remained strong. We expect the ongoing investments in new broadband technologies and services to continue driving growth for the duration of our forecast period; we anticipate the sector reaching 255,000 connections by the end of 2007 (representing 19% penetration). In recent quarters, Estonia has edged up BMI's regional telecoms business environment ranking table, and now sits in fifth position, a little behind Poland. The country now benefits from a high market maturity score, which is on a par with its high competitive and regulatory environment scores.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Industry Forecast Scenario

Fixed-Line

Table – Estonian Telecoms Sector Fixed-line Historical Data & Forecasts

Internet

Table – Estonian Telecoms Sector Internet Historical Data & Forecasts

Mobile

Table: Estonian Telecoms Sector Mobile Historical Data & Forecasts

Chapter 3 - Macroeconomic Climate

Table: GDP, Output & Population

Chapter 4 - Business Environment

Estonia

Estonia Telecommunications Industry SWOT Analysis

Chapter 5 - Competitive Landscape

Market Structure

Table – Key Players: Estonia Telecoms Sector

Table – Selected Operators Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Internet Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data

Fixed-Line

Table – Estonian Local Market, 2005

Table – Estonian Cable TV Market, Q405

Internet

Table – Estonian Broadband Market, H106

Mobile

Table – Estonian Wireless Market, Q206

Table – Estonian Mobile Net Additions, H106

Industry Developments

Chapter 6 - Company Profiles

Elion Enterprises

Eesti Mobilitelefon (EMT)

Tele2 Estonia

Elisa Eesti

Starman

Chapter 7 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 8 - Global Economic Assumptions

Introduction

The World Economy

Table: Global Assumptions

United States

Eurozone

Japan

China

Commodities

Competitive Landscape for Europe Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of European Telecommunications Sources

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BMI's European Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include:.